The Law Offices of Peter N. Brewer put together an “Investment Property Blog Series.” We hope you find the information in this series to be informative as it covers important infomation surrounding investment properties. If you find yourself needing real estate legal counsel, don’t hesitate to contact our office at (650) 327- 2900 x 10 or on the web at www.BrewerFirm.com. Our team of knowledgeable and seasoned attorneys have extensive experience in litigation, representing their clients in various real estate matters in California.

Click Image for Bio
Henry Chuang, Esq.
(Click Image for Bio)

 

Court Limits Class Action Suits Against Landlords HC

In a recent Second Appellate District ruling, the court made it more difficult for tenants to sue landlords in class action lawsuits.  In. Hendleman v. Los Altos Apartments, the appellate court upheld a lower court’s decision to deny certification of a class by …


Julia M. Wei, Esq.
(Click Image for Bio)

Co-ownership of Real Property – Fighting the Partition Action Can Cost You.

There is a fundamental premise in California law that a co-owner of real property has the right to sever the co-ownership at any time by forcing a sale of the property through partition.  The only exception is if the co-owners have expressly waived the right to partition in a contract, such as…


Simon Offord, Esq.
(Click Image for Bio)

New ADA Requirements for Commercial Properties

As of July 1, 2013, a new lease disclosure requirement added one more responsibility for owners and lessors of commercial property. Civil Code Section 1938, part of the legislation designed to limit unwarranted…

{ 0 comments }

Monira Ulkarim, a tenant in a shopping mall, had a year-long lease with her landlord, Westfield.  In the middle of the tenancy, the landlord served Ulkarim with a notice of termination of the lease.  Ulkarim alleged that the termination was improper and was only done because Westfield had obtained another tenant who was the same market as Ulkarim.  A week after receiving the notice to terminate, Ulkarim filed suit against Westfield and the new tenant for the improper termination of the lease.  A week later, Westfield filed suit to evict Ulkarim.  Two months later, in the unlawful detainer action, a court awarded possession of the property to Westfield.

In response to the suit, Westfield filed a special motion to strike, also known as an Anti-SLAPP (Strategic Lawsuit Against Public Participation) motion.  The SLAPP laws are designed to protect freedom of speech to prevent lawsuits when individuals take certain actions.  In general, one of the protected categories is the filing of a lawsuit.  Prior to this case, courts had held that both the filing of the lawsuit and the giving of notice of termination before filing for an eviction were activities protected by the SLAPP statutes.  Given the precedent, the trial court granted Westfield’s motion stating that the SLAPP statutes were likely a complete defense against Ulkarim’s suit.

THE DECISION:

The California Court of Appeals, Second District, overturned the trial court’s decision and denied the special motion to strike.  In. Ulkarim v. Westfield LLC, the appellate court held that while the act of servicing a notice to terminate and filing a lawsuit are protected activities, it distinguished a suit based on the protected action versus a suit based on the motives behind a protected action.  Here, the Court found that Ulkarim’s suit wasn’t about the service of the notice, but the bad faith reasons behind deciding to terminate the tenancy.

WHY THIS DECISION IS IMPORTANT:

This Court expressly stated that it was choosing not to follow two prior cases where courts had held that a special motion to strike was proper where there had been a notice to terminate issued.  This Court questioned the ruling in both previous cases because both of the cases alleged violations arising from conduct beyond just the service of the notice and the filing of the unlawful detainer suit.  Instead, this Court chose to follow a different line of cases that agreed that while a protected action may have been taken, the underlying decision could still be subject to a suit.

COMMENT:

This case highlights a split in decisions between various appellate courts that will need to be addressed by the California Supreme Court.  The appellate courts have come to decisions that directly contradict each other and only the California Supreme Court can resolve this dispute.  It will be interesting to see what the Supreme Court will decide.

As always, give us a call at (650) 327-2900 if you think you have a real estate matter and need legal representation or visit us on the web at www.BrewerFirm.com.

{ 0 comments }

The recent case of Hoffman v 162 North Wolfe LLC confirmed the statutory requirement that in order to prevail on a fraud claim for suppression of a material fact, the defendant must have a legal duty to disclose the fact to Plaintiff.

The Hoffmans (“Buyer”) purchased a commercial property in Sunnyvale, California.  Prior to their purchase, Buyer complained to one of the owners of the neighboring property (“Neighbor”) that vehicles servicing Neighbor’s property were using Buyer’s property. Neighbor allegedly claimed he would “take care of it.”

After escrow closed, Buyer notice that Neighbor’s vendors and employees were still using Buyer’s property to access Neighbor’s property.  Neighbor thereafter sent a letter to Buyer, claiming Neighbor held a prescriptive easement over Buyer’s property.  The parties thereafter sued one another, with Buyer suing for fraud for failure to disclose and Neighbor suing for a prescriptive easement.  Neighbor thereafter filed a motion for summary judgment, alleging that it had no duty to disclose the existence of the prescriptive easement to Buyer.  The trial court granted the motion.

THE DECISION

The appellate court affirmed the trial court’s decision.  The appellate court noted that failure to disclose constitutes fraud in only four circumstances: “(1) when the defendant is in a fiduciary relationship with the plaintiff, (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff, (3) when the defendant actively conceals a material fact from the plaintiff and (4) when the defendant makes a partial representation, but also suppresses some material facts.”

The court found there could not be any liability for nondisclosure unless there was “some sort of transaction” or “relationship” between Buyer and Neighbor. Buyer made the creative argument that there was a relationship by virtue of their “mutual interest” in the properties.  The court of appeal was not convinced.

The appellate court also affirmed that Buyer failed to establish justifiable reliance.  The court reasoned that since Neighbor continued to use the Buyer’s property for 8 months prior to Buyer closing escrow, despite the allegation that Neighbor would “take care” of the issue, there was no reliance.

WHY THIS DECISION IS IMPORTANT

This decision confirms the long-standing principle that in order to prevail in a failure to disclose lawsuit, the buyer must have either a contractual or fiduciary relationship with the defendant.  Here, since Neighbor was not a party to the transaction, Neighbor could not be found liable for failing to disclose the potential easement to Buyer.  Therefore, before filing suit for failure to disclose, one must first establish whether there was a duty to disclose in the first place.

COMMENT

It would be interesting to find out what, if anything, the seller disclosed to Buyer about this dispute.  It is not surprising that the Court found no duty as to Neighbor, but one must wonder if the seller was aware of these issues.  The case makes no mention of what the seller did or did not disclose.

That being said, one would imagine that Buyer would have had an uphill battle against the seller as well, as Buyer was clearly on notice of the issue but decided to close escrow anyway.

The Law Offices of Peter N. Brewer litigate failure to disclose cases regularly, and are here to help.  If you have any questions about this issue, or any real estate legal issues, please contact us at (650) 327-2900, or on the web at www.brewerfirm.com.

{ 0 comments }

Realtor Liability Blog Series


Camille Rogers

by Camille Rogers on September 25, 2014

in Litigation, Real Estate Law

Law Offices of Peter N. Brewer put together a “Realtor Liability Blog Series.” We hope you find the information in this series to be informative as it covers a few common liability pitfalls for Realtors®. If you find yourself needing real estate legal counsel, don’t hesitate to contact our office at (650) 327- 2900 x 10 or on the web at www.BrewerFirm.com. Our team of knowledgeable and seasoned attorneys have extensive experience in litigation, representing their clients in various real estate matters in California.

Simon Offord, Esq.
(Click Image for Bio)

1) Court Again Punishes Dual Agents

We have previously stressed to real estate professionals, in our blog articles and in many of our speaking engagements, that dual agency is a very risky proposition for real estate brokers. The courts have consistently gone out of their way to find liability against…

2) Potential Pitfalls for Real Estate Agents Assisting in Home Improvement Projects

I was recently asked to speak at one of the local real estate associations about restrictions on real estate agents when assisting clients with repairs to property or preparing the property for sale.  It is a very interesting topic because it is a very common issue for real estate agents and has some potentially dangerous consequences.  Unfortunately,

Julia M. Wei, Esq.
(Click Image for Bio)

1) Real Estate Case Update: Dual Agents – Longer Liability Exposure

Bad Facts for the Licensee:

The buyers bought a house with substantial water damage.  The problem? The sellers had painted over the damaged areas with dark brown paint.  The bigger problem? The buyer’s agent was present and taking photos of the paint job.  The biggest problem? Nobody disclosed the water damage to the buyers and the agent did not give…

 

{ 0 comments }

For many people, their first experience with becoming a landlord is a bit of an accident.  They buy a new house and decide to lease out their former place until the housing market improves, or they may be moving for work and decide not to sell their home until things are more certain.  Maybe the homeowner buys a duplex and decides to occupy one unit and lease out the remaining one.  Regardless, more is involved in becoming a landlord than simply buying a pre-printed form lease online.  For example:

  1. Does your city have a rent ordinance?
  2. Do you know what disclosures to make?
  3. Have you read the law regarding security deposits?

It isn’t just cities like San Francisco, Oakland and Berkeley which have city ordinances regarding rents.  The City of Palo Alto has a rent stabilization ordinance that requires the landlord to register the rental units, provide additional disclosures to the tenant, and a mandatory one year minimum rental term.  The City of San Jose also regulates rental increases for apartments and mobilehomes, capping annual increases.

Just like a seller has state mandated disclosures to make to buyers, so too are landlords required to make certain disclosures to tenants.  For properties built before 1978, landlords must provide a lead-based paint disclosure to prospective tenants and a copy of the pamphlet “Protect Your Family From Lead in the Home.”  Other mandatory disclosures to prospective tenants include situations such as when the owner has applied for a demolition permit or if the property has been found to have methamphetamine contamination.

Security deposits can also be tricky because sometimes landlords request a “pet deposit” thinking it is a separate or additional deposit, however, there is a maximum deposit amount allowed under state law for residential leases regardless of what the landlord calls it.

  • If the security deposit is for a residential property without furniture, the security deposit may equal 2 times the rent.
  • If the residence is furnished, the landlord may charge up to 3 times the rent.

Leasing out a property is a new business venture and as such, has its own set of laws and regulations which can present hurdles to the landlord.  Gaining knowledge of the state and local laws governing leasing can assist the landlord before conflicts arise and litigation ensues.

The Law Offices of Peter N. Brewer has extensive experience in handling leasing disputes, both residential and commercial.  If you need guidance in the pre-leasing negotiations or after a dispute has arisen, we are here to help and can be reached at 650.327.2900 or on the web at www.BrewerFirm.com.

{ 0 comments }

Joseph Erlach rented a bedroom and bathroom in a house located in Monterey.  He entered into an agreement with the original owner, Mary Schwann, to rent the property for seven months with the lease ending in October.  In the middle of October, the parties agreed to extend the lease until the end of November.  However, at the end of October, Schwann turned off the utilities at the property because some of the other tenants were not paying rent.

Several weeks after turning off the utilities, the property was red-tagged because of the lack of utilities and Erlach was prohibited from occupying the property.  Four days after the property was red-tagged, the property was foreclosed by Defendant Sierra Asset Servicing, LLC.

After the foreclosure sale, Erlach talked to Sierra and they agreed to extend his lease until the end of December.  In November, Sierra began removing flooring, carpeting, and fixtures from the property over Erlach’s objection.  In early December, Sierra notified Erlach that the property was ready for him to live in, even though there were still substantial habitability problems and the red-tag had never been removed.  Because of these issues, Erlach sued Sierra.

In Erlach’s suit, he claimed that Sierra had constructively evicted him and had violated several habitability statutes.  In response to the suit, Sierra filed a demurrer alleging that there was no valid lease as the lease was with Schwann.  Further, if there had been a lease with Sierra, the lease would have been void because the property had been red-tagged and Sierra had begun renovations.  By making the renovations, Sierra had “destroyed” the property and therefore terminated the lease.  The court agreed with Sierra and granted the demurrer without leave to amend.

THE DECISION:

The Sixth Appellate District overturned the trial court’s judgment and overruled the demurrer.  In Erlach v. Sierra Asset Servicing, LLC, the appellate court held that a red-tag does not automatically terminate a lease.  The court noted that the relevant Health and Safety Codes all refer to the rights and responsibilities of tenants in the present tense and do not refer to them as “former” tenants.  Given that, the court found that the legislature must have intended for the lease to continue beyond the issuance of a red-tag.  Erlach had a valid lease.

Further, since he had a valid lease, under California law it continued beyond the foreclosure sale.  Since Erlach alleged that the property was uninhabitable, he had made sufficient allegations to support claims for violations of the warranty of habitability and related claims.

WHY THIS DECISION IS IMPORTANT:

This case clarifies that a tenant with a valid lease remains a tenant even after a property has been red-tagged.  Also, it would be nonsensical to allow landlords to just let houses get red tagged to get rid of unwanted tenants.  While the statute was clear that a tenant has certain rights against a landlord after a property is red-tagged, this decision helps clarify that a tenant may make claims relating to the breach of contract and other tort causes of action.

COMMENT:

This appellate decision seemed like the obvious conclusion after reading the rent ordinances.  The trial court’s decision led to a rather strange result – that a tenant who rented a red-tagged property had fewer protections than if a property never was red-tagged.  Further, the appellate court went out of its way to highlight that just because a contract may have been for an illegal purpose, it does not mean that it is necessarily unenforceable.

{ 2 comments }

The recent case of Peake v. Underwood will hopefully deter frivolous claims against real estate agents.

Peake purchased a home from Underwood.  Long after the sale closed, Peake filed suit against Underwood and his agent, claiming Underwood and his agent failed to disclose defective subflooring.   During the course of the litigation, Peaked admitted that, during escrow, Underwood’s agent provided Peake with photographs and reports disclosing the defective subflooring.  In light of these disclosures the agent contended he had satisfied his duty to the buyer.

After several months of litigation the agent filed a CCP 128.7 Sanctions Motion, seeking sanctions and dismissal of the claims against the agent.  The Motion contended that the Plaintiff’s claim was frivolous.  The agent argued that since Peake was on ACTUAL notice of the subflooring issues, the agent had satisfied his duty to the buyer (this was especially true as the agent did not represent the buyer).  The trial court agreed with the agent and dismissed the case.  The Court also ordered Peake pay sanctions in the amount of $60,000.00.  The appellate court affirmed.

The appellate court emphasized that it was not suggesting that sanctions should be routinely issued, but that in this instance they were appropriate.  The court reasoned that the ADMITTED facts in evidence unequivocally established that Peake was aware of the subflooring issues before closing escrow.  As a result Peake, or his counsel, could not have had an honest or reasonable belief in the validity of the claim.

This is a welcome relief for real estate agents and their defense attorneys.  Courts tend to be reluctant to dismiss claims outright, no matter how baseless they may seem.  However, this court was not afraid to make the tough decision to dismiss the case and sanction Plaintiff for continuing to advance an obviously baseless claim.  In this instance, the Court found that Peake had notice of the issues complained of but apparently had buyer’s remorse.  In my opinion, the court rightfully dismissed the baseless claim.

Hopefully future courts will follow in this court’s footsteps when approached with similar requests.  The CCP 128.7 motion is an underutilized litigation tool.  However, this case and our own experience have shown that it can be very effective.  Our office understands the benefit of this lesser-known motion and has had success in the past getting cases dismissed this way.

The Law Offices of Peter N. Brewer has extensive experience dealing with failure to disclose cases and are here to help.  If you have any questions about this issue, or any real estate legal issue, please contact us at (650) 327-2900, or on the web at www.BrewerFirm.com.

{ 0 comments }

Real Estate Case Update Blog Series

by Camille Rogers August 4, 2014 Legal Update

The attorneys at the Law Offices of Peter N. Brewer put together a “Real Estate Case Update Blog Series.” We hope that the information you find here will be relevant for you as it covers a wide spectrum of common real estate related issues. Our knowledgeable and seasoned attorneys also have extensive experience in litigation, [...]

Read the full article →

Are Mortgage Loan Officers Entitled to Overtime Pay?

by Julia Wei July 30, 2014 Broker/Realtor

The answer is … maybe.  At one point the industry had some certainty on this issue when, in 2006, the Department of Labor (DOL) issued an opinion letter on September 8, of that year stating that loan officers qualify as exempt from overtime pay under the administrative exemption.  At that point the answer was clear [...]

Read the full article →

Court Finds that Notices of Rent Increase Are Not Necessary for Resident Property Managers

by Henry Chuang July 21, 2014 Landlord/Tenant Disputes

Ceceilia Drumea (“Drumea”) was the resident property manager at an apartment building in Los Angeles for 18 years.  Prior to serving as the property manager, she was a tenant at the property for one year.  During that time, she was paying $850 per month in rent.  However, as the property manager, she paid no rent [...]

Read the full article →