Real Property Transactions

California recently enacted SB 816 to change the penalty provisions for failure to timely file a transfer of property ownership statement with the State Board of Equalization (the "BOE") upon a change in control or change in ownership of a corporation, partnership, limited liability company, or other legal entity. Note that these new rules apply only to late filings of ownership statements upon the change in control or ownership of a legal entity, and not to late filings of ownership statements required to be filed with the county assessor’s office upon the recording of a deed transferring real property.

Continue Reading Changes to Penalty for Failure to Timely File CA Entity Change in Ownership Statement

By Matthew Richardson

The IRS recently issued "safe harbor" guidance that home loans modified under the Home Affordable Modification Program (HAMP) will not adversely affect real estate mortgage investment conduits (REMICs). Without this guidance, payments from the US government to lenders and servicers of home loans under HAMP may have resulted in a 100% penalty tax and may have jeopardized the securitization vehicle’s tax-advantaged classification as a REMIC.

Continue Reading Modifications of home loans under government program will not adversely affect REMICs

By Douglas E. Wance

Espinoza v. Calva, ____ Cal. App.4th ____

(December 16, 2008, Case No. G040006, Fourth Appellate District, Division Three)

In an unlawful detainer action, the Court of Appeal reversed the trial court’s award of past due rent under a lease where the landlord had failed to secure a required certificate of occupancy for the leased premises and the tenants were unaware of the requirement at the time they leased the premises.

The landlord brought the action against the tenants seeking eviction and an award of past due rent.  The tenants claimed the premises were uninhabitable.  They introduced records that no occupancy permit had been issued for the premises and a copy of applicable city ordinances, all which were admitted by the trial court.  The trial court awarded possession of premises to the landlord, and also awarded the landlord $2,350 for rent.

Continue Reading Landlords Keep Your House In Order – Claims For Past Due Rents Dismissed Where Certificate Of Occupancy Not Obtained

California Coastal Commission, etc., et al. v. Michael A. Allen, ___ Cal. App. 4th ___ (Oct. 1, 2008, Case No. B197974)


By David Collins


In this case, California Court of Appeal affirmed an order for sale of dwelling pursuant to California Code of Civil Procedure section 704.740 (part of the state’s Enforcement of Judgments Law) finding the Coastal Commission’s assignee of a $1,469,000 judgment lien had properly secured a valid assignment of the judgment and that the homestead exemption did not apply because the subject dwelling was not owned by a natural person.

Continue Reading Homestead exemption does not apply to Home owned by single shareholder corporation

Patel v. Liebermensch (Aug. 21, 2007, D048582 [4th Dist, Div. 2]) __ Cal.App.4th __;

By William M. Flieshhacker

In this case, the Fourth District Court of Appeal of California addressed the issue of the enforceability of an option contract that did not include essential terms regarding the time and manner of payment.  The court held that the evidence showed that the parties continued to negotiate these terms (and terms related to the amount of the deposit, the escrow period, and the payment of escrow expenses) following the tenant’s notice that he was exercising the option.  The court found that these key terms could not be added by the trial court by implication, thus rendering the option contract unenforceable.

Continue Reading Court May Not Imply Essential Terms Regarding Time and Payment to Make Option Agreement Enforceable if Parties Continued to Negotiate Those Terms After Execution of Agreement.

Kristina Dyer v. Exon Martinez et al. (February 23, 2007, G037423) __ Cal.App.4th__;

By Katharine E. Allen

In this action for specific performance of a contract for the purchase of real property, the Court of Appeals found that the physical recordation of a lis pendens in the county recorder’s office was insufficient to provide a prospective purchaser with constructive notice of the claim until the recorder properly indexed the lis pendens in the county real property records because a diligent title search would not reveal the existence of the claim unless it was properly indexed.

Continue Reading Physical Recordation Of A LIS Pendens With The Recorder’s Office Does Not Provide Constructive Notice Of The Claim Until The LIS Pendens Is Properly Indexed By The Recorder.

Anne Manderville et al. v. PCG&S Group, Inc. et al. (January 24, 2007, D047285) __ Cal.App.4th__;

By Katharine E. Allen

In this case, the Court of Appeals determined that exculpatory clauses contained in a purchase contract are against public policy to the extent such clauses exempt any individual from liability for his own fraud and therefore do not preclude a buyer of real property from showing that he justifiably relied on a broker’s intentional misrepresentation about the character of the property.  The court also found that any lack of due diligence by a buyer in investigating zoning and other laws restricting the use of property, even if negligent, does not preclude the buyer from establishing justifiable reliance if (a) there has been an intentional misrepresentation; and (b) the purchase contract only permits, but does not require, the buyer to undertake his or her own due diligence.

Continue Reading Exculpatory Clauses In A Purchase Agreement Do Not Bar Claims By Buyers Of Real Property Alleging That The Seller’s Brokers Made Intentional Misrepresentations About The Property

Black Hills Investments, Inc. v. Albertson’s, Inc. – January 12, 2007

By Thomas B. Snyder

On November 22, 2004, Black Hills entered into a contract to purchase two parcels of real property in a retail shopping center.  At the time of the contract, the two parcels had not yet been created through subdivision of the property.  Black Hills deposited earnest money of $133,000 which was described as non-refundable.  The contracts contained a provision which permitted the seller, Albertson’s, to terminate the contract if it failed to obtain the proper governmental approvals for creation of the two parcels.  Black Hills was given no such right.

Continue Reading Appeals Court determines that a contract for the sale of two undivided parcels was void in violation of the Subdivision Map Act.

By Doug Van Gessel

On August 4 the California Supreme Court ruled, in Grafton Partners v. Superior Court (Pricewaterhouse Coopers LLP), 2005 DJDAR 9387 that California contractual provisions in which the parties thereto pre-agree to waive the right to a trial by jury are unenforceable. The unanimous opinion stated that a right to a jury trial is a fundamental constitutional entitlement that cannot be waived in advance of a dispute between the contracting parties unless such a waiver is permitted by statute. Thus, the court has left the door open for the legislature to pass a statute allowing such waivers, and the forum for interests pursuing this debate will likely shift to the legislature now.
Continue Reading California Supreme Court Voids Jury Trial Waivers

In order to negotiate a successful lease agreement for a biotechnology laboratory facility (“biotech lab”), landlords and tenants should evaluate the nature of their concerns, adopt a cooperative attitude, and avoid relying on traditional “form leases” better suited to leases for general office space. Biotech lab leases differ from leases for general commercial office space in that they, among other things, (1) have a higher base rent, in part because of a general shortage in biotech lab space; (2) require more tenant improvements; (3) entail a more costly facility build-out; (4) present greater risks in terms of both degradation of the facility and liability for both parties arising out of environmental damage; and (5) require more flexibility with respect to the tenant’s use of the commercial space. As a result of these differences, the tenant will generally be concerned with flexibility and safety, while the landlord will be concerned with achieving high rents, maintaining the value of the facility over the long term, and limiting its exposure to the risks inherent in a lease of a biotech lab facility. Among the major clauses in which these concerns manifest themselves are those relating to tenant improvements, those relating to hazardous materials, and those relating to services and utilities.
Continue Reading Out of Form: Special Considerations in Biotech Leasing