Whether you are ready or not, year-end is here! Incline Law Group LLP has compiled a list of small business resolutions that we feel can help position your business for a successful year ahead in 2018.
- Tax Planning: Year-end is a good time to meet with your account and/or CPA. You should assess the year behind and plan for the year ahead in order to best budget and plan for your small business in the coming year. Don’t forget to review year-end retirement account contributions.
- Charitable Giving: Charitable giving is both tax deductible and a way for small businesses to spread the spirit of the season and support organizations that you believe in. Did you know that most non-profits receive up to 30% of their annual fundraising income during the month of December?
- Business Registrations: All types of business entities, whether a corporation, LLC, LLP or other type have annual or bi-annual renewal filing requirements. Likewise, state and local business licenses may also need to be renewed. Do you know when your registration and license renewals are due? If not, you should take the time to find out and calendar them. If Incline Law Group LLP serves as your Registered Agent, we will track and handle these renewals for you.
- Trademark Renewals: Trademark registrations have expiration dates. Is yours coming up? We suggest you calendar it for an on time renewal.
- Health Insurance: The Affordable Care Act (“Obamacare”) open enrollment period has been shortened for 2018 coverage and ends on December 15, 2017. Your current employee health care plan is also likely to have year-end renewal dates regardless of when you used to renew. Make sure you know your enrollment periods and have coverage in place before your current coverage expires.
- Employment Policies: When was the last time your small business updated your employee handbook? If you are in a state with Medical Marijuana, have you created a workplace policy? As social media becomes more prevalent each year you should have a policy in place. Year-end is a good time to review, revise and/or add new policies for your small business that can become effective January 1.
- Leases: New leases or commercial lease renewals can take more time than anticipated. If yours lease expires in 2018, you should begin negotiations and planning now.
Bonus Tip #8 (because…2018): Review your client list, and make sure all contact information is up-to-date. This is not just to achieve a clean holiday card list, but can also help your small business engage your client base if you use digital communication. Consider segmenting your contacts during this review based on the type of relationship, product or service they have or purchase with you, in order to know where you business has come from and where your future opportunities can be found.
Incline Law Group wishes you a successful and prosperous 2018!
Protect your property. Protect your work.
Property renovation is a trend that is on the rise in our area. One consideration that homeowners often overlook when hiring a contractor and considering renovation work is the contractor’s right to record a mechanics lien against the homeowner’s property in the event that the homeowner does not pay the contractor. A mechanics lien, in certain circumstances, may be recorded against a homeowner’s property to protect the contractor’s rights and ensure payment for the contractor’s services. If the contractor follows the proper procedures and remains unpaid, the contractor may be able to foreclose and force the sale of the property in order to obtain payment for the contractor’s work. It is not only important for contractors to have a solid understanding of these procedures, but homeowners should know them as well.
In Nevada, NRS Chapter 108 governs mechanics liens. In general, a contractor or supplier is authorized by statute to record a lien if an owner fails to pay when:
- They have provided work or materials valued at $500.00 or more for the repair or improvement of the property;
- They are licensed to perform the work;
- They timely provide a “Notice of Right to Lien” if the contractor does not have a direct contract with the homeowner;
- The contractor provides a “Notice of Intent to Lien” fifteen (15) days before recording his mechanics lien;
- The contractor timely records his mechanics lien (formally called a “Notice of Lien”); and
- The contractor timely file a lawsuit to foreclose the mechanics lien within six (6) months of recording the lien.
The “Notice to Right to Lien,” is commonly referred to as pre-lien notice. A pre-lien notice puts the homeowner on notice that the contractor may have a right to a lien on the property in the event that the contractor is not paid by the homeowner for work performed or materials delivered. Previously, even though contractors did not always deliver this required pre-lien notice, mechanics liens were still routinely enforced based on the Nevada Supreme Court’s rulings that “[t]he failure to serve the pre-lien notice does not invalidate a mechanics’ or materialmen’s lien where the owner received actual notice.” Fondren v. K/L Complex Ltd., 106 Nev. 705, 710, 800 P.2d 719, 721-22 (1990). Mechanics lien statutes are “remedial in character and should be liberally construed, allowing substantial compliance with the statutory requirement as long as the property owner is not prejudiced.” Las Vegas Plywood & Lumber, Inc. v. D&D Enters., 98 Nev. 378, 380, 649 P.2d 1367, 1368 (1982). The case law stated that so long as the homeowner had “actual notice of the potential lien claim,” it was “not prejudiced” by not receiving the pre-lien notice. Board of Trustees of the Vacation Trust Carpenters Local No. 1780 v. Durable Developers, 102 Nev. 401, 410, 724 P.2d 736, 743 (1986). The Supreme Court of Nevada has clarified that “a lien claimant cannot invoke the actual notice exception to NRS 108.245 unless the property owner (1) has actual notice of the construction on his property, and (2) knows the lien claimant’s identity. Iliescu v. Steppan citing Hardy Companies, Inc. v. SNMARK, 126 Nev. 528, 542, 245 P.3d 1149, 1158 (2010).
This decision makes it vital for contractors to follow the appropriate procedures with regard to their mechanics lien rights in Nevada. It is worthwhile for a homeowner to understand that they can condition a partial or full payment on a partial or full lien release. It is also important for homeowners to understand that the contractor has a limited time period in which to record a valid lien.
Before beginning a renovation project, a homeowner should consider meeting with his/her attorney to discuss the terms of the contract with the general contractor, mechanics lien rules and procedures, and other considerations to ensure maximum protection for the homeowner.
As expected, California has its own set of mechanics lien rules that differ in many respects from Nevada. Stay tuned for an upcoming Clarity blog post on California mechanics lien laws.
The California legislature isn’t taking bed bugs lying down. California has enacted new landlord/tenant laws relating to bed bug infestations in rental properties. It is important for landlords to take note of the new provisions relating to bed bugs and to consult with their attorneys to make sure they are in compliance with these new provisions.
CCC §1954.602, which became effective on January 1, 2017, states:
- A landlord shall not show, rent, or lease to a prospective tenant any vacant dwelling unit that the landlord knows has a current bed bug infestation.
- This section does not impose a duty on a landlord to inspect a dwelling unit or the common areas of the premises for bed bugs if the landlord has no notice of a suspected or actual bed bug infestation. If a bed bug infestation is evident on visual inspection the landlord shall be considered to have notice pursuant to this section.
In addition to the requirements set forth in §1954.602 above, effective July 1, 2017, landlords must provide written notice, as prescribed by the California Civil Code, to prospective tenants with general information about bed bug identification, behavior and biology, the importance of cooperation for prevention and treatment, and the importance of and for prompt written reporting of suspected infestations to the landlord. This notice provision will apply to all existing tenants effective January 1, 2018.
In addition to the foregoing, the legislature has incorporated the new bed bug statutes into those that govern landlord retaliation (prohibiting a landlord from retaliating against a tenant who gives notice to the landlord about the suspected presence of bed bugs). Additional provisions have been added to the Civil Code that govern access to the premises to inspect for bed bugs as well as a requirement to provide a report to the tenant within two business days of receipt of the report from the pest control operator.
So, what about Nevada? Just because a landlord is in Nevada does not mean that he/she cannot learn from the new laws and procedures that govern California landlords. Even without a specific bed bug statute in Nevada that apply to landlords, a landlord may be sued for a number of causes of action for failure to remedy a known or suspected bed bug infestation (i.e. constructive eviction, breach of warranty of habitability, breach of the covenant of quiet enjoyment, nuisance, among others). Therefore, it may be less expensive in the end for a landlord to routinely order pest inspections of rental properties to avoid the risk of litigation that could stem from bed bug or other infestation of rentals properties.
On September 16, 2016, Governor Jerry Brown signed Assembly Bill 2093, which amended California Civil Code Section 1938 placing increased burden on commercial property owners when leasing their property. Those who ignore or who are unaware of the amended statute are exposed to substantial financial risk for their non-compliance.
The law requires every rental agreement, signed on or after January 1, 2017 to advise the tenant in advance as to whether the subject premises has undergone an inspection by a Certified Access Specialist (CASp). A CASp inspector inspects buildings and sites for compliance with applicable state and federal construction-related accessibility standards under the ADA and state equivalents.
Where property has undergone a CASp inspection and received a disability access inspection certificate, it is advisable to provide the appropriate notices and reports to the tenant within the specified timelines. In the event the subject premises has not been issued a disability access inspection certificate, the commercial property owner is required to state the following on the lease form or rental agreement:
“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”
Failure to comply with Civil Code Section 1938 may allow a commercial tenant to rescind the lease agreement. Of greater concern may be the question of who must pay for the improvements required by the CASp inspection report. Unless otherwise specifically agreed between the landlord and tenant, the presumption is that the commercial property owner shall pay for both the report and any required repairs set forth in the report.
The law requires different notices be provided from landlord to tenant based on whether there has been a CASp inspection and whether a disability access inspection certificate has been granted. Additionally, if a CASp inspection or certificate has not been issued, landlords may wish to consider including specific in the lease agreement with regard to payment of costs regarding the inspection if one has not already taken place as well as the costs of bringing the property in compliance if it turns out not to be in compliance.
If you need more information or have any questions regarding how the new law may affect your business, do not hesitate to contact Incline Law Group, LLP for some clarity on the subject.
The City of Reno is proposing an amendment to its business license ordinance.
If approved, the proposed change would be that business license fees would be assessed based on the business’s gross receipts for goods sold/services performed within the City of Reno only (verses all sales anywhere).
In addition, two new business categories have been created: (1) manufacturing facility, and (2) warehousing/distribution center. Businesses in those categories would also be charged a fee of 10 cents per square foot of “total business footprint.”
A public workshop is being held Thursday, January 19, 2017 at 3:30 p.m. in the Council Chambers at Reno City Hall. At the workshop, City staff will review the proposed ordinance and collect comments. Please attend the workshop to learn more and to voice your opinion about the ordinance.
Additionally, you may submit written comments, data or arguments in writing about the ordinance until January 25, 2017 at 5:00 p.m.
Comments should be submitted to:
Reno City Hall
Business License Division-2nd Floor
1 East First Street, Reno, Nevada, 89501
Mail to: P.O. Box 1900, Reno, NV 89505
Email to: BusinessLic@reno.gov
Learn more in this recent Northern Nevada Business Weekly article.
Andrew N. Wolf (Andy) was selected by the State Bar of Nevada Publications Committee to contribute a chapter in the new Sixth Edition of the Nevada Civil Practice Manual, published November 2016, by Matthew Bender/Lexis-Nexis in partnership with the State Bar of Nevada.
Andy has completely rewritten Chapter 27: Fees, Costs and Interest which details the recovery of attorney’s fees, litigation costs and interest by the successful party in a lawsuit. This important resource explains the intricacies of how and when attorney’s fees, costs and interest can be recovered in Nevada courts, whether it be through an attorney’s fee clause in a contract, as damages in a lawsuit, or as sanctions for frivolous or vexatious litigation conduct.
The Nevada Civil Practice Manual guides attorneys in Nevada through virtually every civil procedure and practice with expert analysis and comprehensive discussion of the Nevada Rules of Civil Procedure as well as many statutory provisions relating to civil cases. Andy, a partner at Incline Law Group in Incline Village Nevada (Lake Tahoe), says, “Attorneys and judges across Nevada use this important practice guide for reference on a daily basis, and it is a real honor to have been selected as a contributor.”
This article originally appeared in the Sierra Sun/Tahoe Bonanza.
Winter is a great time to buy in the Truckee/Tahoe area. Whether you are looking to purchase a new primary residence or just a vacation home, there are a number of legal issues that you will want to consider.
1. TRPA/BUILDING RESTRICTIONS
The Tahoe Basin is under the jurisdiction of a bi-state federal agency known as the Tahoe Regional Planning Agency (TRPA). TRPA’s mission is, primarily, to preserve the environmental health and sustainability of the Lake Tahoe region.
TRPA has the authority to establish and enforce land use planning, building and development restrictions. The TRPA code may limit a homeowner’s ability to build, remodel, landscape and otherwise improve their property.
If you are purchasing within the jurisdiction of TRPA, it is important that you understand what you can and cannot do with your property with regard to improvements and the timelines for permitting and/or building within the Tahoe Basin.
Certain activities like grading and digging are generally prohibited October 15 through April 30. If your property is within a scenic corridor or within a sensitive zone (like a stream zone), you may be subject to additional TRPA oversight.
TRPA does not make redevelopment, remodeling or improvement impossible, but it is important that you be aware that TRPA restrictions may impact your intended use of your new property. There is a great deal of information available on the TRPA website.
2. HOMEOWNERS’ ASSOCIATIONS
If you are looking at purchasing a condominium or townhome that is within a homeowners’ association, you should carefully review any applicable Covenants, Conditions and Restrictions (CCRs).
The CCRs will dictate any use restrictions on your property. For many second-home buyers in Tahoe, rental restrictions are very important.
Some associations may limit the length of rentals or prohibit them entirely. If you are intending to rent out your new house as a vacation rental or on a longer-term basis, you should carefully review the CCRs for provisions relating to rentals.
It is also important that you understand if you will be required to pay monthly assessments, whether there are any planned or pending special assessments and the general financial health of the association, which should be evident in the operating and reserve budgets and financial reports.
3. TITLE REPORT/TITLE INSURANCE
An often-overlooked document in the mountain of paperwork that you wade through when purchasing a home is the preliminary title report issued by the title company in preparation for the issuance of title insurance at the close of escrow.
The title report provides a list of recorded documents that will be excluded from title insurance coverage. It is very important to review this list of exceptions and exclusions.
Often you will see easements affecting the property or any recorded use restrictions (like CCRs), and sometimes you may see issues relating to TRPA building covenants or restrictions.
The title insurance policy that you obtain will not insure against loss resulting from a claim that is related to a title condition that was listed on the exceptions list.
More importantly, certain title conditions can impact your intended use of the property (for example, if there is a public easement for beach access that goes right by your new master bedroom window … you may want to know about that).
It may be possible to remove some title exceptions and/or to insure around others. You may want to seek legal counsel to understand the impact and possible removal of certain types of exceptions.
Your Realtor should be able to guide you on when it is advisable to seek legal counsel to assist with title issues.
4. CALIFORNIA VERSUS NEVADA?
While the Tahoe Basin is one big beautiful region, there is one major tax difference that should be pointed out in case you are not already aware: The State of California has individual and corporate state income tax, while the State of Nevada does not.
When buying a second home that is intended for your personal vacation use, this may not be an important issue. However, if you are intending your new Tahoe home to be your new primary residence, it is worthy of consideration.
Additionally, if you intend to rent out your property, thereby generating income, the rental income is likely to be subject to income tax — not such a big deal if you are already a California state taxpayer, but if you are a Nevada resident, you may be subjecting yourself to California income tax on that rental income.
It’s all food for thought, and depending on circumstances, a reason to get in touch with your tax professional for guidance.
5. REAL ESTATE AGENTS
As with any community, the Truckee/Tahoe area has many excellent Realtors … and a few that may not be quite so excellent. Choose an agent/broker by asking questions of both the Realtor and people who you may know in the community.
Realtors who live and work full time in the community, and have for some time, are going to understand the many unique aspects of home-ownership in Tahoe, such as why you want to think twice about a long, steep north-facing driveway or when you should investigate your grand remodel plans with TRPA.
Many of the communities around the lake and in the Truckee area have a local Board of Realtors. They can often be found online and may be a useful place to do a little research.
The Truckee/Tahoe Area is an amazing region rich with unparalleled beauty, outdoor adventure and close knit communities.
If Incline Law Group, LLP, can ever be of service to you in the purchase of your Tahoe home, or with other legal needs, please feel free to contact us. Until then, we will see you on the trails and the ski runs.
The IRS and Treasury department issued a new ruling on December 12, 2016, which is intended to create more financial transparency and reduce criminal activity (remember the “Panama Papers”?). The new regulations will create a mechanism whereby U.S. tax information will come to the attention of a foreign investor’s home country. This directly impacts reporting requirements for foreign owned single member LLCs.
For tax years beginning after January 1, 2017, domestic disregarded entities (e.g. single member LLCs) will be required to report and maintain records pursuant to Internal Revenue Code 6038A which previously only applied to 25% foreign owned domestic corporations.
Single member foreign owned entities will now be required to obtain a U.S. employer identification number (EIN) and to designate a “responsible party” (who is, in essence, the person that enables the “individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets”). The ruling also requires the filing of IRS Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, which reports certain transactions with related parties, including amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to and distributions from the entity.
On November 21, 2016, the California Supreme Court issued a ruling in Horiike v. Coldwell Banker Residential Brokerage Company that is likely to have far reaching implications for California real estate brokers in terms of dual agency. As we have written about in the past many states, including Nevada and California, allow real estate brokers and sales persons to represent both a buyer and seller in a real estate transaction provided that proper disclosures are made to the parties.
While dual agency statutes generally impose fiduciary duties of care, integrity, honesty and loyalty in dealings with both parties, we have often raised the effectiveness of these duties to overcome the inherent conflict of interest presented by dual agency. In fact, when enacting the current dual agency statutes in California, the California Legislature noted that the proposed statute could not cure “the fundamental problem in dual agency relationships – potential and sometimes unavoidable conflicts of interest” but rather was “simply [a] ‘disclosure’ bill intended to inform the buyers and sellers in a real estate transaction of the possible agency relationships and duties owned by a realtor…” (Sen. Rules Com., Bill No. 3349 (1985-1986 Reg. Sess.)).
Often as one way to mitigate some dual agency conflicts, different agents working under the same broker will each represent one party in the transaction rather than having one agent represent both parties. This is the type of relationship that was at issue in the Horrike case.
Horiike, filed suit after discovering a significant discrepancy between the actual square footage of his new condominium and the square footage that was represented by the marketing materials. The Court, in deciding the very narrow question of whether the listing agent, working under the same broker as Horiike’s agent, owed Horiike a duty to learn and disclose all information that could materially affect the value or desirability of the property, concluded that he did.
The Court interpreted the statute to mean that an agent’s duties are equivalent to the duty of the broker for whom s/he functions. i.e. a real estate agent does not have an independent agency relationship with the client of the broker, rather the agency relationship with the client is derived from the agency relationship between the broker and the client. As a result, the relationship between broker and agent cannot be uncoupled.
Therefore, when the broker agrees to act as dual agent for both buyer and seller, both broker and the agents assume all of the duties of dual agency, including those statutory fiduciary duties to investigate and disclose material information.
It will be interesting to see if the California Legislature takes another look at dual agency in light of this case. We will be sure to inform you if they do.
I recently obtained a full dismissal of all charges brought by the Nevada Real Estate Division (NRED) against one of my clients for alleged violations of Nevada broker licensing laws. In my opinion, NRED was reaching on a number of issues, and was bowing to some uneducated political pressure by bringing the cases in the first place. My client was not the only broker or agent subjected to these charges and it bears noting that most of the cases were fully dismissed before hearings (including that of my client), two after a hearing and another two cases are pending judicial review. There were a number of important issues at stake in these cases. One of which was the propriety of dual agency.
Dual Agency refers to the situation in which the same real estate agent represents both the seller and the buyer in a real estate transaction. Dual Agency is legal in Nevada, however, under NRS 645.252, if an agent acts on behalf of more than one party to the transaction they must obtain written consent from each party which must include: (i) a description of the real estate transaction; (ii) a statement the agent is acting for two or more parties who have adverse interests and that in acting for those parties the agent has a conflict of interest; (iii) a statement that the agent will not disclose confidential information for 1 year after the transaction unless compelled by a court to do so or given written permission by the party to do so; (iv) a statement that the party is not required to consent to the dual agency and v) a statement that the party is not being coerced into consenting and understands the terms of the consent. NRED has prescribed forms for these disclosures.
Where a broker assigns two different agents, who both work under the same broker, to a single transaction, this is not referred to as dual agency and does not require the same disclosures as set forth above.
Dual Agency representation by realtors is a practice that may be questionable in, or outside of, the context of short sales because of the inherent conflicts of interest. The policy implications are significant to the protection of buyers and sellers.
Regardless, it is legal in the state of Nevada and neither our legislature nor the local realtor boards have sought to make changes to this practice. As with many aspects of contracts, and law in general, parties to a transaction or contract are advised to be aware of their rights and what they are contracting for.