Enforcing Restrictive Land Covenants

Land Covenant AttorneysRestrictive covenants are contract clauses that  limit a contracting party’s future conduct. A restrictive land covenant prevents certain use of the land. In this article, we will discuss restrictive land covenants, and how to enforce them in California.

In general, restrictive land covenants serve the purpose of enforcing neighborhood presentation standards. These are your restrictive easements, Covenants, Conditions, and Restrictions (“CC&Rs”), and other Home Owner’s Association rules. They can range from mandating where a home owner puts his trash cans to the permissible colors of a home’s façade. Such covenants are typically written into a deed, or at least referenced in the deed and recorded. Nahrstedt v. Lakeside Village, 8 Cal.4th 361 (1994). Restrictive land covenants are usually created by developers of a planned community, and enforced by community representatives or land owners.

Restrictive covenants “run with the land.” This means that they are tied to the property (land), and not to a  specific owner(s). In other words, the limitations of a restrictive land covenant are legally binding for anybody who subsequently buys the property.

A restrictive land covenant is enforceable as long it was recorded, it is being enforced in a fair and non-discriminatory manner, and there is still an individual or group benefiting from it. It can be enforced by any individual land owner who benefits from the restriction, or the collective homeowner’s association if there is one.  (Cal. Civ. Code §5975).

For the most part, homeowner’s associations are the principal enforcers of restrictive land covenants. California’s Civil Code authorizes these types of associations to initiate legal action, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings on behalf of the association membership (Cal. Civ. Code §5980). An association can take action to enforce CC&Rs, resolve issues concerning damage to common areas, and similar land-use matters.

Steps for enforcing a restrictive land covenant will vary based on the planned community. For example, one particular homeowner’s association may have outlined provisions for commencement of an enforcement action. In the absence of a homeowner’s association, the land owner seeking to enforce a restrictive land covenant can sue. A plaintiff in an action seeking to enforce CC&Rs can petition the court for an injunction against the defendant, which would require the defendant to stop non-compliance and seek money damages.

If you have any questions about restrictive covenants, 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.

LLC Creation Checklist for California

CaliforniaPreviously on the blog, we provided some general information about the formation requirements for various business entities. One of the most commonly utilized entities in California is the limited liability company (LLC). Generally speaking, the steps for forming an LLC in California include the following:

  • Pick a Name for the LLC. Selection of the name is limited by the California Revised Uniform Limited Liability Company Act (RULLCA). See California Corporations Code Section 17701.08. The name must contain the words “limited liability company,” or some permitted abbreviation of those words, i.e., “LLC” or “L.L.C.”

  • File Articles of Organization (Secretary of State Form LLC-1) with the California Secretary of State’s office and pay the associated filing fee. The type of management that is desired, i.e., manager-managed by one or more managers or member managed, is indicated by checking a box on the Articles of Organization, and should be carefully considered.

  • Designate an Agent for service of process. The agent shall be an individual that is a resident of the State of California, such as the company’s lawyer if a resident, or a corporate agent that complies under California law (Corporations Code Sections 17701.13(c), 1505) and whose capacity to act as an agent has not been terminated.

  • File a Statement of Information (Secretary of State Form LLC-12) with the California Secretary of State’s office within 90 days after filing the original Articles of Organization (biennially after that) and pay the associated filing fee.

Although some states have publication requirements for a newly formed LLC, California does not. California also does not legally require a newly formed LLC to prepare and file an LLC Operating Agreement. However, it is highly advisable to have an LLC Operating Agreement prepared (and negotiated if there is more than one member) before making any filings with the Secretary of State.

If you have any questions about forming a limited liability company, 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 business law needs.

Mergers and Acquisitions News: Staples Plans Merger with Office Depot

HandsPreviously on our blog, we discussed the differences between mergers and acquisitions, as well as the recent increase in merger and acquisition activity. There has been increased activity across different industries to adapt to new market dynamics linked to changes in technology. The newest major merger announcement has come from Staples, the office supply giant. In order to stay competitive with goliath’s like Amazon and Wal-Mart, Staples has announced a plan to purchase Office Depot for $6.3 billion.

Staples and Office Depot have tried to consolidate once before in 1996, but the Federal Trade Commission (FTC) stopped the merger over concerns that it would decrease competition and increase consumer prices.  A lot has changed in office supply market dynamics since then, which is precisely what the two companies will be arguing. Specifically, Staples and Office Depot are taking the position that online competitors and bigger store chains have increased competition and reduced prices for consumers, so a merger will also help them stay competitive. To back this up, Office Depot can show that between 2007 and 2013 its annual revenues fell by 36%.

In 2013, the FTC approved a merger between OfficeMax and Office Depot, which could bode well for a merger between Staples and Office Depot. That said, a merger between Staples and Office Depot would be almost twice as big. The merger between Office Depot and OfficeMax created a new company with combined revenue of $18 billion and over 2,500 stores.  A merger between Staples and Office Depot would create a company with combined revenue of $34 billion and approximately 4,400 stores.

The proposed merger is subject to antitrust regulatory approval, Office Depot shareholders’ approval, and other closing conditions. The deal is predicted to close by the end of 2015, but if it fails Staples will have to pay Office Depot a $250 million termination fee.

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, contract, and real property claims. Contact us at (310) 277-7747 to see how we can help you.

U.S. Supreme Court Will Hear Takings Clause Case from California

wine-countryIn January 2015, the United States Supreme Court agreed to hear a property case that originated in California dealing with whether the Fifth Amendment of the United States Constitution protects the seizure of personal property as well as real property.

The case, Horne v. U.S. Department of Agriculture, has already been before the United States Supreme Court before. In 2002 and 2003, the U.S. Department of Agriculture (the “USDA”) forced the Horne family to take almost half of its raisin crop off the market to help keep rising prices down. The Horne family sued, arguing that the USDA’s demand amounted to a taking of personal property for which the Horne family was entitled to compensation, just like a taking of real property would. When the case first came before the United States Supreme Court, the Court agreed to hear the case, but its decision did not address whether the government’s raisin marketing order constituted a “taking” of private property.  Instead the Court ruled on a procedural matter, holding that the San Francisco-based 9th U.S. Circuit Court of Appeals had jurisdiction to consider the takings claim, reversing the 9th Circuit’s finding that the claim had to be heard by the Court of Federal Claims.

The case went back to the 9th Circuit Court of Appeals, which ruled that there was no taking because the Takings Clause rule applies only to real property. The Horne family appealed, and the case will go before the United States Supreme Court once again. Horne v. U.S. Department of Agriculture, 750 F. 3d 1128 (2014).

The Takings Clause prohibits the Federal government from taking real property for public use without just compensation. The Supreme Court’s decision in this case can have major implications for business owners and farmers subject to government market orders.  However, the expansion of 5th Amendment protections to personal property could also set the stage for more federal lawsuits and claims that certain government regulations amount to takings of personal property.

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, contract, and real property claims. Contact us at (310) 277-7747 to see how we can help you.

Non-Disclosure Agreements: Issues and Variations

Non-disclosure agreements (NDA) can be either a stand-alone contract or a provision of a contract within a larger contractual agreement or transaction or a stand-alone contract that typically requires an individual or entity to (1) refrain from disclosing information, (2) protect the confidentiality of information received, and only (3)  limit the use information for a specified purpose. Businesses use NDAs as an asset protection tool. This is especially true for businesses working with technology and other intellectual property. Previously on the blog we discussed trade secrets, which are some type of information a business wants to keep confidential. One way to ensure the protection of a trade secret is by having parties with knowledge of the trade secret sign an NDA.

It is always best to have a NDA signed before confidential information is disclosed, rather than after. However, it is possible to draft non-disclosure agreements to protect information that was disclosed before the parties actually sign the agreement.

Non-disclosure agreements can be either mutually (reciprocal) or one-way (unilateral). A mutual or reciprocal NDA requires both parties, to keep certain information confidential usually an employer and employee, to keep certain information confidential. This type of NDA is used when both sides are revealing sensitive or proprietary information, such as a manufacturer revealing a new product design to a prototype design company who will use their proprietary methods to create a prototype.  A mutual NDA requires each party to protect the confidential information to the other party.

On the other hand, a one-way or unilateral (one-way) NDA only binds one party, usually such as an employee. This type of NDA is used when only one person party is disclosing sensitive information.

The length term of of non-disclosure agreements are typically specified in the agreement, and will depend on the type of information being protected. If the confidential information has a limited shelf life, it may be sufficient to limit the duration of the confidentiality obligation to a certain number of years or the duration of the parties’ association. If the confidential information may remain confidential indefinitely, then the agreement should also continue indefinitely, or at least as long as the confidential information remains confidential.

If you have questions about non-disclosure agreements, 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, contract, and real property claims. Contact us at (310) 277-7747 to see how we can help you.

Liability in an ADA Compliant Commercial Lease

The Americans with Disabilities Act (ADA) requires anyone who owns, leases, or operates a place of public accommodation to make sure that the place or premises complies with ADA guidelines. This means that when drafting an ADA compliant commercial lease, a property owner must address how the parties to the agreement will comply with the ADA, and who will absorb the cost of a potential ADA lawsuit.

Title III of the ADA requires “barrier removal” for existing structures and prevents modifications or new construction that can impede access by the disabled persons. Barrier removal imposes a range of compliance obligations that may include installing ramps, creating designated and accessible disabled  parking spaces for the disabled, widening doors, installing special door hardware, and removing certain types of carpeting.

Determining and memorializing which parties are responsible for meeting ADA requirements is important. At least one individual will have the burden of paying the costs associated with ADA compliance. Generally, the landlord will be responsible for meeting any compliance requirements that deal with the structure of the building, while . A tenant will usually be responsible for issues that are solely within the tenant’’s control. To avoid any confusion about who has what responsibilities, there should be a provision clear language in the commercial lease spelling out the landlord’s and tenant’s respective responsibilities.

NoteablyNotably, both a landlord and tenant can be held liable to a third party plaintiff for violations of the ADA. In Botosan v. Paul McNally Realty, 216 F. 3d 827 (2000), a court held that despite the tenant’s contractual responsibility to ensure ADA compliance, either a landlord or tenant can be liable to a third party.

At the very least, a commercial lease should include language representations and warranties stating whether the property complies with the ADA, provisions setting forth who will be responsible for any required retrofitting, how future liability will be allocated, and how the potential cost of compliance costs will be allocated.

If you have any questions about ADA compliant commercial lease terms, 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, commercial and real property claims. Contact us at (310) 277-7747 to see how we can help you.

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.