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Letter of the Law

 A Monthly Publication of Kring & Chung, LLP
 

July 2010  

Real Estate Law
Borrower Rights During the Foreclosure Process
Anna Greenstin
 
Anna GreenstinAccording to the California Foreclosure Report, the number of foreclosure sales has almost doubled from last year.  In April 2010, it was reported that foreclosure sales increased 92.3% from 2009, when lenders had voluntary moratoriums in place while awaiting the implementation of the Administration's Home Affordable Modification Program (HAMP).
 
The foreclosure process differs in each state, as do the various lenders' business polices.  Some lenders may take up to a year before sending out a notice of default, while another lender may serve a notice of default within 90 days of nonpayment.  California has enacted laws and provisions that lenders must follow prior to filing a notice of default.
 
Unfortunately, many homeowners do not understand the foreclosure process, or the rights afforded to them by the government.  In 2008, Governor Arnold Schwarzenegger signed California SB 1137 (a.k.a. the Perata Mortgage Relief Bill) into law.  The law requires lenders holding loans made between January 1, 2003 and December 31, 2007 to begin contacting homeowners at least 30 days before issuing a notice of default.  On June 2, 2010, the California Supreme Court held in the case of Mabry v. Superior Court (Aurora Loan Services) G042911, that homeowners have a private cause of action to enforce statutes, such as the Perata Mortgage Relief Bill, requiring the lender to contact a defaulting borrower to explore options to avoid foreclosure.
 
The California Supreme Court did not hold that a foreclosure will be prevented or title will revert back to the borrower after a sale is final, should the lender not comply with a statute. The ruling in Mabry limits the right of action to obtaining a postponement of an impending foreclosure, to permit the lender to comply with statutes.  Homeowners on the brink of foreclosure should understand that after late charges are assessed, the lender has to initiate contact with the homeowner to address non-payment.  Thereafter, a demand or notice of breach is provided to the homeowner/borrower in writing.  At that time, a lender will likely attempt to initiate a loan modification.  Initial contact with the homeowner/borrower may take up to 3 months, depending on the lender.
 
Once the lender has made contact with the homeowner/borrower and offered options to avoid foreclosure, the lender must send via certified mail a Notice of Default providing a deadline to pay past due amounts and costs.  If the loan is not brought current, or a repayment plan to bring the loan current is not worked out, then the lender may start the foreclosure process by filing a Notice of Trustee Sale.  Pursuant to the Perata Mortgage Relief Bill, tenants living in the property must receive a Notice of Sale in six different languages.
 
Homeowners can avoid foreclosure through loan modification, repayment plans, forbearance, Deed-In-Lieu, Short Sales, or by filing a bankruptcy petition.  Each of these options have varying timelines and prerequisites that must be satisfied.  Moreover, some circumstances might be further complicated if there are multiple loans at issue from different lenders.  An experienced attorney, foreclosure specialist, and/or CPA, should be consulted before the homeowner stops making payments, or when a homeowner is attempting to rectify his or her payment delinquency.  
 
Anna Greenstin is an associate with Kring & Chung, LLP's Irvine office.  She can be contacted at (949) 261-7700, or agreenstin@kringandchung.com. 
Employment Law
Employee or Independent Contractor? 
Laura C. Hess 
BIO - LCH For businesses, classifying workers as independent contractors versus W-2 employees is a dangerous trap for the unwary.  It is tempting for businesses to do so because they do not have to carry worker's compensation insurance, pay payroll taxes, take tax withholdings, pay overtime, etc., for independent contractors.
 
However, the fact that a company and its worker agree that he or she is an independent contractor is not controlling.  The most significant factor in determining whether the status of a person performing services for another is an employee or an independent contractor is the employer's right to control the manner and means of accomplishing the result, that is, the details of the work.
 
Some of the factors that weigh in favor of finding that a worker is an employee are:
 
· the employer controls when the person reports to work

· the employer controls how long the person works

· the employer provides the person with a uniform or tools of the trade
 
· the employer controls the daily job assignments on which the person works

· the employer controls the means and methods the person uses to perform his or her job assignments
 
· the person works for the employer for a significant length of time
 
If businesses classify their workers as independent contractors when they do not meet the definition, they could be exposed to significant liability for failure to pay overtime, failure to keep time records, meal and rest break violations, and failure to carry worker's compensation insurance. 
 
The employment attorneys at Kring & Chung, LLP can help you determine whether you can treat your workers as employees or independent contractors.  
 
Laura Hess is a partner with Kring & Chung, LLP's Irvine office.  She can be contacted at (949) 261-7700, or lhess@kringandchung.com.  Ms. Hess also provides legal information for companies that do business in Califiornia on her blog, Hess on Business Law, at www.hessbizlaw.com.
Attorney Spotlight
 John Kaniewski
 
John KaniewskiJohn Kaniewski joined Kring & Chung in January of 2009.  Mr. Kaniewski came to the firm as a highly experienced litigator and since joining the firm, he has had a string of victories in trials and binding arbitration.
 
Nightser v. Eyeball Fabrication (O.C. Superior Court Case No. 30-2008 00102027)
 
In this case, the plaintiff suffered a very serious injury while she was riding as a passenger in an off-road vehicle known as a sandrail.  When the driver made a turn in the sand at a high rate of speed, the vehicle overturned and plaintiff's arm was crushed between the frame of the vehicle and the ground.  Kaniewski defended our client against plaintiff's claim that the sandrail was defectively designed and manufactured.  After plaintiff's opening statement at trial, Kaniewski made a motion for non-suit which was granted by the trial judge and judgment was entered for Kaniewski's clients.  Plaintiff appealed the ruling.  However, the appeal was later dismissed as well.
 
Allstate Insurance/Centex Homes v. Horizon Plumbing (O.C. Superior Court Case No. 30-2007-00100208) and
Horizon Plumbing v. Navigators Insurance (O.C. Superior Court Case No. 30-2009-00117471)
 
The Allstate case arose out of a subrogation claim filed by Allstate Insurance Company against Centex Homes Horizon Plumbing.  A water leak occurred in a home built by Centex.  Horizon Plumbing was the plumbing subcontractor for the original construction of the home.  It was determined that the leak resulted from a crack in the water line connection which resulted from removal and replacement of a toilet by the homeowner.  Centex settled the case with Allstate, but continued to prosecute its express indemnity cross-complaint against Horizon Plumbing based on the original subcontract.  Kaniewski teamed up with Anna Greenstin and they obtained a defense verdict on the express indemnity claim.
 
The Navigators Insurance case was a companion case.  In that action, Horizon Plumbing sued Navigators for declaratory relief and bad faith.  Horizon had a general liability insurance policy with Navigators and tendered its defense of the Allstate case to Navigators based upon the terms of that policy.  Navigators rejected the tender.  After successfully defending the Allstate case, Kaniewski filed summary judgment on the insurance claims to recoup the attorneys' fees and costs incurred by Horizon Plumbing in its defense of the underlying claims.  Just before the hearing on the summary judgment motion, Navigators finally agreed to pay virtually all of those fees and costs.
 
Magna & Magna, Inc. v. Kim (O.C. Superior Court Case No. 30-2008-00107886)
 
Just before the trial of this case was to commence, the parties decided to submit this matter, which actually involves 3 different actions, to binding arbitration.  Kaniewski's clients owned a laundromat in a strip mall and were sued by for conditions of the laundromat which purportedly were not in compliance with the terms of the Americans With Disabilities Act.  That action was settled for a nuisance value payment.  The strip mall was then purchased by Magna & Magna.  That company was later sued by yet another party as the result of alleged ADA issues in another business in the strip mall.  Kaniewski's clients and the sellers of the strip mall were sued in the third action for fraud allegedly arising from the non-disclosure of the past lawsuit ADA lawsuit.  The arbitrator returned a finding in favor of both Kaniewski's clients and the strip mall seller.  (At this time, Kaniewski is also pursuing recovery of his clients' attorneys' fees and costs in the arbitration proceeding.  That ruling is still pending.)
 
John A. Kaniewski is an associate with Kring & Chung, LLP's Irvine Office.  He can be reached at (949) 261-7700 or jkaniewski@kringandchung.com.
 
Attorney Advertising.  This client newsletter is a periodical publication of Kring & Chung, LLP and should not be construed as legal advice or a legal opinion on any specific facts or circumstances.   The contents are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.  Any tax information or written tax advice contained herein (including any attachments) is not intended to be and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer.  
In This Issue
Borrower Rights During the Foreclosure Process
Employee or Independent Contractor
Duration of a Mechanic's Lien in Nevada
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Construction Law
Duration of a Mechanic's Lien in Nevada
Monica Dean
 Monica Dean
Nevada Revised Statutes ("NRS") Chapter 108 primarily governs a lien claimant's legal rights to file and enforce a mechanic's lien claim in Nevada.  There are many deadlines and timeframes that must be adhered to in order to protect a lien claimant's legal rights.  It is particularly important that a lien claimant in Nevada is aware of the duration of a lien, and the timeframe in which to bring an action to enforce a lien in a proper court. NRS 108.233(1) mandates the relevant duration of a lien as follows: 
 
1.  A lien provided for in NRS 108.221 to 108.246, inclusive, must not bind the property subject to the lien for a period longer than 6 months after the date on which the notice of lien was recorded, unless:
 
(a) Proceedings are commenced in a proper court within that time to enforce the same; or
 
(b) The time to commence the action is extended by a written instrument signed by the lien claimant and by a person or persons in interest in the property subject to the lien, in which event, and as to only that person or those persons in interest signing the agreement, the time is extended, but no extension is valid unless in writing and recorded in the county recorder's office in which the notice of lien is recorded and unless the extension agreement is recorded within the 6-month period....  
 
[See NRS 108.233(1) (emphasis added)]
 
The law requires that, if the parties agree and execute a written extension agreement, it must be recorded and acknowledged as required by the law for the acknowledgement of deeds.  Although an action may be commenced within the extended time, it can only be commenced against the persons who signed the extension agreement and only as to their interests in the property affected.  A lien claimant may not commence an action on the lien in a proper court if the time specified in the extension agreement lapses.  Notably, an extension must not be given for a period in excess of one (1) year beyond the date on which the notice of lien is recorded.  In addition, "if there are other notices of lien outstanding against the property, an extension must not be given upon a notice of lien which will tend to delay or postpone the collection of other liens evidenced by a notice of lien or encumbrances against the property."  [See NRS 108.233 (3)].  
           
Consequently, if a lien claimant fails to file an action to foreclose on a lien in a proper court within the six month time frame mandated in NRS 108.233(1), and allows more than six months to elapse since the filing of the lien(s) on the real property or fails to request or secure an extension of time to file an action to foreclose in the proper court as set forth in NRS 108.233(1)(b), the notice of lien shall be deemed to have expired as a lien against the property.   
 
The attorneys at Kring and Chung, LLP can ensure that you are complying with the Nevada lien law requirements and adhering to the statutory deadlines and timeframes.  For more information on Nevada mechanic's lien law, please call us or stop by to discuss.
 
Monica Dean is an associate with Kring & Chung, LLP's Nevada Office.  She can be contacted at (702) 260-9500 or mdean@kringandchung.com.