San Jose Business Lawyers Blog

Articles Posted in Commercial, Real Estate and Construction Loans

Contractors, subcontractors, and suppliers have many tools at their disposal to protect their rights under construction contracts. While the mechanic’s lien is one of the most common ways a contractor or supplier can ensure full payment for their services, this type of legal tool can only be used for private construction projects against the private property owners. For this reason, many people who enter into government contracts may wonder what their options may be under the law to make sure they are properly compensated for their work. One of the most important tools under such circumstances is the payment bond.

What is a payment bond?

Payment bonds are common in many large-scale private construction projects and are further required in by California law for the following:

  • State Public Works contracts over $5,000
  • Any other type of public works contracts over $25,000

Payment bonds specifically serve to provide a guarantee that all contractors, subcontractors, and suppliers of materials will be adequately paid for their work. A contractor purchases a bond from a third party surety, which assumes responsibility for payment if the government fails to pay. This forms a three-way agreement between the contractor, the government, and the surety. Once a payment bond exists, the subcontractors and suppliers are certain to receive compensation either from the California Public Works Department or the surety.

The majority of payment bonds go hand-in-hand with performance bonds. This type of bond conversely provides a guarantee to the government that a contractor will perform all of the work promised in the construction contract. For this reason, there can be legal consequences against contractors if they fail to complete work on a government contract. It is important to have the assistance of an attorney with experience handling payment and performance bonds to protect your best interests when entering into a government contract.

Call an experienced Silicon Valley business attorney to discuss your situation today

If you are a contractor working on a government contract, you want to make certain that your rights to payment are fully protected for all of the work and supplies you provide. At the Structure Law Group, our attorneys have a thorough knowledge of the relevant laws and legal tools involving government contracts and how these differ from private construction projects. We work with all types of businesses, so please call our office today at 408-441-7500 to find out how we can assist your business.

Enforceable contracts that accurately describe an agreement between the parties are essential to any business, regardless of industry. Contracts arise in many relationships, including with partners, businesses, suppliers, employees, and client or customers, and a company of even moderate size could easily have thousands of contracts with various parties. For this reason, implementing a system to manage contracts and ensure compliance can significantly improve efficiency, improve compliance, and reduce the risk of incurring legal liability that can arise from contract disputes. In addition, an effective contract management system can help automate certain tasks, significantly reducing the risk of human error resulting in a costly dispute. Below are 4 ways in which implementing a contract management system can help businesses in every aspect of the contract lifecycle management process.

  • Keep all contracts in a central repository – This benefit may seem simple, but consider the inefficiency involved in an employee searching through files upon files for a contract that may have been executed years ago. An effective contract management system can keep a copy of the contract itself while also summarizing key facts regarding the agreement in a way in which they are easily accessible to those searching.
  • Create a database of standard agreement and pre-approved substitutions – There is no need to reinvent the wheel every time your company enters into a new agreement. Creating a standardized contract for use in recurring situations as well as standard substitutions that are pre-approved for use can significantly improve efficiency in contract drafting and execution.
  • Send out alerts to appropriate parties when certain triggering events occur – Many contracts have provisions that trigger significant obligations or forfeitures on a certain date or in the event of a particular occurrence. A sophisticated contract management system can alert the appropriate party to the existence of a deadline, renewal, payment error, or terminating event.
  • Provide insight into corporate obligations – An effective contract management system will be able to provide clear data as to a company’s obligations, whether they are being met, their performance in meeting obligations, and a more comprehensive view of the company’s performance as a while. In addition, it can provide legal counsel with insight as to areas in contract management that may benefit from changes.

Contact a San Jose business law firm today to schedule a consultation with an experienced lawyer

A comprehensive and well-maintained contract management system can increase efficiency and reduce costs for businesses of all sizes. In addition, automating certain tasks associated with the life-cycle of a contract has the potential to reduce contract disputes and legal liability. For this reason, it is advisable for business owners to discuss their contract management options with an attorney familiar with contract management systems and their implementation. To schedule an appointment with one of our experienced San Jose business attorneys, call the Structure Law Group today at 408-441-7500.

Too often, a contractor, subcontractor, laborer, or material supplier on a construction job does not receive the compensation they deserve for the work they have performed or supplies they provided for the project. Fortunately, California law provides a method by which contractors and others can pursue adequate payment. If the job is a private construction project, a primary tool for receiving payment is the mechanics lien. The following are some brief explanations for frequently asked questions amount mechanics liens in California.

What exactly is a mechanics lien?

A mechanics lien is a tool that creates a security interest in the property on which you worked. After a certain amount of time and if payment is not received from the property owner, you can then sue to foreclose on the lien to satisfy the lien amount.

How do you record a mechanics lien?

A mechanics lien is filed with the office of the county recorder for the county in which the construction project took place. The filing must include specific information including the named of the property owner, the nature of the work performed, the name of the person for whom you performed the work (if you were not the direct contractor), and how much money you are seeking. In order to ensure you do not make an error and render the lien invalid, you should seek assistance from an attorney in filing your lien correctly and completely.

How long do you have to record a mechanics lien?

The time frame for filing a mechanics lien depends on your particular contribution to the project. For example, if you are a contractor, you must wait until your contract is complete to file the lien. After that date, you have either 90 days or 60 days after a notice of completion is filed by the owner, whichever is earlier. If you are a supplier or subcontractor, you have from the time you stop work until 90 days after the end of the project or 30 days from a notice of completion, whichever is earlier. A lawyer can closely evaluate your situation to ensure you file your lien in a timely manner.

 What can an owner do to release a lien?

Recording a mechanics lien does not absolutely mean that the property will be foreclosed. If a certain amount of time passes and no foreclosure action has been filed, an owner can file to have the stale lien expunged. You can also obtain a release bond, which requires the lien filer to make a claim against the bond instead of foreclosing on the property. Finally, it may be possible to negotiate with the contractor, subcontractor, or other party and agreement to a settlement in exchange for releasing the lien.

Find out how an experienced California business attorney can assist you

Mechanics liens can be powerful tools for contractors, subcontractors, and others to receive payment for their work. However, in order to successfully obtain compensation, all requirements for a valid lien must be met. In addition, property owners have rights to defend against and release their property from a mechanics lien. The process can be complex, so you should always seek qualified assistance from a skilled business lawyer who thoroughly understands construction law. Call the office of Structure Law Group to discuss your situation today at 408-441-7500.

Whether purchasing or leasing commercial real estate, where you decide to locate your business is critical. Some businesses remain in the same location for decades, even though major changes in ownership or operations.

Some businesses are forced to move because they fall behind on rent, outgrow the space, simply close their doors, or other similar reasons. Other businesses, however, may have their location threatened for reasons that are completely beyond their control. In such situations, an owner should contact an experienced commercial real estate and business attorney to determine their options and rights as soon as possible.

 

Eminent domain can affect businesses

Under the Fifth Amendment of the Constitution of the United States, the government has the authority to take private property from rightful owners under certain conditions. First, the takings must be for “public use,” though the definition of public use has been broadly interpreted. Additionally, the government is required to justly compensate property owners for the taking of their property. These takings are commonly referred to as “eminent domain” or “condemnation,” which is different from condemning a property due to a state of disrepair.

While condemnation is most often associated with the destruction of homes or neighborhoods, the government also has the right to seize commercial real estate. In fact, business districts are often affected by the widening of highways or the construction of larger-scale commercial developments. Whether you rent or own your commercial space, you may be forced to move due to eminent domain.

Losing your location can be harmful to business:

  • Finding a suitable location to move your business can be costly.
  • If your business is located in a high-traffic area that attracted many customers you may not be able to find a new location with similar attributes.
  • If your property is specifically tailored for the operations of your business relocating may result in considerable expense.

 

Rights of businesses in condemnation actions

Because relocating your business can cause substantial hardship, you want to make sure the taking of the property is valid and that your rights as a business owner are protected. A commercial real estate attorney can evaluate the eminent domain action and can assist you in responding to the action.   If the condemnation does occur and you have to move, an attorney can make sure that you’re properly compensated.

If you have any legal question related to business or commercial real estate, please do not hesitate to call the Structure Law Group in San Jose at 408-441-7500 for help today.

Even seasoned business professionals can benefit from having legal counsel on their side when making a purchasing decision. Here are 3 advantages of hiring an experienced lawyer to help when purchasing real estate commercially.

3 Advantages of Hiring a Lawyer for a Real Estate Purchase

1. Determine State-Specific Laws

Real estate purchases are overseen by state laws, not federal and in some cases both. In order to comply with city and state requirements, an experienced Silicon Valley commercial real estate lawyer should help oversee all commercial real estate purchases. Some local jurisdictions have laws that one could not imagine.  Often these laws impact uses that are a material consideration for your business.  Structure Law Group’s experienced team is well-versed with the ins and outs of California real estate law.

2. Navigate Zoning Requirements

Local laws and zoning requirements are complex and can very well limit the uses on the property you are considering. In order to avoid making a costly mistake, a commercial real estate lawyer can advise you on the viability of your proposed use of the property.

3. Avoid Costly Mistakes

A simple mistake or omission in a real estate purchase contract can have tremendous implications for both the buyer and seller. Take the time to hire an experienced real estate attorney to guide you through your purchase, the earlier in the transaction the better.

About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to business formations, debt and equity investments, employment agreements, commercial leasing and purchases, commercial contracts and related litigation.

Commercial real estate transactions can be lucrative investments, however there may also be high risk due to the amount of money that is generally at stake. The following are some examples of legal issues that sometimes arise during the sale or purchase of commercial property.

realestate transactions

 

  1. Accurate property valuation

When you are shopping for a product, it is often relatively easy to compare the price and quality to another similar product. However, pieces of real estate are often unique with no exact comparison based on size, age, use, and/or state of the building or land, making accurate valuation significantly more challenging. In addition, any current income stream or potential for future income associated with commercial property should also be a factor in determining a fair and reasonable price. Utilizing an experienced commercial appraiser can assist both buyers and sellers with determination of value.

 

  1. Due diligence

Just like any type of business transaction, commercial real estate transactions require considerable investigation. This allows a buyer to know exactly what is involved in the transaction and sheds light on any potential problems with their intended use. For example, you want to make sure that the zoning for the property allows your intended use, title of the property will identify liens, and easements, and identifying the property corners will assist in identifying possible encroachments.  Hiring an experienced attorney will assist you in avoiding costly errors.

 

  1. Assumption of liability

Prior to purchasing a piece of commercial real estate, you will want to make sure you are not assuming liability for any violations of law that may exist. For example, if you buy the property and then later find out that environmental hazards exist, you will be liable for eliminating the hazard whether or not you or the previous owner actually caused it. Such liability may be expensive and the potential for it should be examined prior to closing a sale.

 

  1. Evaluation of financial risk

Real estate can be a great investment for your business, though such purchases can also tie up a significant amount of liquid assets for a lengthy period of time. If you have difficulty filling vacancies or collecting rent from tenants, you may not be able to make your required payments to your financing company. Additionally, if you decide to sell the property due to financial struggles, it may take some time especially if the market is down. All of these long-term risks should be evaluated before you close any type of commercial real estate transaction.

 

Commercial real estate transactions can be very complicated and the above are only some examples of legal issues that must be addressed. If you are considering purchasing or selling commercial real estate, you should discuss your situation with an experienced real estate attorney at the Structure Law Group, LLP as soon as possible. Call us at  408-441-7500 for help today.

Historically, only general or limited partnerships were used for investing in real estate, but over the past decade, forming a Limited Liability Company (an “LLC”) has become a more popular choice for real estate investors. An LLC formed for real estate investment purposes is not very different from a regular limited liability company, and the steps for formation are very similar. Here are 4 benefits of using an LLC instead of a partnership or a corporation for real estate.

LLC - Purchaseing REal Estate

 

 

 

 

 

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A commercial lease is the agreement between a landlord and a business that outlines each party’s rights and responsibilities as they pertain to the rental of a property that is to be used for commercial purposes. Commercial leases are distinct from residential leases in that the party renting the property uses the property for business purposes rather than as a place to live. All too often tenants make the mistake of assuming that a standard form commercial lease will not hold any surprises; this assumption can have catastrophic consequences.

leases

Your monthly lease payment may be among the largest outlays for a business. Even if it is not, issues that arise regarding your use or access to the property that you rent may have a significant impact on your ability to effectively operate your business. For businesses that require a physical presence in order to sell their goods or services, a misunderstanding or dispute regarding your lease may effectively put you out of business, and could potentially reach your personal assets. As a result, making the investment in having an experienced business attorney review the terms of your lease can save you from making costly errors. Continue Reading

5 Items to Include in a Real Estate Purchase Contract

When you make an offer on real estate you want to buy, there can be a lot of paperwork involved. Many additions to real estate purchase contracts are obvious, such as the address of the property, purchase price and owners. Here is a list of 5 things to consider and include when drafting a real estate purchase agreement.

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1. Legal Description of Property

Be sure to include a legal description of the property, including zoning information. In commercial real estate, this is more than just the mailing address of the property. Legal descriptions must include proper nomenclature used by the U.S. Public Land Survey System, including zoning codes. If the description is not included, the real estate contract may be invalid.

2. Closing Costs

You want to establish who pays closing costs in the real estate purchase contract. The buyer and seller should specify who is responsible for common fees such as escrow fees, title fees, title insurance, transfer tax and notary fees. If you want the seller to pay all or part of the closing costs, make sure to specify this in your offer. In California, the location of the property is used to determine how fees are divided.

3. Inspection Contingency

Make sure to include an inspection contingency in your purchase contract to protect yourself if a serious issue with the property comes to light after an inspection is conducted. This includes the buyer’s right to cancel the sale after conducting due diligence.

4. Closing Date

Common time frames for closing dates are 30 days, 45 days and 60 days. You should allow sufficient time for closing contingencies, including financing the transaction.

5. Right to Modify Purchase Agreement

Allow yourself room to amend or modify the purchase contract after its completion. By adding a clause allowing the right to amend of modify, both parties may amend the purchase contract after it has been completed. Keep in mind that this does not change the original contract and large amendments are usually better done by creating a new contract.

By including these essential items in your real estate purchase contract, both the buyer and the seller are protected and the purchase is transparent for both parties. Be sure to sit with an experienced real estate lawyer before making final decisions.

About Structure Law Group

Structure Law Group is a San Jose based firm that specializes in business issues including business formations, commercial contracts and litigation.

lease.jpgWhether you’re starting a business or looking to expand, chances are you’ll encounter some kind of lease. The most common are the gross lease and the net lease. In this blog post we’ll take a look at the differences between the two and the benefits of each.

Gross Lease

In this scenario, the tenant pays a fixed amount each month. The landlord is responsible for the costs associated with property taxes, insurance and maintenance. A gross lease offers some flexibility because these properties are generally deemed as either Class B or Class C. They’re less desirable so the landlord may be willing to negotiate over things like who pays the utility bill.

Net Lease

You’ll likely see a net lease in properties deemed Class A. These are typically high value structures in a popular part of town. As such, tenants can expect to pay a fixed amount along with maintenance charges, insurance and taxes. The benefit to you as a business owner is exposure and the possibility of working in a new, less problem prone building.

Letter of Intent

Before you sign a gross lease or net lease, it’s a good idea to craft a letter of intent. This document typically addresses issues like length of the rental, when the space is available and whether or not expansion is possible. You’ll want to have a lawyer look over any lease documents. The professionals at Structure Law Group can help you craft a suitable letter of intent that protects your interests.

There is plenty more to consider when crafting a lease. At least now you understand the key differences between the two main types of commercial leases. This information will help you when you’re coming up with a budget for your business. Knowing these costs up front eases some stress and makes it easier to get started.

About Structure Law Group

Structure Law Group is a San Jose based firm that specializes in business issues including business formations, commercial contracts and litigation.