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On Wednesday, March 14, 2018, the Jewish Federation of Greater Philadelphia’s Real Estate affinity group (JFRE) hosted Mayor Kenney and Seth Shapiro, COO of The Goldenberg Group and Chairman of the Board of Philadelphia Gas Works, to discuss the City of Philadelphia’s 2019 fiscal Budget and its impacts on the City’s businesses and real estate industry. The event took place at the brand new luxury apartment building located at 1213 Walnut Street. Shapiro and Kenney discussed the following:

  • Improving educational outcomes and workforce readiness
  • Improving the Philadelphia school system and increasing wages
  • Increasing Philadelphia property taxes
  • Increasing Philadelphia’s realty transfer tax

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What is a bulk sale clearance certificate, and how is a bulk sale clearance certificate related to a Pennsylvania real estate transaction?  In Pennsylvania, a bulk sale clearance certificate must be obtained in all transactions involving the sale of fifty-one or more percent of the assets of a business, including real estate.  Because it is common for property owners to create single purpose entities to own the real estate, bulk sale clearance certificates are required in many real estate transactions, since the real estate represents the sole asset (i.e., 100%) of the assets owned by such SPE.  A bulk sale clearance certificate from the Pennsylvania Department of Revenue verifies that a particular entity satisfied all tax obligations due to the Commonwealth of Pennsylvania, including taxes, interest, penalties, fees, charges and any other liabilities up to and including the date of transfer.

Moreover, under 69 P.S. § 529, every corporation, joint-stock association, limited partnership or company organized under the Commonwealth of Pennsylvania or any other state that engages in business in the Commonwealth of Pennsylvania which sells in bulk fifty-one percent or more of any stock of goods, wares or merchandise of any kind, fixtures, machinery, equipment, buildings, or real estate, shall give the Department of Revenue ten days’ notice of the sale, prior to the completion of the transfer of such property.

To provide proper notice and comport with Pennsylvania law, the seller must file form REV-181, the Application for Tax Clearance Certificate, with the Pennsylvania Department of Revenue and the Pennsylvania Department of Labor and Industry ten days before the closing of the sale. A copy of the agreement of sale and preliminary settlement statement should be included with the Application for Tax Clearance Certificate.  (Note, however, that the Department of Revenue often requests re-submission post-closing so that all closing information and interim tax returns through the date of closing may be submitted).  In addition, all such entities must file all state tax reports with the Department of Revenue to the date of the proposed closing on the transfer of property and pay all taxes and unemployment compensation contributions due to the Commonwealth of Pennsylvania through the date of closing. If all state tax reports have been filed and if all state taxes and unemployment compensation contributions are paid up to the date of the proposed transfer, the State issues a clearance certificate to the seller, which is then provided to the buyer.

qtq80-HnVsL4-150x150In the August 21, 2017 edition of The Legal Intelligencer, Henry Donner, Of Counsel at Kang Haggerty, and David Dean, an associate of the firm, write on the Practitioners’ Guide to Navigating New Mechanics’ Lien Law Amendments.

By: Henry Donner and David Dean

Pennsylvania’s Mechanics Lien Law of 1963 was amended in late 2014 to require the commonwealth’s Department of General Services to create an internet-based State Construction Notices Directory. As required by the law, the directory went live on Dec. 31, 2016, providing a standardized, statewide, internet-based system for construction notices. This statutory scheme imposes new requirements on project owners, contractors, and subcontractors, compliance with which can drastically affect those parties’ rights under the Mechanics Lien Law. Practitioners representing any of the traditional parties in a construction matter should be sure to familiarize themselves with these new provisions, and advise their clients accordingly.

Kang Haggerty & Fetbroyt, a boutique business litigation firm with offices in Philadelphia, PA and Cherry Hill, NJ, congratulates Henry Donner, Of Counsel, on being selected as a notable practitioner for construction law in the 2017 edition of Chambers USA: America’s Leading Lawyers for Business.

According to Chambers:  “The ‘outstanding’ Henry Donner is a highly experienced attorney who comes recommended for his work on behalf of architects, developers, contractors and engineers. He provides assured counsel in cost disputes and design error cases.”

Chambers notes that with Donner’s prior firm, his construction law team was known for “offering expertise on all aspects of the construction development process, including contract negotiations and litigation. Possesses extensive experience representing a broad client base, consisting of managers, contractors and design professionals.”

In Edward Kang’s March 2016 civil litigation column in The Legal Intelligencer and the Pennsylvania Law Weekly, he writes on the issue of M&As and Attorney-Client Privilege of Selling Corporations.

Courts have long recognized that the attorney-client privilege extends to corporations, as in Upjohn v. United States, 449 U.S. 383 (1981). Because a corporation can act only through its agents, usually officers, a corporation’s attorney-client privilege generally applies to communications between the corporation’s authorized agents and counsel. As the U.S. Supreme Court explained in Upjohn, however, it is the corporation that holds the corporate attorney-client privilege, not individual officers.

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As a business owner, you want to make sure that your company successfully continues for generations to come. So, when you eventually retire or step down from your position, it is important to consider how you want to proceed with passing on your business to the next generation. Consider the following five tips.

1. Highlight your goals. Do you plan on passing your business down to your family, or do you prefer to transition to a buyer? Figure out your goals behind transitioning your business well before you intend to pass on your business. You should give yourself ample time to prepare for any obstacles along the way.

2. Create a clear strategy. Create a clear exit plan strategy as you move forward with the transition. Always be sure you have this plan set before you start so you do not run into confusion while transitioning. Consider the following to include in your strategy as you prepare:

When considering creating a social media policy, it is important to keep in mind that you will never be able to completely control social media use by your employees. There are, however, a few ways that you can successfully create a social media policy that will allow you to place legal boundaries around media use.

1. Create a Policy and BE Informative: Notify your Employees that you are creating a policy. Keeping them informed mitigates future “I didn’t know” excuses. Also, employees have the legal right to be informed about any new policy change or creation.

2. BE Informed: Before you start drafting anything, be informed about recent legislation regarding Social Media policies and cases that have created different interpretations of existing policies. Three major examples are:

It was announced on July 30, 2014 that Chicago Mercantile Exchange Group, Inc. (“CME”), the world’s largest future exchange operator, would purchase GFI Group, Inc. for a net price of $655 million.[1] GFI Group was targeted for its two units that would boost CME’s influence in the global market, Trayport and FENICS.[2]

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1. Define your goals. What is your ultimate goal in transitioning your business? Do you plan on funding your retirement through this transition? Is it to leave a legacy? The reason behind your desire to transition will determine how you proceed.

2. Plan & Implement Your Strategies. Create a clear plan as you move forward with the transition. Always be sure you have this plan set before you start so you do not run into confusion while transitioning. Consider the following to include in your strategy as you prepare:

a. Financial. If your goal is towards retirement, how will you be funding it? What will be your compensation as you leave the company? Be sure you highlight financial issues clearly and consult with the appropriate experts to make sure these issues are handled well.

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