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Thursday
Jan052012

Mechanics Liens — Smart Tools of Construction Industry Professionals, and Bane of Property Owners

Business Litigation AttorneyConstruction Litigation

by Paul C. Bauducco

(818) 907-3245

 

In 1791, Thomas Jefferson and James Madison proposed the first mechanics liens legislation in order to promote development in Washington.

The Maryland Assembly (which governed Washington at that time) passed the proposed legislation. Since then, all 50 states have enacted mechanics lien legislation to encourage development and protect those involved in the construction industry, according to John G. Cameron’s “A Practitioner’s Guide to Construction Law.”

Mechanics liens” encourage “mechanics,” which include members of the construction industry as well as those providing materials and labor in construction, to engage in construction projects by giving them a process to secure payment for the labor and materials they provide to a project. This security allows homeowners and smaller companies to hire contractors who might not otherwise be willing to take on smaller projects.

In today’s economy, mechanics liens can be an essential collection tool for contractors and material providers in construction projects, allowing them to look to the property for payment if the general contractor or owner fails to pay for work and materials going into the property. They provide a bit of insurance for contractors and sub-contractors.

Conversely, mechanics’ liens can pose a real problem for property owners who pay their general contractors without receiving proper lien releases. If the general contractor fails to pay subcontractors or material providers sums they are owed out of an owner’s payment, the subcontractors and material providers may lien the owner’s property, forcing him to pay for the labor and materials twice.

Mechanics liens laws are strictly enforced and contractors and material providers must give timely and proper notice of their claims and file their liens and enforcements actions within the time frames specified by the applicable statute. If they fail to do so, they may waive their mechanics lien rights and be left without recourse against the property. Whether you are a property owner, contractor or material provider, there are some important things to know about recording and enforcing mechanics’ liens.

California Real Estate Law Regarding Mechanics Liens –
A Three Step Process

 

Contractors, subcontractors and suppliers must take the following three steps to ensure the proper filing of a mechanics’ lien:

1. Serve a Preliminary 20-Day Notice – Workers and suppliers must serve notice of services rendered or supplies delivered within 20 days after making improvements or delivering materials. The notice should be served to the:

▪ Property Owner
▪ General Contractor
▪ Lender or Financier

Contractors or suppliers who work directly with the property owner do not need to serve notice, since the purpose is to ensure the property owner knows who is working on the improvements or supplying the project if these subcontractors are working through a general contractor.

2. Record the Mechanics’ Lien – Claimants should record their liens within the county or counties in which the property is located within 90 days of:

▪ Completion of Work
▪ Excusal of Work (because of breach of contract by the property owner or the general contractor)
▪ Occupation and use of work of improvement by owner or agent
▪ Communicated acceptance of work of improvement by owner or agent
▪ Cessation of Labor for 60 days
▪ The Filing of a 30 Day Valid Notice of Completion or Cessation by the Property Owner (a general contractor has 60 days).

3. Enforce the Mechanics’ Lien – Here’s another deadline notice. A foreclosure suit must be filed within 90 days of the recordation of the lien, in the county or counties where the property is located. If a foreclosure suit isn’t filed in that time frame, the mechanics’ lien is voided.

Avoiding Construction Litigation Involving Mechanics Liens

 

It would be best for all parties concerned if mechanics’ liens and foreclosure suits aren’t filed at all. To avoid these situations, property owners should hire, and subcontractors should work with, properly qualified and licensed general contractors.

Both sides should keep track of the 20 Day Preliminary Notices served.

Finally, property owners and subcontractors should make sure proper payment procedures are in place which also provide waivers and releases of financial obligations when payments are made.

Paul C. Bauducco is a Los Angeles business litigation lawyer whose practice focus is on real estate and construction litigation. You can reach him via e-mail if you need more information: pbauducco@lewitthackman.com

 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Dec152011

Tax Strategies – 2011 Year End Tax Planning for Businesses & Individuals

Trusts & Estate Planning Attorney

by Kira S. Masteller
818.907.3244

What tax strategies do you have in place for yourself, your family or your business for this year and for the years to come?

Whether you need business tax planning, or individual estate tax planning, we have some tips for protecting your financial future.

Of course, you’ll need to put some of these plans in place now, since many of the recommendations below involve year end tax strategies to help your economic outlook in 2012, 2013, and beyond.

 

Business Tax Planning – Windows of Opportunity

 

We hate to impose deadlines on you, but the IRS has no such qualms. If you’re a business owner, you should be aware of these limited windows for tax savings which may end on December 31st, unless Congress decides to extend the following benefits:

Bonus Depreciation – Qualified property acquired between September 8, 2010 and December 31, 2011 may be eligible for 100 percent bonus depreciation, if it is placed in service by the end of the year. Certain other property may be placed in service before 2013 and still qualify. These tend to be longer-lived and transportation properties.

Differential Wage Payments – Employers making differential wage payments to employees called to active military duty may be eligible for tax credits until the end of the year.

Energy Credits – Tax credits for energy-efficient homes, energy-efficient appliance production, and the use of certain alcohol or biodiesel fuels will all expire at the end of the year. 

Expensing for Real Property – If you put certain, qualified, real property into service in 2010 or 2011, you might be able to file expenses under Code Sec. 179 of up to $250K of the cost of the property, until January 1, 2012.

Expensing Under Code Section 179 – The dollar limit for Code Sec. 179 is $500K, and the investment limit is $2M, for tax years 2010 and 2011. However, these limits drop dramatically (by 75 percent) in 2012.

FUTA Surtax – As of July 1, 2011, the Federal Unemployment Tax (FUTA) tax rate fell to 6 percent, when the FUTA surtax of 0.2 percent expired. Employers will need to document FUTA paid before July 1, 2011 (or after June 30, 2011) separately. There may be a retroactive reinstatement of the surtax.

 If you increased spending on research or development of new technologies, you may be eligible for credits, set to expire at the end of the year.

Work Opportunity Tax Credits – If you hired individuals from one of the nine groups listed below, you may be eligible for tax credits (dependent on certain circumstances). The groups targeted by the WOTC are:

▪    Long-term Temporary Assistance for Needy Families (TANF) Recipients

▪    Other TANF Recipients

▪    Veteran, or a Supplemental Nutrition Assistance Program (SNAP) Recipient

▪    18-39 year old SNAP Recipient

▪    18-39 year old Designated Community Resident living in an Empowerment Zone, more commonly called an EZ.

▪    16-17 year old EZ resident employed for the summer

▪    Vocational Rehabilitation Referrals

▪    Ex-felon

▪    Supplemental Security Income benefits recipient

Tax Strategies for Individuals

 

Even if you don’t own your own business, you can still take advantage of certain incentives which end in a couple of weeks:

Alternative Minimum Tax (AMT) – What are the pros and cons of filing AMT vs. filing for the regular federal tax liability? You’ll have to decide which of your deductions will qualify for AMT and which of your deductions should be applied to 2012 or 2011.

Capital Gains Taxes & Dividends – Decide now whether income from qualified capital gains and dividends should be filed in 2011 or 2012, since reduced tax rates on these will expire after December 2012.

Energy Efficient Incentives – Under Code Section 25C, you could capitalize on some tax benefits by going green by the end of the year. If you’re thinking about making energy efficient improvements to your primary residence, call us to find out if your planned improvements qualify for the incentives.

Gifting – Consider making gifts as a year end tax strategy. Currently, you can gift up to $13,000 per recipient without gift tax, or $26,000 as a married couple. You should also consider a Lifetime Gift Tax Exclusion for larger gifts.

Major Purchases – If saving to buy a big ticket item in 2012, consider making the purchase this year instead, to save on state and local sales taxes. The deductions for state and local sales taxes expire this month.

Shifting Deductions & Income – If you’re used to shifting deductions or income to the following year, you might want to rethink this particular tax strategy. Individual income tax rates will rise in 2012, so it may be worth it to keep your 2011 income in your 2011 filings.

Business and Estate Tax Planning

 

Whether you own a business or not, your individual tax situation is unique. Be sure to contact your accountant or attorney to address your questions and concerns regarding year end tax strategies. If you have any questions about the tax credits and deadlines listed above, please call me at the number below.

Kira S. Masteller is a Tax and Estate Planning Attorney at our Firm. You may reach her at 818.990.2120.

 

 
Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Thursday
Dec082011

Walmart Black Friday Gets Black Eye: An Injury Attorney’s Opinion

Injury AttorneyPremises Liability Lawyer Los Angeles 

 

by David B. Bobrosky
(818) 907-3254

Was it just a coincidence that most, if not all, of the reported violence by shoppers on Black Friday occurred at Walmart stores?  Absolutely not.  The incidents did not just occur AT Walmarts, they occurred BECAUSE OF Walmart.

I hate to admit it, but I was at several different stores before and after midnight on Black Friday.  What else is there to do in Surprise, Arizona?  I was there visiting family for Thanksgiving.  At the request of relatives, and because there was nothing else to do, we checked out the Black Friday scene.

We visited Best Buy, Toys R Us and Kohls all before the start of their Black Friday sales that night.  At every store, there were at least 300 people in line outside.  The people were all in orderly lines controlled by store employees and security guards.

At the start of the sales at these stores, the people were not sent running in to fight others for merchandise.  They were allowed to enter the store in groups to make sure only a certain number of people were in together.  Additionally, tickets were passed out to those in line for the most popular items.  This also helped control the situation.

All these stores were a stark contrast to Walmart.

 

The Walmart Black Friday Frenzy

 

When I arrived at the Walmart store in Arizona, I found an absolutely packed parking lot — yet no one in line outside.  When I entered the store, I found out why.  Rather than closing the store and having customers line up outside, Walmart stayed open and crammed everyone into the store at once.

Instead of forming lines or passing out tickets, Walmart employees set up pallets of items throughout the store.  The merchandise was shrink-wrapped on pallets and mobs of people surrounded each pallet waiting for the start of the sale.

A Walmart employee explained that at the start of each sale (some items went on sale at 10:00 p.m. and others at midnight), the items would be unwrapped and customers would be set loose to fight for the merchandise.  When I asked if the store ever considered the potential frenzy and injuries, I was told, “Yes, that’s why we have ‘medics’ walking around.  Just look for the Walmart employees with the red backpacks if you get hurt.”

You see, it was apparent to me that Walmart knew, or should have known, what could, and what most likely would, happen.  In fact, they appeared to be counting on it

Walmart did not want prospective customers to see long lines outside and think they had no chance at a deal. They wanted them in the store believing that anyone who fought hard enough, still had a chance to get that Walmart-priced Xbox, TV, or even the $2 waffle maker.  For those surprised that customers were fighting over $2 waffle makers – I’m sure Walmart wasn’t.  They know their customers and appealed to them with these “bargains.”

Black Friday Shopping Safety

 

If anyone would have been seriously hurt during these sales, Walmart – in my opinion – would have been liable.  In California, store owners are subject to a duty to exercise ordinary care to avoid exposing others to an unreasonable risk of harm.

All business owners must use reasonable care to protect their customers from being injured by dangerous conditions.  Not only did Walmart not protect customers from a dangerous condition (as we saw with the Pepper Spray Incident at a Walmart in Los Angeles), it can be argued that Walmart created the dangerous condition.

It’s easy to blame the “crazy people” shopping for Walmart Black Friday bargains.  But when you look deeper, you realize that Walmart was also responsible.  Let’s just hope next year no one is trampled in the frenzy, and that guns do not replace pepper spray.

David B. Bobrosky is a Los Angeles Injury Attorney at Lewitt Hackman. You may reach him by e-mail: dbobrosky@lewitthackman.com.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Tuesday
Dec062011

Steve Jobs Estate Taxes – Which Way is “Up” for the Jobs Family and for You?

 

by Robert A. Hull

As the world mourns the loss of innovative tech giant Steve Jobs, we learn he may have left his wife, Laurene, and family up to $6.78 billion dollars in Disney and Apple stock.

He also left his family in a quandary not of his own making, namely, how to negotiate financial pitfalls while traveling on uncertain terrain.

Unfortunately, with the recent failure of the so-called congressional Super Committee to address tax and spending reform, the “Bush tax cuts” are set to expire in 2013.

Capital Gains Tax Legislation: As it Stands Now

 

If there are no further changes in the law:

▪ The current 15 percent capital gains tax rate is set to rise to 20 percent,
▪ Income tax rates are due to increase,
▪ The current $5 million gift/estate tax exemption will return to a $1 million exemption.

The key takeaway is “absent further legislation”, i.e., no one knows what the law will be in 2013.

At least as far as the Jobs family is concerned, if they sell the stock before 2013, and (here’s the kicker) if indeed the Bush tax cuts lapse, the Jobs family may avoid almost hundreds of millions in capital gains tax they would have to pay at the higher 20 percent rate if they sold after 2013.

The great news is that the beneficiaries of Steve Jobs’ stock will receive an automatic step-up in basis of the stock to the value of such stock on Jobs’ date of death (including a step-up on Laurene’s ½ community property interest in such stock) – i.e., they will receive the benefit of the increase in the stock’s value since acquisition, tax free. However, any further increases (after Jobs’ death) in the value of the stock interest Jobs’ passed to his heirs will be subject to capital gains when the stock is sold.

So, there’s a capital gains tax of 15 percent or ‘possibly’ 20 percent, which prompt some questions:

1. How are individuals and businesses supposed to make certain financial decisions in the face of such uncertainty?

2. And, how are financial and estate planning professionals supposed to give sage advice and counsel when none of them know what the law will be in 14 months?

Steve Jobs’ Estate Taxes: Looking Up

 

The answer to both questions above is that effective planning in such uncertain times is a challenge. Obviously, if considerations other than tax consequences are paramount, then those business decisions may take care of themselves.

If the Jobs family wishes to retain Steve Jobs’ control of Apple, for example, they might hold on to the stock, risking a higher tax in the future if Congress does nothing or increases capital gains.

But, if the tax consequences are the most important consideration (hey, who really wants to give the government $876 million?) they may wish to sell the stock. But, the Jobs family will be divesting themselves of Steve Jobs’ legacy.

Tax and Estate Planning for Your Family

 

Many of you may be facing similar questions, though not on the scale of the Jobs family: To sell or not to sell? To gift or not to gift? For example, do you as parents and owners of a family business utilize the current $5 million gift tax exemption to gift portions of the family business to your children, even though you may prefer to do so in a few years?

If you do so before 2013, you can pass along $5 million of business value tax-free. If not, you risk having to pay gift tax on the portion of the business you pass which is worth over $1 million. . . unless Congress takes some other action, of course.

Given our government’s penchant for last minute deal-making, short-term fixes, and for striking bargains that are difficult to predict (like a “default” return to a $1 million exemption in 2013 absent further action), it may not be prudent to wait till the last minute to make these financial decisions.

Some decisions take time and fit into a family’s overall strategy (e.g., making gifts of minority interests in a family business or property, over time) and you may not have the necessary time to effectuate such a strategy or sell the stock before the new law goes into effect.

So, which way is up? And, where does this leave us all?

It leaves us in the same boat we’ve been in longer than any of us care to imagine – making life-altering financial decisions based on less information than we wish we had. However, it is nonetheless helpful to have a first mate on this trip, a professional who can help you best negotiate the rocks and reefs which may be lying just below the surface.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

 

Thursday
Dec012011

Safe Toys - Your Holiday Guide

Personal Injury Attorney Los AngelesDefective Product Attorney 

 

 

by David B. Bobrosky
(818) 907-3254

 

The holiday shopping season is here, and now is the perfect time to brush up on safe toys buying guidelines.

Whether you’re a parent, relative or family friend of someone with children, you want to make sure that the toy you are giving will not pose a risk to that child – assuming of course, that all toys meet government toy safety standards.

But as we know too well, sometimes defective products slip through the cracks. That being said, you should first get up to date information on toy recalls before you go shopping. There’s a rather extensive list available here: Toy Hazard Recalls.

Then, ensure you pick an age appropriate toy for the child to minimize risks like choking hazards, electric shock or burns, strangulation, falls and other dangers.

When it comes to dangerous toys, here are five key dangers that you should look for:

1. Electric Toys – When it comes to small children, these toys generally require adult supervision. You should not only note the age recommendation, but consider also how mature or responsible the child is, before buying electric toys.

2. Balls & Marbles – The smaller the ball and the younger the child, the greater the risk of choking hazards. Also be careful of giving games or toys that have balls to older children with younger siblings. Generally speaking, balls 1 ¾ inches in diameter or less are dangerous for children under three.

3. Toy or Game Pieces – Again, follow the guidelines for balls, above. If the toy or game you’re about to buy has pieces that are smaller than 1 ¾ inches, think twice before giving that toy or game to a small child.

4. Inflatable Toys or Balloons and Squeeze Toys – There’s a suffocation risk with these, either when a child attempts to inflate the toy and accidentally inhales, or with smaller children who chew on toys (squeeze toys, burst balloon pieces, or deflated toys).

5. Straps – Toys with strings or straps are particularly dangerous for children under three, as toddlers sometimes get entangled in these. Watch out for items like toy guitars, purses and guns that come with shoulder straps.

 

Other Toy Safety Tips

 

The five most common types of dangerous toys are listed above, but there are other toy safety factors that you should be aware of as well. For example: 

  • Brittle plastic toys can break, leaving jagged pieces that can cut or puncture children.

  • Helmets are required by California law for bicycle riders under 18. If you’re buying a bike for minor, make sure you buy the right sized helmet too.

  • And of course, BB Guns and cap guns pose their own, obvious risks for children. 

 

Lead Paint Toy Recalls

 

Believe it or not, lead poisoning is still a problem for children, especially the younger ones. Young children are especially prone to putting things in their mouths.

The federal government limits the amount of lead that can be used in products, but the metal has not been banned entirely. It’s used in plastics, pottery, jewelry, sporting goods and hobby materials.

To keep your child safe from lead poisoning from toys, try to avoid giving toys and jewelry made in other countries, or recycling older toys made in the U.S.

 

Holiday Safety First

 

The most important thing to remember regarding toy safety, is to buy toys that are age appropriate for the child. Read all warning labels on the packaging and consider the maturity level of the child.

Because no matter how wonderful the gift you intend to give, nothing can beat keeping your loved ones safe and happy. Let’s make sure all the memories are good ones this holiday season.

David B. Bobrosky is a Los Angeles Product Liability Attorney. Contact him via e-mail: dbobrosky@lewitthackman.com, or by phone: 818.990.2120.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120