cause they are providing services to support the new neighborhoods. About commercial leasing, many news outlets continue to report that vacancy rates overall are on the rise. Yet, perhaps anecdotally, we are seeing a distinction in vacancy rates in Class A business center locations versus Class B (or lower) suburban locations. Landlords of Class A buildings with large spaces to lease are experiencing higher vacancy rates, while class B buildings, especially those in suburban markets with smaller lease spaces, are filling their vacancies. These buildings appeal to businesses looking to increase their geographic presence to customers and provide additional and flexible workspaces for their employees. The availability of a small office with a short-term lease allows a business to establish an address in a new location and bring employees out of their homes. Lease negotiations will continue to include a more detailed review of relevant terms, specifically, force majeure, early termination, and expansion/contraction clauses are areas of focus. With government ordered shut-downs of many industries (such as gyms and restaurants), force majeure clauses in leases have been reworked and revisited. No longer are businesses quickly skim-
ming this provision of the lease; it is now being negotiated. Additionally, tenants are looking for options to easily increase or decrease their leased space. These types of clauses, allowing a landlord to easily demise spaces, are workable for landlords who are leasing to smaller tenants. In terms of litigation, we are anticipating additional foreclosures and breach of contract cases. Personally, I have seen increased cases involving allegations of fraud and failure to disclose in the underlying transaction. These are cases wherein there are allegations of forged or fraudulent deeds and fraud in the due diligence documentations or other misrepresentations. Overall, the commercial real estate climate continues to be challenging. While we cannot predict the future, we can continue to practice due diligence in protecting our clients’ interests. We can encourage our clients to be flexible, when needed, and in making the appropriate business decisions in the uncertain market. Cassandra McGarvey is the founder and principal of McGarvey PLLC. She has over fourteen years of experience representing clients in complex title, real estate, and probate litigation matters and real estate transactions.
Texas Insurance Law in 2021 and Beyond
By Stephen P. Pate and Karl A. Schulz he practice of insurance law in Texas has been touched in many ways by the challenging events of the last year. Looking forward, it is clear that some trends are still playing out, but some changes are likely here to stay.
in a sloppy, biased, outcome-oriented investigation in violation of the Texas Insurance Code. The insurer will typically argue that the joinder of the adjuster is simply a tactic to defeat diversity and keep the case in state court, which may be perceived as more plaintiff-friendly. This debate is not new, but it is taking place in the The larger new setting of the pandemic. COVID-19 Pandemic Numerous insureds have filed claims and lawsuits The larger trend that is new is the outcome of trend that is new seeking coverage for lost business income under their the coverage disputes. The trend is in favor of inis the outcome surers. The requirement of “direct physical loss of commercial property insurance policies. For example, a movie theater may have shut its doors during of the coverage or damage to” property presents a threshold probthe lockdown and wants to replace income from lost lem for insureds. Courts are recognizing that indisputes. The sureds are not pleading such “direct physical loss sales of tickets and concessions. Typically, such policies insure against “direct physical loss of or damage trend is in favor or damage to” property and that COVID-19 does to” property. Also typically, such policies contain an not cause such loss or damage to property.1 Also, of insurers.” exclusion that precludes coverage for losses due to a virus exclusions are knocking out some claims, virus. but often courts do not even reach the exclusions There is a growing body of case law arising out of these disbecause the insured has not satisfied the threshold burden of putes. One aspect of the case law concerns instances in which bringing the claim within coverage.2 the insured filed suit against its insurer and an in-state adjustContinued on page 49 er. The insured will typically argue that the adjuster engaged