Real Property Transactions

Effective January 1, 2015, California law requires real estate brokers and agents to provide their clients and prospective clients with specific new disclosures, including (1) an initial disclosure form regarding the nature of agency relationships, which is typically provided at the time a listing agreement is entered into; and (2) an additional disclosure form to be presented in connection with a specific lease or purchase transaction.  Owners/landlords may elect at their option not to execute the initial disclosure form.
Continue Reading Important Alert for Commercial Owners/Landlords and Brokers/Agents: Changes to California Dual Agency Disclosure Laws Effective January 1, 2015

Many commercial property owners have approached us with questions about missing data protocols, how to properly comply with AB 1103 (and the consequences of non-compliance) and what buildings are affected.  Here is what you need to know.
Continue Reading Missing Data Protocols Under AB1103 Energy Use Disclosure Rule And Other Important Facts You Need To Know

Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill, LLP (Cal. Supreme Court., 07/03/2014, S208173)

On July 3, 2014, the California Supreme Court decided the much watched case Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill, LLP.  The court held that the “principal architect” “owes a duty of care to future homeowners in the design of a residential building . . . even when they do not actually build the project or exercise control over construction.”  (Emph. added.)

Continue Reading Principal Architects on Residential Projects Liable for Construction Defects Outside Their Control; Developers and Owners May Pay the Price

What You Need to Know:

On July 1, 2014, 2013 CALGreen, Part 11, Title 24, of the California Code of Regulations will go into effect. As a result, certain nonresidential additions and alterations will trigger compliance with more stringent energy-saving measures for plumbing, electrical, lighting and heating, ventilation and air conditioning systems. It is expected that the implementation of these updated Title 24 regulations will result in increased compliance costs in the completion of tenant improvements in commercial buildings. The implications for sellers, buyers, owners and tenants of commercial real estate include the need to update lease forms to take into account the practical impact of these regulations on each transaction and each material work of construction.

Continue Reading Changes To California Title 24 Energy Use Requirements Effective July 1, 2014

Who must sign?
Does whether an entity is in “good standing” really matter?

Leases are often not given the same attention as other types of contracts with respect to issues of corporate authority and enforceability. Proof of authority is often an issue in the context of leases and related documents. What you need to know.

Continue Reading What Makes A Lease “Enforceable” – What You Need to Know

By Michael Gibson

Almost all commercial leases in the United States include a covenant of quiet enjoyment. At its simplest level, the protection afforded by the covenant to a tenant is straightforward: a landlord must not interfere with a tenant’s use and enjoyment of the leased premises. Tenants, however, have attempted to utilize the covenant in a more expansive way to make claims and obtain damages against landlords for various types of landlord behavior. The scope and nature of the landlord’s detrimental behavior are important factors in determining whether the tenant will have a potentially successful claim for the breach of the covenant of quiet enjoyment. But recent cases suggest that leases can be drafted to limit the scope of the covenant and/or the landlord’s liability for breach of the covenant.
Continue Reading The Covenant of Quiet Enjoyment – A Bang or a Whimper

By Sherwin F. Root

Mortgage lenders and brokers are aware that the new regulations on loan originator compensation (part of Regulation Z) will go into effect on April 1. One aspect of those regulations that has received little attention until just recently is that if the consumer pays the loan originator directly (which may be the case with mortgage brokers, but will not be the case with loan originators who are employed by the creditor), the regulations prohibit any other person from providing any compensation to a loan originator, directly or indirectly, in connection with that particular transaction. This means that, if a mortgage broker is paid by the consumer, (i) the mortgage broker cannot receive additional compensation from the lender, and (ii) the lender cannot also pay compensation to any of its internal loan originators in connection with that loan (with the possible exception of an hourly wage). It is also worth noting that payments to a loan originator made out of loan proceeds are considered compensation received directly from the consumer. There is some question as to whether this is exactly the result that the Federal Reserve Board intended. We understand that the Mortgage Bankers Association of America is seeking clarification from the Fed on this provision, so it is possible that some modification will be forthcoming. Barring that, though, mortgage lenders should be prepared to comply with the above limitations commencing April 1.

Continue Reading Brokers – Thou Shalt Not Accept Payments From More Than One Source In Connection With a Mortgage Loan

Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC, No. D055422 (4th Dist. July 30, 2010)

By Michael Wilmar and Aaron Kleven

Homeowners and homeowner associations are not necessarily bound by arbitration provisions in a declaration of covenants, conditions and restrictions, or in a related purchase agreement, where the developer is the initial and only declarant. That is the implication of a July 30th ruling of the Fourth District of the California Court of Appeal. In Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC, a homeowner association brought a construction defect suit on behalf of itself and its members for damage to common areas. The developer of the condominium project attempted to block the suit, claiming the plaintiff was bound to an arbitration provision recorded in the project CC&R’s. It argued the provision committed the Association to resolve all construction disputes through arbitration and waived the Association’s right to a jury trial. The purchase and sale agreements signed by the individual condominium owners also contained a jury waiver and a provision compelling owners to comply with the arbitration provision in the CC&R’s. But the court concluded that the provision in the CC&R’s did not constitute an agreement sufficient to wave the Association’s constitutional right to a jury trial. And it found the corresponding provision in the purchase and sale agreement unconscionable and unenforceable against the individual owners.

Continue Reading Homeowner Associations and Members Not Necessarily Bound By Arbitration Provisions in CC&Rs or in Related Purchase Agreement Where Developer is Initial Declarant

By Claudia Gutierrez

On February 17, 2009, President Obama signed into law the $787 billion stimulus bill, The American Recovery and Reinvestment Act of 2009 (ARRA). As part of ARRA, Recovery Zone Facility Bonds (RZFB) were introduced as a groundbreaking type of tax-exempt private activity bond that would tremendously increase financing opportunities for private development projects that have historically not qualified for tax-exempt financing. The list of qualified businesses under the RZFB program is extensive – any trade or business within a designated recovery zone, excluding only a few types of businesses such as residential property, golf courses, country clubs, massage parlors, facilities dedicated to sale of alcohol or gambling, etc.

Continue Reading Recovery Zone Facility Bonds May Not Provide the Economic Stimulus Local Agencies Hoped For

By Aaron Sobaski & Robyn Christo

On February 3, 2010, the American Land Title Association ("ALTA") Board of Governors unanimously voted to withdraw and decertify its Form 21-06 Creditors’ Rights Endorsement ("Endorsement"). The California Land Title Association ("CLTA") Board of Governors quickly followed suit, withdrawing its own Endorsement (Forms 131 and 131-6) on February 16, 2010. While the ALTA Board made clear that its action had no effect on an individual title insurers’ ability to provide protection to owners and/or lenders with respect to creditors rights, many of the major industry leaders—for example First American Title and Fidelity National Title (including related companies such as Chicago Title)—promptly announced they would no longer be providing insureds with coverage for creditors’ rights.

Continue Reading As of March 8, 2010, Major Title Insurers Will No Longer Underwrite Policies to Protect Creditors’ Rights