Does Business Interruption Insurance Cover COVID-19 Losses?

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Authored by Jeffrey R. Schmitt, with assistance from Haley E. Gassel, contributor

business interruptionBusiness interruption coverage is like most insurance for small businesses – we pay for it with the hope we never need it. The coverage is intended to protect against revenue lost after a business experiences a covered peril or event which results in a temporary closure. Often this involves a casualty event like a fire or flood, or the inability to operate due to loss of utilities or information systems.

However, businesses across the country have filed claims with their insurers seeking business interruption coverage for COVID-related losses.  This is a theory that, fortunately, most businesses have never had to claim in the past. Some claims have found their way to the courts for determination. The issue often boils down to whether there is physical loss or damage to the policyholder’s business location to trigger business interruption coverage. Some policies include coverage for communicable diseases as well.

While most business interruption coverage lawsuits have not concluded, some recent decisions by federal courts in Missouri have been favorable for businesses seeking coverage. This is due in part to ambiguities in the policies and the lack of prior court decisions involving business interruption claims based on a pandemic. In many ways, these are uncharted waters for the litigants and the courts. Continue reading »

Observing Corporate Formalities

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Part 8 of a 12-part series on Legal Considerations for Your Missouri Leasing Business: What You Should Consider Now, Later, and Throughout the Process

It is absolutely critical to keep in mind at all times that your limited liability company or corporation is not an alter ego or simply an extension of yourself. The entity’s bank account cannot be used as your personal bank account, you should not use the entity’s  money to cover personal debts, and, in general, your personal assets should not be relied on to continually cover your entity’s debts. This is true even if you are the sole member or shareholder. The entity is and must be treated as a separate “person” from yourself, with its own assets, activities, and representations.

Keeping that distance is often referred to as observing corporate formalities. Failing to do so can remove the very asset protections that your legal entity was designed to impart. Each business model is different and all necessary formalities cannot be listed for each company, but below are some general guidelines for observing the necessary formalities. Continue reading »

Operational Considerations – Purchasing Real Estate – Indenture Review

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Part 6 of a 12-part series on Legal Considerations for Your Missouri Leasing Business: What You Should Consider Now, Later, and Throughout the Process

Once you’ve established your legal entity, the next step will be purchase the real estate you wish to lease (or invest in). The type of real estate which will be appropriate for your business will vary depending on a number of factors, including your location, level of investment, and potential tenant base. Not surprisingly, thorough research, inspections, and planning are critical to ensuring success. In this series of posts, we’re outlining several important issues to consider when purchasing a property: title insurance, indenture review, and ensuring appropriate loan documentation.

Indenture Review

Most title searches will disclose that the property you are purchasing is subject to certain local rules and agreements between neighbors. The terms used for these neighbor agreements will vary depending on the nature of the property. Condominiums are subject to declarations and by-laws while houses are typically subject to neighborhood or subdivision indentures. (For simplicity, we’ll refer to all of these agreements as indentures.) Continue reading »

What to Do When You Are Served with a Lawsuit

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



For many individuals and businesses, being served with a lawsuit is an uncommon, or possibly even a once-in-a-lifetime, situation. Litigation can be stressful and being served with a lawsuit is often surprising as well.  However, in all situations when you or your business is served with a lawsuit, there are three simple, basic steps to best preserve your rights and protect yourself from the outset.

  1. Make Some Quick Notes

Often, as a result of the frustration or surprise associated with being served with a lawsuit, most people don’t pay attention to the details of how they were served. These details can be very important. There are specific rules and procedures about proper service of lawsuits, depending on the type of lawsuit and the court.

Take a few minutes to jot down notes related to the service. Specifically, identify the date and time of service, the manner of service including whether a sheriff or process server handed you papers or if the lawsuit was received by first-class or certified mail, and the recipient of those papers. These may be important facts for your attorney to know in determining whether or not service was proper and if you should contest service as a result.

Also, don’t assume that service is improper without getting legal advice. In some instances, service by mail or serving papers on your 16 year old son or daughter when you are not home can be proper service. Continue reading »

Short-term Rentals Via Internet Outlets: Three Tips for Homeowner & Condominium Association Boards

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Community associations continue to struggle with the emergence of the “sharing economy” issues raised by AirBnB, VRBO and other online outlets (see CNN Money article: Why everyone is cracking down on Airbnb).

When addressing these issues, condominium, townhome, and neighborhood association boards should consider the following steps as a proactive approach to maintaining their desired community environment:

  1. Be vigilant. The good news is that you are only a few mouse clicks away from finding out whether your owners are making short term or transient leases. Nearly all of these sharing economy services are online and searchable by location. Additionally, urge other residents to keep an eye out for new faces on a regular basis.
  1. Know the rules. Does your association prohibit short term leasing or lodging? Is permission required to rent? Do tenants have access to all common areas?  The answers to these questions should all be found in your governing document, the declaration or indenture and possibly in your rules and regulations as well. Know the rules of the game and consider whether they should be updated or amended to address emerging issues.

Continue reading »

No Vacancy – When Bed & Breakfasts Run Afoul of Condominium Communities

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



The popularity of vacationing or traveling via bed and breakfast lodging, or, as more popularly known, “BnB,” is rapidly on the rise. The concept allows an owner with a vacant house, condominium, apartment, or even a single room, to create investment property by listing the space on a website for rent to vacation and business travelers, often for very short stays and possibly as short as a single night. Property owners can make a little extra money, and travelers can often find better accommodations at lower prices. Add in the ease of use by listing your space on the internet – airbnb.com and vrbo.com are among the most popular sites – and this is a quickly expanding industry.

Frequently, the phenomenon overlooks the legal ramifications of being a short-term landlord, or essentially acting as a hotel or lodge. Some local governments are addressing the issue and requiring that property owners apply for permitting, pay taxes, or maintain compliance with other local rules relating to lodging or short-term leasing. However, the Airbnb concept also runs afoul of various considerations applicable to community associations, specifically condominiums and townhomes. Continue reading »

No-Fly Zones: Using Drones for Commercial Purposes

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Drones are all the rage. Actually, drones are causing quite a rage as well.

Last weekend’s Super Bowl in Arizona was a “no drone zone,” where flying drone aircraft for purposes of getting a better view of the action was prohibited. In fact, all NFL games are no-fly zones for drones, as are nearly all professional sporting events and other outdoor stadium events where more than 30,000 people are present.

Drones are threatening to interfere with air travel near airports, and one crashed on the White House lawn recently. The recent explosion of drone usage by the public has even caused one major drone manufacturer to begin a software update for its vehicles that will prohibit them from entering air space in Washington, D.C., or near airports.

Unmanned aerial vehicle (“UAV” or drone) technology is one emerging area where the speed of technology has eclipsed the speed of the law. If you were lucky enough to receive a drone as a gift during the holidays and want to use it for personal use, the good news is that the Federal Aviation Administration (“FAA”) is not stopping you from doing so, as long as you do so in a reasonable manner and do not infringe on others’ rights.

However, commercial use of drone technology is a different story. Continue reading »

Concussions and Litigation: the Beginning of the End for Youth Football?

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



Last week, the NFL announced the settlement of litigation with former players claiming ongoing health challenges and medical problems associated with post-concussion syndrome. The effects of repeated and severe concussions from playing football (and other contact sports) has become a significant topic for the sports, medical and legal worlds alike in recent years. What was previously not considered to be a barrier for participation is now giving substantial pause when it comes to weighing the benefits of the sport, especially at the amateur level.

While many consider the NFL’s reported settlement a victory considering the potential damages and the duration of the proposed payout by the league, the issue is likely to create a ripple effect on amateur sports, especially at the youth and high school level.

The NFL and most colleges and universities have the financial ability and insurance coverage to defend and/or settle the increasing legal challenges, but lower level organizations, such as school districts, private schools, and private or charitable athletic organizations, might not. Along with this may come increased costs in the way of medical and training staff as well. Continue reading »

Missouri Supreme Court Upholds Foreclosure Laws

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



On April 12th, Missouri’s highest court granted lenders across the state a victory by ruling that banks only need to give defaulted borrowers, in foreclosure, credit for the amount of the foreclosure bid, as opposed to the fair market value of the property. The ruling is consistent with existing Missouri precedent, which, for decades, has maintained that the sale price of a foreclosed property is determinative with respect to the deficiency owed by the borrower to the bank, which is the remaining balance on the loan for which the lender can sue.

In the case, First Bank v. Fischer & Frichtel, the borrower, Fischer & Frichtel, a Missouri real estate developer, defaulted on loans to First Bank, which then foreclosed on properties securing the loan. First Bank purchased the property at the foreclosure sale. The lender proceeded to sue the borrower for the deficiency balance remaining on the loan. The borrower defended the case by alleging that the proper method of determining the deficiency was not the sale price at the foreclosure sale, but rather, the fair market value of the property. In so doing, the borrower essentially sought a modification of existing Missouri law with respect to calculations for suing on deficiency against a defaulted borrower. Fischer & Frichtel maintained that Missouri should align itself with other states which require a lender to determine the fair market value of the foreclosed property and apply that amount, which is generally higher than the foreclosure price, to the loan balance before suing a borrower.

The borrower argued that the current law often grants lenders a windfall after a foreclosure. Foreclosure sales require cash buyers on the day of the sale, except that the foreclosing lender can simply bid as a credit against the amount of the indebtedness owed by the borrower. This allows lenders to often easily outbid potential purchasers who may not have cash readily available. If the lenders obtain the properties at a depressed sale price at the foreclosure, they can then resell the property to a third party, in an arms-length transaction, and are entitled to keep any profits from the resale of the foreclosed property, without applying those profits to the borrower’s loan balance.

Continue reading »

Is Your Condominium Building Compliant With The Americans With Disabilities Act?

Jeffrey R. Schmitt

By Jeffrey R. Schmitt



An aging baby-boomer generation and the increasing choice by empty-nesters to lower maintenance responsibilities and move into multi-unit residential buildings pose an interesting question for property managers and condominium board members. As a building’s age demographic increases, does a condominium association have an obligation to make the units or common areas accessible to persons with disabilities? Condominiums and other multi-unit residential developments present unique issues, because the building includes both private dwellings and public places. Some developments even include public commercial spaces as well. Given this dichotomy, building management will have to consider if, and what parts, of the building need to be accessible.

The Americans With Disabilities Act of 1990 (“ADA”) prohibits discrimination on the basis of disability in employment, public services, public accommodations and services operated by private entities and common carriers. However, according to a supplement issued by the U.S. Department of Housing and Urban Development, strictly residential facilities are not covered under Title III of the ADA. What may pose a dilemma for a condominium, though, is that certain common areas, which are located in residential facilities, are considered places of public accommodation in some circumstances. The ADA identifies 12 categories of places of public accommodation:

  1. Inns, hotels or places of lodging;
  2. Restaurants, bars or establishments serving food and drink;
  3. Movie theaters, concert halls or stadiums;
  4. Auditoriums, lecture halls or convention centers;
  5. Bakers, grocery stores or other sales or rental establishments;
  6. Laundromats, dry cleaners, banks, barber shops or other service establishments;
  7. Terminals, depots or public transportation stations;
  8. Museums, libraries or galleries;
  9. Parks, zoos or amusement parks;
  10. Nurseries and schools;
  11. Day care centers, senior centers or other social service establishments; and
  12. Gymnasiums, health spas or places of exercise or recreation.

Depending on the nature of the condominium building, some of these categories of places of public accommodation may be applicable. Property managers and the building’s board must consider the possibility that federal law imposes obligations to provide reasonable accommodations with persons with disabilities, whether residents or members of the general public. This is especially important if a building is considering renovations to common areas or commercial portions of a building.

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