San Jose Attorney - Almaden Times Articles

Building Contractors Need State License

This week's question: I have a small business of kitchen and bath remodeling. Unfortunately, my license expired a while back and I have been too busy, despite the recession, to get it renewed. Since my business is so small, can I get along without a contractor's license for a little while? Can I just have the homeowners sign a waiver after I point out everything to them? I am bidding on a job right now and it may work out quite well for me.

/s/Bill B., Almaden Valley

Dear Bill- You might want to give your idea a second thought, Bill. I do not think that is a very good idea and may well be illegal in that most if not all building contractors need a license issued by the State of California, unless they are exempt.

It might be a good place to start if you go online and bring up your favorite search engine. Then enter "California State Contractor License Board" in the search box and hit "go". I did just that with Google and in .3 seconds there were 443,000 references available. In case you are not set up to use the internet, you might have a family member, friend, or relative help you.

There is a wealth of information available online and the California Contractors State License Board serves a very important function in our society. Homeowners can check the license status of contractors and contractors can obtain a great deal of useful information to help them get their work done with a proper license. Although I did not review all of those 443,000 entries, I would hazard a guess that none of them authorized a waiver like you asked about. In other words, the homeowner cannot excuse your not having an active, current, valid, license.

A recent court case pointed out the importance of a valid license very clearly. The case is called "White v. Cridlebaugh" and it was decided July 29, 2009, by the Court of Appeal for the Fifth Appellate District. The case arose in Kern County. In that case, the contractor was found by the court to have no valid license when the work was done. The court ruled that not only was the contractor forbidden to collect the balance due on his mechanic's lien of $13,561.62, the contractor was ordered to refund $84,621 previously paid to the contractor for labor and materials.

This was obviously a harsh result, but that's the law. In other words, the Court of Appeal held that the unlicensed contractor could not even recover the cost of his labor, services, and materials of over $84,000 in connection with the unlicensed work. He was ordered to pay it back to the homeowner because he did not have a valid state license when the work was done. The Court of Appeal also stated that licensing requirements and the penalties for violating those requirements are designed to protect the public from incompetent or dishonest providers of building and construction services. You can read the "White v. Cridlebaugh" case for yourself by going to your favorite search engine and entering the name of the case in the search box.

As always, you will want to read this case in consultation with your attorney who is your best guide as to how this case may or may not apply to your particular situation. I personally like to head for the Court of Appeal web site so as to avoid all of the distracting advertising and other material.

If I were you, Bill, I would take a little time out of my busy schedule and get that license up to date! Right away. Good luck with that process. I am sure you will find the time well spent. Not having a valid license at all times could be fatal to your business.

/s/Donald J. DeVries, Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com. If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowitz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

A Contract Clause Requiring Mediation Generally Means What It Says

This week's question: My husband and I signed a contract to purchase a home here in the Almaden Valley. It's the home our dreams. However, the sellers changed their mind because of the husband's serious health issues, or so they claimed. We might need to file suit for breach of contract, but I checked our contract, called a "deposit receipt", and there is a mediation clause that both sides initialed. Must we really go through mediation first? Isn't that a grand waste of time and money? Can't we just file our suit and get it over with? What is mediation, anyway?

/s/Susan S., Almaden Valley

Dear Susan- Interesting question, Susan. And I think the answer is fairly clear, at least in a general sense. In a recent case dated May 28, 2008, from the Court of Appeal, Third Appellate District, entitled Jay Lange v. Roxanne Schilling, the Court held that yes, a mediation clause means what it says and the parties to such a contract must proceed with mediation before the Plaintiff files a lawsuit.

In that case, arising out of Calaveras county, the parties had signed a standard California residential property purchase agreement that contained a mediation clause. The mediation clause stated that: "Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action." The mediation clause in the Lange-Schilling contract went on to state: "If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action."

Plaintiff Lange filed his complaint against defendant Schilling after a dispute arose about claimed misrepresentations about a lake level related to the property in question. The trial court found that Plaintiff was entitled to about $80,000 in attorney's fees against the defendant in addition to damages of only $13,475. However, the facts of the Lange v. Schilling case were clear to the effect that Plaintiff did not attempt mediation before commencing the litigation. The Defendant argued in the Court of Appeal that because Plaintiff filed his lawsuit before offering mediation there was no basis to award attorney's fees. And the Court of Appeal agreed with Defendant's argument. The Court of Appeal reversed the trial Court, denied Plaintiff's application for attorney's fees, and stated that there is a strong public policy in favor of mediation.

In the words of the Court of Appeal: "In mediation, a neutral third party analyzes the strengths and weaknesses of each party's case, works through the economics of litigation with the parties, and otherwise assists in attempting to reach a compromise resolution of the dispute." "The public policy of promoting mediation as a preferable alternative to judicial proceedings is served by requiring the party commencing litigation to seek mediation as a condition precedent to the recovery of attorney fees. . . Had the parties resorted to mediation, their dispute may have been resolved in a much less expensive and time-consuming manner." So, generally speaking, when a contract provides for mandatory mediation before filing suit, it means what it says.

Then the question arises as to what is mediation, anyway. Mediation is a relatively informal way to try to resolve disputes. It is often a simple meeting in the mediator's office. It is voluntary in nature in the sense that the mediator tries to help the parties themselves come to an agreement to resolve the dispute. Typically, the parties may have their own attorney present if they wish. Usually the mediator conducts "shuttle diplomacy", going from one party with their attorney in one room to the other party with their attorney in a second room and back and forth again. This may go on for hours or even days in a complicated case. Once again, the mediation may result in a voluntary settlement or agreement. However, the mediator cannot impose a decision on the parties like a judge can in a court trial.

Mediation is quite different from arbitration which is a good topic for another day. You can read the Jay Lange v. Roxanne Schilling suit in the Court of Appeal for your self by going to your favorite search engine and entering the case name. Sometimes two or three options are available to select and read the case for yourself. I personally favor the Court of Appeal web site so I can avoid all the advertising and entry on yet another junk email list. And as I always add, please read the case in consultation with your own attorney to see how the case may or may not apply in your particular situation. Best wishes for a successful mediation, Susan. I hope it all works out to your satisfaction.

/s/Donald J. DeVries, Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com. If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowitz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.

What A "Fee" Interest In Real Estate Really Means

This week's question:

My husband and I just purchased a nice home here in the Almaden Valley. Everything went quite smoothly and escrow closed right on schedule. However, after escrow closed and our family moved in, we received our policy of title insurance about three weeks after the close. It all looks quite normal except for one thing. It states in the first part of the policy that we own a "fee interest". What is that, anyway? Is this good or bad? If it is bad, do we have any recourse against our agent for misleading us? Or do we have any recourse against the title company for messing things up? Please help. We have paid enough fees already!!

/s/Marilyn M.

Almaden Valley

Dear Marilyn-

Congratulations on the purchase of your new home in Almaden. I'm sure you will find that this is a great place to live and work.

So often I must bring bad news to my clients and readers of this column but in this case, I have some good news for you. The word "fee" in your policy of title insurance is a very good word. You need not be concerned about a thing. Allow me to explain.

I would suspect that almost all of our policies of title insurance pertaining to our homes provide for the word "fee". Just what is "fee" ownership, anyway?

The first part of most policies of title insurance state something to the effect that "The estate or interest in the land which is covered by this policy is a fee." And then the policy usually states the owner or owners' names and how title is held, such as within a living trust, as community property with or without the right of survivorship, tenancy in common, joint tenancy with the right of survivorship, or otherwise.

Why is the word "fee" in your policy of title insurance a very good word? Because "fee" ownership is the closest thing to absolute ownership one can have. My Black's Law Dictionary, Seventh Edition, defines "fee" in the context of "fee simple", as follows:

"Fee simple" is an interest in land that, being the broadest property interest allowed by law, endures until the current holder dies without heirs, especially fee simple absolute. This is often shortened to "fee".

Black's goes on to state that "fee simple is a term not likely to be found in modern conversation between laymen, who would in all probability find it quite unintelligible. Yet to a layman of the 14th century the term would have been perfectly intelligible, for it refers to the elementary social relationship of feudalism with which he was fully familiar: the words "fee" and "feudal" are closely related. . . The estate in fee simple is the largest estate known to the law, ownership of the land itself which is consonant with the feudal principle of tenure.

Fee simple ownership is the most comprehensive estate in land which the law recognizes; it is the most extensive in terms of quantity, and the most absolute in respect to the rights which it covers, of all estates known to the law.

Traditionally, fee simple ownership has two distinguishing features: first, the owner has the power to dispose of the fee simple, either during his or her lifetime or by will or trust, and second, if the owner dies without a will or trust, the fee simple descends to that person's heirs.

You can readily see the difference in other types of ownership, such as if you had a leasehold interest as a tenant for a period of years, for example. Another example of something less than "fee" ownership would be that of a life estate, where you had the right to occupy a certain piece of property for the rest of your life and then it would automatically pass on to the next owner(s).

Still another example of less than "fee" ownership would be ownership of "just" mineral or geothermal rights in connection with the land but not the land itself.

And, of course, "fee ownership" has nothing to do as such with the costs, monetary fees, and other expenses of an escrow, such as real estate commissions, notary fees, document preparation, and other items. I know that those items add up fast, but "fee ownership" is a separate topic.

So, Marilyn, you can see that "fee ownership" is very, very good in your situation. It is basically the greatest ownership you and your family can have. I'm pleased that your escrow closed on schedule and that there were no complications. I'm sure you and your family will be happy in this beautiful valley.

/s/Donald J. DeVries

Almaden Valley

Donald J. DeVries is an attorney practicing law in the Almaden Valley. Past Almaden Times articles since 1986 can be accessed through his web site: www.almadenvalleylawers.com . If you would like him to answer your question in his next Almaden Times column, you can reach him by email at don@almadenvalleylawyers.com, with "Almaden Times" in the subject line, fax at (408)268-6502, telephone at (408)268-9500, or mail at DeVries & Horowitz, 6475 Camden Avenue, Suite 200, San Jose, CA 95120. Your matters are personal and private, so of course, he will not disclose your identity or any details about your situation. Mr. DeVries writes this column to provide you with general information about important legal matters affecting California residents-not to give you legal advice about your specific matter. No attorney-client relationship is created by these articles. The law is complex and constantly changing and varies from state to state. So you should consult an attorney before taking any action that would affect your personal or business matters.