Articles Tagged with “bay area real estate attorney”

If you are a real estate agent working as an independent contractor for a Sacramento real estate brokerage, you may be generally aware of the advantages of forming a solely owned corporation for your real estate salesBusinessFormation-1-300x230 business. Perhaps your CPA even recommended that you organize your real estate sales business as an S corporation to take advantage of favorable tax treatment. While a CPA is in the best position to advise you on your specific tax matters, you can trust a California business formation lawyer to explain why it’s important for real estate agents to consider business formation.

Payment of Commissions

As a real estate agent licensed by California Bureau of Real Estate (BRE), you are probably aware that it is unlawful to provide real estate-related commissions to an unlicensed person or entity under the California Business and Professions Code. Your first concern with forming a corporation may be that you will run afoul of this prohibition, since your entity is not recognized by BRE and  you hold your license as an individual.  Lawmakers anticipated this conundrum and resolved it, so that you can instruct your broker to pay your commission to a third party – such as your corporation.

In California real estate brokers are usually allowed to share commission payments. Up until recently, however, it has been unclear whether real estate agents are allowed to share commissions. A California appellate court has finally decided this issue in a case called Sanowicz v. Bacal. The answer is yes, agents can share commissions, but only under limited circumstances.

What Happened in Sanowicz v. Bacal?

Sanowicz and Bacal are both licensed real estate salespersons. Sanowicz claimed that he and Bacal agreed to share commissions earned by either of them on sales of certain real estate, and that Bacal breached that agreement. Sanowicz sued over this alleged breach.

Conventional wisdom provides that increases to the minimum wage are bad for small business. After all, income that business owners have to spend on labor costs increases what it costs when starting new businesses and uses money that could be invested in real estate when expanding a business. However, a recent study shows that a majority of small business owners with employees actually support an increase in the minimum wage, and that they have good reasons.

A Boon for Small Businesses

The New Pittsburgh Courier reports that a poll sponsored by the American Sustainable Business Council shows that over 60% of small business owners with employees favor increasing the federal minimum wage from $7.25 to $10.0 in three stages. (California’s minimum wage is currently $9.00 an hour and is scheduled to increase to $10.00 in 2016, and some cities like San Francisco have even higher minimum wages). The American Sustainable Business Council is an advocacy group that represents 200,000 businesses, and that actively represents businesses that support an increase in minimum wage. One small businesswoman, Sherry Stewart Deutschmann of LetterLogic in Nashville, Tennessee, argues that when employees are paid more they have more money to spend at all businesses. For that reason, she pays her employees $12.00 an hour. The theory is that with increased wages, consumers have increased purchasing power and are more likely to spend money on elastic goods and services, which increases profits of the small businesses that provide those goods and services.

The term exculpation clause is defined as a contract provision that relieves one party of liability if damages are caused during the execution of a contract. These clauses can be very important in real estate transactions, particularly those involving small businesses.

Recent Example

Just a few years ago, in Frittelli, Inc. v. 350 N. Cannon Drive LP, a California court held that in a commercial transaction, a general exculpation clause was enforceable because both sides had opportunity to read and understand the entirety of the agreement and the plaintiff failed to allege extreme conduct on the part of the defendant. In that lawsuit, Frittelli asserted multiple claims based on the theory that Cannon Drive’s renovation of a shopping center destroyed Frittelli’s business within the shopping center. The trial court ruled in favor of Cannon Drive at the summary judgment stage, and the appellate court affirmed that decision.

Commercial real estate law can be complicated. Before making real estate transactions for your business, you should consult with a qualified attorney. However, it is important for you to understand what your attorney will be able to do for you, so you should have a basic understanding of recent developments in real estate law.

Recent Decision in California

A California Court has held that a lessor may waive the agreed upon period within which a lease extension option may be exercised by consenting to the exercise of the option after the period expires. In the case Kavin v. Frye, there were four lessees (lessees are also known as tenants, or the people who hold the lease on a property). One of these tenants, who was not involved in the lawsuit, signed and delivered a writing to the lessor (commonly known as the landlord) that exercised an option to extend the lease. The landlord accepted this, but the issue was that the time period in which the option to extend the lease was supposed to be exercised had already run.

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