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

Across the United States in 2019, commercial real estate was considered a safe and reliable investment for developers and businesses seeking to grow their enterprises in business districts. However, the trend has sharply reversed in 2023, and now commercial real estate is considered a much riskier endeavor for builders and investors, as the return to office trend has tapered out and many companies are staying out of the Financial Core here in Los Angeles. Now, it is important for developers and commercial landlords to reconsider their holdings and prospective projects, taking into account the new reality and adapting to these new challenges. THE LANDSCAPE HAS CHANGED FOR COMMERCIAL REAL ESTATE There are few historic shifts in real estate that can compare with what has happened in commercial real estate over the last three years. Last month, Los Angeles’s Downtown hit a record of 30% vacancy rate for commercial real estate as many employers continue to use work-from-home models, and the value of the LA commercial real estate market has dropped nearly 40% in the past three years. How developers and landowners respond to these challenges is important, and there are several options that can be explored to help combat this trend. REINVEST The best option for property owners with high vacancy rates is to reinvest in the property, updating the facilities and amenities to create a more desirable property for commercial renters still in the market. New, and recently renovated properties are still performing well in most markets, and this can help turn the trend around for individual owners. RETROFIT Another option that commercial landowners can pursue is to retrofit their properties to attract a different type of client. Many office jobs are still remaining on the sidelines of the commercial market, so retrofitting the property into a flexible work environment may be a good opportunity to capture a growing market of commercial renters. REMODEL In some cases, a drastic change may be necessary to reinvigorate growth, and for that, a complete remodel of the building for a different purpose such as residential use may be appropriate. While not possible in all areas due to zoning and land use restrictions, it can open up an entirely new field of renters for the commercial landowner to target.

As a real estate developer, you’ll be all too aware that every part of the building process comes with its own risks. You’re exposed to being liable for a claim from day one. To protect yourself, your employees and your business you know that it’s important you have the right insurance in place. What are the risks to you if you don’t? 1. YOU MAY FIND YOURSELF LIABLE FOR A NEGLIGENCE CLAIM As a developer, you’re responsible for the acts and omissions of everyone working for you. As humans, people make mistakes. If you don’t have the right professional liability insurance in place, you may find yourself facing a hefty claim against the company if the mistakes that were made are significant and caused damage or injury. 2. YOU MIGHT NOT BE COVERED FOR CONSTRUCTION DEFECTS After the development has been finished, a real estate developer’s worst nightmare is that issues come to light in the way properties have been constructed. It’s expensive, time-consuming and reputationally damaging. If you don’t have insurance in place to cover you in the event this happens, it can cost you a huge amount. Given that these defects may not be uncovered for many years, making sure you’re insured is even more important as it’s almost impossible to plan for financially. 3. EXTREME WEATHER MAY TOPPLE YOUR BUSINESS As a developer, weather can be your best friend and your worst enemy. If you don’t have the right level of construction insurance in place in the event that you face extreme weather you can face a number of consequences including damage to properties and machinery as well as paying financial penalties for not finishing a job on time. A careful and experienced review of your insurance requirements and policy documentation at the outset can help save you time, money and legal hassles later.

As a real estate developer, you’ll be all too aware that every part of the building process comes with its own risks. You’re exposed to being liable for a claim from day one. To protect yourself, your employees and your business you know that it’s important you have the right insurance in place. What are the risks to you if you don’t? 1. YOU MAY FIND YOURSELF LIABLE FOR A NEGLIGENCE CLAIM As a developer, you’re responsible for the acts and omissions of everyone working for you. As humans, people make mistakes. If you don’t have the right professional liability insurance in place, you may find yourself facing a hefty claim against the company if the mistakes that were made are significant and caused damage or injury. 2. YOU MIGHT NOT BE COVERED FOR CONSTRUCTION DEFECTS After the development has been finished, a real estate developer’s worst nightmare is that issues come to light in the way properties have been constructed. It’s expensive, time-consuming and reputationally damaging. If you don’t have insurance in place to cover you in the event this happens, it can cost you a huge amount. Given that these defects may not be uncovered for many years, making sure you’re insured is even more important as it’s almost impossible to plan for financially. 3. EXTREME WEATHER MAY TOPPLE YOUR BUSINESS As a developer, weather can be your best friend and your worst enemy. If you don’t have the right level of construction insurance in place in the event that you face extreme weather you can face a number of consequences including damage to properties and machinery as well as paying financial penalties for not finishing a job on time. A careful and experienced review of your insurance requirements and policy documentation at the outset can help save you time, money and legal hassles later.

Landlords often set policies for tenants. These policies are often in place to help reduce issues between tenants, which can be a tricky balancing act. A tenant may also be required to follow any policies to reduce difficulties as a resident. One common policy that many landlords put in place is a pet policy. Landlords may limit tenants from having pets. Why would they do that? Here’s what you should know: REDUCE NOISE COMPLAINTS Many pets can be noisy, dogs especially. Dogs will often bark at every unknown noise they hear. That could mean that a dog barks at another tenant walking down a hallway. Constant barking can create issues with other tenants. This can be especially troublesome if a tenant’s dog frequently barks at night. REDUCE PET SMELL Many animals leave behind unfavorable smells after a tenant moves out. Cat urine is a very difficult smell to get out of carpets. Landlords don’t always know how clean tenants can be and tenants can’t always control where animals do their business. Reducing pets can reduce these unwanted smells. REDUCE LIABILITY FOR ANIMAL ATTACKS Landlords can’t always expect tenant’s animals to be well-behaved or trained. If a tenant loses control of their animal, then another tenant’s health could be at risk — and there’s always a possibility that the landlord might be held partially responsible for allowing the animal on the premises. ENFORCING PET POLICIES Landlords may allow tenants to have pets. Tenants may only be allowed one to two pets and may be expected to pay one-time or regular pet fees. These fees can be useful for tenants if there happen to be issues or accidents to their properties caused by pets. Some tenants will disregard their renters’ agreements and bring a new pet into a property against their landlord’s knowledge. When this happens, landlords may take legal action against their tenants.

Landlords often set policies for tenants. These policies are often in place to help reduce issues between tenants, which can be a tricky balancing act. A tenant may also be required to follow any policies to reduce difficulties as a resident. One common policy that many landlords put in place is a pet policy. Landlords may limit tenants from having pets. Why would they do that? Here’s what you should know: REDUCE NOISE COMPLAINTS Many pets can be noisy, dogs especially. Dogs will often bark at every unknown noise they hear. That could mean that a dog barks at another tenant walking down a hallway. Constant barking can create issues with other tenants. This can be especially troublesome if a tenant’s dog frequently barks at night. REDUCE PET SMELL Many animals leave behind unfavorable smells after a tenant moves out. Cat urine is a very difficult smell to get out of carpets. Landlords don’t always know how clean tenants can be and tenants can’t always control where animals do their business. Reducing pets can reduce these unwanted smells. REDUCE LIABILITY FOR ANIMAL ATTACKS Landlords can’t always expect tenant’s animals to be well-behaved or trained. If a tenant loses control of their animal, then another tenant’s health could be at risk — and there’s always a possibility that the landlord might be held partially responsible for allowing the animal on the premises. ENFORCING PET POLICIES Landlords may allow tenants to have pets. Tenants may only be allowed one to two pets and may be expected to pay one-time or regular pet fees. These fees can be useful for tenants if there happen to be issues or accidents to their properties caused by pets. Some tenants will disregard their renters’ agreements and bring a new pet into a property against their landlord’s knowledge. When this happens, landlords may take legal action against their tenants.

While the COVID-19 health crisis is apparently in the rear-view mirror after authorities claimed that the pandemic was over, struggles still remain for those suffering not only the ongoing health effects but also the financial impact that still remains. While the name changed from the LA County Eviction Moratorium to the COVID-19 Tenant Protections Resolution, an initiative started in March 2020, the overall framework gave certain protections to residential and commercial tenants and mobile home residents impacted by the worldwide health crisis. THE END OF PROTECTIONS CREATE UNCERTAINTY The resolution came to an end on March 31, 2023. The following day, regular rent payments resumed to keep roofs over heads. However, anti-harassment and retaliation protections are still considerations. However, on that same day, landlords are mandated to serve their tenants with written 30-day notices before they can file an eviction based on unauthorized occupants or pets on the premises. Income-qualified tenants who took steps to contact their landlord and inform them of their inability to pay rent within seven days of the due date have 12 months to repay past-due balances, provided that there are no extenuating circumstances. Additional options may exist and include: For those who deferred rent between July 1, 2022, and March 31, 2023, via the county-sponsored non-payment of rent protection that may allow them to continue residing in their dwellings for “no-fault” reasons Unincorporated Los Angeles County’s Rent Stabilization Program and Tenant Protections Ordinance, combined with the Mobilehome Rent Stabilization and Owner Protections Ordinance, places restrictions on rent increases and provides protections on evictions, except for those with “just cause” for more rental properties and mobile homes. More incorporated cities have added permanent protections, along with coverage from the State of California’s Tenant Protections Act of 2019, restricting rent increases and mandating just cause evictions. In the end, an eviction notice does not necessarily mean that you should pack up and move. Instead, you should take action. Various resources exist to help rental dwellers not only understand but also assert their rights.

While the COVID-19 health crisis is apparently in the rear-view mirror after authorities claimed that the pandemic was over, struggles still remain for those suffering not only the ongoing health effects but also the financial impact that still remains. While the name changed from the LA County Eviction Moratorium to the COVID-19 Tenant Protections Resolution, an initiative started in March 2020, the overall framework gave certain protections to residential and commercial tenants and mobile home residents impacted by the worldwide health crisis. THE END OF PROTECTIONS CREATE UNCERTAINTY The resolution came to an end on March 31, 2023. The following day, regular rent payments resumed to keep roofs over heads. However, anti-harassment and retaliation protections are still considerations. However, on that same day, landlords are mandated to serve their tenants with written 30-day notices before they can file an eviction based on unauthorized occupants or pets on the premises. Income-qualified tenants who took steps to contact their landlord and inform them of their inability to pay rent within seven days of the due date have 12 months to repay past-due balances, provided that there are no extenuating circumstances. Additional options may exist and include: For those who deferred rent between July 1, 2022, and March 31, 2023, via the county-sponsored non-payment of rent protection that may allow them to continue residing in their dwellings for “no-fault” reasons Unincorporated Los Angeles County’s Rent Stabilization Program and Tenant Protections Ordinance, combined with the Mobilehome Rent Stabilization and Owner Protections Ordinance, places restrictions on rent increases and provides protections on evictions, except for those with “just cause” for more rental properties and mobile homes. More incorporated cities have added permanent protections, along with coverage from the State of California’s Tenant Protections Act of 2019, restricting rent increases and mandating just cause evictions. In the end, an eviction notice does not necessarily mean that you should pack up and move. Instead, you should take action. Various resources exist to help rental dwellers not only understand but also assert their rights.

You can and should check up on those who apply to rent or lease your property. Without screening measures, you could end up with a tenant who causes problems for you and others or refuses to pay their rent. Although you may screen your tenants, you must remain within the confines of California landlord-tenant laws and avoid violating their rights. A savvy individual could call out your improper conduct if a dispute arises, potentially leading to a legal nightmare. CAN YOU ASK PERSONAL QUESTIONS ON THE APPLICATION? Like most landlords, you probably have your prospective tenants complete an application. Although this seems like a fine opportunity to conduct some prescreening, you must be careful what you ask on a rental application. Under federal law, you may not discriminate against anyone with a protected status when renting or leasing real property. If you ask questions like these, you risk violating fair housing laws: What year were you born? Are you planning to have children? Do you attend church? Are you or another tenant disabled? What faith do you follow? These questions may seem innocent to some property owners. For example, you might want to ask about disabilities to ensure proper access to the rental unit or grounds. However, such questions can appear discriminatory under the federal Fair Housing Act, especially if you decline the application. A disgruntled applicant or tenant could use these questions against you. As you can see, there are many pitfalls for landlords to avoid when dealing with tenants. An effective way to reduce legal risks and find trustworthy tenants is through legal guidance. Having a professional assist with your application and screening process can help ensure that you don’t violate any discrimination laws.

You can and should check up on those who apply to rent or lease your property. Without screening measures, you could end up with a tenant who causes problems for you and others or refuses to pay their rent. Although you may screen your tenants, you must remain within the confines of California landlord-tenant laws and avoid violating their rights. A savvy individual could call out your improper conduct if a dispute arises, potentially leading to a legal nightmare. CAN YOU ASK PERSONAL QUESTIONS ON THE APPLICATION? Like most landlords, you probably have your prospective tenants complete an application. Although this seems like a fine opportunity to conduct some prescreening, you must be careful what you ask on a rental application. Under federal law, you may not discriminate against anyone with a protected status when renting or leasing real property. If you ask questions like these, you risk violating fair housing laws: What year were you born? Are you planning to have children? Do you attend church? Are you or another tenant disabled? What faith do you follow? These questions may seem innocent to some property owners. For example, you might want to ask about disabilities to ensure proper access to the rental unit or grounds. However, such questions can appear discriminatory under the federal Fair Housing Act, especially if you decline the application. A disgruntled applicant or tenant could use these questions against you. As you can see, there are many pitfalls for landlords to avoid when dealing with tenants. An effective way to reduce legal risks and find trustworthy tenants is through legal guidance. Having a professional assist with your application and screening process can help ensure that you don’t violate any discrimination laws.

As a real estate developer, it is essential to understand the nitty-gritty details of commercial leases. One key factor to consider when negotiating such arrangements is who pays the building expenses. These include costs like property taxes, insurance premiums, maintenance fees, and utilities – all of which can add up significantly over time if not managed carefully. When discussing a gross lease with a potential tenant, everyone must understand what is involved so there are no unpleasant surprises down the line. WHAT IS A GROSS LEASE? A gross lease is a type of commercial lease. The tenant pays a flat fee, and the landlord agrees to pay for all expenses that come with the space. This includes property taxes, insurance, maintenance, utilities, and other costs associated with running the building. The tenant is only responsible for paying one fixed rent payment each month. It makes it easier to budget since they know exactly what their monthly expenses will be. It also lets them focus on their business instead of worrying about fluctuating bills or unexpected costs. The landlord is responsible for covering the building’s operating expenses, including repairs, cleaning services, landscaping, snow removal and more. They may also need to pay for any necessary upgrades or renovations to keep up with changing regulations or trends in the industry. Gross leases can benefit tenants and landlords, but the advantages may vary depending on the situation. The landlord should ensure they can cover all of the necessary costs associated with running the building while still making a profit from renting out the space. A well-drafted rental agreement can help protect the rights of both the tenant and the landlord. It can clarify issues such as rent, expenses, maintenance responsibilities, and other important terms. All provisions should be clearly outlined in the rental agreement to avoid potential disputes in the future.

As a real estate developer, it is essential to understand the nitty-gritty details of commercial leases. One key factor to consider when negotiating such arrangements is who pays the building expenses. These include costs like property taxes, insurance premiums, maintenance fees, and utilities – all of which can add up significantly over time if not managed carefully. When discussing a gross lease with a potential tenant, everyone must understand what is involved so there are no unpleasant surprises down the line. WHAT IS A GROSS LEASE? A gross lease is a type of commercial lease. The tenant pays a flat fee, and the landlord agrees to pay for all expenses that come with the space. This includes property taxes, insurance, maintenance, utilities, and other costs associated with running the building. The tenant is only responsible for paying one fixed rent payment each month. It makes it easier to budget since they know exactly what their monthly expenses will be. It also lets them focus on their business instead of worrying about fluctuating bills or unexpected costs. The landlord is responsible for covering the building’s operating expenses, including repairs, cleaning services, landscaping, snow removal and more. They may also need to pay for any necessary upgrades or renovations to keep up with changing regulations or trends in the industry. Gross leases can benefit tenants and landlords, but the advantages may vary depending on the situation. The landlord should ensure they can cover all of the necessary costs associated with running the building while still making a profit from renting out the space. A well-drafted rental agreement can help protect the rights of both the tenant and the landlord. It can clarify issues such as rent, expenses, maintenance responsibilities, and other important terms. All provisions should be clearly outlined in the rental agreement to avoid potential disputes in the future.

Selecting the right business partner is essential for the success of any shared business venture. However, even with the best of intentions and due diligence, things can go wrong, and you might realize that you’ve made a mistake in choosing your business partner. This can be a critical error that means the business will fail. It could also mean you’re more likely to find yourself engaged in partnership disputes. That’s why it’s so important to identify red flags in advance. WHAT RED FLAGS SHOULD YOU LOOK FOR? You want your business to run smoothly. To help, here are some signs that might indicate that you have the wrong business partner: Lack of shared vision and values: If your partner’s vision and values don’t align with yours, it can create conflicts and hinder the growth of the business. You may even feel like you’re working against each other, rather than working together as partners. Poor communication: Communication is key in any partnership. If your partner doesn’t communicate effectively, misunderstandings can occur, leading to problems down the line. Lack of communication also makes disputes far more likely since you both may make incorrect assumptions. Different work ethics: If your partner is not as committed or hardworking as you are, it can create resentment and lead to a lack of trust. You need to work with someone who values the business the way that you do and who puts in the same time and effort. Financial issues and disagreements: Money, pay and financing are often top sources of conflict in business partnerships. If your partner has different financial goals or is not transparent about finances, it can be a red flag. One important thing for partners to talk about when starting a business is just how much they are expected to invest and how much they will be paid. It’s best to have all financial decisions in writing. Lack of complementary skills: A successful partnership requires complementary skills. If your partner doesn’t bring the necessary skills to the table, it can hinder the growth of the business. For example, your business is stronger with one person who is good at product development and one who is good at sales, rather than two salespeople who don’t have a good product – or two excellent designers who can’t sell the products they’ve made. When starting your business partnership or trying to navigate a dispute, be sure you know what legal steps you need to take. Addressing these issues up front often makes things go smoothly and can lead to better protection of your interests and your company as you move forward.