ROBERT I. LEVY

Attorney & Counselor at Law - A Professional Corporation

(510) 465-0025

Real Estate and Business FAQs

I Own A Rental Home in Oakland California – What Disclosures Am I Required To Make To Prospective Tenants?

Foreclosure

Owning a rental home in California can be a profitable venture. However, there are a lot of requirements that landlords in California must meet, many of which aren’t required of landlords in other states. It’s critical that your lease provide these mandatory disclosures.

First, if the lease was signed after 2012, and you do not wish for your tenant to smoke on the premises, your lease must include a statement describing the areas where smoking is prohibited or limited.

For example, if your tenants are only allowed to smoke outside, you would include a notice that smoking inside is prohibited.

You must also notify prospective tenants about the registered sexual offender database. The following statement must be included in your lease: “ Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meganslaw.ca.gov.

Depending on an offender’s criminal history, this information will include either the address at which the offender resides or the community of residence and zip code in which he or she resides.” This information is provided to potential tenants to allow them to determine whether there are sex offenders in the neighborhood before they sign the lease.

If a landlord has applied for a permit to demolish a rental unit, he or she must give written notice about the application to prospective tenants before taking a deposit. Therefore, it may be illegal in California for a landlord to ask a tenant to sign a lease, and then demolish other apartment buildings next door – that is information a potential tenant would want to know before renting the property.

Landlords also must give the tenants notice about any pest control company disclosure the landlord has received. That disclosure must describe which bugs or animals need to be controlled, which pesticides will be used and their active ingredients, the schedule of pest control services, and a warning that pesticides are toxic.

This will prevent potential renters who may be sensitive to chemicals in pesticides from being exposed to them accidentally.

If the gas or electric service to the tenant’s rental unit also serves other rental units, the landlord must tell the potential tenant how the costs will be fairly divided before a lease is signed. For example, a landlord cannot charge one particular tenant for more than his or her share of the electricity used by the whole building.

Older buildings also have additional disclosures required. If the building was built before 1978, the landlord must disclose if there’s any lead-based paint in the unit, as well as give the tenant a copy of the federal government’s pamphlet called “Protect Your Family From Lead in the Home”, in addition to a written Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards.

The landlord is not required to remove the paint. Also, if the home was built before 1981, it could contain asbestos, which is dangerous if the fibers are inhaled. It’s recommended that landlords notify tenants if asbestos is discovered in the rental property

Landlords are also legally required to notify prospective tenants if the property has been used for production of methamphetamine. A unit that is found to be contaminated with a meth lab must be vacated until a local health officer deems it is safe. If a tenant wants to rent that property, the tenant must be notified of the problem.

If a death has occurred in the rental unit in the last three years, the tenant must tell a prospective tenant about the death, as well as the manner of death, unless it was due to AIDS.

Finally, if the landlord knows or has reason to know that there is mold in the rental home which poses a health threat, or is excessive by law, the landlord must give the prospective tenant a written disclosure.

The State Department of Health Services has developed a consumer handbook which tells about the potential health risks from mold, which must be given to the potential tenant.

Those are a list of state disclosures that must be present when you are renting a rental unit. In addition, some cities in California have laws that limit the amount of rent that can be charged (rent control), and if your rental unit is subject to rent control laws, there may be additional disclosures required, depending on the local city laws.

Also, there are often city and county codes which must be met, some of which may require extra disclosures be given to prospective tenants.

As you can see, following all of the requirements under California law in renting a rental unit can be a difficult task. In most cases, in order to legally protect yourself by law, it’s best to hire a knowledgeable California real estate attorney who can help you with your lease.

Always make sure you speak with an attorney in your area to insure you meet all local laws and regulations. If you are in the Oakland – Walnut Creek area, call Robert Levy, Oakland real estate attorney, at (925) 708-3306. I am happy to give you a consultation on your case. Call to learn more.

What Happens In A Foreclosure In California & Can It Be Stopped?

Foreclosure

If you stop paying your mortgage payments or the payments on your home equity loan, the lender may choose to try to foreclose your home. This means that the bank can force a sale of your home to pay for the unpaid loan.

There are a couple of different types of foreclosures in California, judicial foreclosures and nonjudicial foreclosures. In California, nonjudicial foreclosures are much more common. In the paperwork the homeowner signed when obtaining the mortgage, the homeowner signed a deed of trust, which gave the lender the authority to sell the home if the borrower stops making payments.

In a nonjudicial foreclosure, if the home sells for less money than is owed on the mortgage, the lender cannot later sue the homeowner for the unpaid amount. For example, if a borrower owes $400,000 on their home, but the bank was only able to sell the home for $350,000 in the non-judicial foreclosure, the foreclosing lender cannot sue the borrower for the unpaid $50,000.

Although the banks can lose money in this type of foreclosure, they often prefer it because it’s cheaper and quicker.

Conversely, a judicial foreclosure involves filing a lawsuit to get a court order to sell the home. In a judicial foreclosure, a home is usually auctioned, and the lender is allowed to obtain a judgment against the borrower if the home is sold for less than the amount of the unpaid mortgage. Fortunately, judicial foreclosures are far less common in California than non-judicial foreclosures.

In a non-judicial foreclosure, before foreclosing, the bank must call you to attempt to talk about your financial situation and to see if there is a way to avoid a foreclosure. After this conversation, the lender cannot start foreclosing for at least 30 days.

After the 30 days expires, the lender can record a Notice of Default, which is the beginning of the non-judicial foreclosure process. Once this notice is issued, the foreclosing lender must wait 90 days before taking further steps toward a foreclosure sale.

If you don’t pay the amount of the default during that 90 day period, a Notice of Sale will be recorded and mailed, which states that your home will be sold in about 21 days. After the 21 days, the property can be sold at public auction. You have until five days before the foreclosure sale to stop the process by “curing” the amount of the default.

Finally, after the home is sold, the new owner has to give you a three-day notice to move, and if you refuse to move, the new owner must go through an eviction process in court which can take weeks.

The prospect of a foreclosure can be extremely scary for a homeowner. The good news is that if you are falling behind on your payments, you can’t be kicked out of your home immediately.

You have a substantial amount of time during which you can try to work with the bank, come up with the funds to pay, or make alternative plans for housing if you decide that the home cannot be saved.

If you want to stop a foreclosure, there are a variety of different methods to do that. Which one is best for you depends on your particular situation. You could choose to file for bankruptcy, ask the bank to allow a short sale, attempt to do a refinance, offer a deed in lieu of foreclosure (handing over your property before the foreclosure), challenge the foreclosure in court, or ask the lender for a forbearance.

All of these options are used in different circumstances, and all may prevent the foreclosure process.

If you are facing foreclosure, don’t go it alone. An experienced real estate attorney can be a valuable asset on your behalf to help you navigate which options are best for you. The attorney can also help work with the lender on your behalf, or attempt to stop the foreclosure entirely, depending on your particular situation.

If you are in the Bay Area, feel free to call Attorney Robert I. Levy, at 510-465-0025. He works with homeowners who are facing foreclosures to help them understand their legal options.

What Is A Mechanics Lien & What Can I Do If One Has Been Recorded On My Property In California?

Real Estate Law

A mechanics lien is a lien recorded against your real estate. Mechanics liens are filed by contractors, subcontractors, suppliers of materials, or a laborer, who has worked on your property or provided materials for your property but has not gotten paid for that work or materials.

They is a way in which the unpaid party can use your property to collect compensation for the work performed or supplies provided for the property. In California, mechanics liens are recorded in the county recorder’s office. If mechanics liens remain unpaid, your property can be foreclosed.

In some cases, property owners have paid everyone for the work on their property, but still end up with a mechanics lien on their property. This usually occurs when the owner pays the contractor for the work, but the contractor fails to pay his or her subcontractors, workers or suppliers. Unfortunately, the homeowner is responsible for paying those individuals, even if the homeowner has already paid the contractor.

If you have a mechanics lien against your property in California, the property can be foreclosed on to pay the lien. The owner can also run into problems in trying to borrow against, refinance or sell the property if there’s a mechanics lien on it. The owner could end up paying twice for the same job in order to get the mechanics lien released.

Therefore, it’s critical that if you are a property owner in California and you are getting a home built or remodeled, that you do everything you can to prevent a mechanics lien from occurring in the first place.

One of the best things you can do to prevent a mechanic’s lien is to hire only a licensed contractor. You can click here to check that a contractor’s license in California is valid. You shouldn’t stop there though – you should also find out which subcontractors will be working on the job, and check their licenses as well.

Ask your contractor to provide you a list of all of the workers, suppliers and subcontractors to be used on the job. Finally, you should go online to check with your courthouse to find any lawsuits that have been filed against your contractor.

While a contractor may have been involved in a lawsuit or two and may still be a reputable company or individual, a pattern of lawsuits may indicate a problem.

Another thing you can do to prevent a mechanic’s lien is to keep on top of the paperwork involved. Your initial contract should be very detailed in identifying subcontractors for each part of the job, when they will get paid, and what the price is for each job.

The price and identification of material suppliers should be in the contract as well. You should keep up with the work of subcontractors or suppliers, whether or not they have been paid, and to whom money is owed.

Don’t take a step back and assume it’s your contractor’s responsibility to handle all that – the contractor is not the one who could end up with a mechanic’s lien filed against their property.

Once a certain subcontractor’s work is finished or materials are supplied, get a signed lien release which says that they have been paid and do not have a lien against your property.

Immediately upon the completion of the work on your property, you should file a timely Notice of Completion in your county recorder’s office. This may reduce the length of time a contractor, subcontractor, worker or supplier has in which to record a mechanics lien.

If you do discover that you have a mechanics lien on your property, don’t panic. It may not be valid. A qualified real estate attorney can help you determine if it is valid or invalid. If a mechanics lien claim is invalid, it is typically because the required timelines for filing the claim were not met by the contractor, subcontractor, supplier or laborer.

Often, but not always, a party who is filing a mechanics lien must give you a Preliminary Notice at a certain time; they must give you a Notice of Mechanics Lien; and they must have filed the mechanics lien within a certain time. If the lien is invalid, you can remove it.

The easiest way is to ask the party who filed it to remove it, and threaten a court action. If the contractor, subcontractor, worker or supplier fails to remove it, there is a swift court procedure to ask the court to remove it.

If you have a mechanics lien on your property, don’t panic or do anything right away. The best thing to do is to contact a real estate attorney who is experienced in removing mechanics liens from property. If you are in the Oakland – Walnut Creek area, call Attorney Robert Levy at 510-465-0025. He can help you remove the mechanics lien from your property.

Do You Need Title Insurance in California?

Real Estate Law

Yes, you need title insurance if you own real estate. It provides protection against losses that occur when the title to a property in California is not free and clear of defects.

Examples include an undiscovered lien (such as a mechanics lien) or easement against the property. Most lenders require title insurance as a condition for getting your loan.

Normally, there are two types of policies available when you are purchasing a property – a lender’s policy and an owner’s policy. The lender’s policy will protect the lender’s security interest in the property.

An owner’s policy will protect you, the owner, from claims by others against your property.

You may believe that as long as the lender has a title insurance policy, you do not also need to buy one. You may also believe that if the former owner of the home had a policy, you are protected.

Neither of those statements is true – the lender’s policy protects the lender, and the former owner’s policy protects the former owner. You need your own policy to protect your legal title to the property.

The policy will cover you for as long as you own the property. Your policy will only cover the value of the property.

If you choose to buy title insurance, you should obtain the policy for the full purchase price of the property. Who pays for the title insurance depends on where you live – it’s not set by law, but instead is a matter of local custom.

It may be paid by the buyer or seller, or be split between the parties. In general, in northern California the buyer pays for title insurance, or in some cases it is split between the parties. In southern California, the seller normally pays the premium. The parties are free to negotiate something different than what local custom dictates.

Before you purchase title insurance, it’s important that you understand any exclusions contained in the policy. For example, if you are aware of a lien or claim against the property and your insurance company is not, you may not have coverage for that lien or claim.

You also may not have coverage for eminent domain issues. Before you choose to purchase or refinance the property, you need to understand what your title insurance will cover.

Once you have the policy, you will hope that you never need to use it. If you do find out that there’s a lien or encumbrance on your property, you should pull out your title insurance policy and read it.

Check to make sure that whatever type of claim has arisen is not listed as an exception. You should promptly notify your title insurance company after learning of the problem. This should be done in writing, and you should let the title agent know as well as the attorney who helped you with your closing.

You may be tempted to ignore the problem and hope that it will go away. That’s understandable, but title issues do not go away on their own – they become worse. If you wait until a lawsuit is filed, it’s going to be more expensive, and you may not have the same level of coverage that you would otherwise since you failed to notify the title insurance company immediately.

If your issue with the property is covered under the policy, the title insurance company is required to help you resolve the situation. The company may help negotiate an old, undiscovered mortgage with a lender and obtain a release.

If covered, the title insurance company would pay your defense costs and attorneys’ fees. Another situation may require litigation to get resolved. The title insurance company has the right to fix the title defect, to litigate the case, to settle the case, or possibly even to pay you the amount of insurance under your policy and terminate any further responsibility.

In many cases involving title insurance situations, you should hire your own attorney. In some cases, the interests of the title company will not be the same as your interests.

You should be aware of your legal rights. Your attorney can also help you with the proper notification of the title insurance company, as well as with all of the legal issues that arise after that.

If you are having an issue with your title and you need an attorney’s help, call real estate attorney Robert Levy at 510-465-0025. He can help with title issues, whether you are covered by title insurance or not.

He works with clients throughout the Oakland and Walnut Creek area. Call today to schedule a free consultation on your case.

Do I Need To Set Up An LLC For My Rental Property in California?

Real Estate Law

If you are a landlord, you probably understand that there’s an inherent risk of legal liability any time that you choose to rent out your property to tenants. There are a number of risks that are foreseeable, and can be insured against, but insurance can’t protect against every potential legal risk.

If a tenant is injured on your property and chooses to sue, you could not only lose the property itself, but also your other personal assets as well. Insurance can go a long way towards minimizing the risk of having your assets seized, but an LLC combined with insurance can do even more.

An LLC is a limited liability company, which offers its members the same protections available to owners of a corporation. Assets that are held in LLCs typically give their owners personal liability protection from lawsuits.

Although you may have large amounts of insurance coverage, if some negligent act results in severe injury to a tenant or a guest, the award to the victim could be larger than your insurance coverage. That means your personal assets could be at risk.

For example, you may have $750,000 in liability insurance on your rental home. A dead tree branch falls on your rental home in the middle of the night, hitting a tenant and causing brain damage, which could result in damages to the tenants in the millions of dollars.

In that case, your personal assets, including your home or other properties, your bank accounts, your vehicles, your investments, etc.) would be at risk to satisfy the damages.

However, if your home were owned by an LLC, the LLC would be liable for the damages, and the LLC’s assets could be at risk, but an individual member of the LLC would have protection for his or her personal assets.

Another benefit of an LLC in California is that it can protect against claims by creditors of members of the LLC. If an LLC is in place, the creditors of a member of the LLC cannot attach the assets owned by the LLC.

For example, if you and a friend own a rental house together, and your friend drives while intoxicated one night and hits someone, the accident victim cannot seize the rental house if it is owned by an LLC.

If it is owned in the names of you and your friend, your friend’s half of the house could be at risk.

If you own more than one rental property, you should consider placing each one into a separate LLC. If you place them all into one LLC, and there is a problem with one of the properties, all of the properties are potentially at risk.

There are also tax advantages to an LLC when compared with a C-corporation and an S-corporation. All three forms of ownership offer protection from liability, LLCs are given pass-through taxation.

This means that owners get to report their share of the income or losses from their LLCs on their individual tax returns.

In contrast, a C-corporation is taxed at both the corporate level and the personal level. S-corporations are not double taxed, but they face other tax problems when real estate is involved.

Although LLCs can be great for rental property, personal residences should never be placed in an LLC. If a personal residence is placed in an LLC, the owner loses the loss of the capital gain exclusion on the sale of the home.

Therefore, if you own rental real estate, you should strongly consider placing it into an LLC. If you are in the Oakland, Walnut Creek, East Bay, or elsewhere in the San Francisco Bay  Area, call Oakland-Walnut Creek real estate attorney Robert Levy at 510-465-0025.

He can help advise you on whether or not an LLC would be best for your rental property, and how to go about setting one up. Call him today to learn more or to schedule a free consultation.

Uniform Partition of Heirs Property Act

Real Estate Law

California Enacts Uniform Partition of Heirs Act

The California legislature has enacted a brand new law known as the Uniform Partition of Heirs Property Act which became effective January 1, 2022, and applies to partition actions filed on or after January 1, 2022 (the “Act”).

The Act makes significant changes to the rights of parties in partition actions when the subject real property is either co-owned by family members, or was received from a family member.

The Act Creates a Right of Buyout in Family Owned Properties

I have handled many many partition actions. Of all the calls I have received from prospective partition clients, close to 90% of those disputes were between family members. Prior to the enactment of the Act, a defendant who was sued for partition of real property, might have had an opportunity to buyout the suing plaintiff, but there was no right to a buyout, which meant that if the plaintiff was unwilling to agree to a buyout, the likely outcome would have been a court supervised sale.

Now with this new Act, if the property is co-owned by family members, or if all or a portion of the property was received from a family member (“Heirs Property”) , then the defendant in a partition action now has a right to buyout the plaintiff’s interest in the property.

The Act is a Game Changer in Co-Ownership Disputes of Family Property

The Act is brand new, so how it impacts affected properties is yet untested, but it is very likely that in cases that involve Heirs Property to settle quickly, even before a lawsuit is filed, and if it does not settle, a defendant who wants to keep the property by buying out the plaintiff’s interest, will be able to do so and avoid a sale of the subject property. If you are a defendant of Heirs Property, this will be a very valuable tool for you.

The Act, which sets out what qualifies as a Heirs Property and the procedures to follow to buyout a plaintiff’s interests in Heirs Property, can be found starting at California Code of Civil Procedure  § 874.311.

Understand the Law and Your Rights

If you co-own property with a relative or received title from a relative, and you have been served with a partition lawsuit or are considering filing a partition lawsuit, you should consult with an attorney that is aware of and understands the Act.

I regularly represent clients in negotiating buy-out agreements and in partition actions. I assist clients in the East Bay, California, in Oakland, California, in Walnut Creek, California, and throughout the Bay Area.

If you have questions or need representation by a real estate attorney about a partition action or the need to negotiate a buyout agreement between co-owners, please feel free to contact me to discuss your case, the Act, or to arrange for a consultation. I can be reached at (510) 465-0025.