Using Power of Attorney in a Real Estate Transaction

A power of attorney is a legal document that grants a person the legal authority to sign documents and enter into transactions on someone else’s behalf.  If you give a trusted professional, friend, or family member power of attorney, their signature on your behalf is legally effective to the same extent as if you had signed.

There are several reasons why you may give someone power of attorney, such as anticipation of your own incapacity or extended travel. In the actual power of attorney document, you can limit the extent of an individual’s powers to sign agreements on your behalf. For example, you may give someone power to only handle medical or only financial matters.

Similarly, some power of attorneys are granted specifically for real estate transactions only.  In fact there are often practical considerations that weigh in favor of considering a power of attorney in a real estate transaction. If you are in the middle of a real estate purchase or sale, it can be hard to predict a close of escrow date, or difficult to coordinate a close date with work or leisure travel schedules.  By granting your attorney or other trusted professional power of attorney in a real estate transaction, he or she can sign all the closing documents while you maintain your travel plans.

Another reason to consider a power of attorney for real estate transactions is to protect your interests in the event of your incapacity. Planning for incapacity by creating a power of attorney can make sure your real estate is taken care of as you intend by allowing someone else to step in and take care of your property for you.

Always remember that when an individual uses their power or attorney to sign on your behalf, they are binding you to all agreements just as if you had signed them yourself. A power of attorney does not absolve you of any future responsibilities or obligations associated with a real estate transaction.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

What is a Change Order in a Construction Contract?

“No prudent individual would make a contract for the construction of a building of any magnitude without incorporating a provision somewhere making specific and definite arrangements concerning extra work.” City Street Improvement Company v. Kroh, 158 Cal. 308, 321 (1910).

Previously on our blog, we discussed how changes to construction contracts are often unavoidable, but that there are limitations to how much a construction contract can change. In this article, we will discuss the proper tool for acceptable change requests: the “change order.”

A change order is essentially an amendment to a construction contract. It represents the mutual consensus between the parties on a change to the schedule, price, work, or other contract term.  Like any other contract amendment, a change order has to meet the requirements of valid contract formation (offer, acceptance, reasonable identification of changed terms, exchange of consideration, and be signed by both parties).

A change order should always be accompanied by documentation, such as original contract documents, emails discussing the change, revised plans and specifications, meeting minutes, and any other reports that might be related to the change order.  Change orders and associated documents should be kept on file with all other project records.  Moreover, since the statute of limitations for most construction claims is ten years, every contract, change order, and supporting document for a change order should be kept at least that long. Finally, it is especially important to determine and document the cost of a change order.

If you have questions about construction contract claims, consult an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

What is Incorporation by Reference in a Contract?

Previously on our blog, we discussed how more complex contracts allude to other existing contracts and documents. Incorporation by reference is the method of making these alluded-to documents part of a contract, and is often used to save space when parties want to include or reference another legal document or contract into a new contract. To properly incorporate another document by reference, it has to be adequately described in a new contract, and it is good practice also to attach a copy of the referenced document to the new contract to which it is being incorporated.

The concept of incorporation by reference is similar to that of flow-down contract clauses in construction contracts.  For example, a flow-down clause is used to bind subcontractors to the general contractor in the same fashion as the general contractor is bound under its contract with the property owner. In the same vein, subcontracts usually incorporate general contracts by reference.

When drafting an incorporation by reference clause, parties have the option to incorporate certain provisions of an existing legal document, or the entire document. If the parties make it clear that only certain provisions are to be incorporated, the incorporation by reference clause should be explicitly clear in its limited scope and purpose. However, if the incorporation clause is very general, this could lead to potential disputes about which provisions to a contract were incorporated. To avoid any confusion, parties should specify exactly which terms are being incorporated.

Any time existing legal documents are incorporated by reference, there is a potential for conflicting terms. It is therefore important that all provisions are reviewed for conflicts, and a contract provision dictating how conflicting terms will be resolved should also be included.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

Obtaining a Variance to a Zoning Restriction

In order to build a development, home, or addition that does not comply with local zoning ordinances or restrictions, a property owner or developer must obtain a variance. The exact process of obtaining a variance will vary based on applicable city or county laws, and can vary depending on the scope of the project and the type of variance sought.

For example, there could be different processes or requirements for “residential use” variances versus “residential area” variances.  Generally speaking, there are two types of variances: an “area variance” and a “use variance.” An area variance can be requested by a property owner or developer who is seeking an exception to a regulation dealing with land configuration or physical structure improvements.  A use variance, on the other hand, seeks an exception to the type of use of land permitted by a zoning ordinance or restriction.

Similarly, the process or requirements for residential variances differ as compared to variances for agricultural, industrial, recreational, or commercial property.  Once you have determined the type of variance you will need, the next step will be to contact the local city or county government office that handles development in the area where the property is located.  The local government office will usually have an application that must be completed, and typically require copies of relevant site plans, floor plans, and elevation drawings, as well as the payment of any fees associated with application submission.  Once complete, a city board will review your application and may require public hearings on the application.  If the variance request is denied, there is generally an appeals process.

If you have questions about obtaining a variance, consult an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

Complying with the Uniform Electronic Transactions Act

Every contract in California (and across the country) must meet certain legal requirements to be considered “valid,” such as the manifestation of assent by both parties to be bound by the terms of the transaction.  For centuries parties have been “signing on the dotted line” to evidence their assent to the terms of the agreement.

In an increasingly digital economy many contracts are being consummated electronically.  The Uniform Electronic Transactions Act (the “UETA”) (found at Civil Code § 1633.1 et seq.) responds to the proliferation of contracting and business conducted by electronic means in California.  By following the guidelines of the statute the parties can complete all parts of the transaction entirely by electronic means, including through the transmission of electronic signatures.

Recently, the California Court of Appeal ruled on a case that dealt with the UETA’s provisions governing electronic signatures.  In J.B.B. Investment Partners, Ltd. v. Fair, ___ Cal.App.4th ___ (December 30, 2014) 2014 WL 7421609, the issue that the court addressed was whether the defendant’s “printed name at the end of his e-mail was enforceable under both UETA and, if not, by the law of contract.”

Interestingly, the defendant in J.B.B. Investment Partners, Ltd. at first appeared to agree via email to the settlement agreement proposed by the plaintiffs.  However, once the plaintiffs filed suit to enforce the settlement, the defendant said that there had been no agreement under the UETA because he did not intend for his printed name in his emails to be an “electronic signature.”  The trial court disagreed, ruled to enforce the settlement agreement, and the defendant appealed.

The appellate court focused in on the definitional requirement for a signature under the UETA (Civil Code § 1633.2(h)), which requires that an electronic signature have the “intent to sign the electronic record.”   The court further found that another relevant factor was the apparent lack of agreement to conduct the settlement by electronic means, while acknowledging that the statute specifically does not require an express agreement, allowing the intent to be gleaned from “the context and surrounding circumstances, including the parties’ conduct.”

In the this case, somewhat surprisingly, the appellate court found that despite the defendant’s repeated emails saying “I agree,” the plaintiff’s failed to meet their burden of showing that the parties had agreed to consummate the transaction via electronic means.  While the court acknowledged that simple “names typed at the end of emails can be electronic signatures,” the issue here was that the agreement that plaintiffs were attempting to bind defendant did not appear to be a final agreement (here, meaning that additional terms were added later).  The court also found that later versions of the settlement agreement contained specific electronic signature provisions not found in the version that the defendant said he agreed to (such provisions requiring the use of commercially available electronic signature software), and that there was no agreement between the parties that a simple printed name at the bottom of an email would constitute a signature.  These same facts also led the court to conclude that there was no agreement under “the law of contract.”

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law needs.

Examples of California Unfair Competition Lawsuits

Previously on the blog, we discussed what constitutes unfair competition in California. In this article, we will share a few examples of recent unfair competition lawsuits involving California businesses.

As a refresher, California Business and Professions Code Section 17200 prohibits “unfair competition,” which includes any unlawful, unfair or fraudulent business act or practice. It also includes any unfair, deceptive, untrue or misleading advertising, as well as any other act prohibited by the Business and Professions Code. A  violation under this code section is often one of the many allegations making up a lawsuit accusing a business of some sort of fraud or deceptive practice prohibited by a different state rule or statute leading to wide variation in unfair competition lawsuits in California.

Recent unfair competition lawsuits include:

  • The district attorney offices for the counties of Los Angeles and San Francisco claimed that Uber violated California’s unfair competition laws by misguiding and overcharging consumers;
  • The district attorney offices for the counties of Yolo, Sacramento, and San Joaquin  filed an unfair competition lawsuit against chocolate Easter bunny candy-maker R.M. Palmer Co., alleging that the false-bottomed boxes used to sell the product “Too Tall Bunny” amount to deceptive packaging; and
  • In a case that could impact millions of Americans, two private individuals have brought an unfair competition lawsuits against Apple, alleging that the company falsely advertised the storage capacity available in its iPhones, iPads and iPods, because the large data footprint of the iOS 8 operating software eats into the advertised capacity of Apple’s mobile devices, making a fraction of the advertised capacity of the devices available to users.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

Selling Partnership Shares

Selling partnership shares often involves various considerations.  In most partnerships, partners can choose to sell their share of the partnership to the partnership or a new potential partner as part of the resolution of a partnership dispute or simply because the individual or entity no longer desires to be part of the partnership.

Selling partnership shares will be governed by a partnership agreement, or if there is no partnership agreement, state law will govern sale of a partnership share. It is especially important to check the provisions of a partnership agreement before selling a partnership share, as there might be restrictions on share sales.  For example, a “right of first offer” provision may subject the selling partner to financial penalties or a lawsuit if there is no initial offer to existing partners before offering to sell to outsiders. Also, a partnership agreement might have certain notice requirements that a partner must follow when considering selling his, her or its share.

It is also important to consider what will and will not change as a result of the  sale of a partnership interest.  For example, according to California Corporations Code Section 16201, “partnership is an entity distinct from its partners.” Therefore, if a partner sells their share, that change alone will not dissolve a partnership or create a new one. The original partnership entity will continue to exist despite such changes.  Similarly, section 16502 of California’s Corporation Code provides that a partner’s only transferable interest is “the partner’s share of the profits and losses of the partnership and the partner’s right to receive distributions.” This means that when a partner is selling partnership shares, they are really only transferring their financial interest in the partnership. All other interests are separate, and must be dealt with separately.

If the partner had a managing role in the partnership, the new partners should update the partnership agreement to make sure the new ownership and responsibilities are memorialized in writing.

If you have any questions about selling partnership shares, consult with an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

What is a Cardinal Change in a Construction Contract?

Changes to a construction contract are  a part of doing business in most cases. Therefore, parties to a construction contract almost always have the right to make change orders. However, there are often limitations to the changes that can be requested and made. Parties to a construction contract should be familiar with what a permitted change is, and what an impermissible “cardinal change” is.

Construction contracts should contain what is often called a “contract changes” provision where the parties outline the types of permitted contract changes. These changes are usually limited by the general scope of work provided for in the construction contract.

A cardinal change, on the other hand, is a change that falls outside of the permitted changes detailed in the contract.  It is a deviation so far outside the scope of work that it frustrates the very purpose of the contract and invalidates the terms of the original contract. If a property owner makes a cardinal change order, a contractor could have a basis for damages in a construction contract.

For example, imagine a construction contract in which an owner enters into an agreement with a contractor for the construction of a pool.  The original plans for  call for a snow cone stand next to the pool. If the owner requests that the pool be removed from the contract, this would violate the purpose of the original contract. This cardinal change order would frustrate the purpose of the contract so much that it could invalidate the contract.

On the other hand, if the owner requests that the construction of the pool continues, only without the snow cone stand, the original purpose in constructing a pool would not be violated, and that would be a permissible change. Here, if the contractor refuses to continue work because he is upset the snow cone stand is being taken out of the plans, the contractor could be held liable for breach of contract.  Whether or not the snow cone stand change order would constitute a cardinal change would depend on the unique circumstances surrounding the agreement between the parties.

If you have questions about construction contract claims, consult an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, real estate, construction and property claims. Contact us at (310) 277-7747 to see how we can help you with your business, real estate or construction law needs.

 

What is a Flow-Down Clause in a Contract?

A flow-down clause (also referred to as a pass-through or conduit clause) is usually found in a construction contract and provides that subcontractors will be bound to the general contractor in the same fashion as the general contractor is bound under its contract with the property owner.

Flow-down provisions are important to protect parties to a construction contract by spelling out that a subcontractor’s obligations to the general contractor are identical to the ones a contractor has to the property owner. The specific obligations that “flow-down” generally involve the scope of work to be performed, and often also the timelines in which the work will be completed.

Flow-down clauses may also include terms about dispute resolution and payment. For example, a flow-down payment clause may state that a subcontractor will be paid by the general contractor when the general contractor is paid by the owner. Likewise, if an owner has agreed to resolve disputes with the general contractor through arbitration, a subcontractor may be required to resolve disputes through arbitration as well.

It is in an owner’s interest to have a subcontractor bound by the same obligations and requirements as the general contractor.  Subcontractors, on the other hand, commonly dispute or try to limit the scope of responsibility attributed to them through a flow-down clause, particularly when the subcontractor has limited involvement in a project. It is therefore especially important for contractors and subcontractors to look for a flow-down clause, and understand the full scope of the agreement they are signing. If a flow-down clause is particularly broad and a subcontractor cannot determine which contractual obligations will actually flow down, the clause may be found unenforceable.

If you have any questions about contract terms, consult with an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with your real estate, business, or contract law needs.

Dissolving a Joint Venture

There are many reasons why parties may end up dissolving a joint venture. Their efforts may have been unsuccessful, their project may me complete, there could be clashing management styles, or there could simply be a need for a new characterization of the businesses.

If the parties to the joint venture have a written agreement governing the relationship, that agreement will likely contain the provisions that will determine the process for dissolution. In the absence of an agreement, California law will dictate how the relationship will be terminated.

If the joint venture was characterized as a limited liability company or corporation, the parties will need to follow the formal procedures to dissolve and cancel the existence of the applicable entity. In the absence of this separate legal entity characterization, the parties to the joint venture will need to proceed as if they were dissolving a general partnership. One of the most important steps will be to notify third parties, as well as relevant licensing and taxing authorities. If third parties such as vendors are not notified of the dissolution, the parties to the joint venture could be responsible for any debts that are accrued by the third party under the principles of agency.

Upon dissolving a joint venture, the parties will split the assets and debts in accordance to their agreement. In the absence of an agreement, the parties will get back what assets they contributed.  If, however, the parties do not retake possession of certain assets, such assets should be sold.

If you have questions about dissolving a joint venture, consult with an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with your real estate, business, or contract law needs.