What Must I Include in My Contract?

There are a number of codes and statutes that regulate the content of a construction agreement. California contractors must be aware of the laws that requires them to include certain language in their agreements to perform home improvements for customers.

In Chen v. Kraft, a California appellate court found that using an apartment as a bed and breakfast or as a transient occupancy residential structure was a violation of zoning laws. Courts and cities throughout California have addressed this issue differently.  New laws are being enacted each month in different cities and counties throughout California.  With all of this confusion, you should consult a real estate attorney who specializes in landlord tenant issues to find out what you can and cannot do with respect to short-term rentals.

Problems Caused By Short Stay Rentals

While it may seem like a fine idea to rent a room or your entire home out for some extra cash, problems abound when people try to circumvent many of the regulations that hotels and inns must follow.  Companies such as VRBO and Airbnb do not provide legal support and often short term rentals violate local ordinances.  When people list their apartments or homes, they do not pay the tourism taxes that hotels do. Most landlords do not appreciate having their residential units turned into hotels yet they have been able to use the short-term rental concept as a means of circumventing local rent control laws by taking their unit off the market for long-term housing and then offering it to visitors and tourists.

Cities are addressing these issues and have begun to enact laws designed to regulate, curb or halt listings for short-term rentals.  For example, Indio has started to regulate short-term rentals by requiring licenses and taxes, whereas the City of Ojai recently banned short-term rentals completely.  If you decide to list your place with a room-sharing service like Airbnb, here are some of the legal issues you need to consider.

Listing Your Room Probably Violates Your Lease

Starting in 2016, California law requires any “hosting platform” – which includes any service designed to help individuals rent out short-term or tourist residential space  – to provide anyone who lists with them a warning that such a listing could lead to legal action and eviction.  The reason for this warning is that most residential leases have provisions that strictly prohibit subleasing the unit.  A sublease is generally a lease by a tenant or lessee of part or all of leased premises to another person. If you rent out a room for compensation in a place that you lease from someone else, you will generally be creating a sublease.

Your Homeowner’s Association Might Prohibit Short-Term Rentals 

Airbnb rentals may not only violate a lease, but if you are the owner of the property, you might be violating the rules and regulations of your homeowners association. When you purchase a property in a neighborhood that is governed by an HOA, your use of the property is governed by a number covenants, conditions, and restrictions (CC&Rs). Often, CC&Rs prohibit the operation of a business within a residential community, and breaking that prohibition can leave you open to fines and legal action.

You May Need a Business License

Some cities and counties, such as Laguna Beach and Anaheim are currently grappling with how to manage short-term rentals in their tourist filled cities and have issued moratoriums banning such rentals altogether.  Indio, which claims to be the “City of Festivals,” requires that you have a business license if you are going to offer rooms for transient occupancy, which is usually defined as taking possession of a room for the purpose of dwelling, sleeping, or lodging for a period of 30 consecutive days or less.

In addition, some cities, such as Santa Monica, require that you reside in the property that you list for short-term rental. In San Francisco, you must have a business license, and you can only rent out a space for a total of 90 days during the year, unless you reside in the rental unit that you offer for short-term rental.

You Must Pay Taxes

Virtually every city and county in California has a tax on transient occupancy rentals. In Los Angeles, there is a county “bed tax” for hotels and motels, but the definition of “hotel” is extremely broad. Under the ordinance, a “hotel” is essentially any structure – including homes, mobile homes or trailers – occupied by a person for 30 days or less. The tax is 12% of the daily rent charged to the occupant.

In San Diego, there is a city transient occupancy tax as well as a rental unit business tax imposed annually on any residential real estate that is rented for any length of time. In order to rent out any property in San Diego, you must register with the city and pay this tax every year.

In many cases, services like Airbnb can provide you with a decent income stream that can help you pay your own bills. However, before you list your space for rent, you must understand the nature of your lease or HOA agreements, and you must know the laws of the city and county in which the property is located. Hiring a knowledgeable attorney with experience in dealing with these issues can be extremely helpful to ensuring that you your listing is in compliance with your agreements and local regulations. With more than 30 years of experience helping people like you, the attorneys at Adina T. Stern, A Professional Law Corporation, have a wealth of knowledge in real estate, business, and transactional law.

Adina T. Stern, a Professional Law Corporation has assisted landlords and tenants in and around Los Angeles County, Orange County, Riverside County, Ventura County, San Bernardino County and San Diego County including:  Cathedral City, Del Mar, Laguna Beach, Laguna Niguel, Lake Forest, Long Beach, Los Angeles, Mission Viejo, Palm Desert, Rancho Mirage, Rancho Santa Margarita, San Clemente, San Pedro, Santa Monica, Studio City, West Hollywood, and Westwood.

California regulates the construction industry through the Contractors State License Board which issues licenses to and disciplines contractors. In an effort to protect Californians, the law requires that a contract for home improvement must properly advise consumers of their rights under California law.

If your contractor does not have a valid license for the type of work being performed or does not have a written contract for you to sign, that is a red flag that indicates that you should not be doing business with that person or company. Your choice of contractor affects every other decision down the line, and a wrong decision to hire an unqualified or unlicensed contractor can prove very costly in the long run.

What is a “Home Improvement Contract?”

The statute that controls the requirements for a home improvement contract is codified in the Section 7159 of the California Business and Profession Code, but before explaining those requirements, the term “home improvement” itself needs some clarification. It is quite broad and includes remodeling, repairing, and altering residential property. This relates not only to the home itself but also includes driveways, patios, terraces, fences, garages, pools and spas, and landscaping, and nearly all structures or land modifications. The definition of a home improvement essentially catches any work that was not specifically listed in the law, which means that it applies to a great number of changes to your home. The law also has an additional requirement for a contract to meet the definition of a home improvement contract. The contract price for all work, including labor and materials, must exceed $500.

What a Home Improvement Contract Must Include

Contractors are obligated to follow a very stringent set of rules when drafting a home improvement contract. These rules control everything from the content of the contract’s provisions to the typeface used for headings and the various clauses in a contract. In many cases, the law dictates exactly what must be written into the contract, and also mandates that work cannot begin until the contractor gives you a copy of the contract signed and dated by both the contractor and homeowner.

Here is a list of some of the requirements of a home improvement contract:

• Typeface for any printed section must be at least 10-point font, and all headings must be in bold including the title “Home Improvement.” There are additional typeface requirements for the first page and body of the document.

• The name, license number and business address of the contractor.

• The name and registration number of any home improvement salesperson involved in selling you the contractor’s services.

• The first page should contain the date you signed the contract as well as a statement informing you how and where to send a “Notice of Cancellation.”

• The contract should also contain a notice advising you that the contractor will provide a full and unconditional release from any claim or mechanic’s lien for that portion of the work for which payment has been made.

• A special change-order form to be used in the event changes or extra work is to be performed. The language of this form is also regulated by law.

• A notice advising you that the form must be completely filled in and fully signed. The precise language of this notice is also dictated by law.

With respect to the financial terms of a Home Improvement contract the has requirements as well. Those include:

• The contract price in dollars and cents.

• The approximate starting and completion dates of the work.

• Any finance charges set out separately from the contract amount.

• A description of the project and a description of the significant materials to be used and equipment to be installed. For swimming pools, additionally details are required.

• No down payment may exceed $1,000 or ten percent of the contract and a notice must be provided advising the homeowner of this fact.

• An advisory regarding progress payments which must be put on a specific schedule outlining their amount and a specific description of the work to be done and the materials and equipment to be supplied.

• A notice concerning commercial general liability insurance requirements.

• A notice concerning workers’ compensation insurance.

• A notice stating that you have the right to require the contractor to have a performance and payment bond.

• A notice concerning mechanic’s liens.

• A special notice concerning the Contractors’ State License Board (CSLB), including your right to contact the CSLB for information about any contractor, and your right to lodge a complaint with the CSLB against a contractor.

• There are also specific requirements regarding whether you have a right to cancel and when and how that works.

It is important to know that – except for the down payment – a contractor cannot collect a payment for work that has not yet been completed or collect money for materials not yet delivered.

Beware of Front Loading

Besides checking the legal fine print, it is important to make sure the contractor is not “front loading” the construction contract by overestimating the cost of early demolition work so that the contractor is taking their profit in the beginning of the project. This often means that the contractor is hoping they will get their profit first and may leave you with an abandoned construction project.

The Role of Your Attorney in Home Improvement Contracts

As you can see from this list (and remember, it is only a partial list), the number of required clauses under Section 7159 can really add to the length of a contract. While the law concerning home improvement contracts is designed to protect you from unscrupulous contractors, it also can make your contract a complicated document, and difficult to understand. That is why an attorney with experience in home improvement contracts is so invaluable. Your attorney can help you research a contractor’s history with the Licensing Board, review the contract with you, and work with you to make sure you understand the rights you have before you sign the deal and make a commitment to a contractor. Always remember that you have the right to seek an attorney’s help before signing a contract.

If you are considering making the investment to improve your home, the advice of an experienced real estate attorney can be crucial. Adina T. Stern, a Professional Law Corporation can help you draft or review a home improvement contract to ensure that the contract protects your rights and safeguard your interests. The firm handles construction matters for clients in the counties of Orange, San Diego, Riverside, San Bernardino and Ventura including the cities of Agoura Hills, Beverly Hills, Big Bear, Buena Park, Burbank, Calabasas, Camarillo, Carlsbad, Corona, Coronado, Culver City, Del Mar, Diamond Bar, Hermosa Beach, Huntington Beach, Indian Wells, Laguna Beach, Laguna Woods, Irvine, Lake Forest, La Quinta, Long Beach, Mission Viejo, Moorpark, Oceanside, Newport Beach, Palos Verdes, Pomona, Santa Monica, Simi Valley, Solana Beach, Villa Park and Vista.

A lis pendens is permitted in some types of lawsuits and actually required in other types of actions. It is required in lawsuits for Partition, Eminent Domain, Quiet Title, Claims to Escheted Property, Forefeiture Proceedings, and Actions to Declare a Building Uninhabitable. It is permitted in other types of cases where someone has a real property claim such as mechanic’s lien foreclosure lawsuits, divorces, suits to enforce easement rights, and suits to specifically enforce a real estate contract. It is critical, however, to consult a real estate litigation lawyer who is familiar with these laws because you may subject yourself to liability later for improperly filing a lis pendens.

California law relating to lis pendens filings is found in the California Code of Civil Procedure starting with Section 405. There are a number of strict procedural requirements that must be followed in order to properly prepare, serve and record a lis pendens. There is a danger that if the lis pendens is not proper the owner of the property may be able to recover attorney’s fees and costs from you for the cost of bringing a motion to remove the lis pendens. This procedure is called a motion to expunge lis pendens. (See C.C.P. § 405.30 et seq).  Alternatively, the owner of the property may be able to force you to post a bond as a condition of keeping the lis pendens recorded.

A notice of pending action cannot be recorded unless it is either signed by an attorney or approved by a judge if the person who wants to record it does not have a lawyer and is representing themselves. Additionally, before the lis pendens can be recorded, it must first be mailed by registered or certified mail to the parties listed in the code. A proper proof of service must be attached to the lis pendens to prove it was served in the manner required by the code.

If a party wants to challenge the lis pendens, they will do so by bringing a motion to “expunge” the lis pendens. Any mistake in the service and filing of the lis pendens can result in the expungement of the lis pendens and possible liability for attorney’s fees and costs. Therefore, it is important to hire an attorney who is familiar with these laws and has experience with litigation involving a lis pendens.

Adina Stern has been handling real estate litigation matters and providing services in real estate and lis pendens cases for businesses and individuals for over 30 years in and around Los Angeles County, Orange County, and their surrounding areas, including Beverly Hills, Burbank, Calabasas, Chino, Coto de Caza, Irvine, Long Beach, Malibu, Mission Viejo, Moorpark, Newport Beach, Palos Verdes, West Hollywood, and Westwood Village.

What Is a Subpoena?

First you must determine if you have been served with a summons or a subpoena. If you have been served with a summons it means you are being sued. Click on this link to see an example of a summons. A subpoena is a document that requires the attendance of a witness or the production of documents at a deposition, trial or hearing. Subpoenas can be served on parties and non-parties to a lawsuit or criminal case. An example of a subpoena can be seen by clicking on this link.

Types of Subpoenas

There are two main categories of subpoenas: deposition subpoenas and trial subpoenas. A deposition subpoena requires attendance and/or the production of documents or other things at a deposition. A deposition subpoena is necessary to compel a non-party witness to appear and give testimony or produce documents at a deposition. Subpoenas are not required to compel someone who is a party to an action to appear.

What Must You Do When You Receive a Subpoena?

A subpoena can require three things: attendance only, production of documents and attendance or production of documents only. A subpoena that commands attendance requires a person to attend and testify at a specific time and place. A subpoena that commands production of things requires a person to produce documents, records or the like, at a specific time and place. A subpoena that commands both, attendance and production, requires a person to appear, testify and produce documents at a specified place and time. It is very important that you do not produce documents early because you may interfere with the rights of others to stop the subpoena and seek what is called a protective order.

Who and What Can Be Subpoenaed?

Any person, including a corporation or limited liability company, that is a resident of California can be subpoenaed. For the purposes of a subpoena, residence only requires the witness to live or do business in California. If the witness is an organization, the most qualified person to testify on the organization’s behalf must appear. The witness is entitled to witness fees and mileage.

A trial subpoena can compel attendance and/or the production of documents or other things at a trial, hearing or any other non-deposition matter, such as arbitration. A trial subpoena can compel a party or non-party witness to attend or produce documents, however, a “notice to attend” usually compels a party witness to attend trials and/or hearings.

Any existing document or other item can be subpoenaed for production. Thus, a subpoena cannot require a person to create a document. Additionally, a subpoena must adequately describe the documents and things sought. This can include notes, calenders, computers, digital files, emails and even objects such as machinery, clothing or medication bottles. It is sufficient if the category of documents sought to be produced are described with “reasonable particularity” and if the “person most knowledgeable” is listed as the one having custody and control. (See California Code of Civil Procedure section 2020.510.)

Time For Compliance

The date, time and place for compliance must be listed on the subpoena. If the subpoena is a deposition subpoena and there is a request for documents, a deposition officer must be appointed to receive the documents. As noted above, documents should never be produced prior to the time stated for compliance. An attorney may object to the subpoena for many reasons, including restrictions under privacy laws, and if the objection is sustained and the documents are ordered by the court to not be produced, a witness who released the documents prematurely may be liable. Thus, if the witness is served with written objections or a motion to quash, the witness must hold off producing the documents until a court order or an agreement between the parties allowing release of the documents has been served.

Absent any objections or motions to quash, once the time for compliance commences, the witness must testify or produce the documents at the stated place and time. Whenever a witness produces documents, the witness should take any and all reasonable precautions to redact any private information on the documents, such as blacking out social security numbers.

If you receive a subpoena it is important to discuss this with an lawyer who is knowledgeable about civil litigation to make sure you are properly complying with the subpoena. If you had any involvement in the matter it may also be important to have an attorney of your own represent you at a deposition to make sure you are not dragged into someone else’s litigation and your rights are protected.

Adina Stern has been handling litigation matters and has assisted litigants and witnesses for 30 years in and around Los Angeles County, Orange County, Riverside County, Ventura County, San Bernardino County and San Diego County including Aliso Viejo, Beverly Hills, Burbank, Calabasas, Chino, Coto de Caza, Long Beach, Malibu, Mission Viejo, Moorpark, Newport Beach, Palos Verdes, San Diego, Simi Valley, Studio City, West Hollywood, and Westwood Village.

Keep a Detailed Calendar. People do not realize how important it is to keep an accurate calendar of what they do and where they have been until they are embroiled in a lawsuit. A good calendar can prove where you have been and where you have not been. For example, in construction or breach of contract cases, it may be critical to prove how much work was performed and when it was performed. A good calendar entry which documents who you were with, what you did, when you did it, and where you were is invaluable to prove details you may not realize will be important at some time in the future. Similarly, in fraud actions a critical issue is sometimes what the plaintiff knew and when they discovered it. Cases will often turn on when certain information is conveyed by one party to another. A thorough record of meetings can also prove you were not around when information was provided because you can show you were somewhere else at the time. A good calendar can be in written form or on your computer; just make sure it is in a form that will not be lost or destroyed if it is needed. For purposes of determining statutes of limitations it is also critical to have a detailed and accurate calendaring system.

Keep Notes of Conversations. Judges and juries like note takers. There seems to be a common perception that people who take notes are thorough, honest, and reliable. A witness who says “I remember what was said four years ago even though I never take notes” is often viewed suspiciously. Critical information that should be recorded is: (1) the general subject or subjects of discussion, (2) who was present, (3) discussions about risks or concerns, (4) whether there was agreement or disagreement. An example of such a notation would be ” 08/13/13 – Met with John Doe and Jim Smith, discussed Mockingbird Project, I had concerns re soils issues, JD said experts approved report, JS said project would be done by Winter.” Most lawsuits revolve around representations, disclosures, promises and understandings. A note that will jog your memory or demonstrate to a judge or jury just what was discussed and who was there to discuss it can go a long way to proving your position.

Keep Superseded Documents and Unused Drafts. The intent of the parties is an issue that can often arise in a business case. Often the intent of the parties can be proven by what was deleted from or added to an agreement. While it may seem onerous to keep old documents and drafts, it is well worth it to even scan and store these documents for future reference in the event a lawsuit ever arises.

Prepare a Chronology for Your Attorney. Before you meet with your lawyer for the first time draft up a chronology of events for your lawyer. The chronology can include a “Cast of Characters” explaining the identities and positions of various parties and witnesses as well as a chronological explanation of critical documents, meetings and events. This is where your detailed record keeping will really pay off. You will be able to bring your attorney up to speed quickly by utilizing such a chronology.

Following these simple tips can mean the difference between winning and losing your case. If you or your business have been sued or need to sue someone, Adina T. Stern, a Professional Law Corporation handles a wide variety of business litigation matters. We have represented clients in civil and federal court as well as binding arbitrations in Orange County, Los Angeles County, as well as San Diego, Riverside, San Bernardino and Ventura Counties.

Structuring the Transaction. First you need to decide the structure of the agreement. Structuring the transaction is not an issue that should be determined by a business broker. You should consult with your tax advisor and attorney to determine how you are going to hold the company. Will you operate the business as an S-Corporation, a C-Corporation, a limited liability company or some other form? Are you buying an existing company or only the assets of the business? Each transaction is different and must be separately evaluated.

Investigations. It is surprising how many “standard” agreements say that the buyer has already inspected the agreement when, in fact, they have not. Due diligence is the key to a successful business purchase. Buyers should make the purchase contingent upon their careful and satisfactory investigation of each aspect of the business. You need to determine whether the Seller is the actual owner of the assets and business and make sure no one else has a lien or title to the business or its assets. At a minimum you will want to perform a UCC search. You need to investigate whether the business is properly licensed and whether those licenses can be transferred. Has the business ever been cited or closed by a government agency or sued? Are the assets in good working condition? Are there any warranties for any of the business’ equipment? Are there any problems with the structure in which the business is situated such as mold, termites, or non-compliance with government regulations such as the ADA. Most critically, you need to investigate the accuracy of the company’s book and records.

What are you getting? A business sales agreement should explicitly list exactly what is being transferred to the buyer. This includes all service agreements, leases, inventory, equipment, intellectual property (such as domain names, patents, trade names, service marks, trade secrets, trademarks, business plans, and client lists), accounts receivables and licenses. Information regarding trademarks and service marks can be found on the California Secretary of State’s Web Site. Similarly, if you are acquiring the business as a going concern the liabilities must be clearly disclosed. Liabilities go beyond simply accounts payable, you need to make sure there are no pending lawsuits or problems with hazardous materials that may arise after you buy the business. What are the terms of the existing employment agreements, leases and other agreements to which the business is bound?

Logistics. A good business purchase agreement will set forth the actual logistics of how the transfer will proceed. How will utilities be transferred? Will new bank accounts be created? How will credit card transactions be divided and transferred? What items will be pro rated? Will there be an escrow? Will you take over the Seller’s State Board of Equalization Account? Will the landlord approve of the lease transfer? Will the Seller be liable for issues that arose prior to transfer?

These are only a few the issues that need to be addressed when buying a business. At Adina T. Stern, a Professional Law Corporation, we have nearly thirty years of experience assisting clients who are buying or selling their businesses. We assist clients throughout California including, Beverly Hills, Foothill Ranch, Irvine, Los Angeles, Malibu, Mission Viejo, Riverside, Palm Desert, Palm Springs, San Bernardino, San Diego, and Westwood.

This 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.

When is the Security Deposit Due? Within 21 days after the tenant has vacated the premises, the landlord must provide the tenant with the amount of the security deposit minus any legal deductions. If the landlord deducts any amount from the security deposit for unpaid rent, cleaning or repairs, the landlord must also give the tenant a written, itemized statement that includes: the total amount of the security deposit before any deductions were made; each amount the landlord deducted for unpaid rent, cleaning and/or repairs; and a detailed statement explaining the basis for each deduction that was made.

Content of the Landlord’s Statement. The landlord must attach to the itemized statement any and all pertinent documents relating to the deductions from the security deposit. These include bills, invoices, and receipts, that prove the charges and repairs deducted. The landlord must deliver the itemized statement, along with the documentation and the remainder of the security deposit to the tenant within 21 days. It is important that the costs of the repairs be “reasonable” taking into account the geographic area in which the rental property was located.

Landlord’s Liability. If the landlord, in bad faith, fails to follow the law regarding security deposits, the tenant may be allowed statutory damages up to twice the amount of the security deposit, as well as actual damages. The court may award these bad faith damages whether the tenant has requested them or not. The landlord has the burden of proof to proving that the amounts claimed and deducted were, in fact, reasonable. Therefore, it is important to keep meticulous records as well as receipts and checks showing the cost of repairs and necessary cleaning.

Because laws are always changing, it is a good idea for either a landlord or tenant to consult with a landlord/tenant attorney before signing a residential lease. Adina T. Stern, of Adina T. Stern, a Professional Law Corporation, has handled residential leasing issues for over three decades. We advise clients on commercial, residential, and industrial leasing issues throughout California including, Anaheim, Brentwood, Beverly Hills, Camarillo, Century City, Corona del Mar, Costa Mesa, Coto de Caza, Foothill Ranch, Irvine, Laguna Hills, Laguna Beach, Los Angeles, Malibu, Mission Viejo, Newport Beach, North Hollywood, Riverside, Palm Desert, Palm Springs, Riverside, Somas, San Bernardino, San Diego, Studio City, and Temecula, West Hollywood, and Westwood.

What 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.

What is the Purpose of a Security Deposit? The purpose of a security deposit is to satisfy any lawful claim a landlord (lessor) has against the tenant (lessee) for such things as unpaid rent, repair of property damage, or cleaning. The security deposit cannot be used to repair normal wear and tear to the property. Additionally, the tenant is only liable for the reasonable costs of repairs or cleaning done to the property that are necessary to return the property to the same condition it was in before the tenant rented the property. Often disputes arise regarding the condition of the property at the time the tenant rented it. It is important for both the landlord and tenant to document with thorough photographs and a walk through agreement the exact condition of the property at the time it is rented and well as when it is vacated. The photographs and/or video taken should show all parts of the residence including the insides of cabinets, closets and rooms. If an appliance or system does not function properly at the beginning of the lease, that should be documented immediately.

It is very important for both the landlord and tenant to understand the laws regarding security deposits in order to avoid problems in the future. The second installment of this blog will deal with the issues that rise with security deposits at the end of the lease. Laws constantly change and it is prudent for a landlord or tenant to consult with a landlord/tenant lawyer before signing even a residential lease.

This is a brief summary of the law regarding security deposits. Adina T. Stern has dealt with residential leasing issues for over three decades. We advise clients throughout California on residential, commercial and industrial leasing issues including, Anaheim, Brentwood, Beverly Hills, Camarillo, Century City, Corona del Mar, Costa Mesa, Coto de Caza, Culver City, Foothill Ranch, Irvine, Laguna Hills, Laguna Beach, Los Angeles, Malibu, Mission Viejo, Newport Beach, North Hollywood, Riverside, Palm Desert, Palm Springs, Riverside, Somas, San Bernardino, San Diego, Studio City, and Temecula, West Hollywood, and Westwood.

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The 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.

The Pre-Purchase Examination. For anyone who wishes to buy or even lease a horse, a pre-purchase examination (also called a purchase examination) performed by a skilled veterinarian is critical in order to gain important information regarding the condition of the horse you wish to buy or lease. As the Quigley case demonstrates it is probably not a good idea for a buyer to hire the seller’s veterinarian to perform the examination. It is even more critical to make sure the veterinarian does not have any sort of financial interest in the outcome of the examination. The American Association of Equine Practitioners (AAEP) recently approved a series of guidelines for reporting equine purchase examinations; however, these guidelines leave it to the individual veterinarian “to determine the extent and depth of each examination.” Therefore it is critical for a buyer to work with a trusted veterinarian so that an effective and appropriate purchase examination can be performed.

Pre-Purchase Investigation. It is important to ask the right questions and do as much research as you can. Demand and obtain complete medical records from all veterinarians who treated the horse including x-rays, prescriptions and previous purchase examinations. Request insurance records and verify performance records. Provide these documents to your veterinarian for review. Discuss with the veterinarian the costs and benefits of various tests such as blood tests, radiographs, etc. If you have a particular concern you may need to bring in a specialist such as an equine ophthalmologist to look into some aspects of the horse.

Critical Questions to Ask. The AAEP has made a number of recommendations in connection with pre-purchase examinations. Make sure you tell the veterinarian how you intend to use the horse and make sure the veterinarian is “is familiar with the breed” as well as your intended sport or use of the horse. This includes both short term and long term goals such as breeding. The AAEP suggests avoiding veterinarians if they have a prior relationship with the horse or seller. It is also a good idea to find out the veterinarians’ prior history with the buyer’s agent or anyone else who stands to make a commission from the sale. Ask what procedures your vet thinks should be “included in the exam and why” and find out the cost of these procedures.

When shopping for a horse remember that while it is disappointing to find that the horse who you thought was perfect has a physical problem, it is even more heartbreaking to learn about the problem after you have already bought the horse.

Quigley v. McClellan was decided by the appellate court in San Diego County, California. Adina T. Stern has litigated equine cases in San Diego County and has represented horse owners on legal issue throughout California for over thirty years. In addition to litigating equine law actions, Adina T. Stern, a Professional Law Corporation drafts and reviews documents relating to the horse industry in and around Los Angeles, Orange, San Diego, San Bernardino, San Gabriel, and Riverside Counties.