A partition action is a legal process used when two or more individuals co-own real estate and can no longer agree on how to manage or divide their shared property. In California, this approach to seeking legal remedy to such a dispute commonly arises when family members who inherit property together, unmarried couples who buy property jointly or business partners who invest in real estate cannot reach an amicable solution to their ownership concerns absent legal action. 

When one co-owner wants to sell the property but the others do not—or when disputes about use, maintenance or expenses arise—a partition action may be the only way to resolve the conflict. California law recognizes three types of partition actions:

1. Partition by Sale – The most common type, this occurs when the property is put up for sale and its proceeds are split among the co-owners in accordance with their ownership interests. Courts often favor this method, especially when dividing the property physically would be impractical or would diminish its value.
2. Partition in Kind – This method divides the property physically among the co-owners. It is generally used when the property is large enough or uniquely suited to be split without harming its value, such as vacant land or farmland.
3. Partition by Appraisal – This allows one co-owner to buy out the others at a value determined through an appraisal. This option may be agreed upon by the parties to avoid a public sale or prolonged litigation.

Any co-owner of a property in California has the legal right to file a partition action. It doesn’t matter if they own a majority or minority interest—every co-owner has the right to seek a division or sale of the property. 

STEPS IN A PARTITION ACTION

A typical partition lawsuit involves the following steps:

• Filing the complaint in court
• Notifying all other co-owners (defendants)
• Appointing a referee, if needed, to manage the process
• Obtaining a court order to sell or divide the property
• Completing the sale or division
• Distributing the proceeds or interests based on each party’s ownership share

If one party has paid more toward property expenses like taxes, mortgage payments or repairs, the court may consider that when dividing proceeds.

Ultimately, partition actions can be time-consuming and costly, especially if the parties are in sharp disagreement. However, for a co-owner stuck in a deadlock with others, it may be the only way to resolve the situation and benefit fully from the value of their ownership interest.

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A commercial lease generally involves a long-term commitment. Most standard commercial leases last for at least two years, if not longer. The language included in standard commercial leases usually makes a tenant responsible for rent amounts even if the business fails or the tenant ceases operating the business at the rental property.

In scenarios where a commercial tenant must relocate to a bigger space or goes out of business, landlords can demand that the tenants pay the full amount of the remaining rent due. In some cases, either the landlord or the tenant may propose special inclusions in the lease agreement that could allow for the early termination of the rental arrangement in some cases.

A force majeure clause can end a lease early when there are unusual and uncontrollable circumstances.

WHAT IS A FORCE MAJEURE CLAUSE?

The phrase force majeure is a French term that means greater power or superior force. In the world of commercial leases, a force majeure clause generally only takes effect in highly unusual circumstances. People sometimes refer to force majeure clauses as “act of God clauses.”

When there are unforeseeable and uncontrollable circumstances that prevent a landlord or tenant from fulfilling their lease obligations, a force majeure clause may absolve them of legal and financial culpability. Circumstances that could trigger force majeure clauses include war, natural disasters and acts of terrorism. Sometimes, that means damage to the rental space. It could also relate to an inability to do business due to extreme and uncontrollable circumstances.

Landlords may also benefit from force majeure clauses. Tenants may not be able to hold them legally responsible for a failure to maintain the facilities or provide certain services in accordance with the lease. Such clauses can be mutually beneficial. They can also potentially lay the groundwork for a complex legal dispute. If the two parties do not agree about whether the situation justifies implementing the force majeure clause, then the matter may need to go to court.

Learning more about unique inclusions intended to enhance the protection of commercial leases can help both landlords and tenants. Professionals who know the purpose of specific lease clauses may be able to use that knowledge to negotiate appropriate lease terms.

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Running a manufacturing company can be a very lucrative business model. Consumers and other businesses constantly require goods and materials. Manufacturers who tap into an appropriate customer base can generate regular streams of revenue.

Of course, the profitability of a manufacturing business largely depends on the demand for the company’s products. Higher-quality products tend to generate more demand and therefore more revenue than cut-rate goods of questionable quality. When there are issues with the products, the company’s revenue may drop.

In fact, the products previously sold could become a source of substantial organizational liability. Those starting or assuming control of manufacturing businesses may need to consider investing in recall or product defect liability insurance as a means of protecting their company from potential future setbacks.

HOW CAN PRODUCT RECALL INSURANCE HELP?

Recall or product defect insurance can provide support to manufacturers when they need to recall products already released for sale. The policy can help cover expenses related to the recall itself. From communication with customers to the losses generated when refunding purchase prices or repairing defective products, a recall can potentially cost hundreds of thousands of dollars or more.

Depending on the nature of the remedies provided to consumers and the overall extent of the recall, companies may need to replace or repair thousands of defective units. They may also need to absorb the cost of refunding purchases to consumers.

Recall insurance allows an organization to absorb the cost of a substantial product recall without causing budgetary issues. Product recall insurance is typically part of a broader liability policy, which may include product liability coverage. That coverage is also important in a recall scenario.

Product liability coverage can also help in scenarios where consumers make injury or property damage claims against the business. The insurance can potentially provide compensation to those harmed by defective products released by a company.

Those operating organizations in the manufacturing sector often need to carry multiple types of insurance to help offset operational risks. Obtaining product recall insurance can be as important as carrying insurance to protect machinery and workers. Reaching out to the team at Goodkin APC by clicking here or calling 310-759-8471 can help those who run businesses ensure that they have properly mitigated operational liability.

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A breach of contract can negatively affect an organization in a variety of ways. A construction company failing to begin a project on schedule or complete it according to the proposed timeline can lead to major operational setbacks.

A vendor refusing to deliver materials or increasing their prices despite the terms of an agreement could affect a company’s profit margins or ability to continue operating. Employees who violate their contracts could harm a company by disclosing trade secrets or competing unfairly after leaving their positions.

Contracts exist to protect both parties and make their obligations to one another clear. When contract breaches occur, some organizations ignore the issue, while others may choose to promptly take action in civil court. Organizations may choose to litigate for a variety of reasons, including the three below.

1. SETTING A CLEAR EXAMPLE

Contract breaches don’t occur in a vacuum. The response of one party can influence how others behave in the future. Particularly in scenarios where the contract in question is one of many such agreements, ignoring a breach can be a dangerous precedent to set.

Businesses may find that other employees, service providers or vendors assume they can engage in similar misconduct with impunity if the company has not assertively enforced its contracts previously. Organizations that consistently enforce their contracts may benefit from news outlets or other parties discussing their contract enforcement efforts. Others may think twice about violating an agreement when the company has a history of taking prompt access.

2. INCENTIVIZING A SETTLEMENT

Frequently, breach of contract lawsuits do not actually make it to trial. The defendant responding to the lawsuit decides to settle. They may propose a settlement directly or may agree to undergo negotiations to try to resolve the issue. The possible consequences of litigation can motivate those who have previously violated an agreement to correct issues or attempt to resolve the dispute with the business.

3. PROVIDING VALUABLE RECOURSE

There are several solutions available after a successful breach of contract lawsuit. Judges can enforce penalty clauses or award damages to the plaintiff organization. They can issue injunctions or orders of specific performance. They can also end contractual obligations for both parties.

Reviewing a contract is often the first step toward enforcing it through a breach of contract lawsuit. Businesses that consistently enforce their contracts may minimize the harm caused by contractual violations and may deter others from violating a contract with them in the future.

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The acquisition of real property is a major investment. Whether an individual or business acquires residential property or commercial real estate, preserving the property is usually a top priority. A portion of the parcel the buyer acquired could be at risk in a scenario where a boundary dispute with a neighbor arises.

Perhaps a neighboring business wants to expand its parking lot and intends to build over what one owner believes is the boundary line between the two properties. Maybe a neighbor in a residential neighborhood wants to erect a fence, but there may be questions about where the boundary between the properties at issue actually falls.

In what ways can real estate owners who want to protect their investments resolve a disagreement about where the boundary for a parcel falls?

WITH A REVIEW OF PAPERWORK

Sometimes, reviewing the most recent deed information for a parcel can provide clarity about a boundary issue. Deeds typically need to include legal descriptions that describe the exact placement of a parcel. Occasionally, property owners with conflicting ideas about where the boundary falls between their properties can resolve their disagreements by reviewing their deeds.

WITH THE HELP OF A SURVEYOR

The deeds may actually be the source of the issue because there are inaccurate details included in one legal description or the property owners misunderstand the language used in the deeds. In such scenarios, hiring a surveyor could be useful. Surveyors have training and equipment that make it possible for them to accurately establish where the boundary between two parcels falls. They can put markers down and produce a final report validating the placement of the boundary between the two parcels.

WITH REAL ESTATE LITIGATION

Those intending to build over a boundary line don’t necessarily change their plans after reading a deed or reviewing the survey report. If the property owner intending to build over the boundary plans to move forward with the project anyway, the concerned neighbor may need to involve the courts. A judge has the authority to correct an inaccurate deed so that it reflects where the boundary between the parcels actually falls. A judge could also issue an injunction preventing development over the boundary line or requiring that property owners correct prior incursions that crossed the boundary line.

Real estate owners at risk of losing part of their parcel due to a boundary issue may need help addressing the matter. Taking timely action when facing a boundary dispute is often preferable to ignoring the issue. Legal action can potentially prevent scenarios in which neighbors suffer major financial setbacks or a loss of property rights.

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Every new commercial lease comes with a degree of risk. Landlords often gamble on an entrepreneur’s idea when allowing them to take possession of a commercial space. Most commercial leases last for multiple years, but there is never a guarantee that the business tenant remains solvent for the duration of the lease.

Therefore, many leases include special terms that may apply in scenarios where a tenant business fails. Some leases include force majeure clauses that allow either party to terminate the lease when the business cannot operate due to factors outside of the company’s control. Other times, leases may include provisions either explicitly allowing or prohibiting assignment to a different business.

Is lease assignment beneficial for a commercial landlord in a scenario where a tenant wants to vacate a unit?

WHAT LEAST ASSIGNMENT ENTAILS

Lease assignment is essentially the assumption of the remainder of the lease by an outside party. A new business tenant agrees to take over the remainder of the lease by an outside party. The current tenant can vacate the premises without owing multiple months of rent to the landlord.

Such arrangements can be beneficial for the landlord, as they eliminate the need for marketing, collection activity and downtime between tenants. However, there are risks inherent in allowing lease assignments.

The landlord may need to include Provisions about vetting the new tenant before approving the assignment. Otherwise, a struggling tenant might jump at an opportunity to assign their lease to a company that is likely to follow in its footsteps toward failure. Additionally, tenants may be unfamiliar with the law and might agree to a lease assignment arrangement with a business whose proposed operations may violate local, state or federal ordinances.

Some landlords allow lease assignment but require pre-approval of the new tenant. Others may establish baseline requirements in the lease for prospective tenants seeking to acquire the lease via assignment. In some cases, lease assignment can be detrimental and can leave a landlord struggling to evict a problem tenant.

Carefully considering special requests by business tenants, including requests to integrate lease assignment clauses, can help to protect property owners preparing to sign a commercial lease. The inclusion of very clear terms in commercial leases is necessary for the protection of the landlord giving businesses access to commercial spaces for their operations.

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Commercial real estate can be a source of regular revenue for the businesses that own such properties. Tenants that rent retail facilities, office space or industrial locations often commit to multi-year leases and either pay for maintenance or manage facility repairs on their own behalf.

For years, office spaces were relatively lucrative commercial property holdings. Owners could readily replace tenants whose businesses failed or those who moved on to another space. In some cases, commercial landlords could charge a premium for offices in high-demand neighborhoods. Employers sometimes leveraged the location of their offices as a perk to prospective employees.

That has shifted dramatically over the last few years. Remote work and hybrid work arrangements have become increasingly popular in many different sectors that used to demand in-person job performance. Companies have started limiting their use of office space or foregoing leases entirely. Those who own commercial space that they previously rented to other businesses may want to consider a facility conversion as a way to take a money pit and turn it into a new source of revenue.

DEMAND FOR RESIDENTIAL PROPERTIES REMAINS HIGH

While the need for rental office space has slumped in recent years, there is significant ongoing demand for rental residential space and also owner-occupied residential units. Prices in the residential sector have soared in the last few years.

Investors and businesses that currently own office buildings can potentially seek changes to the zoning and make major adjustments to the facilities to convert them into buildings with multiple residential units. Depending on various factors, it may be more profitable to sell the individual units as condos or to lease them as apartments.

Numerous challenges could potentially arise during the conversion process, including setbacks during the zoning process, difficulty with installing the necessary infrastructure for individual residential units and marketing to prospective tenants or owners. Such projects can take years to complete but can potentially turn a commercial building that does not generate revenue into a highly-profitable residential facility.

Investors and business owners seeking to turn lemons into lemonade by converting unprofitable commercial properties into different types of new facilities often need assistance during that complex process. Bringing in the right support can take some of the frustration out of a commercial property conversion.

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Property owners hire contractors with the expectation that they’ll take care of a project in a professional manner. Most projects are completed without any issues, but there are times when construction defects may plague the process and vision of interested parties.

Determining what type of defect that’s present is often the first step in the process of getting it corrected. The following are the most common kinds of construction defects that may impact the integrity of any particular project.

DESIGN DEFECTS

Design defects happen if there are flaws in the engineering or architectural plans that govern a project. They may arise because of errors or omissions that occur during the design process. Structural issues and other serious problems can occur because of design defects. For example, lack of proper drainage because a building’s design doesn’t allow for it can lead to water damage over time.

MATERIAL DEFECTS

Material defects are the result of using substandard materials for a project. In some cases, this may be because of inappropriate material substitutions. These defects vary in severity based on how crucial the material is to the project. For example, poor quality concrete used as foundation is typically a more serious issue than poor quality trim being used around interior doors.

WORKMANSHIP DEFECTS

Workmanship defects occur when the quality of the work doesn’t meet the client’s agreed-upon expectations or the requirements for the project. This type of defect can encompass any aspect of a project, such as electrical work, plumbing, roofing or framing. Defects in this category may lead to safety hazards or place the structural integrity of a building in jeopardy.

SUBSURFACE DEFECTS

Subsurface defects relate to issues with the ground or soil beneath a structure. These defects can cause serious problems, such as foundation shifting or settling, leading to cracks and structural instability. Poor site preparation, such as inadequate compaction or failing to properly account for soil conditions, often contributes to these defects.

When a construction defect occurs, many contractors will stand behind their projects and correct the problem. Yet it’s possible that a property owner will take legal action if their contractor doesn’t correct a defect. Legal assistance is beneficial in these cases because they can often be particularly complex and lengthy affairs.

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Business owners and executives often have to make difficult choices about harm reduction and risk mitigation. They need to address likely risks for the organization while simultaneously keeping costs to operate the company low. Professionals often have to balance the likely need for certain types of insurance coverage with the cost of a policy. One type of insurance that many professionals overlook is business interruption insurance coverage.

While most companies never need business interruption insurance coverage, those that do may find it invaluable during times of economic hardship.

HOW DOES BUSINESS INTERRUPTION INSURANCE WORK?

Business interruption insurance is a type of coverage that helps pay operational expenses while a company cannot operate. Typically, the business has to face factors outside of the control of executives or ownership for such coverage to be available. A natural disaster might result in the long-term closure of nearby roads. That may force a retail establishment to close indefinitely. Business interruption insurance can help cover fixed operational expenses until the company either closes down for good or can finally reopen.

WHAT DOES BUSINESS INTERRUPTION INSURANCE COVER?

Technically, every business interruption policy is unique. Organizations typically outline the costs they want to cover in the policy, and the insurance company may impose either a set amount of coverage for those losses or a specific duration of time when the policy can pay those expenses. Business interruption insurance can cover mortgage payments or costs for rental space. The policy can pay for employee wages when a company has salaried employees. It can even cover the cost of their benefit packages. Reviewing policy documents to ensure proper coverage for likely expenses is an important part of securing business interruption insurance coverage.

Given how expensive a business interruption policy claim can be for an insurance company, businesses often face a complex claims process. They likely need to have thorough documentation of the issue that caused the interruption and proof of the expenses that the policy should help cover. Those starting businesses, moving into a different position at an organization or reviewing current company protections may need support as they evaluate their current coverage for obvious gaps. Business interruption insurance can be very useful for some organizations and might potentially be a waste of capital for others.

Exploring company exposure and different forms of insurance coverage can help owners and executives determine what forms of support they require for the protection of the organization, its investors and its employees. Reaching out to the team at Goodkin APC can help businesses evaluate their insurance options and current policies accordingly.

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Starting a partnership requires each owner to protect themselves while they simultaneously focus on the broader interests of the company. One way to do this is to have a comprehensive operating agreement in place for the business, ideally before it becomes operational.

One of the primary concerns that should be addressed in a partnership operating agreement is the definition of the partnership structure. This includes specifying the type of partnership, such as general, limited or limited liability partnership.

DEFINING CONTRIBUTIONS AND OWNERSHIP

Each partner’s contributions to the business, including intellectual property, physical assets and financial matters should be noted in the agreement. It should also clearly state the percentage of ownership in the company for each partner.

ROLES AND RESPONSIBILITIES

Each partner may have a part of the company that they’re responsible for. This should be written out in the operating agreement so that there’s not any doubt about who should handle what. Consider daily operations, overall management and decision-making processes.

PROFITS AND LOSSES

Profit and loss distribution is a critical part of an operating agreement. This should include the agreed-upon formula for splitting everything. It might be based on the initial contributions of each partner. The more detailed this information, the less of a chance there will be a dispute in the future.

DECISION-MAKING PROCESSES

The decision-making process should be outlined. This includes the voting rights of each partner and what’s required for making significant decisions. While it may not happen often, deadlocks should also be covered. This includes resolution methods for those situations.

PROCEDURES FOR ADMITTING NEW PARTNERS

There may be a time when new partners need to join the partnership. Having the selection criteria and procedures for this included in the agreement can make that easier. The method for adjusting profit and loss divisions and ownership percentages should also be included.

EXIT STRATEGY AND DISSOLUTION

The terms for a partner leaving the company or for dissolving the partnership should be written out. This can include retirement, resignation and other options like buyouts.

A comprehensive operating agreement may have other elements. For example, dispute resolution methods might be a good addition so there’s a plan in place if partners don’t agree on business operations. Working with a legal representative who can assist with developing this document may be beneficial, given the complexities at issue and all that is at stake.

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