February 2013 Archives

February 26, 2013

PHILADELPHIA REAL PROPERTY OWNERS MAY BE ENTITLED TO A REALTY TRANSFER TAX REFUND

If you recently transferred real property in Philadelphia between July 1, 2012 and January 5, 2013, you may be entitled to a refund in the amount of transfer tax paid. For clear cut real estate transaction where property is being conveyed by a deed at fair market value, the transfer tax is based upon the purchase price of the property. However, when the purchase price is not fair market value, or the deed recorded relates to a long term lease, for example, the common level ratio (CLR) comes into play.

Typically the CLR is updated each year, but due to Philadelphia's tax assessment issues, the State Tax Equalization Board (STEB) did not establish for Philadelphia County a CLR for the period July 1, 2012 to June 30, 2013. Since the ratio in effect for this period remained "to be determined", the CLR from the previous period remained in effect. This amount, 3.97, was used to determine a property's computed value until the updated CLR was published.

Recently, the CLR for July 1, 2012 through June 30, 2013 was determined to be 3.27. Since the new CLR is lower than the previous CLR (3.97), taxpayers are entitled to refunds for transfer taxes paid relating to real property transfers made after June 30, 2012 from both the Pennsylvania and Philadelphia revenue departments (if they used the 3.97 CLR).

This has the potential to amount to a significant refund. For example, if a property has an assessed value of $1,000,000, the computed value with the old CLR would be $3,970,000. The resulting realty transfer tax would then be $158,800. With the new CLR the realty transfer tax would $130,800, with a difference and refund of $28,000.

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February 19, 2013

DO WEBSITE TERMS OF USE BIND CUSTOMERS? SOMETIMES.

At the bottom of virtually every website is a link titled "Terms of Use" or "Terms and Conditions." Click on this and you will see the conditions a company wants to impose on its customers who click through their website. Traditionally courts have held that "terms of use" and "privacy policy" sections of a website are binding. However, a recent federal court decision ruled that a major company's Terms and Conditions was not enforceable and how the implementation of the user agreement (user agreements are what the courts typically call Terms of Use and/or Privacy Policies) was why the court decided the user agreement was not enforceable.

There are two categories of user agreements. The least effective user agreement is the browsewrap agreement. Businesses who adopt this approach take the position that the customer agrees to the user agreement by virtue of the customer merely visiting the website. No affirmative action is required by the customer other than visiting the website.

Contrast this approach with the clickwrap agreement. In the clickwrap agreement, the customer must click "OK" or "Agree" in order to accept the User Agreement before he can access the website. The best example I can think of is Apple. Anybody who has iTunes is familiar with the almost biweekly updates to the "terms and conditions" and that if you want to continue to use iTunes, you have to "Agree" or click "OK".

However, as much as people may criticize Apple, they are doing it correctly. Every time a change is made to a user agreement, it is a best practice to obtain the affirmative consent of the user. Failure to do so leaves the user agreement open to attack. The argument is that because the user was not aware of the one-sided unilateral change, it will not be controlling. In fact, this is exactly why the federal district court invalidated the Zappos user agreement. Because Zappos failed to obtain the customer's acceptance of new terms and conditions, Zappos was unable to impose its mandatory arbitration provision against its customer.

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February 12, 2013

CLIENT ALERT: RECENT COURT RULING REGARDING THE VIOLATION OF A COVENANT NOT TO COMPETE - SOLICITATION OF PAST CUSTOMERS

In a breach of contract case last month (January 2013), a Pennsylvania trial court correctly ruled (in my humble opinion), that a seller did not violate the terms of a covenant not to compete in an asset purchase agreement by providing services to its former clients. The new owners of the company argued for a broad interpretation of the word "solicit" and a holding that the seller had solicited its former business clients. The court disagreed, and in a very clearly worded opinion held the word "solicit" means more than just accepting work from a former client. In this case, the seller did not proactively reach out to any of his former clients, but merely agreed to work for them after the former clients unilaterally approached him.

This unfortunately was a case of a lawyer not paying attention to the details. The main asset in this sale appears to have been the customer list, and the buyer failed to ensure it was properly protected. This problem could have easily been easily avoided by including in the agreement a list of clients the seller could not work with, a mandatory referral clause, or perhaps a broader geographical restriction, just to name a few options. Realize now, every case turns on its own unique set of facts and circumstances and your situation may differ from what the court analyzed here. In the above example, the key fact for this particular court was that the plaintiff was unable to produce any evidence to contradict the seller's statement that he did not reach out to former clients.

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February 5, 2013

WORKPLACE NOTICE REQUIREMENTS - NEW JERSEY

Earlier this year (January 22) I blogged about workplace notices that are required by a business that maintains an office in Pennsylvania. Our New Jersey clients have spoken and I apologize. Set forth below is a list of the posting requirements for New Jersey businesses. These posters are in addition to the federal posting requirements and must be displayed in a conspicuous area. Hard copies are available through the New Jersey Department of Labor and printable copies may be found at
http://lwd.dol.state.nj.us/labor/employer/content/employerpacketforms.html

- Wage and Hour Law Abstract
- Child Labor Laws
- Reporting and Recordkeeping Requirements Under State Wage, Benefit, and Tax Laws
- Payment of Wages
- Schedule of Minors' Hours (if applicable)
- Family Leave Insurance
- Unemployment Insurance and Disability Insurance Laws
- Conscientious Employee Protection Act ( also known as the "Whistleblower" Act)

In addition, the New Jersey Office of the Attorney General requires that businesses that provide services to the public (i.e. doctor's offices and movie theaters) post a Public Accommodation poster.

The OAG also requires employers to post a Notice regarding Discrimination in Employment and post the required Notice regarding the Family Leave Act. In addition, businesses associated with the sale, rental and or lease of real estate are required to post a Discrimination in Housing poster. These materials are available at http://www.nj.gov/oag/dcr/posters.html.

Please remember that these Notices are in addition to the federal notices discussed earlier.

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