Hello everybody. This month I will focus on recent developments pertaining to laundry leases and easements. Although the two topics are dissimilar, often they are both important to AOA members.
News On Laundry Leases
For years I have urged AOA Members to carefully read each and every lease a laundry company prepares and gives them to sign. In particular, I have called to readers’ attention that the standard lease forms of some laundry services contain an automatic renewal or automatic extension provision. Usually those clauses are buried on the back side of the leases, sandwiched among a great amount of other legalese, thereby making it less likely that the apartment owner will see it than if it were printed on the front side of the document.
Such automatic renewal/extension provisions typically provide that the initial term of the lease (often five or 10 years) will be automatically renewed for two successive terms equal to the length of the initial term unless the “Lessee” elects not to have the term extended.
So who is the “Lessee” that has that right to opt out of an extended term, or worse yet, two extended terms? One might think the lessee is the building owner since it is the laundry company which is providing the laundry equipment to the building, the company services the machines, and the company drafts the lease for the owner to sign.
Surprisingly, under the automatic renewal provision in a laundry lease, it is the laundry company, not the owner, that is the lessee.
Thus, only the laundry company may elect to terminate each of the two extended terms. For example, if the initial term is 10 years, the owner of the property (or as well as any successive owner) could be saddled with that laundry lease for a total of 30 years! Would any AOA member knowingly agree to a 30 year laundry lease on his property? I think not.
To avoid that problem, I have continuously advised owners to reject such a provision whenever possible, which is always true when an owner is about to sign a new laundry lease. If the laundry company refuses to delete it when presenting a new lease for signature, the owner could find any number of other laundry services which would be willing to lease the laundry room from the owner without the inclusion of the renewal/extension clause.
In litigations I have filed on behalf of apartment building owners who find themselves stuck in an existing lease with the oppressive renewal/extension legalese, different Superior Court judges have ruled in different fashions. Those inconsistent rulings typically occur near the outset of the case when the laundry company institutes a legal procedure known as a “Demurrer.” A Demurrer is similar to a motion to dismiss a case (without having it even go to trial) on the grounds that the renewal/extension clause in the lease is automatically a valid and enforceable legal provision, and therefore there is no reason to go to trial.
On behalf of my clients, I have uniformly taken the position that the clause is voidable by the owner on the basis that the lease of the laundry room is a lease of residential real property, not commercial property, and that the provision does not comply with Civil Code §1945.5. That section of the Code requires that the renewal provision of a lease of residential real property be set forth in at least eight point boldface type immediately above the place where the lessee (i.e., the laundry company) signs the document.
Unfortunately, there is no definitive authority from either the California Court of Appeal or the California Supreme Court as to whether or not those clauses are voidable under Civil Code §1945.5. Because of that lack of authority, different Superior Court judges in different courtrooms may and have decided the case differently.
For example, some judges have overruled the laundry companies’ Demurrers and allowed the case to proceed to trial (which then becomes an incentive for the laundry company to promptly settle the action). Other judges have sustained the Demurrer and dismissed the case.
One such recent case, where I challenged the validity of the renewal clause, and where the judge ruled in my client’s favor at the hearing on the Demurrer, is Greenfield vs. Dadson Washer Service, Inc. In that case, Dadson Washer filed a 22 page document demurring to my client’s Complaint, together with an eight page supplemental memorandum supporting its Demurrer. On behalf of our client, my office filed a 24 page Opposition to Dadson’s Demurrer.
At the October 30, 2012 hearing, Superior Court Judge Stephen Kleifield overruled Dadson’s Demurrer in my client’s favor, thereby allowing the case to proceed to trial.
With about 14 more years to go under the Dadson lease (i.e, it would not expire until 2026), and in order to hedge my client’s bets and allow it to control its own destiny, we then negotiated a settlement with Dadson whereby Dadson would promptly cancel its lease and pull out its laundry equipment in exchange for a relatively low buy-out payment.
From my client’s perspective, it was a very favorable resolution as it allowed my client the opportunity to then install its own laundry equipment and likely generate for itself substantially more income than it would have received from Dadson over the remaining 14 years.
The settlement also avoided the legal expense of taking the case to trial and an uncertain outcome for either party.
What is important for AOA members to bear in mind is that if presented with a new lease by Dadson Washer Service or any other laundry company which contains the automatic renewal/extension clause, strike it out before signing the document, or find another laundry service which does not include the renewal clause in their preprinted lease form.
Indeed, there are many reputable laundry companies whose leases do not contain that oppressive provision.
News On Easements
On November 13, 2012 in a case entitled Cottonwood vs. Barlow, the California Court of Appeal reaffirmed the principle that once an easement for roadway and utilities purposes is granted in a deed, the trial Court does not have the power to reduce the scope of the easement by narrowing the width of the roadway.
This case is important to AOA members because driveways serving a member’s building may include an easement on the adjoining neighbor’s property. Neither the neighbor nor the Superior Court has the power to reduce the width of the easement portion of the driveway against the apartment owner’s consent.
In the recent Cottonwood case, the owner of six parcels of land sold parcel 6 to Mr. Barlow and granted Barlow an easement for road and utility purposes which easement was 60 feet wide over the owner’s other parcels. A subsequent developer of the non-Barlow parcels sued Mr. Barlow to reduce the width and limit the scope of the easement.
The trial Court partially extinguished the road easement and completely extinguished the utility easement based on that court’s determination that Mr. Barlow did not reasonably need the entirety of the granted easement. The lower court also found that the smaller road easement would lessen the least burden on the developer’s property while still being consistent with Barlow’s reasonable needs.
The Court of Appeal reversed the Superior Court judge, holding that an easement acquired by a deed is not lost nor can it be curtailed merely by non-use or by what a party may reasonably need. The Appellate Court explained that the Superior Court should not have taken into consideration what Barlow’s needs were. The fact of the matter was that Barlow was granted the easement, and the trial court had no power to reduce its size or limit its scope.
With respect to laundry leases, I recommend that AOA members never sign a laundry lease which contains a preprinted automatic renewal/extension cause. Better still, I recommend to members that they find another company altogether whose form lease does not include such a provision even from the inception.
With respect to easements, I recommend members pay attention to what they already have, and not agree with a neighbor to reduce the size or scope of the easement merely because it would be helpful to the neighbor. That’s not being unfriendly. It is just a matter of prudent business practice.
Brief Tree Law Update
In the November 2012 issue of AOA Magazine, I identified six fundamental rules of law which apply to tree owners and neighbors. One reader commented that I should have discussed a 7th rule which prohibits a neighbor’s tree from obstructing an owner’s view. Unfortunately, no such rule of law barring obstruction of view exists in California. Unless there are local ordinances, CC&Rs, or the owner of the trees allows them to block the neighbor’s view “spite” purposes, California does not recognize a law which prohibits interference with view. There is no “easement for light or air” in California.
Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 36 years. He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association. He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice. Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell. An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity. His firm is rated A+ by the Better Business Bureau. You may Google “Dale S. Alberstone” for further background.
The foregoing article was authored on January 2, 2013, and is intended as a general overview of the law and may not apply to the reader’s particular case. Readers are cautioned to consult an advisor of their own selection with respect to any particular situation. Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1801 Avenue of the Stars, Suite 600, Los Angeles, California 90067. Telephone: (310) 277-7300.