Facility maintenance can be one of the biggest financial obligations of any landlord. There may be substantially more maintenance requirements at commercial properties when compared with residential properties. Businesses may rely on large parking lots for customer access. They may also need customized, complex infrastructure, such as loading docks for commercial transportation of goods manufactured at the facility.

Maintaining those facilities is crucial to a company’s safe and successful operations. In some cases, business tenants do some or even all of the facility maintenance themselves at rental properties. Other times, they can rely on a landlord to handle most major maintenance matters.

Depending on the terms of a lease, there are several ways to address the maintenance costs and responsibilities at a commercial property. The following are the most common ways to address the need to maintain and repair any particular premises.

ADDRESSING RESPONSIBILITY AND/OR COSTS

Oftentimes, commercial landlords expect tenants to maintain the premises on their own. Facility maintenance and repairs can fall to the business using the space, not the landlord who owns the property. A triple net (NNN) lease is an example of a commercial lease where the tenant assumes responsibility and expenses for all relevant maintenance and building costs.

However, requiring a tenant to cover those costs or handle maintenance matters might be unrealistic in many scenarios. Small retail establishments or insurance brokerages with three employees may not have the resources to handle facility maintenance. In such scenarios, landlords may pass those expenses on to tenants through common area maintenance (CAM) fees. As such, the landlord provides everything from parking lot maintenance and security to bathroom cleaning services, and the tenants all share a proportionate amount of those costs. Sometimes, a lease makes a tenant responsible for certain matters, while the landlord may charge for other maintenance services.

In all but the rarest of cases, landlords typically either pass actual responsibility for maintenance to commercial tenants or hold them accountable for the cost of facility maintenance. Negotiating terms that work for both a landlord and tenants alike is critical to the success of commercial lease negotiations. Maintenance responsibility and expenses are often among the terms that those parties need to negotiate before signing a lease.

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Adverse possession traces its roots back to ancient legal systems where a medieval farmer tills the soil, plants crops and builds a modest cottage on a piece of land. Over time, the farmer’s descendants continue to work the land, generation after generation. Eventually, the land becomes synonymous with their identity. It’s not just a plot; it’s their legacy.

Fast-forward to modern times, and the concept remains relevant. A legal doctrine that allows a person to claim land ownership under certain conditions, adverse possession allows someone who occupies another’s land openly, notoriously, and continuously to eventually claim legal ownership. In California, as in many other jurisdictions, the rules for adverse possession require the claimant to meet specific criteria before they can gain legal title to the property.

Most people acquire property by purchasing it or inheriting it. However, some people aren’t in a position to acquire property that way. They might instead decide to lay claim to a vacant piece of land or even a house that’s sitting unoccupied. 

If someone occupying or using a piece of real estate does so long enough without the owner fighting back, the owner could potentially lose the property to the person living there without their permission. 

Adverse possession is the legal process by which a squatter or non-owner assumes legal ownership of a piece of property that previously belonged to someone else. How does adverse possession work in California?

FIVE REQUIREMENTS FOR ADVERSE POSSESSION

In California, the trespasser must successfully meet five conditions for adverse possession:

1. Continuous possession: The trespasser must stake their claim and occupy the land without interruption for at least five years. However, that time frame increases to 20 years if the owner has a medical disability. The trespasser must physically use the property, whether performing improvements, living on it or cultivating it.
2. Actual, open, and notorious possession: Rather than secretly occupying the land, the trespasser must be conspicuous, visible, unmistakable or impossible to ignore. It should be overt enough for the true owner to justifiably be concerned that someone occupies their property.
3. Exclusive possession: The possession must be exclusive, meaning the claimant cannot share possession with strangers.
4. Hostile claim: This doesn’t mean aggression or violence; hostility simply means the trespasser occupies the land without the valid owner’s permission.
5. Pay property taxes: Rather than squatting, the occupier pays property taxes on the land.

THE CLAIM OF RIGHT

The “claim of right” essentially eliminates the need for the adverse possessor to show any specific intent regarding the property’s ownership. Instead, it focuses on the nature of the possession itself, which must be adverse to the true owner’s interests. If the occupier treats the land as their own for five years, under the conditions required by law, they may be able to perfect their title to the land through adverse possession, effectively converting their claim of right into actual ownership.

THE PERSON CLAIMING THE PROPERTY MUST LIVE THERE OPENLY FOR YEARS

For a squatter or non-owner occupant to establish an adverse possession claim to a property, they will need to openly take possession of the property and start using it. Only after five years of occupation is a claim of adverse possession possible. In fact, the person occupying the land has to not only live there but also pay taxes on the property. 

Once that occupying individual has met the obligation to stay at the property and pay taxes on it for five years, they can potentially go to court to seek ownership of the property. However, if the owner of record has a medical disability, that time frame increases to a full twenty years. 

FIGHTING ADVERSE POSSESSION

Property owners can protect themselves against adverse possession claims through frequent inspections and the timely eviction of any occupants there without permission. Learning more about real estate laws in California can help you protect your investment in your property.

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Commercial construction projects might involve remodeling an existing facility to meet the needs of new business tenants. They also include scenarios where a landowner hires a commercial construction firm to erect an edifice or expand an existing building on previously vacant land.

A commercial construction project can represent a massive financial investment on the part of an organization, landlord or property owner. It can also be a major source of revenue for construction firms and the professionals that they hire. Typically, commercial construction projects begin with the negotiation of a very thorough contract. The process unfolds in stages, and the client often does not pay the full value of the invoice for the work until the construction firm completes the project.

The vast majority of commercial construction agreements move forward with minimal conflict. However, some cause major legal disputes. The following are some of the most common reasons that commercial construction leads to conflict.

SIGNIFICANT CONSTRUCTION DELAYS

Particularly when a business or entrepreneur needs commercial facilities to operate a business, delays in project completion can be a major setback. Construction delays could be the result of poor planning, unexpected project complications or disruptions in the supply chain. Regardless of what causes the delayed completion of the project, construction companies may face pushback from frustrated clients who cannot operate their businesses profitably until the completion of the project.

UNPROFESSIONAL WORK

Commercial construction projects do not always feature the same prestige finishing touches as high-end residential projects. Still, many companies seeking to erect or improve commercial facilities have specific standards they expect the construction company to meet. Whether the customer-facing spaces look sloppy and dark or there are issues with crucial systems, like the electrical wiring, work that does not conform to current professional standards could lead to significant disputes.

DEVIATION FROM CONTRACT REQUIREMENTS

Regardless of what current practices are in the construction sector, construction professionals and businesses need to prioritize the wishes of clients. Clients might request specific materials or may provide guidelines for the aesthetic or practical standards by which they intend to evaluate the finished project. It is necessary for construction firms to fulfill contractual obligations. Any significant changes to the project or deviations from the contract likely require communication between the construction firm and the client and then written approval of the changes to prevent litigation.

The parties embroiled in a construction dispute may sometimes need to go to court to resolve their conflicts. Reviewing contract terms can be a good starting point for those concerned about a disagreement related to a commercial construction project that may be headed for court.

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Someone’s primary residence is one of their most valuable assets. They may have made a down payment worth thousands of dollars to purchase the property followed by months of regular payments toward the principal and interest accruing on their mortgage.

Homeowners often also reinvest in their property by improving it slowly while they live there. From updating the electrical systems to improving the landscaping, those investments could represent tens of thousands of dollars in income and could substantially improve the fair market value of the home. Unfortunately, all of those investments could be at risk if someone faces foreclosure.

When does a homeowner have to worry about a lender foreclosing and gaining ownership of the home where they live?

OWNERS MUST MISS MULTIPLE PAYMENTS

There are numerous regulations limiting foreclosure attempts for the protection of homeowners. For example, lenders typically cannot foreclose just a few days after a single missed payment. Most foreclosure proceedings require that a homeowner miss at least four consecutive payments before the home is at risk. At that point, A lender must send them written notice. Proper communication between mortgage lenders and property owners is a key component of the foreclosure process. Lenders need to advise people of the risk of foreclosure and provide them with an opportunity to catch up on their mortgages.

PEOPLE CAN FIGHT BACK AGAINST FORECLOSURE

Foreclosure does not occur instantaneously. As previously mentioned, it requires mandatory written communication between the lender and the property owner. The lender must also initiate legal action to foreclose on the property and assume ownership over it.

Homeowners facing foreclosure may have several viable options for defending themselves during that process. For example, they may be able to establish in court that the lender violated procedural requirements. Other times, they may have proof that they have made at least one of the payments that the lender claims to have not received. In some cases, owners can potentially negotiate with the lender before the foreclosure goes to court to modify their loan and protect themselves from foreclosure.

Exploring every option can be beneficial for those facing residential foreclosure proceedings, or the risk of them. Know that the team at Goodkin APC can help homeowners explore their options for defending against a potential foreclosure if you are in need of assistance.

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Regulatory compliance is crucial to the success of any modern business. The failure to adhere to both state and federal regulations could lead to a loss of licensing or financial penalties. As a result, executives and business owners are often familiar with existing statutes that apply specifically to a particular industry. However, they also need to stay up to date on the regulations that apply to their business, as they change all the time.

For example, a law passed by federal lawmakers in 2021 just took effect on the first of the year. The Corporate Transparency Act (CTA) was a bipartisan piece of legislation that created a new requirement for certain businesses. Organizations may need to file a report with federal agencies or could be at risk of large fines of up to $10,000 for non-compliance.

WHAT BUSINESSES MUST FILE A REPORT?

As the name implies, the CTA specifically applies to corporations and other businesses where ownership is not readily evident. Limited partnerships and limited liability companies (LLCs) are also required to file a report under the CTA. Companies must disclose the identities of all individuals with a beneficial ownership interest (BOI) to the Financial Crimes Enforcement Network (FinCEN).

WHAT CONSTITUTES A BENEFICIAL OWNERSHIP INTEREST?

The CTA provides a very clear definition of BOI. The company filing the report must include identifying information about any investor who has at least a 25% ownership interest in an LLC, corporation or other business with an opaque structure. The report should also include details about who filed the paperwork to form the company.

WHEN IS THE REPORT DUE?

Businesses already operating as of January 1st, 2024 have until the beginning of 2025 to file their initial reports. Businesses formed after the CTA took effect must make ownership disclosures during the startup process. Additionally, updated reports are necessary anytime new investors meet the requirements for having a BOI in the company.

It is very easy for those focused on the operations of a business to overlook changes in the law that could end up costing them quite a bit of money. Reaching out to the team at Goodkin APC can help business owners, executives and investors better ensure ongoing regulatory compliance even as the law evolves.

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If a business ever faces litigation, there could be reason to worry about significant financial consequences. Many people have heard the claim that approximately 90% of all civil lawsuits settle. Some researchers claim that the 90% figure is a gross exaggeration. Research does indicate that settlement rates vary between different court jurisdictions and even different types of lawsuits.

Still, a significant percentage of business-related lawsuits do eventually settle outside of court. Even those abiding by the most conservative estimates could agree with the statement that a majority of all lawsuits settle or get dismissed by a judge. Why do so many business lawsuits settle out of the courts?

SETTLING IS OFTEN MORE COST-EFFECTIVE

Even in scenarios where businesses or their insurance companies maintain that the defendant is not to blame for a situation, they could potentially still agree to settle the matter outside of court. They may do this to keep costs low, as the expense involved in litigating can extend multiple times beyond the cost of negotiating and settling.

BUSINESSES DON’T WANT THE PUBLICITY

Lawsuits brought by consumers who claim they got hurt by a dangerous product, allegations of abuses made by former employees and even claims of nonpayment by vendors could do real damage to a business’s reputation. Allegations made an open court become part of the public record and could harm a company’s reputation, even if the organization eventually defeats the lawsuit that it faces. Settlements, even those that require mediation to achieve, are typically much more private and might even include confidentiality clauses for the parties embroiled in the dispute.

SETTLEMENTS PRESERVE WORKING RELATIONSHIPS

Two businesses hoping to work together in the future or an individual who might want to use an employer as a reference later usually prefer to resolve disagreements as amicably as possible. A settlement could lead to far less long-term damage to a working relationship than litigation that goes all the way to trial.

Although filing a lawsuit is sometimes necessary to move a conflict forward, those representing businesses often need to be ready to consider settlement opportunities. Learning from the actions of other businesses can help those running organizations achieve optimal outcomes for their effort.

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A breach of contract can be very expensive for the business affected. The failure to complete a project or deliver materials could slow down an organization’s fulfillment of its own obligations. Sometimes, companies may have to idle production lines or absorb losses because they must source services or materials at the last minute for a premium price.

Executing written contracts with vendors, contractors and service providers may help diminish the likelihood of a significant breach of an agreement. If a breach occurs anyway, the business may need to take the matter to civil court. Breach of contract lawsuits can lead to compensation for damages or orders of specific performance. Companies that include penalty clauses in their contracts could both deter breaches more effectively and more fully recoup losses triggered by contract issues.

HOW PENALTY CLAUSES WORK

Contracts may include terms that impose specific financial consequences or liquidated damages for a material breach of the contract. Late fees charged for delays in payment are an example. Other times, companies may have much more extensive policies that could cost the other party thousands for a contract violation.

When used appropriately, penalty clauses can serve as a powerful deterrent to contract non-performance and other violations. The business facing the contract violation could automatically demand payment based on the penalty clause and take legal action if the other party remains non-compliant and refuses to pay the penalty.

DO CALIFORNIA COURTS ENFORCE PENALTY CLAUSES?

California has many employee and consumer protection laws that can affect the viability of penalty clauses in some contracts. For example, recent court rulings have raised questions about the practice of increasing interest rates on consumer lines of credit when people miss payments. Businesses could have trouble enforcing certain penalty clauses against consumers in the wake of recent rulings.

Many other penalty clauses and contracts requiring liquidated damages are still potentially valid and enforceable in the California civil courts. Those who know there are financial penalties for contract non-compliance may be less inclined to violate a contractual agreement.

Businesses that integrate the right terms into their contracts can minimize their risk of major contract defaults and can benefit from more options for recourse should one occur. In these ways, seeking legal guidance to draft custom contracts can help organizations more effectively protect against operational disruptions and losses.

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The behavior of a neighbor can directly influence someone’s use of a property. For example, if a neighbor pollutes the soil or causes damage to a tree near a property line, those actions could negatively impact the resale value of adjacent properties.

There are laws in California that allow a property owner to take legal action when someone else damages the value of their property. In some cases, such scenarios could justify civil litigation. Private nuisances are grounds for a lawsuit filed against a neighboring property owner. Public nuisances are also potentially harmful to property values and could lead to prosecution.

What are the differences between public and private nuisances?

PRIVATE NUISANCES AFFECT FEWER PEOPLE

The scope of impact is the main factor separating public and private nuisances. A private nuisance might involve someone engaging in rude or offensive behavior that impacts other people. A private nuisance is essentially the unreasonable or unlawful use of a property that interferes with a neighbor’s rights.

Actions that affect people’s health or their ability to use their own property as they see fit, like keeping a dangerous and aggressive dog unchained in the yard, could also constitute a private nuisance. Actions that are offensive to the senses, including making unpleasant odors or being visibly nude on private property, could also constitute a private nuisance. A reasonable person would generally need to agree that the behavior is offensive or inappropriate.

Public nuisances tend to affect multiple neighbors or the entire neighborhood. The impact on the multiple parties affected does not have to be exactly the same for conduct to constitute a public nuisance. Operating a drug house is a public nuisance, as is engaging and prostitution out of a residential property. Even loud parties that require police intervention late at night could be a form of public nuisance.

State prosecutors can bring charges against those who become public nuisances. Prosecution isn’t possible for private nuisance allegations in most cases, but litigation can be an option. Homeowners can file a lawsuit against an adjacent property owner whose actions affect their quiet enjoyment of their property or its potential resale value.

Ultimately, seeking legal guidance and learning more about the rules that govern real estate disputes between neighbors, including nuisance claims, may benefit those trying to navigate a difficult situation involving a neighbor.

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Real property can be the biggest investment someone ever makes. Partially as a result of this reality, people tend to feel very strongly about protecting their property rights. Sometimes, disagreements related to real property ownership will end up in civil court.

People cannot always resolve a dispute via negotiation that could have an impact on their finances or ownership rights, so they ask a civil court judge to rule on the matter. Every real estate dispute is inherently unique, as the conditions of the property and the circumstances of the owners are unique. However, certain types of real estate litigation are far more common than others. The following are some of the most common reasons that people go to court over a real estate matter.

THERE ARE ISSUES WITH BOUNDARIES OR PROPERTY USE

Sometimes, neighbors may disagree about where the boundary line between two parcels actually falls. The actual placement of the boundary can impact the use and value of the land. Someone overstepping a boundary might eventually lead to claims of adverse possession if the owner does not challenge their behavior in court. Other times, people may go to court because a neighbor’s use of their property has affected their enjoyment of their property or the value of their land.

THERE ARE UNDISCLOSED PROPERTY DEFECTS

Issues that people discover with a new home after taking possession can influence not only their enjoyment of the property but often also its actual value on the open market. Buyers who discover significant defects after taking possession of a property may end up taking the seller to court to seek reimbursement for the cost of repairing those defects or the diminished value of the property because those defects exist

THERE ARE PROBLEMS WITH A CONSTRUCTION PROJECT

Construction defect claims are lawsuits brought by property owners against businesses that they hired to construct, remodel or repair a property that they own. Such lawsuits can lead to a court order to correct the issue with the property or compensation for the owner. On the other hand, sometimes construction firms or the businesses that supply them with materials take a property owner to court over nonpayment. Lawsuits seeking liens against real property to compel someone into payment are also relatively common in Massachusetts.

Ultimately, recognizing when a conflict related to real property might justify going to civil court could help homeowners and businesses better protect their interests.

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The commercial real estate market in California, particularly in Los Angeles and Orange counties, can be very lucrative. Landlords and owners alike can potentially profit off of properties by leasing or selling them to others.

Those seeking to invest in commercial properties often need to think carefully about their short-term needs and their long-term goals. Not every commercial real estate investment is equally successful, and people might potentially set themselves up for financial losses if they don’t look carefully at the market before completing a transaction.

CERTAIN TYPES OF PROPERTY BENEFIT FROM CONSISTENT DEMAND

When looking at vacancy rates and default rates for loans, certain commercial property investments tend to work out better for investors than others. Multi-family homes and apartment buildings are among the most in-demand types of commercial real estate. They can also be a source of immediate and long-term revenue. However, they may come with a host of financial obligations, including the requirement to continually maintain the units and repair them if tenants damage them. Manufacturing or industrial properties often tend to see consistent demand too, although economic downturns can have a rapid impact on the value and vacancy rates for industrial properties in certain areas.

SOME PROPERTIES ARE BETTER FOR LONG-TERM INVESTMENTS

Despite slower leasing for retail properties, they still maintain a relatively low vacancy rate nationwide, although it varies drastically from one municipality to another. Retail facilities in high-end neighborhoods often command the highest rents but also have the highest sale prices and tax rates. Retail facilities in some neighborhoods may be cheaper but may also be vacant for longer in between tenants.

Office properties, on the other hand, remain in a slump. Despite widespread efforts to return workers to office settings, some industries and businesses will inevitably remain remote or will embrace a hybridized model going forward. Retail and office spaces are, therefore, often better options for those looking for lower current prices and more long-term investment opportunities. From converting office buildings to high-end condos to investing in up-and-coming neighborhoods by buying retail facilities while the area is still in development, there are many ways for investors to make money off of a commercial property that others may not see as a viable investment.

Ultimately, learning more about the current commercial real estate market in California may help people make more judicious purchasing decisions.

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