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Among the most popular questions we receive each week are those involving residential security deposits. We are often called upon by tenants and landlords to write letters clarifying their positions regarding the return or retention of a security deposit. These “lawyer letters” often help resolve the issue and, if not, are excellent exhibits our clients may use when they pursue their issue in small claims court.

House.jpgThis is the second and final installment of a two part blog dealing with security deposit laws as they relate to residential properties. This second blog deals with how disputes arise regarding security deposits at the end of a residential lease. Please keep in mind that this article only deals with residential security deposits and other laws apply to mobile homes, commercial properties, and boats.

The Inspection. Before the tenant moves out the landlord must notify the tenant in writing that the tenant has the option to request an initial inspection of the property and that the tenant may be present during the inspection. (Civil Code section 1950.5(f).) If requested, the landlord must inspect the property within a reasonable time, but no earlier than two weeks before the lease ends. The landlord must give at least 48 hour prior written notice of the date and time of the inspection. This inspection must be done before the tenant moves out and before the landlord’s final inspection. The purpose of the initial inspection is to allow the tenant to remedy any deficiencies so the tenant may avoid deductions from the security deposit. The tenant must be given the opportunity from the time of the inspection to the time the lease ends, to remedy any and all deficiencies. If, after notice to the tenant, the initial inspection is not requested, the landlord has no obligation to conduct one. It is a good idea for both the landlord and the tenant to write down the results of this inspection and to take plenty of photographs and video to back up their position.
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Each week we receive calls from landlords and tenants who need a real estate attorney to advise them regarding residential security deposits. Nearly every residential landlord requires that a tenant pay a security deposit before moving into a residential property. Even though security deposits are common place, it is surprising how many misconceptions both landlords and tenants have regarding California security deposit law. It is also important to understand that different laws apply regarding mobile homes, commercial properties, and boats. This is the first installment of a two part blog dealing only with laws that relate to residential properties. This part will deal with security deposit issues that arise at the beginning of a lease.

Thumbnail image for Money in Hand.jpgWhat Is Security? California Civil Code section 1950.5 defines “security” as any fee, payment, charge or deposit that is required by a landlord at the start of a tenancy for costs associated with the tenant that can be used to reimburse the landlord for any purpose (except for the application of a screening fee and consumer credit report prior to the time the lease is made.) No lease or agreement may ever categorize a “security” as nonrefundable.

How Much Can Be Charged For A Security Deposits? When a landlord requires a tenant to pay a security deposit, the amount of the security deposit cannot exceed the costs of two month’s rent if the residential property is unfurnished and three month’s rent if the residential property is furnished. There are some exceptions to this rule but they deal primarily with advance payments of rent when a lease is for more than six months. (Civil Code section 1950.5(c).) Just because a security deposit is given a different name such as “pet deposit” or “last month’s rent” does not change the fact that it is a security deposit and must comply with the limits provided by law.
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What is the standard of care for a veterinary pre-purchase examination? This question was asked recently in the March 2013 California case, Quigley v. McClellan. In Quigley the buyers hired the veterinarian who had been treating the horse for the past two years to conduct a pre-purchase examination. The buyer sued the veterinarian and his medical group for veterinary malpractice alleging that the veterinarian failed to disclose that he himself had treated the horse for lameness and had personal knowledge that the horse had been laid up for a six month period. The surprising outcome of this case hinged not on what the witnesses said but on the questions not asked by the Buyer’s attorney during the course of the trial. Thus, the question remains, Although this case does not discuss what the standard of care for the veterinarian should be, it does demonstrate why it is important to hire an experienced litigation lawyer who is familiar with equine law issues in these types of cases.

dreamstime_xs_23124352.jpgThe buyer’s expert testified at trial that, “the three critical parts of the prepurchase to me are identifying the problems . . . documenting them, and then explaining the relevance . . . to the potential buyer.” The expert then went on to testify as to how the horse’s problems were not, in his opinion, documented properly.
The jury found in favor of the buyer and returned a verdict of negligence against the veterinarian. The veterinarian appealed the verdict and the appellate court reversed it because the expert testified only as to his own opinion and did not establish for the jury the applicable “standard of care” in the community. While this case underscores the importance of hiring an experienced litigation attorney who knows how to ask the correct questions, it does not answer the question of what should go into a proper pre-purchase examination.
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Civil mediation in California (as opposed to mediation in family law or other cases) is a type of alternative dispute resolution that helps parties try to resolve their cases without having to face the time and expense of trial. Although many people have heard the term “mediation” they often do not know what to expect. There are a number of rules and procedures regarding mediation and understanding these procedures may help ease anxiety before mediation occurs.

13310195_s.jpgInitiating Mediation

Mediation may be initiated at any time. Sometimes the parties may agree to mediation prior to a lawsuit and other times mediation is scheduled after a complaint is filed. Mediation can be initiated by the court or the parties. The court may order mediation if it determines that the case is suitable and may be resolved before trial. The parties can initiate mediation by agreement, for example through a mandatory contract clause, or by a signed stipulation. If the parties agree to mediation by stipulation, the stipulation must be filed not later than 90 days before trial, unless the court permits otherwise.
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Practicing law in January is always challenging because with the New Year there are always changes in California law. This year is no exception. Governor Jerry Brown signed over 800 new laws that took effect in California on January 1, 2013. Some of the new laws that will be of interest to our clients in the areas of litigation, real property law, business and contract law, and privacy are listed below.

11746299_s (2).jpgPrivacy. California has joined many other states in banning employers and colleges from demanding the passwords for an employee, prospective employee or college applicant’s social media account. Employers and colleges can no longer demand or even ask for social media login information. This does not mean you can freely post whatever you want on Facebook, that information can still be the subject of discovery.

Changes in Litigation Laws. AB 1875 limits depositions to seven hours of testimony. There are a number of important exceptions to this rule but it will make it more difficult to harass witnesses and litigants by keeping them at their depositions unreasonably. AB 1631 allows out-of-state attorneys to represent a party in an arbitration proceeding in California if certain conditions are met.
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Unfortunately, more often than not property owners find themselves involved in a dispute with a contractor or subcontractor whom they have hired. The property owner withholds payment for work that is not performed Thumbnail image for Thumbnail image for dreamstime_xs_4655623.jpgproperly or timely and the contractor retaliates by recording a Mechanic’s Lien against the owners’ property. If the Mechanic’s Lien was not filed correctly or has grown stale, the Mechanic’s Lien can be removed or “expunged” by a court fairly quickly. It is critical in these cases to seek the assistance of an attorney who is experienced with expunging Mechanics Liens.

The California Mechanic’s Lien Law was completely revised and restructured as of July 1, 2012. The change in law means that contractors and subcontractors needed to update their forms and use slightly different procedures to enforce a Mechanics’ Lien. (See Cal. Civ. Code sections 8000 – 9566.) This created a trap for unwary contractors who used the same form they used prior to July 1, 2012.
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With the uncertainty of the economy, many California home and business owners have elected co-ownership when purchasing a home, commercial property, or business. A partnership interest in a business can be a wise investment, but can also lead to the demise of the business if the relationship goes sour. What happens if one person disagrees with the way the business is run or how the real estate is being used? What if one person wants to move away or retire? Can this disgruntled owner part ways and still reap the benefits of his or her investment? When there is a quarrel between co-owners or partners, hiring an experienced business lawyer or real estate attorney to file a partition action may be the best and only way to settle the dispute in a fair and just manner.

Thumbnail image for dreamstime_s_25803673.jpgWhat Is A Partition Action? A partition action allows the court to divide property equally between interested parties. California Code of Civil Procedure section 872.010 et seq. contains the rules regarding partition actions. Since many partition actions involve real estate, this type of lawsuit is commonly associated with real property. However, partition may also be applied to dissolving any type of partnerships. This is known as an action for partition of partnership property. Although personal and real property can be divided through a partition action, community property (property acquired during a marriage) cannot be partitioned by this section of the California code.
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One of the sad truths a business litigation lawyer must explain to their client is that sometimes the cost of going to court exceeds the amount of damages that can be recovered. This is true because in California, unless there is a special statute that allows the recovery of attorneys’ fees, those fees are not recoverable unless they are required by a written contract. This is one of the problems with an oral agreement; if a party breaches the agreement, the aggrieved party is not entitled to recover attorneys’ fees. Because of this rule, arguably the most important clause in a contract can be the attorney fee provision. This is the second installment of a multi-part blog that explains some of the more common provisions found in California agreements.

Thumbnail image for dreamstimefree_155115.jpgUnilateral Attorney Fee Clauses. In some states unilateral attorney fees provisions are permitted. An example of a unilateral attorney fee clause would be a clause that says if Company A has to sue Company B and prevails, Company B must pay Company A’s attorney fees. This leaves Company B with no attorney fees if it wins. In California unilateral attorney fee provisions are automatically construed to be reciprocal under Civil Code section 1717. Therefore, in the example above, Company A would still be allowed attorney fees even though the contract seemed to provide for attorneys’ fees only if company B won. Part 1 of this blog dealt with Choice of Law, Jurisdiction and Venue provisions. This is an excellent example of why choice of law provisions are critical. In California, unilateral attorney fee clauses are not allowed, in other states they are.
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Last Friday, in Plotnik v. Meihaus, the Court of Appeal recognized that under California law, pet owners may recover for “mental suffering” which is caused if another person intentionally injures or kills their animal. This is a case that we have been watching because of its impact on California horse law and the horse industry.

Thumbnail image for Thumbnail image for Thumbnail image for dreamstime_xs_14913179.jpgAmong the cases cited by the court in upholding over $160,000 in damages and over $93,000 in attorney fees was the 2009 case of Jamgotchian v. Slender (2009) 170 Cal.App.4th 1384 in which a horse owner sued the track steward for trespass when the horse was injured in a race after the steward rejected the owner’s request that the horse be scratched from the race. The court looked at the growing trend across the country allowing pet owners to recover for mental suffering caused by another’s wrongful acts that result in injury or death of a beloved animal including the nightmarish Kentucky case, Burgess v. Taylor (2001) 44 S.W.3d 806 in which a lessor under a “feed lease” sold the leased horses for slaughter and then lied about it to the owner.
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The standard legal provisions that appear at the end of a contract are often called “boilerplate provisions.” Although most people are not interested in the fine print of a contract, these provisions are important and because of the nuances in California law, it is important to understand why those provisions appear in your agreement. In fact, one of the biggest problem with online legal forms is that many of them have flawed or no standard legal provisions appropriate for California. The failure to include a critical provision can cost you tens of thousands of dollars in damages and legal fees if something goes wrong.

Thumbnail image for Thumbnail image for Thumbnail image for Fine Print photo.JPGThis is the first installment of a multi part blog that explains some of the more common provisions found in California agreements such as Choice of Law, Jurisdiction, and Venue. Before you sign any business contract, service contract, real estate agreement or other agreement whatsoever, it is important to have that agreement reviewed by an experienced business attorney who can make sure you understand and can live with all the provisions of the agreement. Indeed, as noted in a recent case, Ruiz v. Affinity Logistics Corp., even if the contract does include a choice of law provision, it does not necessarily mean that the provision is actually enforceable. There are many rules that go into determining if the clause, as drafted, will be upheld by a court.
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