You’ll Get the Best Business Vehicle for Your Situation  

Not every business should be incorporated.  A low-risk business with a single founder, who does not plan to sell stock, raise outside capital, or sign numerous contracts with third parties probably does not need to incorporate.  By not incorporating, you’ll save time spent on paperwork and annual maintenance and accounting fees.  You’ll retain the ability to deduct business operating losses on your personal income tax return.  And if you have a new or small business, you’ll find that landlords, lenders, and even some vendors will likely require your personal guarantee anyway before they will extend you credit, so you will not benefit from corporate limited liability.

On the other hand, your business might indeed benefit from being incorporated.  Our skilled business attorneys will be able to quickly identify the business vehicle that will give you the most benefits for the least cost and trouble given your specific, individual situation.  That vehicle may or may not be a corporation.

You’ll Get the Kind of Corporation You Need

If you plan to raise capital from investors, then neither an LLC nor an “S” corporation will work for you. For tax reasons, for the easy transferability of stock, for the ability to issue multiple classes of stock, and for the ability to issue large quantities of stock, a “C” corporation will be essential.  But if your business is small and raising capital from investors is far in your future, it may make more sense to start out with an LLC or “S” corporation and, if you need to, convert it to a “C” corporation later, or to later form a new “C” corporation and then sell the existing entity to it.  Again, our skilled business attorneys can help you select the exact option that will be best for you.

You’ll Get Advice on Where to Incorporate

Some businesses are best incorporated in California.  For businesses that plan to seek outside investors, a state like Delaware — which has laws providing great flexibility in structuring business vehicles and allocating rights and responsibilities between founders and shareholders — will make more sense.   Again, your business attorney at San Diego Law Firm can help you decide which will work best for your business.

You’ll Get Additional Useful Documents and Advice

Website incorporations do not include any of the other documents that are likely to be essential to the long-term, successful operation of your business.  These can include:

• A buy-sell agreement to protect you in case one founder leaves, dies, or becomes incapacitated.  This is usually funded with life insurance.
• A stock-vesting schedule.  If you lack this agreement, and an original founder leaves after a short time but continues to own a significant part of the stock, you may find it is difficult to sell the business or raise outside capital later.
• An agreement to transfer any important intellectual property — patents, copyrights, trademarks, trade names — to the corporation.  If these are not transferred, it will not be possible to later raise money from investors if these items are crucial to the business.  This is particularly true if the intellectual  property is owned by a founder who has left the corporation, or if the property is owned by a founder and his or her spouse, and they later divorce and the spouse retains shares of the intellectual property.
•  An agreement for California resident agent service, which will protect your personal privacy should someone decide to sue your company.
•  Depending on the type of corporation you have, a 401K or other pension plan, medical reimbursement plan, and other benefit plans.
• In some cases, it may be advantageous to have major corporate assets, such as buildings, owned by a separate corporation that is either owned by the founders or by a vehicle such as a family limited partnership trust.  This can protect assets from creditors if the incorporated business is sued or runs into financial trouble. 

Depending on your plans, your lawyer will also advise you on how many shares of stock to authorize, how many shares to issue initially, and what the issuing price should be. He or she will file the document required by California law for your business to issue stock to the founders, called a “25102(f) notice” or “Limited Offering Exemption Notice.”  If you have been approached by someone who says they can find you investors in return for a portion of the money raised, your lawyer can help you vet this “finder” and make sure they comply with all the legal requirements so they do not jeopardize your exemption for small stock sales to founders and investors under California and federal securities law.  Your San Diego Law Firm attorney can also advise and assist you in staying fully compliant with all federal and state tax laws, labor laws, and safety laws, as well as fully compliant with local zoning, licensing, permits, and similar laws.

Call San Diego Law Firm for Skilled, Experienced Incorporation Services

The experience business law attorneys of San Diego Law Firm can give your business superb advice and assistance in all aspects of incorporation, far beyond anything you could possibly find online.  We have helped many businesses incorporate and grow, while providing their founders with excellent advice and carefully prepared documents at each step of the life of the business.  We provide fixed-fee estimates for all of our business services once we know what your situation requires, and we offer extended evening hours so you can meet with us without disrupting your business.  Please call us at (619) 794-0243 to make an appointment.  We look forward to helping you.

• Living trust property.  The inheritors can sell real estate held by a living trust after they take title to it as part of the trust administration.
• Joint tenancy property.  If the inheritor was a joint tenant owner of the real estate, or owned it with their deceased spouse in a “tenancy by the entirety,” they can sell the real estate after they take title to it.  A San Diego Law Firm attorney can assist with the title transfer and recording, and the transfer of the title insurance, at a modest cost.
• Property passing by the terms of a will.  The inheritors are determined by the terms of the will.  If the will does not require the real estate to be sold, or it does not need to be sold to pay expenses and bequests, or for other reasons, the inheritors can sell it after probate is over and title has been transferred to them. 
• Property passing without a will.  A “no will probate” is needed if the deceased had no living trust, no joint owner, and no will.  The inheritors are determined by state law.  Again, the real estate may need to be sold during probate to pay creditors or for other reasons, or the inheritors can sell it after probate is over.

The first two methods are the fastest and easiest – the inheritors sell the property at their convenience in the traditional way.  But when real estate has to go through probate, the sale must adhere to the legal requirements of California probate law.

Probate Sale under IAEA

In most probates, the real estate can be sold in the normal way by the representative of the estate without interference by the probate court.  This is authorized by the Independent Administration of Estates Act (IAEA).  The representative is a person who was named as executor in the will, or who was appointed as the estate administrator by the probate court.  However, either the representative or the probate court – who can act when an “interested party to the estate” files an objection to the sale under the IAEA – can decide the property should be sold with a confirmation hearing.

Traditional Probate Sale

When court confirmation is chosen by the representative or ordered by the court, then the real estate is sold according to the procedures required by California probate law.   Here is how those procedures work:

1. A probate referee appraises the property; this appraisal must occur no more than one year before the sale.
2. The estate hires a real estate agent who has probate sale experience.  Your San Diego Law Firm probate attorney can recommend a qualified agent to you.  (Real estate commissions must be confirmed by the court when the property is finally sold.  The court must honor any commission split percentages – i.e., 50-50, 40-60.)
3. The agent lists the property as a probate sale.
4. A potential buyer makes an offer.  If the estate representative likes it, he or she can conditionally “accept” it and sign a purchase agreement.  However, this purchase agreement is not binding on the estate.
5. After the buyer removes all contingencies (such as an inspection, financing approval, etc.), the probate attorney files a petition for a confirmation hearing. The hearing is usually held 20-40 days after the petition is filed.
6. The buyer must deposit 10% of the property’s purchase price before the court confirmation hearing is held.
7. The sale and the accepted offering price is advertised in a local paper for the time specified by law, and in the way specified by law.
8. The confirmation hearing is held.  At the hearing, anyone can bid openly for the property.  The first overbid must be at least 5% above the accepted price, plus $500, and overbids cannot have any conditions at all – no inspections, no financing, no anything else. Then the court makes a ruling on how much higher the next overbid must be – i.e., $1,000 higher, or more.  The bidding ends with the final bid.
9. The court confirms the sale to either the first buyer or an over-bidder, whichever is higher.  The purchase price accepted must be at least 90% of the probate referee’s appraised value of the property.
10. A confirmed overbidder must pay a cashier’s check deposit for 10% of the confirmed purchase price, just as the original buyer did. If the overbidder then defaults, he loses his  deposit.  When there is a confirmed overbidder, the original buyer gets his  deposit back.
11. If there is a confirmed overbidder, the original buyer gets his deposit back.  Otherwise, the sale to the original buyer proceeds, and he must arrange for payment of the remaining 90% sales price.

Because these procedures are time-consuming and limit the field of buyers to ones who are willing to risk losing the property to an overbidder, it is obviously much better for the inheritors if the deceased had a living trust and they could inherit the property quickly through the trust and then sell the property in a normal way. 

A living trust is also better than a joint tenancy between any two or more persons, or a tenancy by the entirety for a married couple, because a living trust allows the inheritor — even a spouse — to receive the deceased’s ownership interest at a “stepped up” basis, meaning the inheritor(s) will not have to pay any income tax on the appreciation of the house before the date that the deceased passed away.  If there was no living trust, and the house has appreciated substantially, a probate sale either through the IAEA or traditional probate will be valuable for this same benefit.

Call San Diego Law Firm for Help Inheriting Real Estate

When a loved one has passed away, San Diego Law Firm’s experienced will, trust, and probate attorneys have the skills and years of experience to make sure all assets, including real estate, are transferred to the inheritors as quickly as possible, with all safeguards in place, in full compliance with California law.  We have handled many probates and living trust administrations that required real estate sales, and we can give you sound advice and complete all of the paperwork so that your family can attend to other matters.  We provide fixed-fee estimates for all of our will, trust, probate, and living trust administration services once we know what your situation requires.  Please call us for an appointment at (619) 794-0243.  We look forward to helping you.

Typical Post-Sale Lawsuits

Most lawsuits filed against former owners by business buyers are for intentional or negligent misrepresentation. The buyer typically claims the seller misrepresented good things about the business, or did not disclose bad things. The buyer claims he relied on these misstatements / nondisclosures in purchasing the business. The buyer’s lawsuit asks that the seller be made to pay the buyer either the “as represented” business value minus the actual value, or if the court finds fraud by the seller, to pay the buyer for all his losses plus a large penalty for the fraud. In the worst situation, the buyer asks to be indemnified for losses and attorney’s fees due to unexpected claims against the business, either on the grounds that the contract requires this indemnification, or on the grounds the seller should have known about and disclosed these potential claims.

Put Everything, Good and Bad, in Writing

When a buyer indicates an interest in your business, it can be very tempting to “talk up” the great things about your business – for example, to tell the potential buyer that your business is a “golden opportunity” with “a huge upside potential” that has “a superb competitive advantage.” But this, unfortunately, is where many lawsuits begin. To avoid a lawsuit, you should instead:

1. Never sign a vague “letter of intent;” in California, these can be enforceable as contracts if a potential buyer relies on them to his harm.
2. Put everything about your business (good and bad) in writing, and do not expand on it with oral statements or discussions. Get the buyer’s signature on every document you provide.
3. Provide factual information only, not your opinions, and always include disclaimers. For example, profit and loss statements should be accompanied by a disclaimer that they can change and you do not guarantee that either profits or losses will be the same in the future.
4. Disclose any negative events or possible events that could hurt the business in the future. If a major customer is in financial distress, a potential road expansion in the planning stages could hurt store traffic, or you have heard that a competitor plans to bring out a much-improved product next year, tell the buyer in writing.
5. Disclose information about taxes, possible lawsuits, and any obligations owed to current or former employees. If you think a key employee may quit after the sale, disclose it. When you have listed everything state in writing at the bottom of the page that you know of nothing else that could negatively affect the business.
6. Have the buyer sign a statement agreeing that in buying the business, he or she is relying only on the written information provided by you, and not on any oral statements or other information.
7. Clearly explain, in writing, every contingency the buyer must meet, and the deadline for each, for the sale to go through.
8. Have all documents, including all the disclosures and financial information, either prepared by an experienced business attorney, or at the very least reviewed by one before any escrow is opened. Do not rely on the buyer’s attorney; he is protecting the buyer, not you. 

Consider “Representation and Warranty” Insurance

Any business can have an unexpected claim made against it after the sale for a pre-sale event. For example, a business in another state may claim your business has infringed on their trademark, or an adjacent business may claim your business operations have undermined the stability of the soils under their building. One way to limit your exposure to unknown risks and claims that could result in a post-sale lawsuit is to purchase “representation and warranty” insurance that protects you against a claim for your good-faith failure to disclose an unknown business liability. It is best to involve the representations and warranties insurance company early in the sale, as the company will generally review the transaction and require that specific documents and disclosures be made part of the sale as a condition of issuing the policy.

Contact San Diego Law Firm for Help Selling a Business

The experienced business lawyers of San Diego Law Firm have helped many owners successfully sell their businesses. We understand that the long-term success of your sale hinges on maximizing your profits while minimizing your risks. We’re deal-makers, not deal-breakers, but we stay focused on getting the details right and on fully protecting your interests throughout the sale process so that you can walk away with peace of mind. For an appointment, please call San Diego Law Firm at (619) 794-0243. We look forward to helping you.

Steps of a Commercial Eviction

Step 1:  Three-day notice prepared

The landlord or his attorney prepares a “three-day notice” to “pay rent or quit” or “cure breach or quit” (to perform other terms of the lease) or of “termination of tenancy.”  The notice must be in a specific legal form.  A commercial landlord can choose between two types of three day notices for a failure to pay rent:  one that specifies the exact rent owed (which must be accurate to be legally effective), and one that estimates the rent owed, sometimes used when the tenant pays a percentage rent.  If the lease requires the tenant to pay both rent and other separate amounts, the landlord should get legal advice on whether two separate notices are needed.  If the landlord accepts an overpayment of the rent because the tenant has miscalculated and overpaid estimated rents, the tenant will not only win the eviction action but be entitled to recover attorney’s fees.

Step 2:  Notice served

The landlord “serves” the tenant by delivering the notice to the tenant personally, or to a responsible person (such as a business officer or manager) on the premises.  If no one is available, the landlord can fasten the notice to the front door of the premises and simultaneously send a copy of the notice by certified mail, return receipt requested.  The landlord must then prepare a “proof of service,” in the proper legal form, stating the date the three-day notice was served.

Step 3:  Three day wait

The landlord must wait three days starting the day after service.  If the third day is on a weekend or holiday, the wait is until the end of the next business day.  If the tenant pays all rent due or corrects any other specified violation of the lease during this time, the eviction stops. However, the eviction does not stop if the tenancy is being terminated for criminal activity or other conduct specified by the lease as cause for immediate, non-curable termination.  If the tenant pays only part of any back rent due, the landlord can accept it but should simultaneously inform the tenant in writing that by accepting the part payment, the landlord is not waiving any rights to proceed with the eviction.

Step 4:  Summons and complaint

If the tenant has not paid the back rent, performed as required, or left the premises during the three days, the landlord will need an experienced real estate attorney.  The tenant will need to be properly served with a summons and complaint for unlawful detainer by a registered process server or other authorized person, or by another method that is legally authorized.  The complaint and proof of service must then be filed with the court, along with copies of the lease and the three day notice and its proof of service. 

A complaint for unlawful detainer is a technical, situation-specific legal document, and not a good do-it-yourself project, particularly when commercial property is involved. If you are a landlord and make a mistake, the tenant may challenge portions of your complaint that are not properly prepared, substantially delaying the eviction.  

Step 5:  Court proceedings

If the tenant does not contest the eviction:

A tenant who was personally served has five days to contest the eviction by filing legal documents.  If another method of service was used, the tenant will have ten to fifteen days. If the tenant does not contest the eviction, the landlord’s lawyer will seek a default judgment of possession from the court. Once granted, the case goes to the sheriff’s office for tenant lockout. 

If the tenant contests the eviction:

A tenant may contest the eviction by filing legal documents.  Again, this is not a good “do it yourself” project.  If you are a tenant, you may have valid legal defenses to the eviction of which you are not aware, or even counter-claims for money against the landlord.  If the tenant contests the eviction, the attorneys for both sides will seek a court date for a trial, generally within 30 days after the tenant’s legal documents were filed.

A trial is then held before a judge.  If the landlord wins, the court will award the landlord unpaid rent and payment for other losses as provided in the lease.  Once a judgment is entered in the case in the landlord’s favor, the tenant may ask the court for more time before the tenant has to leave.  The court may give the tenant up to 41 extra days but usually requires the tenant to pay the additional rent in advance.  After the time is up, the court sends an order to the county sheriff giving him the right and duty to carry out the eviction. 

Step 6:  Lockout

The sheriff then posts a five day notice to vacate the premises on the tenant’s property. On the sixth day, the sheriff meets the landlord or his representative at the property at a designated time. The landlord then receives a receipt of possession of the property.   If the tenant is still there when the sheriff arrives, the sheriff will physically remove the tenant and the landlord can have a locksmith change the locks at that time.  This is called the “lockout.”

Step 7:   Notice to claim property

The landlord must give the tenant 15 days after the lockout to claim any possessions from the property, or if the tenant left before the lockout,18 days after the mailing of a “notice of belief of abandonment” to the tenant’s last known address.  The notice must specify the property so the tenant can identify it, and specify any storage costs.  The landlord should photograph and inventory the belongings to prevent any claim of theft or negligent destruction, because the law requires them to be stored safely and returned if the tenant claims them in time.  The landlord cannot legally hold belongings as “security” for payment of money awarded by the court.

Step 8:  Unclaimed property disposed of or sold

After the waiting period is over, the landlord can dispose of the commercial tenant’s property if it is worth less than $750 or $1.00 per square foot, whichever is greater.  If it is worth more, the landlord must auction it through a public sale held after properly published notice, and the proceeds, minus the cost of removing, storing, advertising, and selling the property, must be turned over to the county to be held for the tenant.

Alternatives to Commercial Eviction

The drawbacks to a commercial eviction are obvious.  For the tenant, the eviction often spells the end of the business.  The landlord may find that in a poor economy, the premises cannot be quickly re-leased, particularly if the evicted tenant modified them extensively.  If the evicted tenant is insolvent or bankrupt, a court award of unpaid rent and other expenses may be worthless. 

For this reason, it is always worth exploring whether a rent reduction or other concession (such as the landlord assisting the tenant to move to a smaller, cheaper vacant space in the same building) would enable the tenant to continue in business and the landlord-tenant relationship to continue as well.

Call San Diego Law Firm for Help with Commercial Evictions

If are a commercial landlord needing help with eviction, or are a commercial tenant with a legitimate potential defense against an eviction, contact the skilled business real estate lawyers of San Diego Law Firm.  We have many years of experience in all types of commercial real estate disputes, including commercial evictions.  We can help you and your business.  Please call San Diego Law Firm at (619) 794-0243 to schedule a consultation. We look forward to helping you.

1.  Current Pregnancy Disability Leave Law

California’s current Pregnancy Disability Leave law applies to all employers with five or more employees.  It provides that employees who are disabled by pregnancy, childbirth, or related medical conditions can take up to 16 weeks of job-protected leave in 12 months.  If the employer provides more than 16 weeks of leave to workers with other temporary disabilities, it must also provide the same extra leave to women with pregnancy-related disabilities. The job-protected pregnancy disability leave must be provided to all women employees, even those who are new and/or part-time.

The employee is entitled to take pregnancy disability leave as needed, and in small increments or on a reduced work schedule, if her health care provider recommends.  The leave may be used for prenatal visits and to cope with severe morning sickness in addition to more serious disabilities. The law only requires that the employee be unable to perform one or more of her job functions due to pregnancy or a pregnancy-related condition.  However, the employer may require the employee to provide a certification from her health care provider that the pregnancy leave is medically necessary.

2.  New “Clarification” of Current Law

The new law “clarifies” that it is an unlawful employment practice for an employer to interfere with, restrain, or deny an employee’s pregnancy leave rights.  The effect of this is that employers who have previously discouraged employees from taking pregnancy leave may now be vulnerable to an employee rights violation claim for this past conduct.  If you are in this situation, you should contact your business law attorney for advice.

3.  New Employee Health Benefits During Pregnancy Disability Leave

The new law also requires employers to continue group health insurance coverage for up to 16 weeks for employees who become disabled due to pregnancy, childbirth or a related medical condition.  The group health benefits must be maintained at the same level and under the same conditions that would have existed if the employee had not taken leave.  If the employer currently pays the entire health insurance premium for employee coverage, the employer must continue to do so for up to 16 weeks of pregnancy disability leave.  However, if the employee normally contributes to these insurance premiums, she may be required to continue paying her portion of the premiums (for either self or dependent coverage) while on leave.

If the employee does not return from leave, the employer generally may recoup premiums it paid for the employee’s continued coverage during the leave. However, no premiums may be recovered if the employee fails to return due to a continuing disability or because she then takes a leave under either the federal Family and Medical Leave Act or the California Family Rights Act, two laws which cover employers with more than 50 employees and which have some interrelationship with the pregnancy disability leave law.

Call San Diego Law Firm to Update Your Business Policies on Pregnancy Leave

San Diego Law Firm’s experienced business law attorneys can help bring your business into full compliance with the new pregnancy disability leave and health care benefits law.  We can update your employee handbook, leave policies and procedures, and posted employee notices and communications to fully reflect the new law.  We now offer extended evening hours so you can meet with us without disrupting your business.  Please call us at (619) 794-0243 to make an appointment.  We look forward to helping you.

When forgiven mortgage debt is not taxable

You can escape Federal and California income tax on forgiven mortgage debt in each of these situations:

 1.  Your Total Debts Are Calculated to Exceed Your Total Assets 

To the degree your total debts exceeded the fair market value of your total assets immediately before your mortgage was reduced or eliminated, you are legally “insolvent” and the cancelled mortgage debt is not taxable income.  Many California residents can meet this legal definition because they have home equity loans, auto  loans, rental property mortgages, and other liabilities that exceed the total fair market value of all their assets.  An experienced real estate attorney can easily help you with the expert appraisals and accounting needed to establish legal insolvency for tax purposes.

2.  Your Mortgage Was Eliminated or Reduced in a Chapter 13 Bankruptcy 

Chapter 13 bankruptcy allows judges to reduce or eliminate home equity loans and second and third mortgages.  This “forgiven” debt, no matter how large, is not counted as taxable income. Chapter 13 can also eliminate or reduce many other types of debt. Again, an experienced attorney can determine if you qualify for Chapter 13, and can help you decide whether this would be a good choice for your situation.

3.  The Mortgage Debt Relief Act of 2007 Applies

In 2007, Congress passed the Mortgage Debt Relief Act; it was extended in 2011 and now lasts through 2012.  Under that law, mortgage debt that is forgiven on a “qualified principal residence” is not taxable income if it is under set dollar limits and was forgiven as part of a mortgage restructuring, foreclosure or a short sale.  California has a similar law, but the dollar limits are different.  

Under this federal law, debt forgiven between 2007- 2012 can be excluded from taxable income if it is less than $2,000,000 for taxpayers who file as married filing jointly, single, head of household, or widow/widower, and $1,000,000 for taxpayers who file as married filing separately.  Under California law, these limits are $500,000 and $250,000 respectively for 2009-2012, and $250,000 and $125,000 for 2007-2008.  In California, registered domestic partners are treated the same as married taxpayers filing jointly or separately.  There is no federal limit on the amount of income that can be considered “qualified principal residence debt”; for California tax, the limit is $800,000 for the first group of taxpayers, and $400,000 for the second.

Only “Qualified” Debt Forgiveness Can Escape Income Tax

To be considered “qualified principal residence indebtedness” that can be forgiven without income tax owing, the mortgage debt must meet these requirements:

   1.  It must have been used to buy, build or substantially improve your principal residence and be secured by that residence.  Refinanced debt used for this purpose is also OK.

   2.  It cannot have been a “cash out” refinance where loan proceeds were used for other purposes, such as paying off credit cards, school tuition, or buying another piece of property.

   3.  It cannot have been debt on a second home, rental property, or business property.  For this and other non-real estate debts, you will need to come within the insolvency or bankruptcy exceptions.

Call San Diego Law Firm for Help with Mortgage Debt Strategies

Over 2,000,000 California residents are currently stuck with “underwater mortgages,” as California has suffered some of the largest decreases in property values in the nation. If you are in this situation, our experienced San Diego real estate lawyers can help you identify the best strategy for handling your mortgage while avoiding additional income tax on forgiven mortgage debt.  We provide skilled legal help with insolvency calculations and Chapter 13 bankruptcy, and can assist you with a deed in lieu of foreclosure and other real estate strategies that require legal documentation.  Please call San Diego Law Firm at (619) 794-0243 to schedule a consultation. We look forward to helping you.

Avoid Trademark Conflict when Using Artwork to Brand Your Business

Using artwork to identify (brand) your business offers many advantages over using a live person, such as your CEO or a media spokesperson. Artwork never ages or dies and is not subject to scandal.  Your business will be easier to sell later if you have a strong brand identity, not identified with any person, available for transfer to a buyer.

Before buying a license to use any artwork as your business brand, though, see a trademark and copyright attorney for a brand development consultation.  A modest amount of legal research can confirm that the artwork you are interested in won’t give rise to a trademark dispute with a business in the same general industry.  For example, a dental office could choose to be identified by a smiling T. Rex illustration, but an insurance agency identifying itself with a T. Rex could find itself in a trademark dispute with Geico, already identified by an illustration of a standing green gecko.

Buy Exactly the Copyright License You Need

Your copyright attorney can also help you select the exact licensing rights you need, so you don’t waste money on a license that is overly broad. For example, a dental office might want to license a photo-realistic T. Rex for use in a banner at a consumer tradeshow, to reinforce its message about the benefits of choosing modern rather than “Jurassic” dentistry, but might be unsure if this would develop into a business identity. The copyright attorney would likely recommend a short-term print-only copyright license, which requires only a form agreement.  If the T. Rex was a big hit at the tradeshow, then the dental office could decide whether to buy print rights for a longer period of time, or rights to additional uses, or even exclusive U.S. rights.

When to Obtain a Written Assignment or Exclusive Copyright License

The creator of an original work of art has the right to decide who can use it, how, when, and where they can use it, how long they can use it, who can adapt it to other forms, and who can financially benefit from reselling it.  This “bundle of rights” is part of the “copyright” that every creator has by law in their artwork, whether or not they register or document their copyright.

If you intend to use a specific image or set of images to create your business identity or brand, you will need a signed written agreement that either permanently assigns (sells) all rights in the artwork to you, or grants you an exclusive right to use and adapt the artwork for a set number of years in a defined geographical area.  An oral agreement, or even an invoice, cannot protect you if the artwork’s creator sells the same image to one of your competitors.  It will also not be enough to protect you from a copyright infringement suit by the artwork’s creator if, for example, you decide to use your exclusive rights to brand a consumer product for sale on the Home Shopping Network, and the creator had no intention of granting you this right.

Call San Diego Law Firm for Help with Copyrights and Trademarks

San Diego Law Firm’s experienced business lawyers can help you with all issues of copyright and trademark licensing, sales, and assignments, including brand development and advertising.  For an appointment please call San Diego Law Firm today at (619) 794-0243.  We look forward to helping you.

There are many examples in California case law, and they generally do not favor the party who claimed that a commercial real estate “agreement to agree” was not enforceable because the parties could not agree.  For example, the California Court of Appeal in San Diego has noted with approval the authority of a jury to determine a “reasonable rental rate” for a commercial lease renewal where the landlord has not “negotiated in good faith” for a “reasonable” amount with the lessee of the commercial premises.  Similarly, the California Court of Appeal in Los Angeles has held that a “letter of intent” setting out the general terms for the purchase and sale of an ice-cream manufacturing plant is an enforceable “contract to negotiate an agreement” that required good-faith negotiation. The court determined that the amount of damages that can be awarded for one party’s “failure to negotiate a contract” is the amount lost by the other party who has detrimentally relied on the letter of intent.

Even more troubling, the federal Ninth Circuit Court of Appeals in California recently held that a signed “Final Proposal” that was missing a material term – the length of a ground lease – nonetheless created an enforceable ground lease with a put and call option to purchase.  The court upheld a $15.9 million award for the landlord’s lost rent for a lease term that was decided upon by the jury based on all the evidence, and for the loss of the value of the put option, even though the parties had been unable to agree on all the terms of the final agreement.

The bottom line:  when you are negotiating a commercial real estate contract in California, never sign any document – even a proposal, a letter of intent, or a current lease calling for future negotiations – unless the document also provides that either party can change its mind for any reason, and refuse to negotiate or exercise good faith to reach an agreement on any material term of a future contract, without further liability for any damages, including damages for detrimental reliance.

Call San Diego Law Firm for all Help with Commercial Real Estate Transactions

Before you negotiate or sign any commercial real estate agreement, contact the skilled business real estate lawyers of San Diego Law Firm.  We have many years of experience in negotiating and documenting all types of commercial real estate contracts, and have successfully represented many businesses in negotiating contracts to buy, sell, purchase, lease, build out, and develop commercial property.  We can help you and your business as well.  Please call San Diego Law Firm at (619) 794-0243 to schedule a consultation. We look forward to helping you.

            Trees and Other Plantings

A few cities and counties in California restrict tree height to preserve views; most do not.  However, if your home is in a planned development where views were an important feature of the initial home sales, your development’s CC&R’s may limit the height of trees, and provide that trees over a certain height must be trimmed or removed.  CC&R’s may also limit or forbid hedges or other tall plantings within a certain distance from one or more of the property lines. 

If a neighbor’s tree has branches that overhang your property, you have the right to trim those branches back to the property line.  You also have the right to dig down and sever tree roots that have come under your property and that are cracking your pavement or invading your water or sewer line. However, you need to use care in this, since you will be responsible if your root trimming destabilizes a tree and causes it to fall and damage the neighbor’s property.  If root trimming cannot be done safely, it is best to either reach an agreement with the neighbor to share the costs of removing the tree, or to seek a court order that the tree be removed because it is a legal “nuisance.”

If your local power utility is notified that a tree is touching power lines, the utility will send workers to trim the tree back, for the sake of public safety.

            Weeds and Trash

Your CC&R’s may also protect your views and property value from harm due to weeds, trash, and other unsightly items on your neighbor’s property.  For example, many CC&R’s forbid clotheslines, garden sheds, and lawn equipment from being kept outside on any lot within the development.  In addition, California cities and counties all have code enforcement divisions with responsibility for ordering the clean-up of properties with extensive junk, trash, and debris in public view.  Once they receive a written complaint in the proper form, they will investigate to decide if the situation is bad enough for them to order the owner to clean up the property or reimburse the public agency for the cost of clean-up.  If you have no protective CC&R’s and your code enforcement agency does not deem the situation serious enough to get involved, you may still be able to obtain a court order for your neighbor to clean up their property if it is so full of weeds, junk, and trash that it is a public nuisance. 

            Buildings, Fences, and Improper Uses

CC&R’s often restrict the size and type of fences, building additions, and free-standing structures that can be added to lots in the development.  CC&R’s also may prohibit homes from being used for any commercial purpose, which becomes particularly important to surrounding residents when a neighbor’s commercial use of a residential property is an unsightly or noisy one, such a car repair business.

Building regulations and zoning laws also place limitations on fences and structures on residential lots, and zoning laws generally restrict or prohibit commercial activities on residential lots.  Again, your city or county code enforcement division will often take steps to enforce these laws and regulations once they become aware that a violation exists.

California’s Coastal Commission also has long and detailed regulations covering buildings on private property that are in the coastal zone. This is a complicated area of law, and a homeowner who is not in compliance with all Coastal Commission regulations may find that if they complain about a neighbor who blocks their views, the neighbor may retaliate by filing their own Coastal Commission complaint.  For this reason, a lawyer and an architect familiar with coastal regulations should always be consulted before the initial complaint is filed.  

            Spite Fences and Structures

California law forbids property owners from erecting “spite fences” or other structures that are not being used for any purpose other than to block a neighbor’s view.  Although these are rare, it may be possible to obtain a court order requiring the spite fence or structure to be removed by proving the lack of any practical purpose for the fence or structure, and by proving that a long-standing dispute over views or boundaries preceding the building of the fence or structure.

If your views and enjoyment of your property are being impaired by a neighbor’s trees, fence, building, or unsightly use of their property, the skilled real estate attorneys of San Diego Law Firm can help you. We have years of experience in obtaining property owners’ compliance with CC&R’s, California state laws, and local property laws and regulations through negotiation, mediation and court injunctions. We generally start with friendly outreach to seek your neighbor’s cooperation, and only take more formal steps if no cooperative agreement can be reached.  We work to minimize the time and expense of legal proceedings, to get the best outcome possible given the circumstances, and to set up a methodology and lines of communication to help you and your neighbors avoid future conflicts.  For experienced, concerned help with any real estate problem, please call San Diego Law Firm at (619) 794-0243.

If you order the employee to remove the offending material, he or she may file a claim for discrimination or for violation of his or her employee labor law rights. If you do nothing, other employees may be offended, and if the material has sexual, racial, religious, or other discriminatory overtones, you may see your inaction as approval of hostile workplace conditions that discriminate against them. Your employee’s offensive comments may also cause you to lose customers or valued business associates.

The best way to solve this problem, or to prevent it in the first place, is to create a written technology policy and enforce it equally in all situations, regardless of what the content is or who has created it.  The reason for the policy – to avoid workplace conflicts, to protect the financial well-being and reputation of the business, and to make sure all employees feel valued and protected from harassment and discrimination – should be clearly stated in the policy.  Here are things to consider for your social media policy:

Workstation Screen Savers

Although a screen saver is technically not social media, the open nature of most workplaces means an offensive screensaver is likely to be visible to other employees, and possibly, to suppliers and even to customers. The best policy is to prohibit all personalized screen savers or computer desktop backgrounds.  If you tell one employee to remove an offensive personal screen saver or desktop background, yet allow other employees to keep their own creations visible, the first employee may perceive racial, religious, or other discrimination in the unequal treatment.  Also, the National Labor Relations Board has ruled that if any personal screen savers are allowed, employers must permit ones with pro-union messages. It is acceptable business policy to simply prohibit all personal screensavers and desktop backgrounds. 

Social Media – Facebook, YouTube, Twitter, Blogs, Etc.

The National Labor Relations Board protects the rights of both union and non-union employees to join in groups of two or more to discuss issues of pay, safety conditions, performance reviews, and other workplace conditions. The NLRB has said this rule applies equally to social media, which would include websites such as Facebook, Twitter, YouTube, and LinkedIn, as well as blogs and company forums.  

However, your business can do several things to limit undesirable commentary by employees using social media:

1.  You can prohibit employees from identifying your business and their position in a way that suggests they represent your business or are speaking on its behalf.  An employee could then not put up a blog entry saying something like, “As a manager of XYZ company, it is obvious that the mayor is unfair to our industry.”

2.   You can prohibit employees from disclosing confidential business information and trade secrets if these terms are clearly defined (for example, in an employment manual), and the prohibition does not interfere with an employee’s rights to discuss workplace conditions.

3.  You can forbid employees to use social media to sexually harass another employee or to create a hostile workplace based on an employee’s sex or sexual orientation, or to make comments that violate Title VII of the Civil Rights Act of 1964 (which prohibits discrimination on the basis of sex, race, religion and national origin), the Americans with Disabilities Act (forbidding discrimination based on disability), and the Age Discrimination in Employment Act (forbidding discrimination based on age).  Although the law is not yet clear, you may also be able to prohibit comments that do not pertain to working conditions but that are derogatory to other groups of people protected by specific employment laws, such as women who are pregnant.

The experienced business attorneys at San Diego Law Firm can help your business craft social media, technology usage, and other employee policies that will protect your business interests in maintaining a stable, reputable, and productive workplace while not violating the legal rights of your employees. We can also help you if your business has been threatened with legal action by an employee or former employee based on your current or former policies.  Please call San Diego Law Firm at 619-794-0243 to make an appointment.  We look forward to helping you.