Real Estate and Business FAQs

It is not an uncommon problem where a seller of real estate enters a contract to sell the property and then attempts to back out of the contract.  Sometimes there are innocent reasons why a seller would do this, but often attempts to back out of the contract are motivated by the seller receiving a later, higher offer, or learning that the property is now worth more than when the seller entered the contract with the buyer.

Real estate contracts once signed by both buyer and seller are enforceable contracts that include obligations of both the buyer and the seller, as well as rights of both the buyer and the seller.  If a seller tries to back out of or breach the contract and refuses to follow through on selling the property, the buyer has remedies, which are informed partly by the terms of the real estate contract and partly by the law in California.

A buyer of real estate who has been learned that the seller wishes to back out of the contract and not sell the property to the buyer, would first look to the real estate contract to determine next steps.  If the contract is the form contract from the California Association of Realtors, there typically would be first, an obligation to provide the seller written notification.

If after notifying the seller, the seller continues to refuse or fail to cooperate, depending on the terms of the contract, the buyer either demands mediation or arbitration, or files a lawsuit for damages and/or what’s referred to as specific performance, which is an action to obtain a court order, forcing the seller to sell the property to the buyer under the terms of the original contract.

Most real estate contracts contain an attorneys’ fees clause, which states that in the event that one party to the agreement has to file a lawsuit against the other party, the prevailing or winning party to that lawsuit would be entitled to recover their attorneys’ fees.  Therefore, if a buyer is forced to file a lawsuit against a seller for the seller’s failure to fulfill their contractual duties, the buyer may be able to recover their attorneys’ fees in having to file and prosecute that action.

The most important thing to keep in mind under these circumstances is the need to act quickly.  If the seller successfully sells the property to another buyer prior to you commencing a lawsuit, you probably would be limited to a lawsuit and claim for damages, as the court probably no longer under those circumstances would be able to force the sale of the property to you since the seller no longer owns the property.  Therefore, it is very important that under these circumstances you get quick legal advice and act swiftly.

I regularly represent clients in lawsuits involving real estate contract disputes. If you have questions, or need representation by a California real estate attorney involving a contract dispute, please feel free to contact me to arrange for a consultation at (510) 465-0025.

A lis pendens, properly referred to as a “Notice of Pendency of Action,” is a very simple document which, in California, is recorded against real property after a lawsuit is filed with the court.  A lis pendens creates a lien against the affected property for any judgment obtained in the lawsuit.

Just filing a lawsuit, however, does not necessarily entitle a plaintiff to record a lis pendens.  Only those plaintiffs who assert a real property claim in the lawsuit may record a lis pendens. This means the lawsuit must allege a claim to the property itself.  If, for example, the lawsuit merely seeks damages, that is not a real property claim.

A properly used lis pendens can be a very effective tool since it places a lien on the property which typically prevents the owner of the property to sell the property or borrow against the property until after resolving the lawsuit.

I regularly represent clients in lawsuits involving lis pendens’. If you have questions, or need representation by a California real estate lawyer in an action involving a real property claim or a lis pendens, please feel free to contact me to arrange for a consultation at (510) 465-0025.

An easement is an interest in real property that entitles its owner to limited use or enjoyment of land in the possession of another. A common example of an easement is the situation where landowner one has the right to use the property of an adjoining property (owned by landowner two) for the purpose of entering and exiting landowner one’s property.

Most commonly, easements are created by an express grant between landowner one and landowner two.  However, occasionally an easement may be created even without the consent or permission of landowner two.  One such manner is the creation of a prescriptive easement or an easement by prescription.

A property owner (landowner one in our example) asserting rights to a prescriptive easement must show that he or she has used the property over which the easement is claimed (property of landowner two) for at least five years, and that his or her use has, during all of that time, been open, notorious, adverse, continuous and uninterrupted. [Taormino v. Denny, (1970) 1 Cal. 3d 679, 686; Welsher v. Glickman, (1969) 272 C.A.2d 134, 137].

If the requirements of a prescriptive easement are met, the prescriptive user acquires title to the easement, and that title is “sufficient against all,” including landowner two. No compensation would have to be paid by the prescriptive user (landowner one) to landowner two.

I have effectively represented many clients in easement cases.  If you believe that you would benefit from a consultation regarding a possible prescriptive easement or other easement issue, please feel free to contact me to arrange for a consultation at (510) 465-0025.

Partition Actions

Co-owners of real estate have an absolute right to sell their interest in that property.  Despite that absolute right to sell their interest in the property, it is not uncommon for co-owners of real property to disagree as to whether to sell the property.

When one owner of property wants to sell the property (“Selling Owner”), but another owner of the property refuses to consent to a sale of the property (“Non-selling Owner”), the Selling Owner has a couple of options.

First, if practical, the Selling Owner can sell just their interest in the property (and not the Non-selling Owner’s interest).  As a practical matter, however, it is rare that this option is realistic.  Typically, the only party that would have an interest in purchasing a part interest in the property would be the Non-selling Owner.

If the Non-selling Owner is not interested in buying out the Selling Owner, there is typically only one other option available to the Selling Owner, to file a lawsuit, known as a partition action.  A partition action is an action that one owner of real property files against all of the other owners of the property to obtain a court judgment forcing the sale of the property.

Partition actions are usually simple lawsuits since there typically are no important facts in dispute, and it is just a matter of getting the court to order a sale of the property.  The court then issues an order, after hearing evidence on the issue, as to how to distribute the proceeds.

Because of the straightforward nature and simplicity of partition actions, once one co-owner files a partition action against another co-owner, the partition action usually settles.  Unless there is a dispute regarding who has title, or there is a large disparity in the amounts that the co-owners paid towards maintaining the property, there is a strong financial incentive for the parties to agree to either a buyout of the Selling Owner by the Non-selling Owner, or for the sale of the property and distribution of the proceeds.

I regularly represent clients in partition actions.  If you believe that you would benefit from a partition action or a consultation regarding a possible partition action, please feel free to contact me to arrange for a consultation at (510) 465-0025.

The California Department of Real Estate has created a fund known as the Recovery Account (“Recovery Account”) to protect individuals who have been defrauded by real estate professionals licensed by the California Department of Real Estate arising out of any transaction in which the licensed individual was conducting licensed activity .  This would include real estate brokers as well as real estate agents.  The effect of the Recovery Account is to give consumers who have been defrauded by either their real estate broker or real estate agent to recover some or all of the money stolen by their real estate broker/agent from the Department of Real Estate.

If a consumer has been defrauded by their  real estate broker or agent, and the real estate broker and/or the real estate agent that defrauded them is unable to pay restitution to the defrauded consumer, and the consumer has obtained a court judgment for the amount that the consumer was defrauded, a consumer can apply to the Department of Real Estate to be reimbursed some if not all of the amount that they had been defrauded but had been unable to collect from the real estate broker and/or real estate agent.

Under California Business and Professions Code sections 10471 et. seq., after obtaining a judgment for fraud perpetrated by a real estate broker or real estate agent, and attempting efforts to collect on that judgment unsuccessfully, a consumer can then apply to the Department of Real Estate to the Recovery Account of the Department of Real Estate to be reimbursed the unpaid amount of the loss up to $50,000.00 per instance, with a cap of $250,000.00 per licensed individual by the Department of Real Estate. [California Business and Professions Code section 10474].

The Recovery Account is a wonderful resource for individuals that have been defrauded by individuals licensed by the Department of Real Estate, including mortgage brokers.  I have used the Recovery Account in the past as an effective resource for clients.

If you believe that you have been defrauded by a real estate broker, mortgage broker, or a real estate agent in the course of a transaction they handled for you, please feel free to contact me at (510) 465-0025 to arrange for a consultation to determine whether or not the Recovery Account would be available to assure recovery in your case.