ROBERT I. LEVY

Attorney & Counselor at Law - A Professional Corporation

(510) 465-0025

General Information

What Is A Reverse Mortgage And Should I Get One?

General Information

A reverse mortgage is a way for people to borrow against the equity in their home in order to receive a tax-free income stream. Reverse mortgages are only available to those age 62 or older, and can be a great benefit to people who may have a equity in their home, but need cash. The amount that can be borrowed depends on how much the home is worth, how much you owe on it, and your age. A reverse mortgage can only be done on a primary home, not a vacation home.

There are several types of reverse mortgages. One is a Home Equity Conversion mortgage (HECM) product, which is insured by the FHA. There are also lender or privately insured mortgages, as well as uninsured mortgages offered by a lender or a financial institution.

There are some great advantages to a reverse mortgage, as well as drawbacks. Some positive aspects of reverse mortgages are that they will allow you to remain in your home, while giving you money that is not taxable. The money from your reverse mortgage can be payable in a lump sum, in fixed monthly payments for life, or as a line of credit that you can draw on.

You will not make payments on the loan until the end, which is when the borrower dies or leaves the home, or at a specified date in the future. You can also pay off other mortgage payments using a reverse mortgage. Also, your income and your credit score are not considered, because you don’t make payments until the end of the loan.

There are some drawbacks to consider with reverse mortgages as well. They are more complicated than traditional mortgages, which can make it difficult to determine the consequences of certain options. Reverse mortgages are fairly expensive when compared with other loans.

Also, the money that you receive from the reverse mortgage can affect your eligibility for any public assistance programs that are based on need, such as SSI and Medicaid. When you take out a reverse mortgage, you are essentially cashing in the equity in your home, which can affect the amount that your heirs will receive. If you take out a reverse mortgage that is not FHA insured, there’s a possibility that your other assets and income are considered as sources for repayment if the value of your home doesn’t cover the amount of the loan.

Finally, reverse mortgages are often not understood well by professionals. Before choosing an accountant, mortgage broker, or legal professional, you should make sure that they have experience with reverse mortgages.

Before you make a decision on a reverse mortgage, you should consult with a HUD-approved reverse mortgage counselor, who can help you decide whether a reverse mortgage is best for you. Make sure you understand all the fees that will be involved in the mortgage.

There may be another type of loan that will meet your needs and which may be less costly. In addition, your home may not even qualify for a reverse mortgage – that is something you will want to determine before you get too far into the process.

Determine if the mortgage will mean that you cannot qualify for needs-based benefits. Also, talk to your children about the reverse mortgage – they may be willing to help if they know that their inheritance is at risk with the reverse mortgage. You should also consider very carefully what will happen when you die or move to a long-term care facility.

Reverse mortgages have been on the rise in recent years, as more and more older Americans are opting to use the equity in their homes to help maintain their standard of living. However, many people are getting reverse mortgages who don’t really know what they are getting into.

A reverse mortgage should generally only be taken out if there’s a legitimate reason you need the money. If someone is trying to sell you something and recommending that you use a reverse mortgage to pay for it, it’s probably something that you don’t need. You should also be sure that you can afford to start using up your home equity now, because you may need it later to move into a long-term care facility or to pay for health care needs or emergencies.

For some people, reverse mortgages are a huge benefit. Other homeowners have big regrets about getting a reverse mortgage. Whether or not a reverse mortgage is right for you is very dependent on your situation.

If you have questions about reverse mortgages or other real estate law questions, call Robert Levy, Walnut Creek real estate attorney, at 925-708-3306. I can help walk you through the legal implications of a reverse mortgage. Call to learn more.

COMMERCIAL LEASE OBLIGATIONS IN THE COVID-19 ERA

Business Law, General Information, Real Estate Law

The economic affects of the COVID-19 Pandemic are currently immeasurable, and will profoundly impact all of us for quite some time, even in ways that we cannot today appreciate or fully comprehend.  While the Coronavirus Pandemic and Stay in Place Orders remain in affect, many, if at not all of us, will be scurrying to address short and long-term issues prompted by the Pandemic and the lengthy Stay in Place Orders.

Most, if not all businesses have been and will continue to be adversely impacted by both the Pandemic itself, as well as the Stay in Place Orders throughout the State of California.  Many of you are parties to a contract or lease in which either (1) you are financially unable to perform your obligations, partially or entirety, or (2) because of the Stay in Place Order(s), you cannot either perform on the contract/lease, or reap the benefits of the contract or lease.  This article will address the unique affects that the Coronavirus Pandemic and the Stay in Place Orders have on commercial leases, discuss the legal issues, and potential strategies in dealing with landlords and tenants during these stressful times.  While this article is directed toward leases, many of the same principles impact dealing with commercial contracts in general.

Presently, in California, there are state and county Orders, staying or prohibiting evictions for as much as 90 days from the date of the applicable order.  It is fair to say that there is a high probably that those Orders may be further extended.  Many of the California courts are presently closed and are not accepting new filings. Further, for many businesses, the stay at home orders caused by the Coronavirus prevent commercial business from using or even accessing their businesses, which raises the question as to what impact the Stay in Place Orders may have on a commercial tenant’s duty to pay rent while the Stay in Place Orders are effective.  Those tenants that cannot access their business, are unable to produce revenue sufficient to enable them to pay their rent (and other obligations) and are unable to reap the benefits of the lease.

From the landlord’s perspective, until the evictions’ moratoriums expire or are repealed, even if they wanted to remove a tenant for non-payment, they are unable to do so.  And even if they could evict an existing tenant, it might be wise to reconsider evictions as a strategy except in certain narrow circumstances.  If a commercial landlord has a tenant who historically has been a reliable tenant, but is now unable to pay because the Stay in Place Order temporarily prevents the tenant from operating their business, the landlord may not want to evict that tenant, even if they could.

Similarly, without question, after the Stay in Place Orders are lifted, many business tenants are not going to be able to sustain the record high rents that were negotiated prior to COVID-19.  Again, if a landlord has a tenant who historically has been a reliable tenant, but the tenant will require a modest to substantial rent decrease in order to sustain the tenancy and business, the landlord will be wise to consider the concession.  If the tenant left or was evicted, in the current environment, who would the landlord realistically be able to bring in as new tenant, at what price, and how long will the space be empty without any incoming rent, before finding a replacement tenant?  Based on present projections, it could very well be years before a new tenant is found.

There are a variety of legal principles in California which may be a basis for a California tenant to avoid or suspend the duty to pay rent.  I will speak of a few of those principles in a non-exhaustive function, just to make you aware of the various doctrines.  If any of these principles appear of interest to you, you will have to do some research or call me to see if they might apply to your individual circumstances.  All of these doctrines are going to turn on the specific facts in a case.

Force Majeure

Many commercial leases and contracts have force majeure provisions, which state that if there are certain acts of god or possibly government that impact the tenant or landlord’s duty to perform, that may be a basis either to suspend or relieve the duty to perform under the contract/lease.  These provisions are typically self-defining.  They may or may not be applicable to a viral pandemic and/or the Stay in Place Orders.  Even if there is a force majeure provision, and even if it specifically addresses pandemics or viruses, there are still going to be important questions that need to be answered, such as whether there is causation between the virus/pandemic and a tenant’s inability to perform on the contract/lease, and other disputes as to whether a viral pandemic or county or state order to stay at home would trigger the remedies set forth in the force majeure provision.

Frustration of Purpose

Under the doctrine of frustration of purpose, if an unforeseen event frustrates the very purpose of the lease (or contract) for both parties, it may terminate or possibly suspend that parties’ duties to perform under the lease or contract.  There are cases in California that state that if a governmental action prevents a tenant from using the leased premises for its principal purpose, the duty of the tenant may be terminated.

Impossibility

Similarly, under the doctrine of impossibility, if some event causes an impossibility to perform on a contract (including a lease), including governmental intervention or a “superhuman” cause, that “impossibility” may relieve or suspend performance on that contract/lease.  Like the other legal principles discussed above, there are going to be questions such as what constitutes a “superhuman” cause, whether there is a causal relationship between the Pandemic and the impossibility to perform, and similar questions regarding the Stay in Place Orders.

Practical Approaches

The coronavirus creates a truly novel set of circumstances that simply are unprecedented.  The courts will be tackling all of these issues likely for years. I strongly advise all parties who are evaluating a commercial lease or contract, to first try to take a practical, pragmatic approach to resolve the problem, and only if that approach fails should you consider litigation.  While the courts are available as a remedy once they re-open, because we are tackling such a unique set of circumstances and issues, in many cases it is unknown how the courts will decide these cases.  This uncertainty may make a pragmatic resolution in many instances more economically efficient, particularly during the periods where access to the courts is extremely limited.

In light of the Coronavirus Pandemic and its impacts on commerce in the Bay Area, I am placing emphasis of my practice on contractual issues arising from the affects of COVID-19 in the East Bay, California in Oakland, California, in Walnut Creek, California, and throughout the Bay Area. If you have questions, please feel free to contact me to discuss your case or to arrange for a consultation. I can be reached at (510) 465-0025 or (925) 708-3306.

RESOLVING PARTITION ACTIONS AND AVOIDING PARTITION ACTIONS

General Information, Real Estate Law

As I have discussed in the prior article Partition Actions, a partition action is a lawsuit filed by one owner of real estate against a co-owner in the same piece of real estate to force the sale of the property or a potion of the property. In California it is a rare instance when a defendant to a partition action has a legitimate defense to the partition action. That is because in California any owner of property has an absolute right to sell their interest in that property. Consequently, there is typically very little in dispute in a partition action.

With that being the case, in most partition actions, the only participants in the partition action that truly benefit from the partition action are the attorneys. What I mean by this is that because there is typically no valid defense to the partition action, the partition action was unnecessary, and its end result could have been avoided by both owners of the property by agreeing to a sale of the property or the plaintiff’s interest in the property, the same or similar results the parties would have achieved through a partition action.

Lawsuits are expensive and if it is possible to avoid a partition action and resolve the dispute before it escalates to a lawsuit, it is in everybody’s interest to do so because of the costs associated with a partition action. Therefore, prior to filing a partition action, in most instances all possible efforts to try to resolve the dispute without the necessity of filing the partition action should be pursued.

Although it does not always resolve the dispute, it has been my experience that an attorney letter to the uncooperative co-owner, which sets out the law relating to partition, prior to the filing of the partition action, can be an effective method at times to resolve the dispute without the necessity of having to file a partition lawsuit.

Another effective tool is to utilize the mediation process prior to filing the partition action. See my article ADR (ALTERNATIVE DISPUTE RESOLUTION) AND MEDIATION, regarding the mediation process.

As discussed above, there are alternatives to a partition action available to a co-owner in real property who wants to sell their interest in the property and has an unwilling co-owner in that same property. I regularly represent clients in partition actions and in negotiating with co-owners of real property to avoid partition actions in Walnut Creek, Oakland, the East Bay, and throughout the Bay Area, California. If you believe that you would benefit from a consultation regarding a partition action or resolving a dispute with a co-owner of real property, please feel free to contact me to discuss your case or to arrange for a consultation at (510) 465-0025.

WHAT CAN I DO IN CALIFORNIA IF A PLAINTIFF HAS TAKEN MY DEFAULT IN A CIVIL LAWSUIT?

General Information

In California, as a general rule, defendants who have been served with a lawsuit, have 30 days to respond. If the defendant, after being properly served with the summons and complaint, fails to respond within that 30-day period, the plaintiff has a right to obtain a default in the lawsuit against that defendant.

If a defendant’s default has been taken in the lawsuit, it creates big problems for that defendant in the lawsuit. Once the defendant’s default has been taken, he/she cannot defend or even appear in the lawsuit. If this happens, and the defaulted defendant takes no further action, the defaulted defendant’s case becomes an uncontested matter, which means that the plaintiff can present whatever facts the plaintiff chooses to the Court, which evidence cannot be countered by the defaulted defendant. This makes it almost a certainty that the plaintiff will obtain a judgment against the defaulted defendant, and this process typically happens very, very quickly.

Even though a defendant has had their default taken in a lawsuit, however, all may not be lost for the defaulted defendant. If the defendant has a reasonable explanation as to why the default occurred and acted diligently in trying to undo or set aside the default, the Court has the power, authority, and obligation in many instances to set aside the default, enabling the defaulted defendant to appear and defend in the lawsuit.

If your default has been taken, it is very, very important that you act very quickly. Because of the diligence requirement, every day that goes by without doing anything to set aside the default, reduces the likelihood that the Court will set aside your default.

I regularly represent clients in California throughout the Bay Area and in the East Bay, California, to file motions to set aside defaults and then represent the clients in the ongoing lawsuit. If you have questions, or need representation by a California attorney, involving setting aside a default taken against you, please feel free to contact me to arrange for a consultation at (510) 465-0025.

WHAT CAN I DO IF I HAVE BEEN SUED IN A MERITLESS OR BASELESS LAWSUIT?

General Information

A question I hear often enough is “What can I do if I get sued in a lawsuit where the claims against me are meritless or baseless?” This happens because either the facts alleged in the lawsuit against you are untrue or the claims themselves are legally invalid.

Unfortunately, as a general rule, even if someone sues you in a meritless case, you have to defend the lawsuit. There are, however, a number of different ways to deal with a meritless lawsuit to expedite ending the case or revealing to the Court the defects in the case.

First, in a case where the claims are legally invalid, you can attack the Complaint early on using different tools such as demurrers, motions to strike, and motion for judgment on the pleadings, to name a few.

And in those instances where the factual claims are just completely invalid, lies, or mistruths, the best thing to do is to gather evidence to demonstrate that the facts alleged in the lawsuit are untrue and then your attorney can do their best to try to dispose of the case with a dispositive (case-ending) motion such as a motion for summary judgment, or to simply convince the attorney for the plaintiff to just dismiss the case.

Unfortunately, these types of issues come up much more often than they should. I often represent defendant-clients in the Bay Area, California, in an effort to dispose of these types of meritless claims. If you have questions, or need representation by a California litigation attorney involving these types of baseless or meritless claims, please feel free to contact me to arrange for a consultation at (510) 465-0025.

RIGHT TO AN ACCOUNTING IN PARTITION ACTIONS

General Information, Real Estate Law

A partition action is a lawsuit between co-owners of real property, where the plaintiff is attempting to have the Court force the sale of property which they own with another owner or owners. Partition actions are not, however, limited to obtaining the court’s Order to sell the property jointly owned. The Court has other equitable powers in a partition action including the court’s ability to conduct an accounting if there is an imbalance in who received rents on the property or an imbalance in payments made by the co-owners towards maintenance of the property.

What this means is that the Court can require an accounting to be done between the parties before deciding what to do with the proceeds from the sale of the subject property. If the Court determines that one of the owners has received more than his/her share of the rents, the Court can Order that owner to first repay the amounts he/she received in rents in excess of the other co-owners, before they can receive their percentage share from the proceeds from the sale.

Similarly, if one of the owners has paid more than their share of the costs in maintaining the property, as compared to the other owner or owners, the Court has the power to Order that the owner that has paid less than the other owner(s), reimburse the other owner(s) so the amounts that each have spent on maintaining the property are properly proportionate.

To conduct the accounting, the Court would order the property be sold and then after determining the amount of net proceeds available from the sale, would issue an Order on how those proceeds would be distributed after taking into account whether one of the owners needs to be reimbursed for their share of rents that they never received or for their overpayment for property expenses. After those funds are redistributed, the Court would then Order all of the proceeds to be proportionately distributed.

I regularly represent clients in Oakland, California and in the East Bay, California, in partition actions. If you have questions, or need representation by a California real estate attorney involving a partition action or a dispute between co-owners of real property, please feel free to contact me to arrange for a consultation at (510) 465-0025.