Skeletal ANATOMY of Insurance Policies

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Doron F. Eghbali Business Law

Skeletal ANATOMY of Insurance Policies

Tuesday, April 19, 2011 by Doron F. Eghbali

Insurance policies are rather esoteric documents. Let us dissect insurance policies main parts and understand the BASICS of Declarations, Endorsements, Conditions and Exclusions.


DECLARATIONS 

Declarations page "Dec Page" is the page often attached to the top of the policy and contains certain important information, including but not limited to the following:

• The Name and Address of the Insured
• The Particular Type of Coverage
• The Period of Policy
• The Limits of Liability
• The Premium of the Policy

ENDORSEMENTS

Endorsements, in insurance parlance, are referred to additions to the terms and provisions of insurance policy often enclosed by variety of professionals to address needs and requirements of the underlying circumstances or transactions. Often Endorsements are in STANDARD industry forms.
Endorsements might be crafted to:

• Enlarge the Insurance Pool by Adding More Coverage to More People
• Limit Coverage of the Policy

Since Endorsements are specifically crafted for a particular policy, EXPRESS Endorsements OFTEN supersede any conflicting terms and provisions found inside other parts of the policy.

EXCLUSIONS

Exclusions are to a great extent similar to Endorsements, in that they also limit the scope of insurance coverage. Insurance company OFTEN has the burden of proof in such cases. Exclusions MUST be conspicuous, clear and plain and construed in favor of coverage. Exclusions are OFTEN found under the "Exclusions" section of each policy type.
The insured has the obligation to ensure all the exclusions have been enumerated by the time the policy commences to forestall problems down the road, to the extent possible. If there are exclusions the insured does not agree with, revisions should be intelligently and prudently made.

CONDITIONS

Conditions set forth the obligations of the insured and the insurance company vis-a-vis each other. Conditions are OFTEN meant to give proper NOTICE to the insurance company in the event it is served with a suit.
HENCE, this NOTICE requirement is extremely important and MUST be taken seriously by the insured. In fact, the insured is OFTEN required to give NOTICE to the insurance of a claim or POTENTIAL claim which might trigger coverage under the policy. Notice is often entitled "Duties in the event of Occurrence, Claim, or Suit". In fact, the insured's failure to fully comply with Notice requirements of the policy can adversely affect or even DENY coverage.

CAVEATS

Insurance needs and requirements vary from business to business. This article in no way seeks to render any advice on types of business insurance.  
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DORON EGHBALI Is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertain ment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

What Does Estoppel Certificate Encompass In Commercial Properties?

Doron F. Eghbali Commercial Leasing Law

What Does Estoppel Certificate Encompass in Commercial Properties?

Monday, April 18, 2011 by Doron F. Eghbali

Estoppel Certificates serve a salient purpose to landlords, lenders and potential buyers of commercial property. Let us explore the salience and legal effect of such Certificates to some extent and further educate ourselves about them.


WHAT IS A ESTOPPEL CERTIFICATE?

An Estoppel Certificate is a signed statement by tenant or landlord certifying certain information as to the commercial premises. Estoppel Certificate is often required by lenders or potential buyers in refinancing or sale of commercial properties. In addition, it is possible for tenants to use Estoppel Certificates while seeking transfer of their interest under the lease, if possible.
Estoppel Certificates could literally derail a potential sale or refinancing, as lenders or buyers dissect the enclosed information as to the viability or liability of the building.

WHAT IS THE SALIENCE OF ESTOPPEL CERTIFICATE?

Estoppel Certificate provides some clarification and confirmation to interested parties in sale, refinancing or, to a lesser extent, transfer of commercial properties. The information to be provided on an Estoppel Certificate includes, but not limited to the following:

• Clarify Whether the Lease Still is Enforceable or Not
• Clarify Whether the Lease Contains any Changes, Amendments, Modifications, Assignments or Not
• Clarify Whether the Lease Contains any Defaults
• Clarify What the Lease' Essential Terms and Provisions Are, Such As: The Amount of Rent, The Place of Rent, The Rights Under the Lease Bestowed on Tenant(s).

Hence, by seeking such information, the most salient questions tends to become clearer, i.e. how much money is the property making? What are the existing or potential problems? The following lists some potential pitfalls for lender or potential buyer:

• Whether The Tenant is Solvent.
• Whether There are Still Renewal Option for the Property and Whether Such Rights have or Are Being Exercised.
• Whether There Are any Violations of the Lease Agreement.
• Whether There Are Any Security Deposits, How Much They Are and Where They Are, If Possible.

SALIENT NOTE
Given the salience of Estoppel Certificate, most leases contain a clause obligating tenant to provide it when requested. It might be possible for the tenant to negotiate a clause which obligates the landlord to provide the same document when and if tenant reasonably requests.   __________
DORON EGHBALI Is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

What Does TV Production Encompass?

What Does TV Production Encompass?

Friday, April 8, 2011 by Doron F. Eghbali

Film and TV production are rather largely dissimilar. Let us explore such esoteric variations in some detail. 

SOME BACKGROUND ON TV PRODUCTION

Film production, arguably and relatively, embraces a larger number of independent producers compared with Network Television, often dominated with large studios and a limited number of large independent producers. Even, those few independent producers supplying programming to Network Television have production-financing deals with larger studios or larger independents. In fact, unfortunately, industry demands such symbiosis because of the costs involved in producing original/new programming. Such costs surpass first-run license fees and such producers MUST accomplish long runs spanning at least 22-episode seasons to provide enough programming to run in a 5-episode week and become profitable through foreign sales and reruns.

SOME ESOTERIC MECHANISMS IN TV PRODUCTIONS DEFICIT FINANCING

Deficit financing is probably the most salient aspect of Network TV production since it determines if someone can or cannot produce. To understand deficit financing, it is useful to understand how prime-time series are financed and created.

The Federal Communications Commission (the "FCC") has severely restricted the ability of TV Networks in the Network's control of and financial interest in Network Programming, to foster a relatively more competitive environment. This FCC restriction has culminated in the fact that most prime-time series are not owned by TV Networks, but licensed from rather large independent producers.

Now, the way TV Networks pay for prime-time series to such independent producers is fascinating and daunting:

1. TV Networks, to make their programs more attractive, require independent producers to budget each hour of a new series more than $1.1 to 1.3 million.
2. TV Networks pay a starting license fee of around $800,000 to $900,000.
3. TV Networks payment arrangement, thus, creates anywhere between $300,000 to $500,000 or more budget deficit per episode for TV producers.

HOW COULD INDEPENDENT PRODUCERS RECOUP THE BUDGET DIFFERENCE, IF ANY? 

Now, the question arises how could relatively large independent producers recoup their money if it costs them to produce each episode around $1.3 million and receive only $900,000? The answer is as elusive as the money since most producers could recoup by having a repository of at least 50 to 70 episodes (22 episodes per season for three to four years of syndication). Nonetheless such recoupment strategy is fraught with perils since:

1. Possibly, TV Networks do not renew prime-time series beyond pilot let alone the second season.
2. Possibly, even if successful on TV Networks, the series are not necessarily successful upon syndication.
3. Possibly, even if successful on TV Network and syndication, it takes at least several years after the series were created for it to become profitable.

CAVEATS

Hence, given this rather daunting TV Production economics already delineated, the following caveats are worth considering:

• It is incumbent on TV producers to be large, well heeled and diversified. Such TV producers must be able to front the whole money required for production in the hopes of recouping the deficit with some reasonable yields in foreseeable future.
• It is incumbent on TV producers to have a balanced portfolio of programming. In other words, such portfolio diversification should encompass one or more prime-time series. It is ideal, not always feasible or foreseeable, to have a mix of programs some in syndication yielding profits, others in renewals on Network TV, and some in development and pilot stages.

• It is incumbent on TV producers to take note of two evolving trends. First, the ever increasing number of new programming channels COMBINED with new media to broadcast and monetize TV programming, is revolutionizing TV production market and economics. Second, Reality TV (unscripted TV) often involves different economics as there are no reruns, but other evolving opportunities for its monetization.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

What Do Mortgagages Encompass in Real Estate Transactions?

Doron F. Eghbali Real Estate Law

What Do Mortgages Encompass in Real Estate Transactions?

Thursday, April 7, 2011 by Doron F. Eghbali

Purchasing real estate, residential or commercial, most often requires large sums of money. While potential purchasers might borrow from family and friends to consummate the transaction, financial institutions such as banks, loan associations and credit unions are the common sources of such financing. Let us explore the mechanics and some intricacies of mortgages and further enlighten ourselves about them.


WHAT IS A MORTGAGE?

Borrowing money to buy real estate involves signing two documents, among other things: Promissory Note and Mortgage. 

A. PROMISSORY NOTE

Promissory note is rather a formal IOU by which the borrower promises to pay the money back to the lender according to certain terms including payment of the interest for using the money and compliance with the time schedule for making payments on the loan, among other things.

B. MORTGAGE

Mortgage is just another document which secures the debt or provides collateral for the loan if the borrower defaults on it. In fact, if the borrower defaults on the loan or breaches the terms of the mortgage agreement can foreclose on the secured property.

• PURCHASE-MONEY MORTGAGE: Purchase money mortgage, in reality, is the money SELLER lends BUYER to purchase the property.

SOME OTHER IMPORTANT YET RELATIVELY BASIC TERMINOLOGY AND OBSERVATIONS

• Mortgage Not Always On Purchased Real Estate: This is noteworthy, mortgages are not always made on the purchased real estate. It is conceivable, and feasible for borrower, for instance, to purchase a vacation home but borrows against the already-purchased residence. In such scenario, if the borrower defaults, lender would generally have recourse against the residence, unless their agreement provides otherwise.
• First Mortgage OR Second Mortgage, Senior Mortgage OR Junior Mortgage: This ranking order establishes the priority (right) over proceeds of a sale. In fact, mortgages of a lower priority (second and third) are referred to as junior mortgages and mortgages of higher priority are called Senior Mortgages. Hence, if borrower has three mortgages, the second mortgage is Senior to the third mortgage and Junior to the first mortgage.  Consequently, the lender having the first priority MAY use all proceeds from sale of real estate (foreclosure sale) if possible and necessary to satisfy the amount owed. Then, if any sales proceeds remain after satisfying the first mortgage, the money MAY be used to satisfy the second mortgage holder, and so on. Any proceeds remaining after satisfying all notes secured by the mortgages belong to the property owner, if any.
• Due-On-Sale Clauses: Due-on-sale clauses require the entire note be paid before seller can deed the property to a new purchaser. Nonetheless, some lenders MIGHT allow the new purchaser to ASSUME the loan and make payments on it. In such scenario, the new purchaser becomes wholly liable on the note. Generally, if the underlying property cannot be sold great enough to extinguish the secured indebtedness, then the lender might have RECOURSE to the subsequent purchaser's other assets for the deficiency. In addition, the first purchaser, generally, remains liable to the lender for any unpaid amounts.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

Some Last Minute TAX CREDITS for 2010 Tax Filing

Filing taxes could be deservedly daunting as we all strive to painstakingly collect all our data and reflect them accurately on our 2010 tax returns, if we have not already done so. Accordingly, taxpayer should be mindful of venerable TAX CREDITS to legally and ethically slash our taxes dollar for dollar, if possible. Let us further educate ourselves about such important subject, to some extent.

APRIL 18, 2011 DEADLINE NOT APRIL 15, 2011

Unlike most years, this year, the due date for filing taxes is April 18, 2011 and not April 15, 2011. This is because a District of Columbia holiday coincides with April 15, 2011.

SOME BACKGROUND ON CREDITS

There are two types of credits: refundable and non-refundable.

1. NON-REFUNDABLE TAX CREDITS

Non-Refundable tax credits - similar to refundable tax credits - would slash taxable income dollar for dollar. However, the drawback for non-refundable tax credits would be, since it is non-refundable, if we do not have tax liability, we will lose it.

2. REFUNDABLE TAX CREDITS

Refundable tax credits would be the best of two worlds. You have not paid anything towards taxes, yet you receive money. Such nature of refundable tax credits make them increasingly susceptible to fraud, unfortunately.

SOME RELATIVELY USEFUL CREDITS


1. EARNED INCOME TAX CREDIT (REFUNDABLE)

Earned Income Tax Credit (EITC) is a way for low-wage people to put some money back into their pockets, if possible. To become eligible for EITC, the person claiming it, MUST meet the following criteria, AMONG OTHER THINGS:

• MUST have a valid Social Security Number
• MUST have earned income from a business or self employment
• MUST be a US citizen or resident alien all year, or a nonresident but married to resident alien or US citizen, filing jointly.
• CANNOT be a qualifying child of another person.
• CANNOT have income from investment of more than $3,100.
• CANNOT be married, filing separately.

CAVEAT

This list is TRUNCATED and NOT EXHAUSTIVE at all.

2. CHILD CREDITS 

A. CHILD TAX CREDIT
Child tax credit could be worth up to $1,000 per qualifying child. The question is who considers qualifying child.
SOME of the criteria to be met for such qualification include BUT NOT limited to:

• To Qualify, the child MUST HAVE BEEN under age 17 at the end of 2010.
• To Qualify, the child MUST BE YOURS or LEGALLY ADOPTED.
• To Qualify, the child MUST NOT HAVE provided more than half of their own SUPPORT.
• To Qualify, the child MUST HAVE BEEN reported DEPENDENT on your federal tax return.
• To Qualify, the child MUST BE a US Citizen, Legal Resident Alien or US National.
• To Qualify, the child MUST HAVE LIVED with you more than half of 2010, generally.

B. CHILD AND DEPENDENT CARE CREDIT
Such tax credits range from $600 to $1,050 per child UP TO two children. To qualify for $1,050, the parents must have earned $15,000 or less. In addition, to qualify for such tax credit, usually, both parents MUST, usually, work.

CAVEAT

This is a very LIMITED description of such tax credit.

3. EDUCATION CREDITS

A. AMERICAN OPPORTUNITY CREDIT (REFUNDABLE) 

The full credit of UP TO $2,500 is available, FOR 40% of tuition and fees, to individuals whose MODIFIED adjusted gross income is $80,000 or less or married couples filing jointly with MODIFIED adjusted gross income of $160,000 or less. The tax credit covers cost of books, supplies, and course-related equipment. This tax credit is available ONLY for undergrad and not for GRAD school. Nonetheless, one can take advantage of such tax credit for the four years of college.
The best aspect of such tax credit id even if there are no such expenses, $1,000 of the tax credit is refundable.  

B. LIFETIME LEARNING CREDIT(NON-REFUNDABLE)

As the name signifies, this tax credit covers more than four years of college and could be used for graduate school or even learning job skills. The amount is up to $2,000 and can be used only for tuition and fees.  

DISCLAIMER

This article in no way supplants specific facts and circumstances of a case and in no way provides an exhaustive description, delineation, or articulation of such rather salient subject.
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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.

Actor's Film Performance: Pre, Post and Concurrent Issues with Performance

Doron F. Eghbali Entertainment Law 

Actor's Film Performance: Pre, Post and Concurrent Issues with Performance

Thursday, March 31, 2011 by Doron F. Eghbali

Actor's film performance starts not from principal photography and does not end with shooting the scenes. Such performance actually starts from actor's reading of the script and deciding to accept the role to control or approval over the script to the actor's make-up and physical appearance in the film. In addition, such actor's performance encompasses the final editing and the way the final product is altered or diminished, thereby altering or diminishing the actor's performance. 

ISSUES RELATED TO PRE-PERFORMANCE

1. APPROVAL/CONTROL OF SCRIPT BY ACTOR OR LACK THEREOF

Between actor and producer inevitably exists some kind of friction as to the amount of control or approval each one contractually can exert over the project. On the one hand, actor prudently desires to ensure the role accepted is the role actually performed after numerous revisions of the script.
On the other hand, producer desires flexibility to modify or alter the script depending on fluid conditions such as:

1. Casting Issues: Reducing the significance of some roles to accommodate others. For instance, the possibility of altering or modifying the script to accommodate a star actor and tailor the dialogue to showcase a particular's star's strengths rather than weaknesses.
2. Budgetary and Contractual Issues: It all comes down to money. It is often possible the producer concludes it will be too expensive to shoot in certain locations or it is absolutely necessary to cut the script to comply with censorship or studio guidelines or the film is literally too long.
3. Balancing Issues: The reality is there are so many other participants involved in creating a movie and there are not just the actor and producer. In fact, myriad stakeholders ranging from studio, distributor to financiers, director, co-stars and possibly writers desire to exert some kind of control over the film. In such situation, the producer prudently seeks to balance such often divergent interests.

2. MAKE-UP AND PHYSICAL APPEARANCE

 Actors rightly are concerned about any drastic transformations demanded by the role and not disclosed to them in full or in part. Such transmutations might not be befitting the actor's its public persona and whether or not such persona is appropriate for a particular role.

ISSUES CONCURRENT WITH PERFORMANCE

There are a couple of issues that often arise concurrent with actor's film performance. Such issues relate to the dynamics between the actor and other personnel especially other actors on the set AND rarely the actor's desire to have exclusive control over the performance.

1. Actor's Dynamic with Other Film Personnel

Actor's concern might not include only the actor's relationship with other actors, but also such dynamic with the director and production personnel. In such instances, problems might arise as to the compatibility, stature compared to others and even the quality of their work. For instance, some actors might demand - depending on their level of control laid out in their contract - a particular director, photographer, cinematographer or star-quality supporting cast.

ISSUES RELATED TO POST-PERFORMANCE 

As indicated before, the salient issue connected with an actor's post-performance concerns edition of the movie. In fact, it is well known that in Hollywood "films are made on the cutting-room floor." In such scenario, it is prudent actor demands and receives assurances the end product audiences will see would not be very different from what the actor reasonably came to believe. Undoubtedly, the producer, as always, longs for the most possible flexibility to ensure the ultimate film is not hamstrung by contractual obligations.
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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. Doron Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.