Mechanic’s Liens and How Business Owners Can Avoid Them

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What is a Mechanic’s Lien

A mechanic’s lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property.

A University Heights Story

A restaurant owner and client in the University Heights area of San Diego called me one evening concerned because he had just received a Notice of a Mechanic’s Lien. He thought this meant he was being sued in Superior Court. I alleviated his concerns right away by letting him know that this document is not a lawsuit but it essentially states that there is a problem with a potential upcoming legal dispute.

A mechanic’s lien is used mainly by contractors who are not paid for work performed in a property. The language on the notice looks intimidating. If you receive one, read it carefully and read it twice for comprehension.

A mechanic’s notice reads as follows, “Upon the recording of the enclosed MECHANICS LIEN with the county recorder’s office of the county where the property is located, your property is subject to the filing of a legal action seeking a court-ordered foreclosure sale of the real property on which the lien has been recorded. That legal action must be filed with the court no later than 90 days after the date the mechanics lien is recorded. The party identified in the enclosed mechanics lien may have provided labor or materials for improvements to your property and may not have been paid for these items. You are receiving this notice because it is a required step in filing a mechanics lien foreclosure action against your property. The foreclosure action will seek a sale of your property in order to pay for unpaid labor, materials, or improvements provided to your property. This may affect your ability to borrow against, refinance, or sell the property until the mechanics lien is released. BECAUSE THE LIEN AFFECTS YOUR PROPERTY, YOU MAY WISH TO SPEAK WITH YOUR CONTRACTOR IMMEDIATELY, OR CONTACT AN ATTORNEY, OR FOR MORE INFORMATION ON MECHANICS LIENS GO TO THE CONTRACTORS STATE LICENSE BOARD WEB SITE AT www.cslb.ca.gov.”

Procedural Requirements

Understand that as with other court actions, a mechanic’s liens has certain procedural requirements before a party such as a contractor can seek a lien against your property. Check out the Contractor’s State License Board to learn a bit more about the procedural requirements and changes made effective as of 2012.

Call to discuss a notice of mechanic’s lien as soon as you receive one as there are important deadlines involved in the process.  Resolution to your disputes may come quickly if immediate action is taken.

Document Review: Have Your Contract Reviewed For Specific Terms

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A client of mine in in the City and County of San Francisco California called in to my office because he had just landed a new independent contractor gig in a nationally recognized technology company in the Bay area. As part of the new position he was tasked with the job of creating manuals for several internal operations and procedures. As with all other employment arrangements, following the grueling multi-step interview process he was issued an independent contractor agreement. Familiar with independent contractor agreements and arrangement requirements, he asked me to decipher the document full of legalese into plain English.

Upon his initial review of the document, he wasn’t bothered by the terms described within the 10-page agreement. The terms were short and reflected the general understanding the two parties made over the phone. However, this client wanted clarity concerning certain provisions that appeared to limit his rights upon entering the agreement. Following my same-day review of the document, we had a lengthy conference call to discuss the details of the contract.

First, wage and payment arrangements needed clarity. For example, a certain compensation amount was identified, but what are the reporting requirements? When was pay delivered and via what method? Was a time limit required? When are payments deemed late and what happens then? And so on. These are all questions that should be answered within the contract or described within some separate written policy.

Then we moved on just about 2/3 of the way into the agreement. This is where terms start getting interesting in a contract review. Terms included  the following:

  • a strict non-competition policy
  • a loyalty provision
  • a non-solicitation requirement
  • a media communications restriction
  • a moonlighting restriction
  • representation and warranties
  • limitations of liability
  • governing law
  • mediation and alternative dispute resolution
  • severability clause
  • a unique confidentiality clause
  • and the terms continued on.

While some of these are rather normal, some of the terms were too restrictive and 1 of them was arguably unlawful.

In all, my client was happy to have his independent contractor agreement reviewed BEFORE signing it allowing him the opportunity to negotiate certain terms. After a few days of some back-and-forth between the two parties and a bit more legal counseling through the process, he was able to settle the terms he was comfortable with and completed the agreement with information so as to remove ambiguities in other areas.

With a completed agreement at the end, the client was off and running with his job. Having his contract reviewed saved him future headaches by seeking clarity with plenty of areas in his contract. Do the same for yourself if there are provisions of the agreement that you do not understand. Do the same even if you do understand the terms and greatly value the transaction. Attorneys are trained to review documents with a critical eye and recommend negotiations when needed.

Protecting Your Product Name – When To Do This & How It Works

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You have spent countless hours developing your product. You’ve hire professionals like an attorney to help you set up your business structure and spent a chunk of change to receive help from a CPA to set up your financial structure. You’ve hired an employee to help you develop your product and other professionals to help you market your product. By the time you take your product to market you have spent a good amount of time and money to get there. After an exciting launch your first year, you learn that someone else on the other side of the country has developed a semi similar product and sells the product using the same name you came up with. What gives?! This happens more often than you would think.

This office assists with trademark registrations and trademark enforcement. Here’s an example: I once represented a clothing manufacturing company located in the City of San Diego. After being in business several years with their clothing articles, the company’s officers learned of another company in California selling similar clothing articles using the same company name. Luckily in this case, the client had their name registered on a national level with the United States Patent & Trademark Office (USPTO). With such registration, we informed the other company about infringement of the name and its unlawfulness resulting in a change in the competitor’s name. Fortunately this matter was resolved quickly before the infringing company affected the clothing manufacturer’s reputation and good will it had developed with its consumers.  This result was in response to having a proper intellectual property portfolio.

Before you go public with your work you want to know how to protect the clever name you came up with for your new business idea and product, seek out a consultation with an attorney to learn about trademarks.

Trademarks

A trademark is a brand name. A trademark or service mark includes any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.

When To Register

It is recommended to submit a trademark registration application as soon as you develop your trade name. However, you can still register your trade name for protection well after the product has been in commerce.

How It Works

Once your trademark is registered with the USPTO, you’re able to monitor and enforce your registration rights afforded you under the Code of Federal Regulations (37 CFR). Learn more about your trademark registration rights and enforcement rights by speaking with an attorney.

Selling Arts & Crafts Depicting Famous Faces & Characters. Can You Do It?

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With Comic-Con International 2016 right around the corner (July 20-24 including preview night) in San Diego, I am sharing a question that comes up quite often in my practice in Business and Intellectual Property Law. The question, often involving famous comic characters and celebrities, goes something like this –

Q: I created an art piece for my grandson that contains a famous cartoon character on it. Can I sell these to others since I made them? I am interested in selling them online in marketplaces like eBay and Etsy for profit.

The question also involves artwork and crafts including celebrities, sports athletes, and other famous characters. Without knowing it, the asking party just asked a very complicated question as this simple inquiry triggers various area of the law including:

  • copyright law
  • business law
  • first amendment rights (under certain circumstances)
  • privacy laws (under certain circumstances)
  • publicity rights (under certain circumstances)
  • cyberspace laws
  • and more

This simple question requires plenty of legal analysis to fully provide an answer and a recommendation. However, for the sake of brevity, it is generally unlawful to use the image of a famous cartoon character to generate your own products for commercial sale. But let’s consider things further.

Let’s assume that the drawing is such a success with your grandson that you decide you’re going to use it for use with your online store in a well-known marketplace and will also use it for marketing purposes for your business. Upon using the image for commercial purposes, you’re exposing yourself to liability for unlawfully using a person’s liking or a person’s copyrighted work without permission. If you make 1 single sale in a private setting, you open yourself for exposure. However, from a practical perspective, it’s very unlikely that the Marvel brand or large company will pursue a claim. On the other hand, if you wind up being the next big thing on the market thanks to the you should expect a lawsuit for damages. Other things to consider are how you’re using the work, whether you transformed the image in any way, and many other factors.

If you have a similar question like the one above you should speak with an intellectual property attorney before proceeding to fully analyze your question and determine whether to move forward with your plans. Factors analyzed include:

  • what image are you using?
  • is the work protected y copyright registration?
  • did you ask for permission from the creator?
  • if the work involves a person, does the person know about your use?
  • where did you get your image from?
  • did you copy the image or transform it in any way?
  • what are you using it for?
  • are you engaging in private sales or commercial sales?
  • other questions depending upon your circumstances

Note that this type of question is complex and requires serious factual analysis.

What is a Contingent Beneficiary and Why Is That Important to Me?

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In short, a Contingent Beneficiary is a person who will receive a benefit under a Will or Trust subject to a condition or event occurring.

I am in the process of assisting another San Diego family prepare their Estate Plan. A husband and wife team happily married for 25+ years with two children are planning what to do with their North Park home in the event of their deaths. In this case they want the house to transfer to their two adult children in the event of their death. But, what happens in the not-so-random case where mom, dad, son and daughter are all on a family trip when a tragedy occurs and all of them die? This is where a Remote Contingent Beneficiary or Contingent Beneficiary steps in. The person, persons, group or charity identified as a Contingent Beneficiary (or in this case a Remote Contingent Beneficiary) in the Will or Trust steps in to receive the house if the son and daughter cannot receive the house due to their deaths.  The purpose of identifying a Contingent Beneficiary in a legal document such as a Will or Trust is to leave a back-up plan. No one wants to consider such possible tragic scenario like a plane crashing with all family members within, or a boat capsizing with all family members on it. However, back-up plans including Remote Contingent Beneficiaries are important for that specific reason – we never know what will happen in our future.

Take a look at your Will or Revocable Living Trust. Does it identify a Remote Contingent Beneficiary? Do you know who you’re listing as a back-up beneficiary to take your assets (your house, cars and money) in the event your primary beneficiaries predecease you? You have worked very hard to pay off that house mortgage and car loan. Now take the next step and plan properly while you’re in good mental health and have the mental capacity to plan these things yourself.

Some families leave a friend or distant family member. Other families list their grandchildren or extended family. Others elect a charitable organization or favorite group. Consider your options and leave this in writing. If it’s not part of your Will or Trust, it won’t do anyone any good to simply think about your wishes.  This is a good time to also have your Trust reviewed by a professional if you chose to prepare a Will or Trust using a self-help method. An improperly prepared Will or Trust is not valid in the State of California and you don’t want to leave such document to chance.

 

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Neat! Check out the brick at CSUSM

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Neat! Look for Ruth Ryan-Cruz’s brick located at California State University San Marcos adjacent to the Starbucks patio near the Kellogg Library. Go Cougars! ‪Participate in the CSUSM Giving Program. 

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New Overtime Pay Laws for Salaried Workers Making Less Than $47,476

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Under a new rule announced by the White House last month (May, 2016), effective December 1, 2016, anyone earning a salary of less than $47,476 ($913/week) will automatically qualify for overtime pay when they work more than 40 hours a week. Currently the threshold is at $23,660. The new rule is intended to expand access to overtime pay to salaried workers working long hours under exemption rules. The new threshold will be updated ever 3 years to keep the threshold at the 40th percentile of full-time salaries in the lowest income region of the country.

Highlights about the new rule include:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest wage Census Region, currently the South, which is $913 per week or $47,476 annually for a full -year worker;
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full -time salaried workers nationally, which is $134,004; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Learn more.

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February, 2016 Bar Exam Results Are Released Today. Good luck, recent exam takers!

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On Friday, May 13, 2016, results from the February 2016 California Bar Examination will be mailed to applicants. Applicants will be able to access the pass list this evening, beginning at 6:00 PM  (PST). Wish them all plenty of luck today!

To my past California Western School of Law mentees and interns waiting on bar results today: I wish you good luck this evening. Think positively and I look forward to welcoming you to the Bar along with the CWSL Alumni Group.

To my past CWSL mentees and interns who are practicing attorneys today: Rock on and help me wish CA bar takers the best today. I’m still proud of each and every one of you for accomplishing success with the Bar.

Interested in learning statistics about passing the CA bar? Review information published by the State Bar of California.

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Celebrate Mother’s Day With the Kids (Sunday, May 8th) & Then Set Time Aside Time to Make Arrangements for the Children

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As families prepare to celebrate Mom this Mother’s Day on Sunday, May 8th, children and significant others prepare to make this 1 day extra special for her. This day usually showers Mom with flowers, a dining experience, gifts and other memorable moments for the whole family to remember. The point of this day is for Mom’s to feel extra special, but Mom’s can also take this day as a reminder of things to arrange for their family’s future.

Regardless of whether you have been a Mom for 1 year or 21 years, you and your children will feel even more love between yourselves when you let them know that you have planned for their future with estate planning arrangements. Estate planning arrangements offer answers to the following questions:

  1. Who will care for the kids in Mom’s long term absence or death?
  2. Will the kids be left under the parental guidance of their natural father upon Mom’s death?
  3. Are there any savings accounts reserved for supporting the kids upon Mom’s hospitalization, incapacity or death?
  4. Are there any life insurance policies Mom set up?
  5. Who will handle the children’s financial, healthcare and educational future if Mom cannot do it?
  6. If Mom passes away, what items (including houses) do the children split and when?
  7. If Mom owns a business and suffers an accident, who carries on the business?

Estate planning answers many other questions that are dependent upon the family structure. This is even more important where there are circumstances involving adopted children, step children, blended families, disputes among family members and so on.

Therefore, enjoy Mother’s Day this coming Sunday. Hug your children like never before on this day and then focus on how you can show them your love even more through estate planning.  Calendar a reminder to yourself as a Mom to plan for your children’s future through Wills, Trusts, Financial Planning and other methods.

 

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Local San Diego Business Spooner Boards on Shark Tank This Friday!

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Are you a fan of the ABC hit-show Shark Tank? Or perhaps you like to support your local business on television? Watch Shark Tank this Friday, May 6, 2016 at 9pm PST on KGTV Channel 10 (ABC Channel) to support local business, Spooner Boards. Spooner Boards based out of National City, CA builds boards in the South Bay area. I’ll be watching as this local team of entrepreneurs wades through tough waters with the “sharks.”

Learn more about Spooner Boards through the National City Chamber of Commerce.
Ryan-Cruz Law, APC is a proud member of the National City Chamber of Commerce.

Learn how small businesses grow into big successes on a local and national level.