Hypo Friday: Mary Jane and the Ganja Givers

     Larry Landlord owns a strip mall in Los Angeles.  He hosts a few tenants: Taco Bell, Happy Dry Cleaners and Nailtacular Salon.  He has one unit that he has had a lot of trouble leasing.  He has tried everything he can think of - offering free rent, renovating and using a broker.  Finally, he is approached by Mary Jane who is interested in leasing the unit for her medical marijuana dispensary, Ganja Givers.  She has proper documentation from the city and capital to invest in improving the unit.  Larry Landlord is excited to finally have a potential tenant but is concerned about her line of business.

Q: What can Larry do to protect himself?

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A: In Los Angeles, there seem to be as many medical marijuana dispensaries as there are Starbucks.  However, it is crucial to note that even though marijuana dispensaries are legal in the state of California, they are illegal under federal law.  This means that at any point, the feds can come after a landlord who has a dispensary as a tenant and demand that he evict the tenant or face consequences such as losing his or her property.  If you are looking into having a dispensary as a tenant, consider the following safeguards to minimize your liability:

1) Lease Provisions - Most commercial leases include a clause that prohibits the tenant from engaging in illegal acts on the premises but they do not specify which law they pertain to.  In your lease, be sure to include language that states a tenant faces automatic eviction should they violate state or federal law.  

2) Security Guards - The federal authorities are less likely to go after a dispensary that is running responsibly.  Consider requiring your tenant to maintain a security guard on premises during business hours to prevent loiterers in the parking lot and other unsavory characters.

3) Stop the Stink - Marijuana has a pungent odor that carries easily.  While the scent may be a beacon to some, it is a nuisance to others.  Consider requiring your tenant to install a heavy duty air purification system to keep the odor inside.  Be sure to hold them responsible for all maintenance and repairs.

     Having a medical marijuana dispensary for a tenant presents new challenges and exposure to liability.  The attorneys at The Rad Firm, APC, can walk you through the lease process and make sure you cover all of your bases.

Leave on Me: The Basics of Leave Law

     Welcome to a new series on Muse and News called Leave on Me. In this series we will explore the nuances of federal and state leave law. Leaves of absence and the laws that surround them can be exceptionally complicated. There are many different types of leave of absence: Family Medical Leave Act (FMLA); California Family Rights Act (CFRA); Disability Leave; Kin Care; Pregnancy Disability Leave; and several non-traditional leaves. In future posts we will get into specifics of each of these leaves, as each leave requires certain different requirements. In this first post we will break down the the basics of leaves of absence.

Covered Employers/Employees

     One of the first factors when considering a leave of absence matter is determining whether or not the employer in question is a covered employer. A covered employer is an employer who is required to comply with specific leave laws. Determining whether the employer is covered is usually determined by looking at how many employees the employer has. For example, both FMLA and CFRA only applies to employers who have a minimum of 50 employees within a 75 mile radius.

     The next factor is going to be whether the employee is entitled to leave. Generally this is determined by looking at how long the employee worked for the employer and why the employee is seeking a leave.  Using our previous example of FMLA, only an employee who has worked for 12 months for an employer within the previous year and seeks leave for a serious health condition of the employee or the employee's spouse, parent, child or baby bonding is eligible for FMLA leave.

Notice Requirements

     Employers are required to post in the workplace, the guidelines and process for employees to know how to give notice for a leave of absence.  The employee must let the employer know that they are seeking to take a protected leave.  The employee or the employee's representative may give notice of the leave. The employee should let the employer know the duration of the leave and must give reasonable notice. Reasonable notice is generally 30 days or as soon as practicable.

     Once the employer is on notice that the employee seeks to take leave, the employer is then required to provide to the employee their eligibility for leave within 5 business days. If an employee is not eligible for leave, the employer must let the employee know why they are not eligible. Employers must also inform employees of their rights and responsibilities in writing, informing the employee of any required documentation they must provide, whether the leave is paid, how the employee's leave is determined and terms of reinstatement. Employers must also inform an employee whether they are required to pass a fitness for duty assessment to return to work.

Reasonable Accommodation/Interactive Process/ Undue Hardship

     Reasonable accommodation generally refers to any accommodation afforded to an employee who is returning from a leave. A reasonable accommodation can be an extended leave, reduced hours from full time to part time, or a requirement that an employee must sit most of the day and not lift more than 15lbs. What is considered a reasonable accommodation for a returning employee is determined in an interactive meeting between management and the employee. During this meeting the employee and management consider what the employee needs to be able to return to work or continue to heal, balanced by what may or may not constitute an undue hardship on the employer. What will constitute an undue hardship for an employer will depend on a case by case basis. Determining a reasonable accommodation for an employee does not require an employer to waive essential job duties. If an employee is required to reach certain productivity standards, and all employees in the same position are required to achieve those same standards, the employer does not necessarily need to waive them for a returning employees.

     Next week we will dig deeper into two of the most popular leaves, FMLA and CFRA.

    If you are having a leave of absence issue contact the attorneys at The Rad Firm, APC to discuss your  issue with experienced employment attorneys.

 

Hypo Friday: The Short-Sale Surprise

     Larry Landlord gets a great deal on a short sale and buys a four-plex with an attached garage.  When Larry does his first walk-through of the property, he realizes that the garage is not just a garage, but a residence being occupied by Stanley Squatter.  He has a certificate of occupancy for four units but not for the converted garage.  Now aware that the unit is illegal, Larry refuses to accept rent from Stanley and instead, asks Stanley to vacate.

1) Does Stanley have a right to live on the property?

2)  How can Larry kick out Stanley?

3) Can Larry recover damages from the bank from which he purchased the short sale for non-disclosure?

A: This is an all to typical situation that I hear about daily.  Landlords get stuck with an illegal unit and even though they have no intention of renting it out, they have to invest the effort in evicting them.  Let's take each question individually: 

1) Yes. Stanley has a right to live on the property.  The unit is illegal because it is a converted garage and is not covered by the certificate of occupancy.  Even so, Stanley has a right to remain in the illegal unit as an occupant until a lawful eviction is instituted against him.

2) Yes.  Larry can kick out Stanley but he will have to pay a price.  The Los Angeles Rent Stabilization Ordinance requires that landlords pay tenants relocation fees to move out of illegal units.  The guidelines for this relocation are set out in Los Angeles Municipal Code section 151.09.A.11  This means that even though Larry doesn't have an intention of using the illegal unit as a rental, he will still have to pay to have Stanley move.

     Relocation fees start at $7,200.00 and top out at $19,000.00.  The amount a landlord is required to pay depends on how long the tenant has been in the unit, whether the tenant is a senior, whether the tenant lives with minor children, the median income of the household and more.  It is recommended you consult an attorney to determine just how much you can be liable to pay.

3) No.  Larry purchased the property in a short sale meaning he purchased it "as-is."  He cannot go after the bank from which he purchased the property to recover the relocation fees for evicting this tenant even if the existence of the unit was unknown to him.

     The attorneys at The Rad Firm, APC are adept at untangling relocation fees that a landlord may face in his or her career.  If you have a tenant in an illegal unit, it is recommended that you speak with an attorney to understand the process behind a lawful eviction for that tenant.  Failure to institute a lawful eviction can result in fines or more severe repercussions.  Call The Rad Firm, APC at (310) 461-3766 for tailored solutions to your situation.

Want to buy a home for $1,000? Don't get too excited...

Homes are being auctioned off in the City of Detroit starting at $1,000. Buyers however must meet certain requirements, including being a resident of the mitten, not having lost property to back taxes in the past 3 years and a requirement that the home purchased be brought up to code and lived in by the buyer within 6 months of purchase. Check out Huffington Post's article on this new program in the Motor City.

Lemons or Lemonade: The Airbnb Dilemma

We’ve all heard it:  “When life gives you lemons, make lemonade.”  This old and admittedly hackneyed adage is ever-applicable in the world of business, particularly when it comes to real estate.  Own an old factory building downtown?  Turn it into mix-used lofts.  Own an old theatre?  Turn it into a restaurant.  

      The key is recognizing just what kind of lemons you have been handed, finding the recipe to turn those lemons into lemonade, and figuring out who is buying the sweet and sour goodness.

      Airbnb is the latest crop of lemons to hit the real estate market.  It is a site where property owners and tenants can list their property as a vacation rental for eager tourists looking for a unique, day-in-the-life, traveling experience or frankly, to save a couple bucks on a hotel.  This means that if a property owner or tenant has a furnished place in a decent part of town, they could fetch anywhere from fifty to three hundred dollars a night or more. 

      So what’s the catch?  If you aren’t doing it, then chances are, your tenants are doing it and the risks could be exponential.  I received a call from a landlord the other day (lets call him “L”) with regard to one of his tenants who  sublets his quaint West Hollywood bungalow on Airbnb.  L told me that his other tenants were complaining of parties lasting long into the night, unfamiliar faces walking the complex grounds and questionable activities that would make any grandmother shake her head in disgust.   

      L was faced with a quandary – he could either evict this one tenant in a spiteful act to show him who is boss or he could keep the tenant there and push his other tenants out.   To bring back our friendly figure of speech – should he throw out the lemon or make the lemonade?

      Remedies are available to the landlord who chooses to rid himself of the Airbnb user.  The most direct remedy would be to begin an eviction using a Three Day Notice to Cure or Quit.  Basically, you tell the tenant that their activity is unacceptable under the lease and that it is time to either stop listing the property or get out.   It is important when using this remedy that you consult an attorney to make sure all necessary bullet proof language is present to really get your tenant packing.  

      A second remedy would be to use a Three Day Notice to Quit that hinges upon the violation of a specific municipal law.  In San Francisco for example, the municipal law prohibits short-term rentals that are less than 30 days.  San Franciscan landlords have taken advantage of this law to push out tenants more quickly because it allows them to simply say, “You broke the law, now get out.”  Again, it is important to consult with an attorney to determine whether this remedy is available to you in your jurisdiction.

      Finally, some landlords have taken to paying relocation fees to tenants who use Airbnb to evict said tenants while bypassing the legal system.  This is always an option, but it is important to understand the guidelines for relocation fees in your jurisdiction and to also draft a solid release agreement so tenants cannot combat your kindness with affirmative actions.

      But, if you want to turn this proverbial lemon into lemonade, there is definitely a way.   Some landlords have struck deals with their Airbnb wielding tenants to skim a percentage off of the revenue earned from subletting their unit.  These same landlords will also put in place requirements that the unit is kept clean, certain activities be prohibited and certain screening processes be used before opening the door to tourists. 

      Choosing the right remedy is totally contingent upon the individual landlord making that decision.  However, whichever option you choose, it is recommended that you speak with an attorney to maximize the efficacy of your remedy and shore up any possible pitfalls. 

      The attorneys at The Rad Firm, APC have the legal wherewithal and entrepreneurial spark to help guide you through the decision making process.  Contact us for a consultation.

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“How Long Does an Eviction Take?” and Other Important Questions

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Rhino Neal/Flickr

Rhino Neal/Flickr

The Rad Firm, APC prides itself on staffing capable attorneys who can tackle the most abstract question but there are a few questions that plague just about every caller’s mind: 

1)   How long does an eviction take?

Multiple months without rent payments?  LAHD complaints?  Jury trials?!  Evictions can be a financial nightmare for a landlord.  As a landlord myself, I understand the stress a troublesome tenant can bring and just how important it is to get them out before they severely impact one’s bottom line.  

That said, most evictions take approximately six weeks from start to completion.  Factors to take into consideration include: 

·      Whether the tenant is represented by an attorney

·      Whether the tenant files motions

·      Whether a jury trial is requested

·      Where your case will be heard

2)   Where will my case be heard? 

In mid-2013, eviction cases were consolidated to four courts throughout Los Angeles County: Stanley Mosk Courthouse (Downtown Los Angeles), Santa Monica Courthouse, Governor George Deukmejian Courthouse (Long Beach) and Pasadena Courthouse.  This means that all of the eviction cases in L.A. County are now heard in only four courts.  

You can use the “Filing Court Locator” search tool on www.lacourt.org to see where your case will be heard.  Simply enter in the zip code of your property and the site will direct you to the proper court.

3)   What should be my first move?

Your first move, even before contacting an attorney, should be to shore up any Los Angeles Housing Department or Los Angeles Building and Safety complaints levied on the property.  If you have not yet scheduled repairs, schedule them before talking to an attorney.  Any unmade repairs can be hazardous or even fatal to your eviction case.

4)   What does “uncontested” mean?

Uncontested means that the tenant has not answered the lawsuit within the requisite amount of time provided under the law.  For instance, if the tenant is served with the complaint by personal service, the law allows them five days to answer the lawsuit.  If the tenant does not answer the lawsuit or file a motion within those five days, then the matter is uncontested and you can request a default judgment from the court.

Feel free contact us at The Rad Firm, APC with any of your landlord/tenant related questions or comment on this post to see your question appear in the blog.

Shaken, Not Stirred: Earthquake Preparedness for Landlords

  If you were in Los Angeles County on Friday night, March 28, 2014, chances are, you felt an earthquake.  For those in La Habra or in its immediate surrounding areas, chances are, you really felt an earthquake.  A recent jump in seismic activity has made the discussion of earthquake preparedness omnipresent.  

   Whether you are a Southern California native earthquake pro or a terrified newbie, there is always room for improvement on the preparedness front.  After you get your personal earthquake preparedness kit together for your family, your next move should be to evaluate your properties.  

Here are some resources that can help: 

  • TotallyUnprepared.com:  The name is playful but the information is serious.  This site has tips for securing furniture.  Have furnished common areas on your property?  If those furnishings are not secured properly, you could be opening yourself up to liability for injuries caused to tenants seeking refuge in those areas during a quake.  http://www.totallyunprepared.com
  • The Los Angeles Fire Department Emergency Preparedness Handbook: Tips on earthquake and other emergency safety.  Consider handing this handbook out to your managers.  Who knows, they might catch a hazard that you never noticed before.  http://lafd.org/eqbook.pdf 

 Stay tuned for more important resources to keep you and your property secure.

Changing Overtime: What you need to know about changes to State and Federal overtime laws.

     On Thursday March 13, 2014, President Obama announced that he would be implementing changes towards the federal requirements for overtime pay exemptions. Federal law states that certain employees who handle certain tasks and make more than $455 per week (an equivalent of $24,000 a year) are not entitled to receive overtime pay.  President Obama signed a memo to increase the salary threshold for overtime exemptions. The memo signed by President Obama did not state what the new salary threshold for overtime pay will be, but the business world is abuzz with the implications.

     Federal overtime laws are not the only changes California employers need to be aware of. California state laws require that exempt employees, amongst other requirements, must make at least one and a half times the state minimum wage. Due to the scheduled increase to the state minimum wage effective July 1, 2014, California employers must also be prepared for the other effects.  In addition to making sure all employees are paid at least $9.00 an hour, employers must also now ensure that all exempt employees now make at least $13.50 an hour to maintain those overtime exemptions. Not making these changes may expose employers to both minimum wage claims and overtime claims.

     To make sure that your company is prepared for the upcoming wage and hour changes contact the attorneys at The Rad Firm for a free consultation. 

The Quest to Develop Silicon Beach's Perfect Apartment.

Los Angeles' Silicon Beach may still be as new as your latest smart phone, but original Marina Del Rey developer Jerry Epstein and partner David Levine are betting big on creating apartments for LA's upstart techies. In a 544 unit complex in Marina Del Rey, the two developers focused on creating apartments with a tech twist for Silicon Beach's newly affluent: the apartments will feature roof top fireplaces with gas firepits and "conversation places", electric vehicle charging stations, and will even allow dogs - provided you're interested in forking over a sample of your pooch's DNA, that is. More info on the new complex can be found here.

Housing Affordability Across So. Cal drops.

In response to the recent jump in housing prices, housing affordability in southern California has fallen across the board. That’s good news for California’s property managers interested in finding middle cost properties with tenants on the fence over whether or not they want to purchase.   

After a whopping record high of 42 percent of Southern California residents being able to find affordable housing in early 2012, the California Association of Realtors is reporting that the figure has dropped to 27 percent, a number unseen since the height of the recession.

California’s tenants are responding by turning more towards the long term housing rental market to keep their housing needs afloat without breaking the bank. Not surprisingly, the strong demand for apartment living has driven up rents in reaction.

The falling housing affordability is believed to be primarily caused by increased investor interest and LA’s unique position of having few buildable lots for developer driving up home prices. You could find more information on the current state of affordable housing, here.

Skid Row's Gateway Apartments set to open.

Looking for an apartment? Have you tried Skid Row? SRO Housing's Gateway Apartments, a 106 unit compund which marks the beginning of Skid Row's personal skyline, will open today. Locatred at 505 S. San Pedro St., the complex will feature a host of social services intended to get homeless people moving to a positive direction. The Complex will be SRO's third largest development, behind their own Rosslyn Hotel and Ford Apartments. Check out more information here. 

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