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HOA Disputes – Equitable Servitudes Can Be Used Against HOA For Its Failure to Maintain Common Areas That Damage Separate Property

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HOAs are responsible for the maintenance of Common Areas. An HOA’s failure to maintain a Common Area component, (such as sanitary sewers, roof, siding, plumbing, etc…) often times causes damage to a homeowner’s separate interest Unit. Sometimes, CC&Rs are silent regarding repairs to a homeowner’s unit caused by Common Area failures. However, California Courts have applied the Doctrine of Equitable Servitude in compensating a homeowner for damages sustained as a result of an HOA’s failure to maintain Common Areas. The California Court of Appeal for the Fourth District in Affan v. Portofino Cove Homeowners Association, (2010) 189 Cal. App. 4th 930 held that the HOA was liable for breaching an equitable servitude to indemnify plaintiff homeowners for their casualty loss and awarded plaintiffs their remediation and restoration costs as damages when the Common Area sewers backed up and flooded plaintiff’s separate unit.

If you are a homeowner subject to CC&Rs and have an issue with your HOA, contact one of our HOA Dispute Attorneys in Los Angeles for a free consultation and case evaluation.

Statute of Limitations Regarding Covenant Enforcement Actions

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Our Los Angeles Real Estate Attorneys were recently asked to analyze whether the 5 year statute of limitations on land covenant enforcement actions was applicable to recently discovered violations. The statute reads as follows:

The period prescribed in this subdivision runs from the time the person seeking to enforce the restriction discovered or, through the exercise of reasonable diligence, should have discovered the violation. A failure to commence an action for violation of a restriction within the period prescribed in this subdivision does not waive the right to commence an action for any other violation of the restriction and does not, in itself, create an implication that the restriction is abandoned, obsolete, or otherwise unenforceable.

The statute is clear that a failure to commence an action for one violation, will not bar an action for another subsequent violation within the 5 year statute. If you have questions regarding a real estate matter, contact one of our Los Angeles Real Estate Attorneys for a free consultation and case evaluation.

Commercial Leases Are Assets and Subject to California’s Bulk Sales Law

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Commercial Landlords, be advised that the commercial lease governing the tenancy of your commercial income property is considered an “asset” that is subject to the Bulk Sales Laws which govern the sale of certain businesses, such as restaurants for example. See Cal. Com. Code § 6102(a)(1)(ii). Thus, a commercial tenant seeking to sell a business, including his/her interest in a commercial lease must list the commercial landlord as a claimant in the event back rent is owed. If a commercial tenant in a sale governed by the Bulk Sales Law owes back rent, the landlord would then be a creditor subject to the Bulk Sales Laws. Commercial landlords with claims on a commercial lease in a sale governed by the Bulk Sales law would hold an unsecured claim which is lowest in terms of priorities in terms of distribution considerations. See Cal. Com. Code § 6106.4(b).

If you are a commercial landlord or a commercial tenant with questions regarding your commercial lease, contact one of our Los Angeles Commercial Lease Attorneys today for a free consultation and case evaluation.

Interpreting the Exclusive Authorization and Right To Sell Listing Agreements

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Executing an “Exclusive Authorization and Right to Sell” agreement with a broker does not create the authority in the broker to sell the property by binding the seller to a purchase contract with a buyer. It is merely the authority to invite or procure prospective purchasers. See Holway v. Malloy, (1945) 70 Cal. App.2d 317, 319 (“Authority given to a broker ‘to sell’ real property, in listing it for sale, only authorizes him to find a purchaser; it relates to the services to be performed by the agent in order to earn the agreed compensation and does not make him the agent of the owner to enter into a contract of sale. This is a well established canon of the law of real property.”) Thus, the listing agreement only confers a right to bring buyers to the table, not to bind the buyer and seller to a deal.

If you are a seller or buyer of real estate, or if you are an agent or broker and have a question regarding a real estate transaction or deal, contact one of our Los Angeles Real Estate Attorneys for a free consultation and case evaluation. Our Real Estate Attorneys are also licensed California Real Estate Brokers. (888) 693-5556.

California Law Supports Implied Contract Modifications

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Implied in fact modifications have been consistently recognized under California law in that the parties’ modification setting aside the written provisions will be implied wherein the subsequent conduct of the parties is inconsistent with and clearly contrary to provisions of the written agreement. See Diamond Woodworks, INc. v. Argonaut Ins. Co., (2003) 109 Cal. App. 4th 1020, 1038 (overruled on other grounds); see also Garrison v. Edward Brown & Sons, (1944) 25 Cal. 2d 473, 479 (“Before a contract modifying a written contract can be implied, the conduct of the parties according to the findings of the trial court must be inconsistent with the written contract so as to warrant the conclusion that the parties intended to modify the written contract.”); see also Wagner v. Glendale Adventist Medical Center, (1989) 216 Cal. App.3d 1379, 1388 (“When one party has, through oral representations and conduct or custom, subsequently behaved in a manner antithetical to one or more terms of an express written contract, he or she has induced the other party to rely on the representations and conduct or custom. In that circumstance, it would be equally inequitable to deny the relying party the benefit of the other party’s apparent modification of the written contract.”) Moreover, The existence of the implied modification is a question of fact to be proven by a preponderance of the evidence. See Keeble v. Brown (1954) 123 Cal. App. 2d 126, 132 (“Whether a writing has been modified by an executed oral agreement is a question of fact.”)

If you have a question concerning a contract such as a commercial lease agreement and its interpretation, contact one of our Commercial Lease Attorneys in Los Angeles today for a free consultation and case evaluation.

Cancelling Real Estate Contracts Pursuant to a Failure of a Condition

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Buyers and Sellers in a standard California real estate purchase and sale each have obligations to fulfill which the completion of the contract are contingent upon, the failure of which may be grounds to cancel the purchase and sale agreement pursuant to Cal. Civ. Code § 1434 (“An obligation is conditional, when the rights or duties of any party thereto depend upon the occurrence of an uncertain event.”) For example, sellers are under a statutory duty to make certain disclosures regarding the property (see paragraph 6 of California Residential Purchase Agreement) and buyers have a duty to lift loan and inspection contingencies under the same purchase agreement. The failure of a party to perform certain contingencies is grounds for cancelation.

If you are a buyer or seller of real estate in California and are faced with contract related issues, contact one of our Los Angeles Real Estate Attorneys today for a free consultation and case evaluation.

A Quick Summary Of Escrow’s Role In Earnest Money Deposit Disputes – The Interpleader Action

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California Code of Civil Procedure Section 386 authorizes the private right of action known as Interpleader. Section 386 authorizes Escrow to initiate an interpleader action where the parties (often times buyer and sellers disputing amounts owed) have competing claims over property (usually money).

Escrow as the Interpleader, whether initiating the action or later interpleading may deposit any amount which a plaintiff or cross-complainant admits to be payable with the clerk of the court at the time of the filing of the complaint or cross-complaint in interpleader without first obtaining an order of the court therefor. Any interest on amounts deposited and any right to damages for detention of property so delivered, or its value, shall cease to accrue after the date of such deposit or delivery. See Section 386(c).

Escrow seeking interpleader is not required to show that any claimant has a good claim, but only that the claimants make claims for the same thing, that their respective claims are adverse to each other, and that the party seeking interpleader cannot safely determine for himself or herself which claim is right and lawful. See Fidelity Sav. & Loan Ass’n v. Rodgers, (1919) 180 Cal. 683.

Once the property in dispute is deposited with the clerk of court, the Escrow may apply for its costs and fees and be asked to be discharged from the action leaving the adverse parties to litigate over the property or money deposited with the Court.

Real Estate Transactions – Commissions and Compensation to Unlicensed Persons

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Under Cal. Bus. & Prof. Code § 10137, It is unlawful for any licensed real estate broker to employ or compensate, directly or indirectly, any person for performing any of the acts requiring a license, who is not a licensed real estate broker, or a real estate salesperson. Simply stated, unlicensed persons are not entitled to real estate commissions. A broker may share a commission with the principal who is not performing services for which a license is required. See Williams v. Kinsey, (1946) 74 Cal. App. 2d 583. However, unlicensed persons, performing services requiring a license may not be compensated. That is not to say that certain services performed by unlicensed persons could not be compensated. For example, property managers gathering financial data or rent schedules could be compensated as those services are not such as to require a license. See Venturi & Co. LLC v. Pacific Malibu Development Corp. (2009) 172 Cal. App. 4th 1417, 1422. Thus, if escrow instructions call for the compensation of unlicensed individuals, then that compensation must be scrutinized to ensure that the unlicensed person is not being paid for services rendered requiring a license.

If you are a real estate agent or broker, or if you are a buyer or seller of property and have questions regarding real estate commissions, contact one of our Los Angeles Real Estate Attorneys today for a free consultation and case evaluation.

Commercial Evictions – Partial Rent Payment Waivers

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We’ve received some recent inquiries from commercial landlords in Los Angeles asking about acceptance of partial payments and waivers and what a landlord’s rights are with respect to making a claim for the difference at a later time, whether through a notice of non-payment or an unlawful detainer action.

As with all commercial lease disputes, written notices of the express intent of the parties is essential. The California Court of Appeal in Woodman Partners v. Sofa U Love, (2001) 94 Cal. App. 4th, 766, held that a letter to a tenant that the landlord was accepting tenants’ partial rent subsequent to acceptance of the payment would not satisfy the notice requirements of C.C.P. § 1161.1(c). Id. at 569. Thus, when a tenant is notified that acceptance of partial rent does not constitute waiver of any rights prior to the acceptance of the partial payment, then such actual notice is valid. Id.

Therefore, a provision in a commercial lease stating that “acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted” satisfied the statutory requirement of prior actual notice that payment did not constitute waiver of any rights or defenses. Id. at 569-570.

Accordingly, commercial landlords are well advised to ensure that their written commercial lease has such a partial payment no-waiver provision in their contracts. AIR commercial lease and CAR commercial lease forms have such standard provisions. If you are a commercial landlord or tenant and you have a commercial lease dispute, contact one of our Commercial Lease Attorneys in Los Angeles for a free consultation and case evaluation.

Single Family Residence Generally Not Subject To LA Rent Control

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Under L.A.M.C. § 151.02, the term “rental unit” excludes the following “Dwellings, one family, except where two or more dwelling units are located on the same lot.  This exception shall not apply to duplexes or condominiums”.  Under L.A.M.C. § 12.03 a “Dwelling Unit” is defined as “A group of two or more rooms, one of which is a kitchen, designed for occupancy by one family for living and sleeping purposes.”  Thus a “One-Family Dwelling Unit” for purposes of rent control is defined as a detached single family residence.  The question of whether a particular rental unit is subject to rent control becomes a bit unclear when guest houses are rented out.  A simple test for landlords to use as a guide is whether such a “guest house” has a kitchen.  Landlords and homeowners renting out a guest house with a kitchen should probably contact LA Housing to determine whether their rental unit is subject to rent control before an eviction action is filed or contemplated.  If you are a landlord in Los Angeles facing the possibility of evicting a tenant, contact one of our Los Angeles Eviction Attorneys for a free consultation and case evaluation.