The Karlin Law Firm LLP

Providing quality legal services to statewide and national clients in ADA defense, Personal Injury, business and real estate for more than 35 years

866-500-8932
Email Us
Practice Areas

Tustin Litigation & Appeals Law Blog

Important commercial lease agreement provisions

The leases for California commercial properties in California are often several pages long and generally contain dozens of clauses. The signing of a commercial lease agreement often marks the beginning of a long and fruitful business relationship, but failing to read or understand certain key provisions of these legal documents can lead to protracted and costly landlord-tenant disputes.

Disputes over competition clauses can be especially contentious. These clauses prevent landlords from renting nearby properties to competitors of their tenants, and they may be of great importance to companies seeking to rent retail or restaurant space. Before finalizing commercial lease agreements, landlords and tenants should be familiar with provisions, such as escalation clauses, that specify when rents can be increased. Landlords may include fixed rent increases or they could link rents to their operating costs or an outside index such as the rate of inflation.

Experts worry about developing CRE asset bubble

California residents may be aware that the U.S. Federal Reserve announced the latest in a series of interest rate increases on June 14, and the nation's central bank has braced markets for further rate hikes in late 2017 and 2018. Higher interest rates allow the economy to continue to grow while reining in inflation, but they also have an impact on lending. While most experts agree that banks should be active, many of them have raised concerns about a possible asset bubble developing in the commercial real estate sector.

Tumbling residential property prices played a large role in the 2008 financial crisis, and worries about the sustainability of the commercial real estate sector have contributed to a sharp fall in transaction volume. Year-over-year commercial property transactions fell 17 percent in the first four months of 2017 compared to the same period a year earlier, and they have plummeted by 30 percent since 2015 according to the industry information firm Real Capital Analytics.

Predatory ADA lawsuits becoming a major problem in California

Filing predatory lawsuits over alleged violations of the Americans with Disabilities Act has become so prevalent that the weekly news show '60 Minutes" recently ran a segment on the practice, and more of this litigation is filed in California than in any other state. One reason for the disproportionate amount of serial litigation in the Golden State is a law that increases the amount that plaintiffs can recover in ADA lawsuits from the $1,000 per violation allowed by the 1990 statute to $4,000. The defendants in ADA cases in California are also required to cover the legal costs of both sides.

This law has created a situation where a small number of lawyers and plaintiffs in California are using ADA lawsuits to earn damages rather than improve accessibility for the disabled. The '60 Minutes" segment, which aired in December 2016, showed attorneys using online resources like Google Maps to identify small and medium-sized businesses that could be violating obscure provisions of the ADA. These provisions include highly specific requirements for mirror and sign placement and the exact wording of notices, and the damages business owners are ordered to pay can mount up quickly even when violations are the result of innocent mistakes.

California leads the country in predatory ADA lawsuits

Lawmakers in California introduced reforms in 2016 that were designed to reduce the number of predatory lawsuits filed against business owners for violations of the 1990 Americans with Disabilities Act, but the data suggests that more needs to be done. The disability litigation problem is an especially thorny one in California due to the state's Unruh Civil Rights Act. The federal penalty for ADA violations is $1,000, but this rises to $4,000 in the Golden State. Defendants must also pay the plaintiffs' legal fees in these cases under the Unruh Civil Rights Act.

The ADA is a landmark law, but it can be extremely difficult for business owners to comply with its myriad requirements. A minor oversight or mistake like a faded disabled parking space sign or a bathroom mirror mounted an inch too high could lead to a lawsuit, and this has made California fertile ground for predatory litigation. Only 12 percent of America's disabled population live in California, but more than 40 percent of the nation's ADA lawsuits are filed in the state. Court records reveal that most of these lawsuits were initiated by two law firms on behalf of just 14 plaintiffs.

California millennials lack funds for down payments

According to a study by Apartment List, 70 percent of millennials around the country have less than $1,000 for a down payment on a home. Fewer than 30 percent of those between the ages of 25 to 34 would be able to save 10 percent of a home's purchase price within three years. Furthermore, only 15 percent would be able to do so in the next year.

Another finding was that 40 percent of those between 18 and 34 do not save money on a regular basis. This trend may make it harder for younger people to afford homes in the next few years. However, the findings also indicate that millennials are not giving up on their dream of becoming homeowners and that affordability is their biggest obstacle.

Supply issues are heating up residential property markets

The pace of home sales in California and around the country generally picks up during the spring and summer months, but recent reports suggest that today's buyers have a dwindling supply of houses to choose from. Desirable homes are being snapped within days of being listed, and bidding wars are becoming increasingly common. The problem is especially acute at the entry level, and realtors say that it is not uncommon for sellers to receive a dozen or more offers for affordable properties.

Figures from the National Association of Realtors indicate that the supply of homes across the country is down by more than 6 percent since the 2016 spring sales season, and most homes that were listed in March were snapped up quickly by anxious buyers. Experts say that a healthy residential real estate market should have a five or six month supply of homes, but current available inventories would be exhausted in less than four months according to the NAR.

Trump tax reform uncertainty strikes commercial real estate

Commercial property developers in California may now be thinking twice before starting projects that would have been carried out without hesitation a few years ago. Potentially huge changes on the horizon, including tax reform and inflation, are uncertain and likely to have serious implications in the debt-heavy world of commercial real estate financing. A look at the market in New York offers insights into why some investors are moving ahead despite the uncertainty and others are choosing to forego profits and play it safe.

Brokerage data showed a Q1 2017 drop of 58 percent in sales compared to the same quarter last year. When averaged across the nation, property sales experienced a drop of 18 percent. One real estate advisor suggests that the frenzied pace of overbuilding during the past six years of bull mania in major markets has caused commercial property developers to pause and wonder how long this could continue. Other investors claim the slowdown is more about concerns over whether President Trump's tax reforms will fail to pass Congress.

The benefits of commercial property investing

There are several reasons why real estate investors in California and around the country may be drawn to commercial rather than residential properties, and this may be especially true when they are landlords. Residential renters often complain belligerently about relatively minor issues, and they may ask their landlords to intervene when they become embroiled in petty disputes with their neighbors. However, commercial tenants rarely bother their landlords unless the situation is pressing and their options are limited.

Customers often associate businesses with their locations, and the owners of thriving stores or restaurants may be extremely reluctant to uproot even when their rents are raised substantially. While residential tenants may have sentimental attachments to their homes, these feelings will rarely be enough to stop them from moving if they find a nicer house at a lower rent in a more desirable area. When businesses do move, they will generally try to do so amicably to avoid negative publicity, disputes and possible lawsuits. Residential tenants will generally be less concerned about being sued.

Understanding the rights of a tenant

Those who wish to rent property in California have many rights. For instance, a landlord cannot reject an application for an apartment because of a person's race, gender or religion. Landlords also cannot reject applications from people based on their national origin, because they have children or because of a physical or mental disability. On a state or local level, there may be laws against discrimination based on sexual orientation or marital status.

Landlords are not allowed to advertise or otherwise imply any preference or restrictions on those who may be in a protected class. Tenants may not be harassed by their landlords or be put in different facilities because they are of a protected class. Policies related to late or missed rent payments must be handled in a consistent manner without regard to a person being part of a protected class.

How residential property is titled and transferred

California residents who have purchased a home know that completing a residential real estate transaction involves signing copious amounts of documents and dealing with a profusion of legal issues. Deciding how residential properties will be titled is a crucial consideration when more than one buyer is involved, and understanding the differences between joint tenancies and tenancies in common can prevent bitter legal disputes should one of the buyers die.

The word "tenant" is derived from English common law and means "owner" when used in residential property transactions. When more than one party is involved in a real estate acquisition, they may hold title to the property involved as either joint tenants or tenants in common. The main difference between these two ways of taking title is how real estate is treated when one of the tenants dies.

Contact Us Today

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

L. Scott Karlin

L. Scott Karlin

Attorney Profile
David E. Karlin

David E. Karlin

David E. Karlin is a California attorney with a primary focus on business and real estate, including law and legal issues...

Attorney Profile
Michael J. Karlin

Michael J. Karlin

Michael J. Karlin is a Southern California based attorney whose practice primarily focuses on Entertainment Law. Michael began...

Attorney Profile

Recent Articles

ADA Fraud Reported

A recent article on the news concerns a man in Riverside County who allegedly has attempted to obtain money from property owners and businesses based on alleged violations of the Americans with Disablities Act (ADA). Read More

Tustin Office
13522 Newport Avenue, Suite 201
Tustin, CA 92780

Phone: 714-881-0054
Tustin Law Office Map

Newport Beach Office
2901 West Coast Highway, Suite 200
Newport Beach, CA 92663

Phone: 949-427-9328
Newport Beach Law Office Map

Carlsbad Office
2173 Salk Avenue
Suite 250
Carlsbad, CA 92008

Phone: 760-407-2409
Map & Directions

Riverside Office
6809 Indiana Avenue
Suite 100
Riverside, CA 92506

Phone: 951-643-8769
Map & Directions

Los Angeles Office
1100 S. Hope Street
Suite 103
Los Angeles, CA 90015

Phone: 213-519-5633
Map & Directions

Fresno Office
1444 Fulton Street
Fresno, CA 93721

Phone: 951-373-4384
Map & Directions

Review Us