Legal Advice Blog: Legal Advice, Case Insights, & Local Law Information

With the midpoint of 2016 approaching, it is safe to assume that the growth that investors had predicted will come to fruition, albeit at a slower pace. Nevertheless, the real estate market in Southern California is poised to continue its growth. This notion is based in part on the encouraging flow foreign investment into commercial real estate projects,  so that more than just multi-family real estate projects are expected to drive international money into our economy. According to a Forbes.com report, investors are flocking to six major cities across the globe for deals. Indeed, Sydney, Australia; London, England and New York City are obvious choices, but foreign investment is also expected in Los Angeles and San Francisco. The growing employment opportunities in Southern California suggest that developers will be working diligently to keep up with the demand for suitable business venues and multifamily housing projects. Additionally, with the volatility that the stock market has given so many investors pause in past years, the real estate market has maintained a steadiness that has analysts have come to rely on. If past numbers are a predictor of future success, consider this; $625 billion was invested in real estate during the first nine months of 2015. This was a 12 percent increase from the same period in 2014. With the future of the real estate market poised to reap considerable benefits, property owners have a genuine interest in avoiding costly legal issues. The advice and counsel of an experienced real estate attorney can help.

In the first part of this post, we discussed a key appellate ruling on the scope of California’s Right to Repair Act, also referred to as SB 800. In Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, the California Court of Appeals held that SB 800 is not an exclusive remedy for homeowners when seeking compensation for construction defects. In this post, we will discuss some of the implications of this decision. We will also consider the question of how SB 800 affects subrogation claims when insurers take immediate action to repair defects. Implications for homeowners The Liberty Mutual ruling is a welcome one for homeowners who may face defect issues. In situations where there has been actual property damage, the ruling makes clear that homeowners have options. One option is to use the alternative remedies allowed under SB 800. This means using a pre-litigation procedure in which the builder is given notice of the alleged defects and given a chance to repair them before any formal litigation is filed. Another option is to assert a common law claim against the builder for damages from the defects. That type of action is based on principles of tort law, not on SB 800. Even if the losses suffered by the homeowner involve economic losses but not property damage, homeowners can still pursue common law claims – as long as they utilize the pre-litigation procedure in SB 800 first. In short, California’s Right to Repair Act puts significant burdens on builders. These burdens make getting the right insurance in place, and complying with its requirements, very important. Subrogation claims by insurers But insurance companies also have their own challenges under SB 800. In that context, let’s take note of another important appellate ruling in recent years, KB Home Greater Los Angeles, Inc. v. Superior Court (Cal. App. 2013). In KB Home, a property manager for the insured found a water leak and informed the owner. The owner quickly informed the homeowners insurer, which promptly stepped in to six problem. This included repair of the damage done to drywall and carpeting by the leak. The homeowners insurer then tried to recover from the builder through a subrogation action. But the court found that the insurer could not do this because it had failed to notify the builder of the defect, as required by SB 800. The court’s ruling raises many questions about what an insurer has to do in order to retain its subrogation rights. To know how this may affect your particular situation, it makes sense to get counsel from a knowledge real estate attorney.

In the first part of this post, we discussed a key appellate ruling on the scope of California’s Right to Repair Act, also referred to as SB 800. In Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, the California Court of Appeals held that SB 800 is not an exclusive remedy for homeowners when seeking compensation for construction defects. In this post, we will discuss some of the implications of this decision. We will also consider the question of how SB 800 affects subrogation claims when insurers take immediate action to repair defects. Implications for homeowners The Liberty Mutual ruling is a welcome one for homeowners who may face defect issues. In situations where there has been actual property damage, the ruling makes clear that homeowners have options. One option is to use the alternative remedies allowed under SB 800. This means using a pre-litigation procedure in which the builder is given notice of the alleged defects and given a chance to repair them before any formal litigation is filed. Another option is to assert a common law claim against the builder for damages from the defects. That type of action is based on principles of tort law, not on SB 800. Even if the losses suffered by the homeowner involve economic losses but not property damage, homeowners can still pursue common law claims – as long as they utilize the pre-litigation procedure in SB 800 first. In short, California’s Right to Repair Act puts significant burdens on builders. These burdens make getting the right insurance in place, and complying with its requirements, very important. Subrogation claims by insurers But insurance companies also have their own challenges under SB 800. In that context, let’s take note of another important appellate ruling in recent years, KB Home Greater Los Angeles, Inc. v. Superior Court (Cal. App. 2013). In KB Home, a property manager for the insured found a water leak and informed the owner. The owner quickly informed the homeowners insurer, which promptly stepped in to six problem. This included repair of the damage done to drywall and carpeting by the leak. The homeowners insurer then tried to recover from the builder through a subrogation action. But the court found that the insurer could not do this because it had failed to notify the builder of the defect, as required by SB 800. The court’s ruling raises many questions about what an insurer has to do in order to retain its subrogation rights. To know how this may affect your particular situation, it makes sense to get counsel from a knowledge real estate attorney.

Residential construction defect disputes in California can be costly, complicated and confusing. Many of the complications involve the Right to Repair Act, also known as SB 800, which the Legislature passed in 2002. It took effect in 2003. In this two-part post, we will discuss two court decisions that have interpreted key aspects of SB 800. One case involves the subrogation rights of insurance companies on homeowners’ insurance claims. The other case involves the question of whether SB 800 is the exclusive remedy for homeowners for construction defects. Let’s start with the question of which defects SB 800 covers and whether it is the exclusive remedy. The case we’d like to inform you about is Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, decided by the California Court of Appeals in 2013. (219 Cal. App. 4th 98) The Liberty Mutual case concerned a dispute about water damage that resulted when a pipe in a sprinkling system burst. The homeowner had to move out for several months (staying in a hotel) while the builder fixed the damage. The insurance company for the homeowner paid for the hotel. The insurer also covered other expenses related to the homeowner’s relocation. Then the insurer sought to get those expenses back by making a subrogation claim against the home builder. The home builder contended that the claim was too late because SB 800 sets forth a four-year limit on construction defect claims for plumbing system defects. The insurer contended, however, that SB 800 is not the exclusive remedy for construction defects. Through a subrogation action on behalf of the homeowner, the insurer sought to bring common law claims to which the four-year statute of limitations for plumbing defects under SB 800 would not apply. The California Court of Appeals agreed with the insurer. The court said SB 800 did not impose limits on claims when there is actual property damage. In part two of this post, we will discuss the practical implications of this decision. We will also take note of another important appellate case, KB Home Greater Los Angeles, Inc, v. Superior Court. That case concerns that status of subrogation claims when an insurer takes action to repair without informing the builder first.

Residential construction defect disputes in California can be costly, complicated and confusing. Many of the complications involve the Right to Repair Act, also known as SB 800, which the Legislature passed in 2002. It took effect in 2003. In this two-part post, we will discuss two court decisions that have interpreted key aspects of SB 800. One case involves the subrogation rights of insurance companies on homeowners’ insurance claims. The other case involves the question of whether SB 800 is the exclusive remedy for homeowners for construction defects. Let’s start with the question of which defects SB 800 covers and whether it is the exclusive remedy. The case we’d like to inform you about is Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, decided by the California Court of Appeals in 2013. (219 Cal. App. 4th 98) The Liberty Mutual case concerned a dispute about water damage that resulted when a pipe in a sprinkling system burst. The homeowner had to move out for several months (staying in a hotel) while the builder fixed the damage. The insurance company for the homeowner paid for the hotel. The insurer also covered other expenses related to the homeowner’s relocation. Then the insurer sought to get those expenses back by making a subrogation claim against the home builder. The home builder contended that the claim was too late because SB 800 sets forth a four-year limit on construction defect claims for plumbing system defects. The insurer contended, however, that SB 800 is not the exclusive remedy for construction defects. Through a subrogation action on behalf of the homeowner, the insurer sought to bring common law claims to which the four-year statute of limitations for plumbing defects under SB 800 would not apply. The California Court of Appeals agreed with the insurer. The court said SB 800 did not impose limits on claims when there is actual property damage. In part two of this post, we will discuss the practical implications of this decision. We will also take note of another important appellate case, KB Home Greater Los Angeles, Inc, v. Superior Court. That case concerns that status of subrogation claims when an insurer takes action to repair without informing the builder first.

Even in an auto-dependent culture, sidewalks are important infrastructure. From business customers to dog walkers, all sorts of people benefit from well-placed pavement that helps knit a city together. The question of who should pay to maintain sidewalks, however, has become a contentious one in Los Angeles. Who should pay to do that – property owners or the city? In this post, we will update you on the controversy. Ordinance on the obligation to repair Since 1974, Los Angeles has had an ordinance making the city responsible for repairing sidewalks damaged by city trees. The ordinance was passed at a time when the city was flush with federal funds. Those funds have long since dried up. And the city has struggled to keep up with its duty to repair the tree damage. Thousands of linear miles of sidewalks throughout Los Angeles have fallen into disrepair. This isn’t only a matter of appearances, either; cracked and broken-down streets are also dangerous, especially to the disabled. Advocates for the disabled have therefore been particularly concerned with LA’s sagging streetscape. Faced with a lawsuit brought by disabled residents, the city has finally committed to a multi-year maintenance project, pegged to cost $1.4 billion. That agreement, however, was hardly a resolution to the overall sidewalk problem. Last week, the LA City Council approved a plan for a new proposed ordinance that has the working title “fix and release.” Fix and release The wording of the proposed fix-and-release ordinance is still being drafted. But the idea is to have the city fix sidewalks, then hand off the obligation to maintain them to property owners. It’s not a quick fix. The first priority would be sidewalks near government buildings and business or commercial property. Priority would also be given to severely damaged sidewalks and to sidewalks along highly-traveled routes. Residential homeowners would have to bide their time. But if a property owner wants to step in and take care of the repairs without waiting for the city, the city is prepared to offer a rebate of half of the cost of repair, as long as the repair is done within three years after the fix-and-release program begins. Next steps The program hasn’t started yet. A key next step is to draft a new ordinance to repeal the old one that made the city responsible for sidewalks damaged by trees. And of course the budget commitment will have to be clarified. But by the time the new fiscal year rolls around in July, the fix-and-release program is expected to be underway – with important implications for the city’s streetscape.

Even in an auto-dependent culture, sidewalks are important infrastructure. From business customers to dog walkers, all sorts of people benefit from well-placed pavement that helps knit a city together. The question of who should pay to maintain sidewalks, however, has become a contentious one in Los Angeles. Who should pay to do that – property owners or the city? In this post, we will update you on the controversy. Ordinance on the obligation to repair Since 1974, Los Angeles has had an ordinance making the city responsible for repairing sidewalks damaged by city trees. The ordinance was passed at a time when the city was flush with federal funds. Those funds have long since dried up. And the city has struggled to keep up with its duty to repair the tree damage. Thousands of linear miles of sidewalks throughout Los Angeles have fallen into disrepair. This isn’t only a matter of appearances, either; cracked and broken-down streets are also dangerous, especially to the disabled. Advocates for the disabled have therefore been particularly concerned with LA’s sagging streetscape. Faced with a lawsuit brought by disabled residents, the city has finally committed to a multi-year maintenance project, pegged to cost $1.4 billion. That agreement, however, was hardly a resolution to the overall sidewalk problem. Last week, the LA City Council approved a plan for a new proposed ordinance that has the working title “fix and release.” Fix and release The wording of the proposed fix-and-release ordinance is still being drafted. But the idea is to have the city fix sidewalks, then hand off the obligation to maintain them to property owners. It’s not a quick fix. The first priority would be sidewalks near government buildings and business or commercial property. Priority would also be given to severely damaged sidewalks and to sidewalks along highly-traveled routes. Residential homeowners would have to bide their time. But if a property owner wants to step in and take care of the repairs without waiting for the city, the city is prepared to offer a rebate of half of the cost of repair, as long as the repair is done within three years after the fix-and-release program begins. Next steps The program hasn’t started yet. A key next step is to draft a new ordinance to repeal the old one that made the city responsible for sidewalks damaged by trees. And of course the budget commitment will have to be clarified. But by the time the new fiscal year rolls around in July, the fix-and-release program is expected to be underway – with important implications for the city’s streetscape.

The Harvard Business Review (HBR) is a highly prestigious, often-cited source of information on leading trends and the prevailing views of business elites. As such, it is hardly an oracle of the future. And so, when HBR devotes significant space to a phenomenon such as coworking, it suggests that the phenomenon has already become influential among decision makers. In the case of coworking that is indeed the case. And as we will discuss in this post, the rising popularity of coworking has important implications for the commercial leasing market in Los Angeles. HBR on the benefits of coworking spaces Coworking spaces are workplaces in which members don’t all work for the same company yet share a communal setting. This setting often features lots of amenities, such as free beer on tap or the ability to bring your dog to work. It isn’t amenities such as free beer or gourmet coffee that are the real driver, however, behind the increasing popularity of such spaces. As the HBR noted in a recent issue, the popularity comes from the perception that a coworking setup offers a more meaningful way to work. Since the members don’t all work for the same employer, traditional office politics are downplayed. Instead, there is the opportunity to collaborate and have conversations with other professionals – some of whom are doing very different types of work. Harvard Business Review conducted surveys that identified other sources of satisfaction as well with the coworking setting. Another benefit is participants in coworking spaces often have the opportunity to help each other out, using their unique skills sets. And they get to do this in ways that don’t involve trying to climb the corporate ladder. Small wonder, then, that so many people have found coworking so meaningful – and that it is becoming so popular. This is reflected in the Coworking Manifesto, an online statement that has been signed by people in upwards of 1,700 workspaces. Implications for commercial leases in LA The popularity of coworking is also affecting the commercial leasing market in Los Angeles. As the LA Times reported this week, firms that offer coworking space are getting plenty of business from tenants looking for that space. As the Times pointed out, it used to be that coworking settings were associated mostly with startup companies (often in the tech industry) and with independent professionals looking for someplace other than or in addition to a home office. What’s happening now is that more and more companies in more and more industries are looking at the advantages of coworking spaces. It isn’t only the collaborative benefits of the shared space that are driving this, of course. The fact that leases for coworking space tend to be short-term is another. Many companies like the flexibility of such arrangements. After all, a company may seek to respond to an opportunity in its industry by adding contract jobs or perhaps expanding in a new city. Using a coworking space allows for such responsiveness, while also keeping costs down and allowing for a way of working that employees have enthusiastically embraced. What’s best for a particular company As with any other commercial lease, it’s important to get sound legal counsel before signing off on a lease for a coworking space. By doing so, you will be in position for the proverbial win-win: furthering your own interest while doing something that benefits others as well.

The Harvard Business Review (HBR) is a highly prestigious, often-cited source of information on leading trends and the prevailing views of business elites. As such, it is hardly an oracle of the future. And so, when HBR devotes significant space to a phenomenon such as coworking, it suggests that the phenomenon has already become influential among decision makers. In the case of coworking that is indeed the case. And as we will discuss in this post, the rising popularity of coworking has important implications for the commercial leasing market in Los Angeles. HBR on the benefits of coworking spaces Coworking spaces are workplaces in which members don’t all work for the same company yet share a communal setting. This setting often features lots of amenities, such as free beer on tap or the ability to bring your dog to work. It isn’t amenities such as free beer or gourmet coffee that are the real driver, however, behind the increasing popularity of such spaces. As the HBR noted in a recent issue, the popularity comes from the perception that a coworking setup offers a more meaningful way to work. Since the members don’t all work for the same employer, traditional office politics are downplayed. Instead, there is the opportunity to collaborate and have conversations with other professionals – some of whom are doing very different types of work. Harvard Business Review conducted surveys that identified other sources of satisfaction as well with the coworking setting. Another benefit is participants in coworking spaces often have the opportunity to help each other out, using their unique skills sets. And they get to do this in ways that don’t involve trying to climb the corporate ladder. Small wonder, then, that so many people have found coworking so meaningful – and that it is becoming so popular. This is reflected in the Coworking Manifesto, an online statement that has been signed by people in upwards of 1,700 workspaces. Implications for commercial leases in LA The popularity of coworking is also affecting the commercial leasing market in Los Angeles. As the LA Times reported this week, firms that offer coworking space are getting plenty of business from tenants looking for that space. As the Times pointed out, it used to be that coworking settings were associated mostly with startup companies (often in the tech industry) and with independent professionals looking for someplace other than or in addition to a home office. What’s happening now is that more and more companies in more and more industries are looking at the advantages of coworking spaces. It isn’t only the collaborative benefits of the shared space that are driving this, of course. The fact that leases for coworking space tend to be short-term is another. Many companies like the flexibility of such arrangements. After all, a company may seek to respond to an opportunity in its industry by adding contract jobs or perhaps expanding in a new city. Using a coworking space allows for such responsiveness, while also keeping costs down and allowing for a way of working that employees have enthusiastically embraced. What’s best for a particular company As with any other commercial lease, it’s important to get sound legal counsel before signing off on a lease for a coworking space. By doing so, you will be in position for the proverbial win-win: furthering your own interest while doing something that benefits others as well.

In economic theory, supply and demand are two laws, not one. The law of supply is one principle; the law of demand is another. But you don’t need to have received an A in Econ 101 to know that supply and demand are intimately related – and that together they have a great effect on price. This is certainly true in the area of real estate, as we will discuss in this post. What are some of the supply-and-demand factors that are affecting real estate investment and development in Los Angeles? National (and global) trends Nationally, U.S. commercial real estate has been on a strong run for the last six years. Prices have been climbing steadily every since the 2008 crash. Today the Wall Street Journal reported that a plateau on prices appears to be in site. There are complex forces behind this, relating more to global stock markets than anything to do with particular real estate deals. These global trends are starting to affect interest rates. Bonds that are backed up by commercial mortgages are expected to decline significantly this year compared to a year ago. But there is still a lot of momentum in the market. Banks and insurance companies have money to lend and are often willing to do so. Real estate is still an attractive investment in many cases, often through the vehicle of a real estate investment trust (REIT). The market in Southern California Here in Southern California, the national and global trends we outlined above play out in a context of a real estate market that remains very dynamic. To put it in the simplest terms, it’s still pretty hot. One way this is reflected is a highly competitive market for residential housing. In general, there is more supply than demand – especially for homes that are not on the high end of the market. This has been reflected in scenarios involving all-cash offers and bidding wars in some cases. How is this likely to affect real estate investment and commercial real estate? Let’s take one clear example: the strength of REITs. The benefits of REITs include ease of purchase and the receipt of quarterly dividend income. And with an REIT, these benefits are available without the burden of actively managing the property. Pursing and protecting your interests Of course, it’s important to get sound legal and financial counsel before investing in an REIT or any other real estate project. The laws of supply and demand create many opportunities for rich returns. But to get the best results it’s best to get guidance from trusted professionals who know how to help you pursue and protect your interests.

In economic theory, supply and demand are two laws, not one. The law of supply is one principle; the law of demand is another. But you don’t need to have received an A in Econ 101 to know that supply and demand are intimately related – and that together they have a great effect on price. This is certainly true in the area of real estate, as we will discuss in this post. What are some of the supply-and-demand factors that are affecting real estate investment and development in Los Angeles? National (and global) trends Nationally, U.S. commercial real estate has been on a strong run for the last six years. Prices have been climbing steadily every since the 2008 crash. Today the Wall Street Journal reported that a plateau on prices appears to be in site. There are complex forces behind this, relating more to global stock markets than anything to do with particular real estate deals. These global trends are starting to affect interest rates. Bonds that are backed up by commercial mortgages are expected to decline significantly this year compared to a year ago. But there is still a lot of momentum in the market. Banks and insurance companies have money to lend and are often willing to do so. Real estate is still an attractive investment in many cases, often through the vehicle of a real estate investment trust (REIT). The market in Southern California Here in Southern California, the national and global trends we outlined above play out in a context of a real estate market that remains very dynamic. To put it in the simplest terms, it’s still pretty hot. One way this is reflected is a highly competitive market for residential housing. In general, there is more supply than demand – especially for homes that are not on the high end of the market. This has been reflected in scenarios involving all-cash offers and bidding wars in some cases. How is this likely to affect real estate investment and commercial real estate? Let’s take one clear example: the strength of REITs. The benefits of REITs include ease of purchase and the receipt of quarterly dividend income. And with an REIT, these benefits are available without the burden of actively managing the property. Pursing and protecting your interests Of course, it’s important to get sound legal and financial counsel before investing in an REIT or any other real estate project. The laws of supply and demand create many opportunities for rich returns. But to get the best results it’s best to get guidance from trusted professionals who know how to help you pursue and protect your interests.

Finding the right space for your business feels exciting. It marks growth and creates stability. The challenge is that commercial leases in California are long and detailed contracts. If you rush through them, small details can lead to major problems later. Knowing where many tenants stumble helps you sidestep the same mistakes. HIDDEN COSTS IN LEASE TERMS A lease that looks affordable on paper may hide expensive obligations. Triple net leases often pass along property taxes, insurance and maintenance. If those costs are not capped, they can rise faster than expected. Careful review keeps you from committing to payments that hurt your bottom line. UNCLEAR REPAIR AND MAINTENANCE DUTIES Another trap lies in repair language. Landlords sometimes expect tenants to handle repairs that go beyond day-to-day upkeep, even structural issues. Unless the lease states who is responsible, you could face bills that were never in your budget. Clarity up front protects you from these surprises. RESTRICTIONS THAT LIMIT GROWTH Your lease should fit your business today and in the future. Use clauses that limit operations or block subleasing can prevent growth. When your company changes direction or expands, these limits may stop you from making smart moves. Spotting restrictive language early preserves flexibility. OVERLOOKED DISPUTE RESOLUTION TERMS Most tenants skip over dispute resolution clauses yet they carry real weight. Some require arbitration, others force you to handle cases far from your property. Both options can add time and expense if conflict arises. Addressing this section before you sign can save you headaches later. PROTECTING YOUR BUSINESS A commercial lease is more than a rent check. It defines your rights and responsibilities for years. By catching hidden costs, unclear duties, restrictive clauses and unfair dispute rules, you safeguard your business. Speaking with a real estate attorney before signing helps ensure your lease supports your goals and keeps your investment secure.