What happens at the end of the lease?  At the end of the does the tenant move out automatically?  What if the tenant does not move out at the end of the lease?  California Attorney and Real Estate Broker Chris Adishian answers the question, “If the lease ends, doesn’t the tenant have to move out?” at the South Bay Association of Realtors Commercial Attorney Panel on June 2, 2015.

Transcript

One, the gentleman back there said, “Well, what if the term of the lease has ended?” And, that’s sort of the distinction in our society and our system of justice between your contractual right and what you need to do to actually enforce this contract. There’s the contract, and then there’s enforcement. So that’s one distinction I wanted to call your attention to. You may have all the rights in the world, but you still need to enforce them – and that enforcement involves costs and time and risk.

What is a tenant indemnification clause?  Is a tenant indemnification clause helpful to the commercial landlord?  California Attorney and Real Estate Broker Chris Adishian answers the question, “Should I have my tenant indemnify me?” at the South Bay Association of Realtors Commercial Attorney Panel on June 2, 2015.

Transcript

On the indemnity piece, it’s something that’s often talked about quite a bit in a lot of different contractual contexts, including leasing.

As you’re negotiating those things though, you also want to back up and just look at “Does this person that we’re asking or does this entity that we’re asking indemnity from, do they have the capability to pay for that indemnity if it came to pass?”

Very often, landlords have superior resources, superior bargaining power and the tenant can sign off on an indemnity and say “sure I’ll indemnify you if this happens,” but then that happens and the tenant goes “I don’t have any money to pay you that indemnity.” So, that’s just something to keep in mind, is how hard you’re going to negotiate on that point.

California Attorney and Real Estate Broker Chris Adishian answers the question, “When can a residential Landlord access a Tenant occupied unit?” at the South Bay Association of Realtors event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript

What are the general rules governing a residential Landlord’s ability to access a Tenant occupied unit?

Question: “In a six-unit multi-family building, one of the units was tested for mold and in the bathroom there was a spot that tested positive. It wasn’t a toxic mold, but nonetheless, it’s mold. So the landlord wanted to go in to replace it to fix the problem. He served notice to the tenant; said, ‘48 hours we’d like to come in to repair that area.’ The tenant responded by saying, ‘No one may enter this unit without my permission and I do not grant permission until this has been re-tested by a third party.’ And that kind of created a bit of a stalemate. So the Landlord does not know how to proceed.”

Answer: “Well I’m sure we’ve all probably had some variation on this over the years and a lot of this stuff, the attorneys become desensitized to it and the inflammatory nature of it. But people learn things whether by the news or Internet or Oprah or whatever, and they’re like, ‘Oh!’ and they raise, and the big one’s mold, but oftentimes mold is just something they know will get the Landlords on the defensive, because ‘Oh God, mold,’ million dollar verdicts, and stuff.

So first thing and foremost, the landlord should have insurance that covers mold remediation. It’s common enough, it’s out there, it’s available. Getting that insurance will give you a lot of peace of mind.

Second thing is: most leases, again you have got to look at your lease and the law I think supports this, that if it’s an emergency condition, the landlord does not

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need the tenant’s consent. So that’s what I would say.”

Question: “And if it’s not an emergency because this is not a toxic mold, evidently does that mean that they’d have to…”

Answer: “Hold on, well, frankly I’d have to go look at the case law to see if there’s been a case as to whether or not the existence of mold is an emergency condition and has it been litigated? Maybe it’s not been litigated. And if the tenant has asked that the work be done, then that would be evidence that obviously the landlord has permission to go in.

It’s a very easy argument though, due to the nature of mold, to say, ‘Look, a little old may be nontoxic today. But over time, dripping, dripping, dripping and mold’s characteristics, it could easily become toxic or widespread, so it is necessary.’”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @adishianlaw | LinkedIn | Facebook | YouTube

Commercial rent increases are evaluated differently than residential rent increases in some ways.  While both are creatures of contract, there are fewer laws governing the terms of commercial rents.

California Attorney and Real Estate Broker Chris Adishian answers the question, “Is there a limit to how much a Landlord can increase the rent on a commercial property?” at the South Bay Association of Realtors’ event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

Question: “For a commercial property, is there any maximum percentage that a landlord can increase rent?”

Answer: “Again, there’s no rent control on commercial properties. Again you’re talking about a different set of rules versus a residential, consumer-type situation. So you’re only going to be constrained by the language of your lease. Leases usually have some escalation provisions in them during the term, and then on renewal, it’s a negotiation point. Are you renewing at a certain percentage above the last rent? Or is it market rate? Or is it an agreed-upon rate at the outset that’s not market and not based on the last rent ,but just some rate that you picked 3 years earlier? But there’s no rules governing the amount of rent that can be charged or negotiated between the parties.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @adishianlaw | LinkedIn | Facebook | YouTube

California Attorney and Real Estate Broker Chris Adishian answers the question, “What are some important ‘take-aways’ regarding ADA compliance for commercial landlords?” at the South Bay Association of Realtors’ event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

What are some important “take-aways” regarding ADA compliance for commercial landlords?

Answer: “I didn’t realize we were going to get on this topic, but this is such an important topic and it’s been well covered by the panel, but there are a few take-aways I think that everyone in this room who’s got some commercial property, particularly, or even a multi-family residential should take away.

One is: the designation is CASP, as Bill said, and I think it might be even on the Department of Bureau Real Estate website, there’s a whole list of consultants. This is money well spent. Don’t try to figure out the regulations by yourself, it’s impossible. There are so many regulations and these consultants have some software, they’ll go visit your building, and they’ll generate a report that’s maybe 20-40 pages with pictures; ‘Here’s the rule, here’s what you have. Either it’s in compliance or it’s not in compliance. Here’s why this thing should be an inch and a half higher or an inch and a half lower. Your wheelchair access should be this wide instead of this wide.’ Use the consultant. It’s a little bit of money, but well worth it and it’s a defensive mechanism too, and they turn around these reports pretty fast.

We’ve had it done on two separate buildings and it’s very valuable, and you cannot replicate that level of accuracy or information without using a consultant. So if you have this concern, it’s a CASP consultant, get a referral, get someone out there to look at your property. Then you can give it to your landlord or your client and say, ‘Hey look, he says you’ve got to do 85 different things to bring your building into compliance.’ Well then you have a business issue. ‘How many of these are musts? How many of these are probablies? And how many of these are ‘Look I can’t do that this year or never or it’s a minor issue, it’s not significant?’’

And the other thing to keep in mind, to take-away, is that these lawsuits, they work kind of like in a different area of law. They’re high-volume lawsuits, generally low-dollar values, still you don’t want to pay it, but they’re usually in the $2,000-$10,000, $2,000-$20,000 range. There are some outliers, but this is where an attorney with a particular client will target like the 800 block of Sepulveda, and just go up and down the block and then the letters will follow. And that’s how this is done; it’s a means of enforcement, that’s how the legislature chose to enforce it.

And the other take-away I would say for Mo’s story is if you’re an owner of a real estate asset or a business or a multi-family, open your mail and read it, and if it has a letter from an attorney, don’t throw it away. We attorneys are not known for being quitters, we don’t give up, we just look, ‘Oh great, that person’s ignoring us, let’s just go forward.’ And the law is what they call a compulsory process: you can’t opt out once you get sued, you either appear or you’re going to get a default judgment against you.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @adishianlaw | LinkedIn | Facebook | YouTube

California Attorney and Real Estate Broker Chris Adishian answers the question, “What to do when a tenant refuses to pay the rent?” at the South Bay Association of Realtors’ event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

Question: “What can I do if my tenant refuses to pay the rent?”

Answer: “Well this is a good question, which Jim very thoroughly covered on the residential side, and I’ll just highlight one thing that sort of permeates all of law is there’s a general distinction between commercial and how we handle people in a commercial business setting, and how we handle people in a residential or consumer setting. And generally speaking in big picture, the law is much more stringent if you’re dealing with consumer tenants or residential tenants, and a little more loose on the commercial business side because they figure, ‘Well, either deep pockets, or they know what they’re doing, or we don’t need to be as paternalistic or make as many careful statements on the notices.’

But the process is the same: tenants not paying their rent, it’s a 3-day notice. Now it has some of the same requirements, but generally, just for illustrative purposes, if you’re off by 10 cents on a residential 3-day notice, that might void the notice, and then the tenant gets to restart the clock and go, ‘Oh no, you’ve got to serve me another notice. That wasn’t proper because it was 10 cents off.’

But the commercial one is generally the courts are, ‘Well, if you’re in the ballpark, the guy knows that he’s not paying his rent, so we’re not going to hold you up on a technicality. There aren’t a lot of individual rights we’re concerned about or due process rights we’re concerned about. So it’s still a 3-day notice, and if they don’t pay, then you’re still into an unlawful detainer.’ An unlawful detainer is ‘legal-ese’ for the eviction process, and it’s an expedited calendar versus a regular civil calendar.

And usually, especially with the

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court consolidations that have gone on in L.A., there’s very few court rooms that are unlawful detainers and that’s pretty much all they do, 9am-5pm, every day, is tenants and Landlords in that courtroom all day arguing about rent and eviction. And it’s not like the trials you see on TV, or you read about the OJ trials. These trials are like, ‘OK, do you want to pay the rent?’ ‘No.’ ‘Do you want to move out and reach a settlement?’ ‘No.’ ‘Do you want to have a trial?’ ‘Yes.’ ‘OK, let’s go.’ And they have a trial right there. And it’s over in 10 minutes. And the vast majority of the time, the trial is judgment for the Landlord, tenant needs to move out within so many days, otherwise they’ll get the sheriff.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube

California Attorney and Real Estate Broker Chris Adishian answers the question, “What if the Tenant leaves without paying his utility charges?” at the South Bay Association of Realtors event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

Question: “If you have a tenant that moves out, and 4 months later you get a bill from the Edison Company or Department of Water bill, that says that you owe that bill, and you tell the Department of Water or Edison that it’s the tenant’s responsibility, what can you do? Because the company or Edison or the Department of Water says, ‘No, but since you’re the owner, you have the money.’”

Answer: “Yeah sure, I mean there’s a lot of ways to handle this. One is: in our leases, in leases where I’m the Landlord directly versus managing for clients of ours who may have other leases, we have the tenants pay for everything, so it’s in their name. Or if it’s something we’re paying, we bill it to them on their ledger. So if we bill it to them on their ledger, it becomes an item if they fail to pay it, so we know because we’re doing the ledger every month. If they skip without having paid it, it’s in their name.

I think you as a Landlord have probably two choices: one is kind of take the ‘who cares’ approach, the place is vacant and move on; or pay it and take them to small claims, which I imagine this is going to be somewhere between $30 and $300? $1,000? Okay, still small claims. So you get your Judge Judy moment; you get to pay your bill; you go learn on the LASC if it’s in the LA county or whatever county, how to do a small claims action. You can’t have an attorney or like any of us represent you, but we could advise you on how to fill it out, and then you serve them.

And then you go in front of the judge and say, ‘Hey Judge, I served this person. I paid this $1,000. It happened during their tenancy. They owe me the money.’ If they show up, the judge will make a ruling on the spot. If the tenant doesn’t pay within 30 days I think it is, then it becomes a judgment and you can start attaching assets and go down that road. Or if they just don’t show up at all after you serve them, then you’ll get a default judgment.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube

California Attorney and Real Estate Broker Chris Adishian answers the question, “What if my commercial Landlord wrongfully refuses to refund my security deposit?” at the South Bay Association of Realtors event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

Question: “What if my Landlord refuses to give back my security deposit? What do I do?”

Answer: “Well that’s a common question too. We had a case like this, and we very rarely go into limited jurisdiction. So the court system is organized still there’s small claims, which is $10,000 and below; there’s limited, which is $10,000-$25,000; and then there’s superior, which is $25,000 and over. In the nearly 11 years that I’ve been practicing law, I think we’ve been in limited twice and usually we just say, ‘Hey look, work it out with them.’ It’s not really a place where we put a lot of our time and energy.

But this tenant came to us and he had a good case. He was a commercial tenant and he said, ‘Look, I had a (I think it was) $12,000 deposit with this guy and it was 2 years ago the lease ended, he’s not paid me back.’ So I’m like, ‘Alright, let’s send him a letter.’ So we sent him a letter and the Landlord came back with all this stuff which amounted to a bunch of nonsense, and he said, ‘Well here’s $2,000.’ And the tenant’s like, ‘I don’t want $2,000.’ So long story short, back and forth, back and forth, and the Landlord eventually got up to $10,000. And our tenant, to his credit, he said, ‘He shouldn’t keep a dollar. I literally left the place in perfect condition under the lease.’ So after a while, we filed a lawsuit. The end of the story is: about a month after we filed the lawsuit, the Landlord ended up paying all the security deposit, which I think again was $12,000 or $14,000, all of our attorney’s fees, 3 years of interest at 10% a year, and all the costs.

So you know, it’s a feel-good case for us on the law side, but from a Landlord’s side it’s a very good lesson because at the end of the day, he ended up paying about double,

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$12,000 versus $24,000, because of really just sort of bullheadedness and intransigence. I mean, we laid the law out to him and the facts were clear, but fortunately actually I commend his attorney because probably after he started getting his attorney’s bills, the attorney’s like, ‘Well I’m not going to work for free.’ And he probably said, ‘What do you recommend?’ And he’s like, ‘I recommend you pay him,’ because the statutes are very clear what the penalties are, and there really was no reasonable argument in opposition.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube

California Attorney and Real Estate Broker Chris Adishian answers the question, “How do I select good tenants? Evict bad tenants?” at the South Bay Association of Realtors’ event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.

Transcript:

Question: “How do I select a good tenant and how do I get rid of a bed tenant?”

Answer: “In my property management company, we have a lot of commercial properties and commercial tenants and we also have residential. But folks, my answer is going to be primarily commercial here and I’m happy to answer questions about residential later.

But the things you want to do on the commercial side are to do a credit check obviously, maybe run a background check even, you may need to get their consent. But there are services any good law firm or property management firm can access which will allow you to receive: ‘Was there a prior bankruptcy? What’s their credit score?’ They should voluntarily give that to you.

And then you can look at the business: ‘Is this a viable business? Is it an In-n-Out Burger going in there or is it Mable’s Bead Shop? And how much rent are they paying?’ The branded chain tenants are sort of the highest probability of being able to fulfill the lease obligation in general, and the ‘Ma and Pa’ one-off stores are a little risky. But you’ve got to look at each one on a case-by-case basis, see what kind of assets they have behind them, you can ask for bank statements and those sorts of things. If you do those steps in conjunction with your leasing agent and call on his/her experience, that would be a pretty good way to start so you don’t have a tenant who moves in with a lot of promises and then stops paying rent after 2 months.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube

This article focuses on attorney’s fees clauses in real estate leases.  The principles here could apply to any written contract.  Often times, the negotiation of attorney’s fees and the implications of having these clause become the “Game Within The Game:”

In California, unless attorney’s fees are provided for by statute or contract, each party will absorb his/her/its litigation fees.  This becomes a consideration in whether or not to pursue litigation, or settling a claim.  To use a simple example, if it will cost a Plaintiff $50,000 of attorneys fees (plus time, etc. etc.) to recover $50,000, such that Plaintiff’s net recovery is zero, is it worth it?  Probably not.

Attorney’s fees provision change this calculation by granting the winner his/her/its attorney’s fees on top of the recovery.  For example, if it will cost you $50,000 of attorneys’ fees to recover $50,000, but there is a statutory or contractual provision for attorneys’ fees to the prevailing partythen suddenly the Plaintiff’s net recovery is $50,000.  On the other side, the Defendant’s exposure is much higher, as Defendant is now possibly paying 2x the original amount at issue.

As a Landlord when you are drafting your leases, look carefully at the attorney’s fee provision.  Residential landlords generally have more assets and more bargaining power than tenants.  Commercial landlords, aside from situations involving large national tenants (i.e. Home Depot, Walgreens, etc.), also generally have more assets and more bargaining power than their tenants.   Given this relative relationship, Landlord’s often mistakenly believe that having an attorney’s fee provision in a lease will be a deterrent to litigation.  Often times it is just the opposite.

Attorneys representing Plaintiff tenants (particularly residential tenants) typically work on a contingency basis, with the backing of an attorney’s fee provision in the event that they prevail.  This is generally the first inquiry that a contingency attorney will take in evaluating a plaintiff’s case.

Landlords often don’t consider these provisions, or if they do, they mistakenly believe that the tenant will fear the prospect of paying Landlord’s attorney’s\ fees and it will be an effective deterrent.  In the majority of cases, where there is a significant disparity between the Landlord and Tenant in terms of assets, resources and bargaining power, it is not a deterrent.  If you are Landlord with an open ended attorney’s fee provision in your leases, you are inviting Plaintiffs’ attorneys to take a “free shot” with a Plaintiff who may have a marginal case and “nothing to lose” financially.

Better practice in these situations is to include provisions that either (1) cause each party to bear the its own attorney’s fees and costs or (2) limit attorney’s fees to some reasonable amount of money.  Where the parties are more evenly matched in terms of assets and bargaining power, then this provision may serve as more of a deterrent to baseless or highly speculative litigation.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc |   LinkedIn | Facebook | YouTube