LA Mansion Tax Starts April 1
1. City of LA Mansion Tax Starts April 1
If you own a home or apartment building that is worth $5 Million or more, now is the time to sell in order to avoid the tax.
For example, if you sell home or apartments for $10 Million April 1 or after, additional tax to city is $522,000 on top of other taxes and fees/commissions. No sunset clause meaning tax is permanent.
Where does the money go? It goes to affordable housing and homeless assistance. So, people with money are subsidizing those less fortunate. Those motel/hotel rooms are not cheap that are rented currently to try to get homeless off the streets. Money is also going to tenants’ advocacy groups to pay attorneys to defend tenants from evictions! Therefore, apartment owners are funding the attorneys representing tenants they are trying to evict.
Who is exempt from this new tax? Of course – nonprofits, affordable housing providers and government agencies.
Comment: Homeowners and apartment owners are going to think twice about selling. This will further chill the real estate market in LA and cause a devaluation of expensive properties. Going to be lots of shenanigans with sales contracts setting price.
2. Simple Construction Dispute Turns Into a Nightmare
In the case of Karton v Ari Design & Construction, Inc., 61 Cal.App.5th 734 (2021), the Second District Court of Appeals reviewed the attorneys fees motion brought by an attorney/litigant in a construction case involving his own house seeking $271,000 in attorney fees and $52,000 in discovery sanctions and $204,000 for allegedly proving matters in trial that were denied in request for admissions during discovery, for a total of $550,000.
The problem that the Court of Appeals had was the entire lawsuit only involved $35,000 in damages that the plaintiff was claiming as being over-billed by the contractor for work on plaintiff’s home. Interestingly, the contractor did not disagree that he had over billed but contended he only over-billed $13,000 not $35,000.
This scorched-earth winner take all hand-to-hand combat litigation tactics occurred over several years regarding this case.
Despite plaintiff winning the case, the Court of Appeal struck most of the attorneys fees based upon the nature of the dispute and awarded $90,000 total fees, claiming that the plaintiff had over-litigated the case involving a $23,000 dispute. The Appellate Court further stated the following:
“Excellent lawyers deserve higher fees, and excellent lawyers are civil . . . The plaintiffs came out swinging, apparently believing the best defense is a good offense. This approached demonstrates the trial court was within its discretion to conclude the plaintiffs conducted litigation that was less than civil.”
Conclusion: It pays to be civil and professional in litigating cases. Over-litigating cases involving many motions and excessive discovery will not be rewarded in the long run when it comes to recovering attorneys fees.
About the Author
Scott Souders is a real estate attorney who has practiced real estate law in excess of 45 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.