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Palos Verdes Estates Real Estate Law Blog

How does the Housing Crisis Act of 2019 help developers?

The Housing Crisis Act of 2019 was signed into law late last year -- and it promises to significantly increase California construction projects and housing developments.

It's no secret that California is in the middle of a housing crisis. Median home values in the state hover at $610,000 (compare that to states like Ohio, where the median home value is just a little over $152,000) -- which is too hot for most average people to handle. It isn't remotely unusual for people to spend more than half of their income on rents, and homelessness is a serious issue. Yet, new housing keeps getting delayed. In early 2019, requests for new building permits dropped 20% from the same period the year before.

Understand commercial lease terms before you sign

When you want to lease a spot for your business, you might be shocked to learn about all of the different things that go into a commercial lease. Making sure that you understand the lease in its entirety is critical, and it must occur before you sign anything.

There are several things that are different on a commercial lease than they are on a residential lease. This includes things like common area maintenance. This is a fee that you will have to pay when there are things that need to be done. Sometimes, it is a standard monthly fee that won't ever change. In other cases, you might pay a monthly fee and then a portion of other expenses.

Choosing a structure for your business

One of the first decisions you have to make when you're starting a business is what type of business structure you will use. This is important because it sets the standards for personal and business protection. It also determines what type of tax liability the company will have.

There are several options to choose from, but the circumstances you're facing dictate which are the most appropriate. If you're the only owner of the business, you might consider a sole proprietorship. This choice doesn't provide you with any division between your personal finances and the finances of the business, however. Therefore, it isn't usually appropriate for people who engage in financially risky businesses.

Include these points in your construction contract

When you're drawing up a contract for a construction project, you have to ensure that it protects your interests. This doesn't have to be difficult, but you do need to include the important information so that you can enforce it if you have to down the road.

The minimum information that you should have in the contract include:

  • Name, purpose and description of the project: The name and purpose won't be very detailed; however, you should include everything you can in the description. By including as much as you can, you don't leave much room for the client to claim that you promised other things. You will be bound by the scope of the project outlined in the contract.
  • Schedule for the project: Include the start and projected finish date for the project. Remember to pad the completion date a bit so that things like inclement weather won't mean that you miss the finish date that you tell the client. Most clients will be happy that a project ends early but they won't want it to go past the expected date.
  • Cost and payment information: Outline what costs the project estimate includes. Tell the client what they are responsible for paying on top of the estimated cost. You can also include the payment schedule in this section of the contract. Make sure that that you include a snippet about interest charges in case payments aren't remitted on time.
  • Make a note of the warranty and exclusions: Outline what type of warranty you provide on the work and mention anything that the warranty excludes. This sets the standard for client protections and often makes them feel like they're getting a better deal.

The impact of public policy on real estate in California

There are a wide variety of factors that impact the real estate market, especially in a state the size of California. What matters most in northern California may not be much of a factor in southern California, for example. However, the public policy set by state leaders can have a significant impact on a state's real estate market.

A recent report analyzed the differences between two of the largest states in the country: California and Texas. Overall, the results of the analysis seem to indicate that the differences between the public policies of these two states sets their respective real estate markets at polar opposites of the spectrum of "healthy and thriving" to "not great and getting worse." Our readers can likely guess that it was California that ended up on the worse side of this analysis.

The right experience matters when facing business law issues

The people in California who run businesses are oftentimes focused on similar overall goals: hiring the right people, expanding, and increasing profitability. However, running a business is usually a complicated affair, and those who are in charge of a business need to be ready for anything and adapt as needed. In some cases, that may include addressing complicated legal issues.

When the future of a company is on the line in a business law matter, the right experience can make the difference between a successful result and a more complicated situation. For example, starting a business is in itself a huge step. Making the right decisions from the start, including choosing a business structure and making sure the appropriate legal documents are drafted, is crucial. For existing businesses in California, contracts are oftentimes the backbone of their relationships with vendors, contractors and suppliers. The terms of those contracts must be carefully considered and worded to avoid being taken advantage of by others.

The basics about contracts

Most construction companies in California depend on the terms and conditions of contracts to form the basis of their business relationships with landowners, vendors, contractors and suppliers. Indeed, most businesses of any kind will depend on contracts in this manner. The written contract is the bedrock outline of the legal obligations that companies have to one another when they enter into an agreement. Construction companies in California should know the basics about contracts.

For starters, why is a contract needed to begin with? Well, in essence, a contract is a "legally binding" document, which means that, once a company signs on to the terms and conditions of a contract, that company is bound to comply, or face consequences. If a company is alleged to have "breached" a contract, the other party or parties to the contract usually have options to force compliance, such as taking the case to courtroom litigation, arbitration or mediation. Some contracts even include financial penalties for non-compliance.

Changing weather patterns mean changes in contracts and insurance

At least once in the past year or so, you have probably been surprised by the weather. Temperatures can fluctuate wildly, and rain can be torrential or just enough to be annoying. If you were a meteorologist, you would probably experience frustration at the fact that your job has become more difficult since global weather patterns appear to be changing.

As a construction contractor, you would more than likely feel the same way. Your work often depends on the weather, much more than in most other industries. The weather has probably affected your bottom line on more than one occasion since it's hard to predict, and accounting for it in your contracts has never been more important.

Court halts construction of new school

Any type of construction project can be tricky in California, as all parties involved attempt to balance environmental concerns, water concerns, aesthetic concerns and, for public projects in particular, financial concerns. Sometimes, the parties representing these various concerns are able to sit down, negotiate and come to a deal. However, in other cases, courtroom litigation becomes inevitable.

That appears to have been the case in San Diego recently, when a superior court ruled in favor of a group of concerned citizens who sued to stop the construction of a school near George Berkich Park. According to reports, all construction on the school project has been halted as a result of the injunction that the court issued preliminarily on November 18, and then confirmed on December 2.

Home sale statistics on the rise in Southern California

When the local and national economies are in good shape, the housing market is usually in good shape too. For those who are selling real estate in Southern California, times are good. However, there are deals for buyers who are willing to do their homework and understand the legal implications of buying and selling real estate.

According to reports, statistics show that the housing market in Southern California is staying strong; even getting better with each month. Reports indicate that home prices have climbed 2% on a year-to-year review and that sales of homes jumped a whopping 8.2%. Mortgage interest rates are at near-record lows which, according to the report, has likely played a role in buyer interest in jumping into the real estate market nationwide and in Southern California.

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