Mechanics Liens Process for Contractors and Subcontractors

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Firm handshakes can no longer be trusted by contractors and subcontractors to ensure they get paid. Proper use of a mechanics lien is one of the best ways to obtain a security interest in the owner’s property. An experienced California real estate attorney can help ensure you follow the statutory process for preparing, filing, and enforcing a mechanics lien.

Need for Mechanics Lien

Contractors and subcontractors can use mechanics liens to collect payment for their construction work and supplies. The lien allows for taking possession of the property on which the work was completed if the property owner fails in making the necessary payments.

Mechanics liens are typically filed against property owners when they fail to pay their contractors and subcontractors. Filing a mechanics lien should not be your first go-to option, however. You should try and obtain your payment in an amicable fashion.

Call the property owner. Send them reminder emails and notifications for the property. You should let them know that you fully intend on pursuing legal remedies to get your fair and due payment.

This will let a judge know that you tried your best to resolve the dispute in good faith before filing a suit. If the property owner is hell-bent on not paying you, it may be time to file a lawsuit for a breach of contract and other damages (quantum meruit) along with a mechanics lien.

Process for Filing a Mechanics Lien in California

You can file a mechanics lien in 6 easy steps. While these steps may seem straightforward, it’s recommended that you have a reputable law firm represent your interests. California law requires you to do the following for filing a mechanics lien:

Include the provision in your contract

Contractors are usually required to inform the property owner regarding the right to payment and filing of a mechanics lien. This language should be included in your services or materials contract. It will essentially protect your rights in case you are not paid and have to file a lien down the road.

Send direct notice to the property owner

You are required to send notice to the property owner directly within 45 days advising them of the right to file a lien. Contractors should also explain that the property owner has the authority to make direct payments to the subcontractors for materials or work. This is an important notice as it preserves your access to filing a mechanics lien.

Obtain owner information

Subcontractors may not have direct access to the property owner. They should demand the name and address of the property owner for which they are providing the materials and services. It’s best to make this demand in writing with the contractor.

Request payment

The mechanics lien cannot be filed right away. You should first ask the property owner for payment before using the lien option. The property owner should also be given the opportunity to pay. Send a nonpayment letter to the property owner reminding them of the dues.

File a Statement of Lien

You only get 120 days for filing the Statement of Lien. The timer starts from the day you completed the work and not when the due date for the payment was missed. You may end up waiving your right to claim a lien if you miss this deadline. The original Statement of Lien has to be filed with the county recorder. A copy of the same needs to be sent to the property owner using certified mail.

Legal action

You can take further legal action against the property owner. You get 365 days from the last day of work to file a complaint against the property owner

Your first step when considering filing a mechanics lien should be hiring an attorney. It’s best to work with an established law firm with the necessary experience.

Do You Have a Right to File a Lien?

You will need to determine whether you have the right to file a mechanics lien or not. Certain construction laws in California state the circumstances in which contractors and subcontractors can file a lien.

Just because the property owner did not pay you, doesn’t give you an automatic right to file a lien. On a related note, you can always lose the right to file a lien even if you had that right at the beginning of the project.

“Frivolous lien” refers to a lien when you did not have the right to file it. This can lead to an expensive legal mess. There is a lot of room for error in these situations since nothing is set in black or white. This makes it important for you to work with a qualified real estate business lawyer who understands the laws and your needs.

Speak With an Experienced Real Estate Attorney in California Today

It can be difficult and confusing to figure out whether you have lien rights or not. The real estate lawyers at Peterson, Martin & Reynolds can help you understand all available legal options to recover the money you are owed from the property owner.

To schedule your initial consultation with our office, call us today at (415) 849-2564 or fill out our online contact form.

Understanding And Resolving Easement Disputes in California

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According to a recent survey, 17% of real estate issues were found to be boundary disputes between neighbors. This occurs when residents are uncertain about where their property begins and ends.

Unfortunately, easement disputes can quickly become ugly, lengthy, and expensive. An experienced real estate attorney can help you with skilled legal guidance and direction if you are involved in a boundary dispute with your neighbor.

Overview of Easement Issues in California

An easement refers to a situation in which an entity or individual has the legal right to use or occupy the land of another person for a particular purpose. However, the landowner retains the title. Such property is usually termed “servient estate.” The property owner can keep every other person from using the land except the easement holder.

Types of Easements in California

There are four general types of easements that apply to properties in California. These are:

Easement by Express Grant

Express easements are created when the easement is granted by the landowner. This allows another entity or person to use the land as specified or directed.

An express easement can be created using a contract, grant, deed, or any other form of written document. It’s recommended that you work with a trusted attorney to draft the express easement document. This will help prevent common disputes from cropping up at a later date.

Easement by Implication

The second type of easement is by implication. This is created when it becomes certified by law that there was a previous easement between the two parties (although implied). It’s necessary for the claimant of the implied easement to bring proof that they had the landlord’s word or were already able to use the servient estate for a defined purpose.

Easement by Necessity

Easement by necessity happens when there is no other option but to use the land for the intended purpose. It becomes absolutely necessary to allow the use of land for the specified purpose in easement by necessity. This happens when there may not be any possible alternative for accessing the other person’s property. For instance, a landlocked party will need to use their neighbor’s property for accessing their own property.

Easement by Prescription

A prescriptive easement is generally granted when an individual continues using a part of another person’s land for a certain time period. Easement by prescription can be granted even if the landowner did not specifically permit the use of the land.

Common Examples of Easement Disputes in California

Easement disputes between neighbors are a common issue in California as previously stated. These are a few common easement and boundary disputes between neighbors:

  • Trespassing: Landowners have an express right to keep their property safe from unwanted intruders and strangers. A neighbor driving through another’s land every day can be considered trespassing if it is without permission.
  • Interference: Interference happens when the actions of a person hinder or affect the purpose for which the property easement was granted in the first place. The person interfering with the use of easement can be held responsible for their actions.
  • Zoning: Zoning and land-use regulations, which prevent a landowner from using the property can be the cause for an easement dispute between the landowner and the city.

Easement and boundary disputes should not be taken lightly. You should speak with an attorney as soon as possible if you are involved in one. In fact, it is a good idea to consult with an attorney even before you formally discuss the issue with your neighbor.

Your attorney will be able to help direct the conversation in the right direction while maintaining your best interests. They may also outline the available legal actions at your disposal in order to obtain a favorable outcome.

Resolving an Easement Dispute

Easement disputes frequently turn into frustrating and lengthy arguments. But it doesn’t always have to be that way. There are a few possible ways of resolving a dispute if you are a property owner who is frustrated by an easement.

  • Try and resolve the disagreement mutually by opening a discussion with your neighbor. This approach usually works with neighbors that are friendly, reasonably minded, and community-driven.
  • Try to enter into a contract or agreement with the easement holder for the purpose of putting an end to the easement entirely.
  • Purchase the neighbor’s property if you have the means and your neighbor agrees.
  • Send a demand letter to the easement holder or neighbor. Note: it is best to have your letter drafted or at the very least reviewed by an experienced attorney.
  • Use the threat of legal action as leverage to negotiate with the easement holder or neighbor. Using a document that is drafted by a well-established law firm usually works well with this strategy.
  • Speak with a dedicated attorney about legal remedies that are available for limiting or terminating the easement.
  • If other more amicable measures have been exhausted, file a lawsuit against the easement holder to recover monetary damages if they improperly used the easement and caused you to sustain compensable losses.

Consult With an Experienced Real Estate Attorney in California

The experienced team of real estate attorneys at Peterson, Martin & Reynolds is committed to offering comprehensive representation with regard to easement disputes and other types of boundary dispute issues. We encourage you to set up a case evaluation by calling us at (415) 849-2564 or reaching out to us online.

 

Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One

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By M. Henry Walker

This case involves the appeal of a trial court’s judgment granting an equitable easement over rural property in Ventura County. Plaintiff Hinrichs originally owned two large parcels which he inherited from his mother. He grew up in a home located on the southern parcel but hadn’t lived there since moving to Alaska in the 1980s. He sold the southern parcel to a third party based on the belief that he still had access to the only public road servicing the area via an historic trail which first appeared on a federal survey map in 1868 and which traversed several neighboring parcels. He was wrong in this regard; the owners of the neighboring parcels denied him access over the historic trail meaning his northern parcel was actually landlocked.

Hinrichs sued several neighbors, claiming he had an easement which was appurtenant to the original land patent, that he had acquired a prescriptive easement, and that he was entitled to an equitable easement by necessity. The trial court rejected the first two theories but entered judgment in favor of Hinrichs on the third, creating an equitable easement by necessity. The location of the created easement, however, was not over the historical trail area previously used for ingress and egress but rather over a new indirect route which was less accessible due to the terrain. While portions of the newly created easement had existing driveways, in order for Hinrichs to use the judicially created easement he would be required to grade two new roadways to connect to the existing portions. The trial court applied the “balancing of hardships” test and determined this to be the best location because this location would only minimally interfere with the servient parcels.

Hinrichs appealed, arguing the trial court erred in denying him an easement over the historic trail. The other parties appealed as well, claiming among other things that the trial court erred in creating a new easement where none had ever existed. The appellate court focused on the issue of whether a court can create an equitable easement by necessity where the party claiming the easement has made no prior use of the easement. On the latter issue, the appellate court affirmed the trial court’s judgment, holding that “the court may grant an equitable easement without there being a preexisting use by the landowner seeking the easement.” The appellate court reasoned that despite the holdings of several cases which recognize the imposition of an easement by necessity in the case of a “long-standing encroachment,” such an encroachment is not an absolute requirement for an equitable easement. Moreover, the court found no evidence that Hinrichs was negligent in creating the landlocked parcel because he had a reasonable belief that he had a right of way over the trail.

This residential real estate case serves as a reminder that while the law recognizes a strong interest in preventing land-locked parcels, a trial court sitting in equity must balance the rights of all parties rather than focus solely on the rights of the party claiming the equitable easement. In other words, Hinrichs got his easement but can’t be heard to complain that the location was not over the best access route. Perhaps that’s why it’s called an easement by necessity rather than an easement by convenience.

Hinrichs v. Melton (2017) 17 C.D.O.S. 4217.

Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects

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In California, the Right to Repair Act, codified at Civil Code sections 895 et seq., was established with the goal of resolving construction defect claims in an expeditious and non-adversarial manner. The Act requires that, prior to filing a lawsuit, a homeowner must provide the builder with a notice of claim. The notice must contain the claimant’s name, address, and preferred method of contact. The notice must also state that claimant is alleging a violation pursuant to section 910 of the Act, and describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the alleged defects.

Once such a claim is delivered via overnight mail, certified mail, or personal delivery to the builder, the statutory timelines go into effect. The builder must acknowledge receipt of the claim within 14 days, may elect to conduct an initial inspection of the property within the following 14 days, and may offer to repair the violation and compensate the owner within 30 days of the initial or second inspection. The owner then has 30 days to authorize the builder to proceed with the repair or request alternative contractors. If the builder fails to strictly comply with any of the requirements or timelines, the owner is released from the requirements of the Act and may proceed with filing a lawsuit.

In a recent case, Blanchette, the owner of one of 28 homes constructed by GHA Enterprises, served GHA with a notice of claim under the Act. GHA did not respond to the notice until 21 days later. GHA’s response asserted that Blanchette had not alleged the defects with sufficient detail as required by the Act. Because the response took 21 days, Blanchette took the position that it was untimely and filed a construction defect class action against GHA. GHA moved to stay the lawsuit, and the trial court granted the motion, agreeing that Blanchette’s notice of claim lacked sufficient detail to trigger GHA’s obligations under the Act.

The Court of Appeal reversed the trial court decision, finding that the timelines under the Act are to be strictly construed. Although the Court agreed that Blanchette’s notice of claim lacked sufficient detail of the alleged defects, the Act nonetheless requires that the builder respond and acknowledge the claim within 14 days. Here, the builder should have raised any objection to the sufficiency of the notice within the 14 day time period rather than relying on that defect as a basis to delay the response. Because GHA did not timely acknowledge receipt of the claim and set forth its objections, Blanchette was released from the requirements of the Act and could proceed with the lawsuit.

This case serves as a reminder to builders in California to make sure and strictly comply with all provisions of the Right to Repair Act, or risk becoming embroiled in what may become much more lengthy and expensive civil litigation.

Blanchette v. Superior Court (GHA Enterprises) (Feb. 10, 2017) 17 C.D.O.S. 1302

(2/17)

Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners

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Jacobs, a licensed real estate broker, signed a vacant land listing agreement granting her the exclusive right to sell a parcel of property in Marin County. The listing agreement was signed by one of the property owners, Locatelli, as trustee for the Locatelli trust. There were signature lines on the listing agreement for five additional owners, but they did not sign. However, the term “owner” was defined in the agreement as the Locatelli trust “et al.”, which means “and others”. Locatelli told Jacobs he was authorized to act on behalf of all owners.

Jacobs marketed the property and found a potential buyer, The Trust For Public Land (TPL). When Jacobs informed Locatelli, he claimed that he had already been speaking with TPL for 3 years and would deal with them directly. He instructed Jacobs to cease all communications with TPL. The owners later sold the property to TPL, and refused to pay Jacobs a commission.

Jacobs filed a complaint against the owners and TPL to recover the commission. The owners who had not signed the listing agreement moved to dismiss the case against them, and the trial court granted their demurrer. The court of appeal reversed the decision, thus keeping all the owners in the case.

The non-signing owners argued that Jacobs’ complaint was barred by the statute of frauds, which provides that a broker’s commission agreement is invalid unless some form of it is in writing and signed by the party to be charged or the party’s agent. The court, however, found the statute inapplicable because Jacobs alleged there was a written agency agreement between Locatelli and the owners allowing him to act on their behalf, and he signed the listing agreement. In addition, Jacobs alleged that at least two of the other owners had acknowledged her as the listing broker during the marketing of the property. As such, the court of appeal held that the trial court should have allowed extrinsic evidence on these claims rather than dismissing the complaint.

The owners also argued that the parol evidence rule barred introduction of extrinsic evidence to dispute the listing agreement because it was a fully integrated and thus a final agreement. The court of appeal also found this rule inapplicable, because there was no apparent contradiction between the terms of the listing agreement and Jacobs’ allegations, i.e., that all owners had retained her through their agent, Locatelli.

This case was decided correctly under the facts and circumstances involved. It is nonetheless an important warning and reminder to brokers and agents to ensure that all necessary parties sign listing agreements and other transaction documents, so as to avoid unnecessary litigation and problems down the line.

Jacobs v. Locatelli (Feb. 9, 2017) 17 C.D.O.S. 1232

(2/17)

Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer

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It is settled law in California that a real estate broker representing both seller and buyer has fiduciary duties to both parties. In a recent decision, the California Supreme Court has now confirmed that, when there is such dual agency by the broker, the associate licensee acting solely as the listing agent under the broker’s license also has a fiduciary duty to the buyer.

In this case, seller retained Coldwell Banker to list a luxury residence for sale. The listing agent marketed the home as having approximately 15,000 square feet, which was more than reflected in public records. Buyer was also represented by Coldwell Banker, but by a different salesperson in a separate office. As required by law, buyer had knowledge of and consented to the dual agency. The listing agent provided copies of public records and the marketing flyer, but did not advise buyer to verify the square footage. After the purchase, buyer discovered the discrepancy and sued for breach of fiduciary duty.

Initially, the trial court decided that listing agent had no fiduciary duty to buyer. After the Court of Appeal reversed that decision in 2014, the California Supreme Court agreed to hear the case. The court first examined the history of dual agency in California, noting many developments since the early 1980s. At issue was interpretation of the final two sentences of Civil Code section 2079.13(b), in which the term “agent” refers to the broker and contemplates a real property transaction: “The agent…bears responsibility for his or her associate licensees who perform as agents of the agent. When an associate licensee owes a duty to any prinicipal, or to any buyer or seller who is not a principal,…that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions.”

The listing agent argued that, taken in context, the “equivalent” language merely clarifies that the broker assumes duties owed by its agents, not the other way around. The court, however, agreed with buyer’s contrary position that because the agent’s authority derives solely from that of the employing broker, the second sentence imposes on the agent the same responsibility as held by the broker. This reading of the statute is supported by its full legislative history.

As such, the court affirmed that listing agents, when their brokers act as dual agents, owe buyers a duty to learn and disclose all information materially affecting the value or desirability of the property being purchased. In this instance, that included a duty by the listing agent to the buyer to investigate and disclose everything he could learn about the square footage. Here, the duty to investigate arose because there was a known discrepancy regarding square footage.  This decision further clarifies and strengthens protection afforded to real estate buyers in California.

Horiike v. Coldwell Banker Residential Brokerage Company (Nov. 21, 2016) 16 C.D.O.S. 12228

(12/16)

Appellate Court Slams Scofflaw Tenant for Bogus Anti-SLAPP Motion

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This case pitted the competing goals of two very important statutory schemes.  On the one hand, an unlawful detainer action provides landlords a means to evict a tenant in a short, simplified proceeding where the only issue to be tried is whether the tenant is in lawful possession of the premises.  The availability of such an expedited procedure is hugely important to landlords, especially given that landlords are prohibited from using “self-help” to remove a tenant.

 

This case pitted the competing goals of two very important statutory schemes.  On the one hand, an unlawful detainer action provides landlords a means to evict a tenant in a short, simplified proceeding where the only issue to be tried is whether the tenant is in lawful possession of the premises.  The availability of such an expedited procedure is hugely important to landlords, especially given that landlords are prohibited from using “self-help” to remove a tenant.

 

On the other hand, the anti-SLAPP statutory scheme is designed to deter the filing of non-meritorious lawsuits which are aimed at thwarting a party’s valid exercise of protected activity, such as the exercise of free speech or the filing of a lawsuit to remedy a wrong.  When invoked by a defendant in a proper case, a plaintiff must present evidence at the very beginning of a case to establish the probable validity of their case or face dismissal.  Moreover, discovery is stayed pending resolution of the motion.

 

In what may have seemed like clever legal maneuvering at the time, the tenant in this case (who was behind in rent and presumably knew that eviction was inevitable) filed an action claiming its landlord was liable for allowing another tenant to monopolize parking spaces in a shopping center.  After the landlord filed a separate unlawful detainer (eviction) action, the tenant responded by filing an anti-SLAPP motion to strike which argued that the landlord’s unlawful detainer action was filed to thwart tenant’s exercise of its free speech rights.

 

The trial court denied the motion to strike and sanctioned the tenant almost $3,500 for filing a frivolous motion, finding that the purpose of the landlord’s unlawful detainer action was to address the tenant’s failure to pay rent and common area charges rather than to thwart the tenant’s public participation in a protected activity.  The Court of Appeal agreed that while the tenant beat the landlord to the courthouse by filing its action first, the mere timing of the two lawsuits was not dispositive.  The court looked to the California Supreme Court’s opinion in Navellier v. Sletten, (2002) 29 Cal. 4th 82, which provides that the mere fact that an action was filed after, or even triggered by, protected activity does not establish that the action arose from that activity as required by the anti-SLAPP statute.

 

Applying the holding of Navellier, the Court of Appeal concluded that “the unlawful detainer complaint arose from Tenant’s unprotected activity in allegedly failing to pay rent and CAM charges, rather than from its protected petitioning activity in filing the prior lawsuit.”  According to both the trial court and appellate court, this was not even a close call.

 

This decision is yet another reminder that, as powerful as an anti-SLAPP motion to strike can be, discretion must be used in bringing such motions because they are only proper in cases which truly arise from protected activity.

Olive Properties v. Coolwaters Enterprises, Inc. (2015) 241 Cal.App.4t 1169

(03/16)

Homeowners Were Not Liable, This Time, for Injury Sustained by Employee of Their Unlicensed, Uninsured Contractor

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Vebr v. Culp serves as a cautionary tale for any homeowner considering hiring a contractor to perform work on their home.

 

The Culps contracted with OC Wide Painting to paint the interior of their home. The contract specified that OC Wide had workers’ compensation insurance, or would acquire it. Culp confirmed online that OC Wide had a valid license and also checked OC Wide Painting’s references. Before signing the contract, Culp reviewed the California Contractors State License Board’s detail for OC Wide which stated: “This License is exempt from workers compensation insurance; they certified that they have no employees at this time.”

 

An hour into working in the Culps’ home, OC Wide’s employee, Plaintiff Tomas Vebr, fell from an extension ladder provided by OC Wide resulting in serious injury. The ladder was supported by two helpers employed by OC Wide. OC Wide never did acquire workers’ compensation insurance as promised in the contract and the Culps did not halt the project despite the fact that other individuals were working in their home.

 

California Business and Professions Code § 7125.2(a)(2) provides that a contractor’s license is automatically suspended by operation of law as of the date the contractor is required to obtain workers’ compensation insurance but fails to do so. Labor Code § 2750.5 provides that a worker who performs services for which a license is required but lacks such a license is rebuttably presumed to be an employee, not an independent contractor.

 

Vebr sought to hold the Culps liable in tort under the theory of respondeat superior as Vebr’s statutory employer in light of OC Wide’s unlicensed and uninsured status. The Culps moved for summary judgment on the grounds there were no facts to show that they were liable for Vebr’s injuries, that they breached any duty owed to Vebr, that the premises were dangerous or defective, or that the Culps’ actions were the legal or proximate cause of Vebr’s injuries. The trial court agreed and granted the motion for summary judgment. Vebr appealed, and the Court of Appeal, Fourth Appellate District, affirmed the decision of the Orange County Superior Court.

 

Ordinarily, when an employee sustains a worksite injury, the exclusive remedy is provided by the workers’ compensation law, and the employer is immune from a lawsuit. (Lab. C. §§ 3600, 3601, 3602.) But if the employer has not secured workers’ compensation coverage, an injured employee may bring a civil suit against his employer. (Lab. C. § 3706.) If the employee establishes that he was injured in the course and scope of his employment, a rebuttable presumption is created that an uninsured employer was negligent and the employer is precluded from claiming comparative fault or assumption of risk as a defense. (Lab. C. § 3708; Huang v. L.A. Haute (2003) 106 Cal.App.4th 284, 289–291.)

 

When an employee of a contractor is injured, and the contractor is unlicensed and uninsured at the time of injury, the injured employee’s recourse may be against not only the contractor, but also against the landowner who hired the contractor, as an additional employer. (Heiman v. Workers’ Comp. Appeals Bd. (2007) 149 Cal.App.4th 724, 734.) The injured employee may have the landowner deemed a “statutory” employer and seek workers’ compensation benefits through the landowner’s general liability or homeowners’ insurance policy. In this case, the Culps were insured under a homeowners’ policy but Vebr did not qualify as a “residence employee” under that coverage. This meant that if the Culps were found liable, they would have to pay out of pocket for Vebr’s injuries.

 

The potential scope of a homeowner’s tort liability to an injured employee of an unlicensed contractor whom the homeowner hired has not yet been resolved by the California Supreme Court. (See Cortez v. Abich (2011) 51 Cal.4th 285, 291 [“Whether unlicensed contractors or their workers may or must be deemed the homeowners’ employees under section 2750.5 … are difficult and unsettled questions.]; Ramirez v. Nelson (2008) 44 Cal.4th 908, 916 [same].

 

The Court ruled that it did not need to decide whether the Culps were the statutory employer of Vebr because no triable issue of material fact existed regarding such liability. The court concluded: “Here, the undisputed facts show the cause of Vebr’s fall is a mystery. There is no evidence showing what had occurred or that Vebr was free from negligence himself. There is no evidence, for example, that at the time of the fall, he was holding on the ladder with two hands and did not cause the fall himself by losing his balance. On this record, there is no reasonable and logical inference that…anyone…present in the residence at the time of the accident, was negligent. Someone might have been negligent, but we do not and likely never will know whether that was the case.”

 

Don’t count on being as lucky as the Culps. If you are considering hiring a contractor to perform work in your home, review their license and insurance status. If the license deems the contractor exempt from carrying workers’ compensation insurance because there are no employees, make sure no one other than the contractor himself performs work at the property. Otherwise, immediately halt the work and demand written proof of workers’ compensation insurance. Doing so will reduce the possibility of being deemed a statutory employer and possibly held liable for injuries sustained by workers on your property.

 

Vebr v. Culp (2015) 14 C.D.O.S. 11845

(12/15)

Physical Division of Property Does Not Necessarily Equate to Division Under the Subdivision Map Act

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Save Mount Diablo v. Contra Costa County involved the question of whether an imminent domain taking which physically splits an existing parcel into several non-adjacent pieces constitutes a subdivision of the original parcel under the Subdivision Map Act, thus allowing a would-be developer to forego the often onerous requirements of the Subdivision Map Act.

 

The property in question consisted of a large undeveloped tract off Vasco Road in Eastern Contra Costa County. Historically, the tract had been recorded as a single parcel and used for agricultural purposes, but in the mid-1990s the Contra Costa Water District (“District”) acquired two narrow intersecting strips of land by eminent domain for an underground pipeline and to relocate Vasco Road, respectively. The District’s acquisition of the strips in fee left a remaining property consisting of four irregularly shaped parts, each physically separated from the other parts by one of the strips owned by the District.

 

Nunn, the property owner who had purchased the property after the District’s acquisition of the strips, first attempted to subdivide the land using the parcel map process outlined in the Subdivision Map Act. After those efforts proved unsuccessful, Nunn changed course and instead sought a certificate of compliance from the County. While the County initially denied the request at the planning staff level, the matter was brought before the Planning Commission, which reversed the staff’s decision. The County Board of Supervisors eventually agreed with the Planning Commission and issued four certificates of compliance (i.e., one for each physically separated portion of the property) certifying that the four newly created parcels complied with the Subdivision Map Act.

 

Save Mount Diablo (“SMD”) filed suit, petitioning the Court for a Writ of Mandate requiring the County to set aside the four certificates of compliance. The trial court granted SMD’s petition and the Court of Appeal, First Appellate District, affirmed. The Court first examined the purpose of, and procedures mandated under, the Subdivision Map Act’s requirements for creation of a new legal parcel. Next, the Court considered Nunn’s main argument, that the District’s physical division of the Property by acquiring the strips traversing the Property constituted a “division” under the act. While Nunn contended that the District had effectively divided the Property because the result was four non-contiguous “parcels,” the Court disagreed.

 

While the Court agreed that the District’s acquisition of the strips physically divided the Property, such that a person would need to traverse the District’s property in order to travel from one portion of the Property to another, the physical division of the property by imminent domain did not constitute a division of the Property under the Subdivision Map Act. On this issue, the Court found that a physical division of property was not determinative, but that the key issue was whether the newly created parcels complied with the Subdivision Map Act. The Court noted that a division within the meaning of the Subdivision Map Act is not established merely because parts of a property do not touch. In reaching its holding, the Court looked a California Attorney General opinion which advanced the notion that the term “contiguous” could be used to not only denote two things which are in physical contact, but could also be used in this context describe two things which are “nearby.” The Court ultimately held that despite being separated by strips running across the Property, the portions of the Property were still contiguous and, therefore, no division had taken place.

 

The takeaway from this case: The Court was likely influenced by equitable considerations, as evidenced by the reference to Nunn’s predecessor’s receipt of almost $1 million from the District to compensate for the taking of the two strips of land and the fact that the remaining pieces of the Property were still easily accessible.

 

Save Mount Diablo v. Contra Costa County (Nunn) (2015) 14 C.D.O.S. 11084

(12/15)

SB800 Right to Repair Act Determined to Be Exclusive Remedy for Residential Construction Defect Cases

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The Fifth Appellate District of the California Court of Appeal recently held that SB800 (otherwise known as the “Right to Repair Act” and codified at Civil Code sections 895 through 945.5) is the only remedy available to homeowners for residential construction defect claims against builders. (McMillin Albany LLC v. Superior Court)

 

In so holding, the court rejected the reasoning and outcome of the 2013 decision by the Fourth Appellate District in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, which allowed for common law remedies outside SB800 when the defective conditions caused actual damage to property. (The Fifth Appellate District covers nine counties in central California:  Fresno, Kern, Kings, Madera, Mariposa, Merced, Stanislaus, Tulare and Tuolumne. The Fourth Appellate District covers six southern California counties: San Diego, Imperial, Orange, San Bernardino, Riverside and Inyo.) Given the split of authority, the issue may now be ripe for review by the California Supreme Court.

 

Both cases examined the legislative history of the Right to Repair Act. Enacted in 2002, the Act established a mandatory process to manage residential construction defects prior to litigation. The Act set forth building standards, the violation of which constitute construction defects. Prior to litigation, homeowners must follow certain notification procedures and builders must be permitted to inspect, test, and offer to repair the defects. The Act also prescribes statutes of limitations, affirmative defenses, and recoverable damages.

 

The Act sought to abrogate the 2000 decision in Aas v. Superior Court, in which the California Supreme Court held that construction defects in residential properties must cause actual property damage or injury prior to being actionable. The Act, by contrast, was intended in part to grant statutory rights where construction defects caused economic damage alone. The Act made major changes to the law governing construction defects, and sought to respond to builders and insurers concerned about litigation costs as well as giving homeowners the ability to have defects identified and corrected before they caused actual harm.

 

The Liberty Mutual case had interpreted the Act to not eliminate the property owner’s common law rights and remedies where actual damage occurred as a result of the defect. The more recent McMillin decision however undertook a more comprehensive analysis of the Act and concluded that the “groundbreaking reform” and “major changes” intended by the Legislature did not allow for the Act to be optional. The implications of the recent case for home builders are that claimants will have to comply with the Act before filing suit and will arguably have shorter time periods in which to do so.

 

McMillin Albany LLC v. Superior Court (2015) 14 C.D.O.S. 9696

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