1. Q: It took me 4 months to find a house I like. The real estate agent brought me a pile of documents to sign. I was told that the house would soon be sold to another buyer if I do not sign off the purchase contract right away. What should I know about the contract before I sign it?

A: A buy-sell agreement of real estate is very technical and complicated. Most people adopt the “Residential Purchase Agreement and Joint Escrow Institutions” designed by the California Association of Realtors (CAR). There are eight pages in total. The major terms and conditions within the contract include: the date of the agreement, names of the buyer and seller, legal description, escrow closing day, selling price and deposit, mortgage and interest, contingency, date of delivery, treatment of termites, sharing of miscellaneous expenses, furniture and household appliances included in the sell, deadline for repair from the seller, damages for the losses (may be 3% of the sell price or uncertain), resolution for a dispute by either arbitration or litigation, agent fees, names of agents, escrow company, and so on. More attention needs to be paid to the restricted condition of the trade, which means that one condition needs to be met before the trade can go on. For example, the buyer wants to obtain an annual interest rate of less than 7% within 30 days; the buyer must sell the house he/she owns and the seller must also buy another house. Either buyer or seller any time has the right to cancel one’s own restricted condition.

2. Q: All our family members together found an inexpensive house with a good school district and a nice neighborhood. We signed a buy-and-sell agreement with the owner and then opened an escrow. We are supposed to move into the house on the escrow closing date when is 30 days later. When we informed the previous owner that they are required to vacate the house in 30 days, the previous owner suddenly changed their minds to sell their house to us and asked to cancel the escrow. Can the previous owner do this? What are our legal rights on the matter?

A: The owner of the house seriously breached the buy-and-sell contract. You have two options to choose. First, if you still want the house, you may ask your agent or retain an attorney to inform the owner that you insist in buying the house, requesting the owner to continue the escrow. If the owner still refuses to do so, you may have to hire a lawyer to help you file a lawsuit in court to get the house, at the same time record a document called “Lis Pendance” with the

County Recorders Office of where the house is located. The Lis Pendance informing the general public that the house is in litigation. Consequentially, the owner is not allowed to freely sell the house and refinance it. This is the way to prevent the owner from selling, giving, or transferring the property to any third party. More often than not, the reason why the owner refuses to sell the house to you is that someone else offers a better deal. Second, if not wanting the house any more, you may claim from the owner the losses incurred, including the loss in rent and the price difference either between the new buyer’s offer and your offer or between the house from the owner breaching the contract and another house you bought from someone else. For instance, if the new buyer offers $650,000 and you offer $600,000, the difference is $50,000, or if you pay $640,000 to someone else for another house, costing you extra $40,000, the difference is $40,000.

3. Q: I retained agent Chang, to sell my house and signed a three-month contract with him. He promised me to sell the house in high price within a month. After two months, he is still unable to find a buyer. I was so upset that I retained another agent Lee, who sold my house in two weeks. As I expected, an attorney retained by agent Chang sent me a correspondence claiming for commissions. Do I need to pay him?

A: It depends on what kind of listing agreement you signed with agent Chang. If the agreement is one “Exclusive-right-to-sell listing”, you are required to pay agent Chang commissions whether you or a new agent sells the house. If the agreement is one “Exclusive-agency listing”, agent Chang is still entitled to commission unless you find a buyer on your own. When you sell your house next time, you may choose the option of “Opening-listing”, which has time limit for selling the house. The opening-listing gives you option to use more than one agent to sell the house for you. Whoever sells the house first earns the commissions, others get nothing. So you do not need to worry about commissions of other agents.

4. Q: I have signed an agreement to sell my house and the sale is in escrow. One day the escrow company called me that they will need to take $50,000 from the sale proceeds to pay a collection agency which is totally unbeknownst to me. What is happening? Can I refuse to pay?

A: You should ask the escrow company to check the Preliminary Report to find out whether there is a judgment lien on record. A judgment lien is a court order obtained by your creditor (or a collection agency who purchases the lien from your creditor) from the court for the unpaid debts. Your creditor records with the County Recorder Office the judgment, which became a judgment lien. Before the escrow can be closed, all the debts have to be paid off, such as a security loan, judgment lien, tax lien and mechanical lien. You may choose to make a full repayment of $50,000. If the judgment lien is not legally binding on you because, for instance, you were not served with a Complaint and Summons, you may retain a lawyer to vacate the judgment and judgment lien in the Court. Or you may hire a lawyer to negotiate with the creditor/collection agency to repay less than you owe. A Motion to Vacate needs to be filed with the court within 180 days from the day you know or you should have known of the judgment.

5. Q: I am thinking about transferring the title of my house to my son. What procedure needs to be followed? Is there any tax issue involved?

A: You need to prepare and file 2 documents called “Grand Deed” and “Preliminary Report of Change Ownership” with the County Recorders Office where your house located. Usually any lawyer or Title Company can provide you with those forms and assist you in filling out the forms and then record them. Keep in mind that all the contracts and transactions relating to real estates must be in writing to be valid, and some of the documents are required to be recorded to become legally binding. For the transfer of title to property between husband and wife, a “Quit-Claim Deed” is required instead of a “Grand Deed”. No tax is required for the transfer of title between husband and wife. If the house being transferred to someone other than your spouse worth more than $10,000, you might need to pay gift tax. The tax rate is very high. You should consult with a CPA for detailed information.

A: If the house was purchased by you and is under your name before your marriage, both of you have the shared interests of it even though your husband makes payments from his income for it after your marriage. The only difference about ownership between you two is that you own the larger share of interests over the house than your husband does. For instance, the house cost $300,000 the time you purchased 4 years ago. You made a down payment of $60,000, which is 20% of the purchase price, and took out a mortgage for $240,000. In a month that followed, you married your husband. Your husband has been working and you have been raising children and doing the housework since your marriage. The market value of the house now skyrockets to $600,000, that is, you gain $300,000 ($600,000 - $240,000 - $60,000 = $300,000). According to the law of Community Property in the California State, your own property, including any interests earned from the property, before your marriage all belong to you when your marriage is legally dissolved. On the other hand, all the property earned after your marriage, including your husband’s income and any interests earned from his income, is equally divided when your marriage is terminated. Thus, if the house is sold, you can take $240,000 ($60,000 + [$300,000 x 20%] + [$300,000 x 40%] = $240,000), and your husband can take $120,000 ($300,000 x 40%). If your husband transfers his ownership of hours to you of his own volition during the marriage by filing a Quit Claim, the house 100% belongs to you no matter the transfer is conducted before or after the marriage or who pays for the house.

7. My friend and I jointly purchase a house and equally pay for it. How do we record the title to the real property?

Q: There are three types of title registration or to hold title to real property: Joint Tenancy, Tenancy in Common, and Community Property.

1) The “Joint Tenancy” means that all the property owners/joint tenants hold the equal shares of the interests, which is nontransferable to his/her heirs when he/she passes away and is equally distributed to the other owner(s). Most people choose this type without truly understand the legal meaning of it. For example, Brother A and Sister B together bought a house as joint tenancy. When Brother A passes away, his ½ goes to Sister B rather than Brother A’s children or wife.

2) In the “Tenancy in Common”, joint owners hold the shares of interests of the property in a certain proportion, equal or unequal, such as ½-1/2, 1/3-1/3-1/3, etc. When one of the owners dies, his/her share is transferred to his/her heirs instead of the other owners, and the heirs will become new owner as tenancy in common with the other owners. Mostly, friends adopt this type. For example, Brother A, Sister B and Friend C own a property together as tenancy in common, 1/3 each. When Brother A passes away, his 1/3 goes to his children and wife, Sister B and Friend C gets nothing from Brother A.

3) In the “Community Property”, a husband and a wife jointly purchase a property, title to which is under both of their names. The feature of this type is that when one party dies, half of his/her share of ownership (50% of the whole property) goes to the surviving spouse, and the other half will be split among the children (If there is no child, goes to the deceased spouse’s parents).

Be aware of claim of “holding title to a property for the other”. If you and your friend jointly own a house and your friend’s family lives in the house, your friend should pay rents to both of you. Your friend may make mortgage payments in lieu of paying rents if both of you make such an arrangement in a written agreement. The written agreement can avoid a future dispute over the ownership of the property by your friend who might claim that he is the 100% owner of the house because he is the only one making mortgage payments over the years, while you are “only holding the title for him/her” for some reasons (such as to help him/her to qualify a loan).

8. Q: I am currently unemployed and unable to make mortgage payments on my house. What should I do?

A: Act immediately, no delay, or you may lose your house or the equity on the house. You may consider one of the following options:

1) Contact your mortgage lender, ask it not to impose late payment penalty and to postpone the reporting of delinquency (late payment) to the credit bureaus (Experian, Equifax and Trans-union).

2) Ask your mortgage lender to amend the terms and conditions within the loan agreement, making the late payments in installments or after the last payment period. For example, you are six months behind on payments at $2,500 a month at total of $10,000. Your lender may agree to allow you to clear the $10,000 by making 10 payments at $1,000 a month, or to make 5 extra payments at $2,000 each following the projected last payment under the loan agreement. In any case, your lender wants you to prove to them that you are able to maintain the normal monthly payment of $2,500.

3) If you decide not to keep the house, put it up for sale, then you don’t have to worry about the payments anymore. You may pocket the net sale proceeds if there is enough equity on the house.

4) if there is no equity in the house or the equity is not enough to cover the loans, liens and closing costs (such as commission, tax, escrow fee, title insurance, document fee, notary fee, messenger fee, etc.-runs about 8% of the selling price), you may consider to hire a lawyer to help you to voluntarily offer the lender to take the property back “as is” without pursuing you for the shortage between the highest bid at a foreclosure and the loan and foreclosure costs. For example, the loan amount is $500,000, the best price received at the foreclosure is $400,000 and the costs is $30,000, you will end up owing to the lender $130,000 ($500,000-$400,000 +$30,000), the amount is called the “deficiency” and the process is call “deed-in-lieu of foreclosure”. An experienced lawyer should be able to assist you to grant the title to the house to the lender after the lender agrees in writing accepting the deed-in-lieu arrangement.

5) Similar to option 4) above, you can also have your realtor or lawyer try to convince the lender to let you sell the house under market value, and the lender takes whatever you can sell for without chasing you for the deficiency.

9. Q: After I stop making mortgage payments, about how soon the bank will foreclose on my house?

A: Usually, after two to three months from the day you stopped making payments, the bank will write you to urge you to make the delayed payments, together with late payment fees. If you still make no payment, around 60 days, the bank or an auction company will send you by certified or registered mail a notice called “Notice of Default and Election to Sale under Deed of Trust”. If you still fail to make the payment, 90 days later, the bank or an auction company will mail you another notice called “Notice of Sale under Deed of Trust”, informing you that your house will be foreclosed (auctioned out in public) after 20 days at the entrance of the Superior Court house where your housed is located.

You have the right to reinstate then stop the foreclosure by paying off all the late payments, penalty fees, and auction expenses 5 days before the auction day. For example, your three-month late payments totaled up $6,000, and theforeclosure day is set on the 20^th of November. You may keep your house by paying off $6,000 plus the foreclosure expenses so far incurred (like say, $1,500) by 15^th of November.

If you do not timely reinstate the account as stated above, you still can redeem the property by paying off all the late payments, penalty fees, auction expenses, and the balance of the home loan (like say $300,000) between the 15th and 20th of November. In the above case, you need to pay $307,500 by November 20 in order to redeem (buy back) your house, or it will be auctioned off to the person who makes the highest bid at the foreclosure sale. Of cause, you may also bid for the house and buy it back on the day. If nobody bids more than $307,500, the mortgage lender will take the property back and sell it in the general market.

10. Q: I received from the bank a notice, which states that the bank will foreclose on my house in 3 days. Is there any way to stop the foreclosure?

A: If you are unable to pay off the loan in full within 3 days, you may consider declaring bankruptcy. Declaring bankruptcy can immediately stop the whole foreclosure procedure, but the bank loan cannot be discharged. If you just want to temporarily suspend the foreclosure procedure to gain extra time, so you can obtain money to pay off the late payments and penalty fees, you may consider the Chapter 7 bankruptcy. If the bank does not want to wait 3 to 4 months until the bankruptcy case is closed, the bank may request the court to terminate the Automatic Stay early and proceed with the foreclosure.

In case you are unable to get enough money before the foreclosure process is resumed, you may consider the Chapter 13 bankruptcy. You are granted 3 to 5 years to pay off all the late payments and penalty fees. Meanwhile, you need to make a normal monthly payment. For instance, supposing your late loan payments for 8 months total up $24,000, during the long period of five years for a Chapter 13 bankruptcy, you need to make a monthly payment on the house for $3,400 ($400 + $3,000), plus your monthly disposable income (your total household incomes – your total household expenses).

11. Q: It is said that declaring bankruptcy can keep one house. Is that correct?

A: It is not correct. The California law only allows a bankruptcy petitioner to keep a certain amount of equity of one house. The exemption for a single person is $50,000, for a married person or a single parent with children is $75,000, and for a person equal or over the age of 65 or an invalid is $125,000. For a single person, equal or over the age of 55, whose annual income is below $15,000 or a married person whose annual income is below $20,000, the exempted values of equity is $125,000. Equity = Market value – Loan balance – tax – judgment lien – other liens. For example, supposing the market value of a house is $300,000. The balance of mortgage is $200,000. The judgment lien is $50,000. The equity of the house will be $50,000 ($50,000 = $300,000 - $200,000 - $50,000). As long as you or your spouse had lived in the house for more than 3 months in the past 6 months, the $50,000 is exempted from being taken away by your creditor. Although the bankruptcy law does not require that you must hold a Homestead Declaration in order to secure the equity of the house, the California law do requires the declaration. It is in your best interests to retain an attorney to draw up one Homestead Declaration and record it for you.

12. Q: Someone is suing me now. Is it safe for me to transfer the title of the property to my wife or my children? Is there any way to legally protect my property?

A: It is a very common question. Most people make this same mistake. No matter you are being sued by some one else, you predict a lawsuit against your, or you have lost a case, transferring the ownership of your property without gains is a Fraudulent Conveyance or Fraudulent Transfer. Consequently, your creditors may sue you and your relative or friend for an unlawful transfer of the property. Not only does your relative or friend get involved, but the court may also order that the transfer of the ownership is invalid. As a result, the ownership of the property must be transferred back to you to pay off your debts. Of course, if you have other reasonable grounds that can justify your selling your property for a market value to a third party, who is unrelated to you and does not know your current lawsuit, to stop a foreclosure without intent to avoid your creditor, the third-party buyer is considered a Bona Fide Purchaser, so the creditor can revoke the trade and return the property back to you. Of course, the creditor has the legal right to continue to collect the money obtained from the sale of the house. You can record a Homestead Declaration to protect a certain amount of equity (refer to the above-mentioned question 11. Please note that if you are filing a dissolution of marriage when your creditor is also suing you, your creditor may, if the court order that you and your spouse obtain half of the interests of the property, your creditor may collect the half of the interests from your divorced spouse to pay off the debts you and/or your spouse owes before you get divorced.

13. Q: My house was put up for auction by the bank last week. The bank informs me that I have to vacate immediately; otherwise, they will take a legal action. Should I move out of the property right away?

A: The bank must give you’re a 30-day-notice, informing you that you must voluntarily vacate the building within 30 days, or an Eviction will be used to force you to leave the building. Once the house was foreclosed, the bank becomes the legal owner. From now on, you become a tenant from an owner. Because you do not enter into a contract with the bank, the bank can in accord with the law request you to quit the tenant after 30 days. If you remain in the property after 30 days, the bank will retain an attorney to file an Unlawful Detainer/Eviction in a Superior Court. The bank usually will serve on you in person a Summons and Complaint via a sheriff or private messenger. If they fail to serve you 3 times at your home or in the workplace, they may hand over the summons and Complaint to any family member over 18 years old at your home or an adult co-worker in the workplace. You have 5 days only to answer from the day you were served with the Summons and Complaint. Please note that the 5 days are calculated by calendar day but not working day. For instance, if you are served with the Complaint on Wednesday, the deadline for you to answer is the following Monday; if a national holiday falls on the following Monday, the deadline will be extended to Tuesday. An answer must be filed to the court in writing in compliance with the standard legal form required by the law. Either oral response or answer in ordinary writing is invalid. In the event that you fail to file an valid written Answer within 5 days, the bank make request a Default Judgment, which has the legally binding power equivalent to a regular court order. If you file an answer within 5 days, the bank and you can continue for the process of Discovery, or if there is substantial evidence, the bank can request to set a court day around 3 to 5 weeks later. If the court orders you to move out, the bank will deliver the judgment to the sheriff, who will serve you at home with a Notice to Vacate, giving you 5 days to vacate. After you vacate the property, a new lock will be replaced and a court order will be posted. Do not attempt to change the lock and enter into to the house again. You are breaking the law if you do that. If have some important personal belongings left inside the house, you may contact the bank or their attorney to schedule a time to take back your stuffs. Normally, a simple disputable Eviction procedure takes about 6 weeks, and a complicated case may take two to three months.

A: Most landlords now adopt the Standard Industrial/Commercial Lease jointly designed and printed by the American Industrial/Commercial Association of Realtor. It is because that the lease agreement is very detailed, clear, and fair.
Basically, it fairly considers the interests of a landlord and tenant, but it is not required to adopt by the law. If specific needs are requested, the landlord or you may amend the terms and conditions within the agreement, or a retained attorney may draw up a new lease agreement. No matter which lease agreement is adopted, the agreement is effective as long as both of the landlord and the tenant sign it together. Before signing the agreement, you need to understand the following issues: the rent, leasing time, annual raise of the rent, management fees and other miscellaneous fees, security deposit, size of the area, maintenance responsibility, permission to transfer the lease or sublease, restriction on the type of business, purchase of insurance, personal guarantee, and so on. If there are other supplementary terms and conditions, another Addendum needs to be signed too. If you do not understand English, you should find an interpreter to explain the agreement in detail. Otherwise, if there is any dispute to be settled in the court, the judge may not consider it a valid ground for defense. Of course, you are strongly recommended to retain a lawyer, spending one to two hours, to assist you in understanding the agreement before you sign it.

15.Q: I leased a store, and then I am thinking about transfer the lease to my friend to take over the business. The landlord always disagrees. Does the landlord have the right to do so? What if the landlord agrees, am I not held responsible for the rent any more?

A: Whether the landlord can stop you to transfer the lease depends on the terms and conditions within the lease agreement. If the agreement does not specifically stipulate the prohibition on transferring the lease, the tenant may freely transfer the lease or sublease to another tenant. Most lease agreements, including the one adopted by the American Industrial/Commercial Association of Realtor, stipulate that a tenant’s transferring the lease or sublease requires consent from the landlord. Under reasonable circumstances, the landlord should give consent to the transfer of the lease or sublease. The “reasonable circumstances” is always a controversial point in a dispute, for general lease agreements and the laws do not specify what the reasonable circumstances really are. Usually, if the new tenant is doing the same or similar type of business, has a good credit history, is running a stable business, and is willing to pay the same rate of the rent and adhere to all the stipulations within the agreement, the landlord is considered unreasonable to decline the tenant’s request to transfer the lease or sublease. Sometimes without clear consent in writing to the transfer of the lease or sublease, if the landlord accepts the payment of the rent from the new tenant, the landlord do give silent consent to the transfer of the lease or sublease and can not change his/her mind. In transfer of the lease, the whole premises are transferred to a new tenant. The original tenant is no longer a tenant; on the other hand, in sublease, the new tenant lease only part of the premises but not the whole premises and a period of time but not the whole time stipulated in the agreement. The original tenant is still the tenant, who is also a landlord to the new tenant. For instance, if Mr. Lee transfers the lease of the premises, which is two thousands square feet and two more years of lease, to Mr. Cheng, it is a transfer of the lease. If Mr. Lee only subleases one thousand square feet to Mr. Chang, or he sublease the whole premises for the first year only and then keep the lease for the last year, it is a sublease. Usually, no matter in the transfer of the lease or sublease, if the new tenant, who is supposed to make rent payments, fails to pay the rent, the original tenant is held responsible to pay the rent whether using the premises or not.

16. Q: I own a house with four bedrooms.I am living in one bedroom alone.I rented out the other three bedrooms and a remodeled bedroom from a garage.One of the tenants has stopped making rent payment.I am thinking about changing the lock to stop the tenant from entering my house.Is it legal for me to do so?

A: It is legal to do that. The law strictly forbid the landlord from changing the door lock or forcing the tenant to move our by force without consent from the court (self-help). The eviction of the tenant must follow the legal procedure. You might otherwise be counter-sued by your tenant. Besides, if the remodeled garage does not pass the inspection by the Health Department of the city, you might need to pay the tenant the damages for the actual losses, including the medical costs incurred by insomnia, emotional stress, and moving expenses, along with $100 to $1,000 in the punitive damages. In the event that the dispute goes to the court, the court may decide the amount of the rent.

17. Q: I rented an apartment and pay $1,000 for the security deposit. After three months from the day I moved out, I received a check from the landlord for the amount of only $100. The rest of the deposit, $900, was deducted to pay for the expenses on replacing new carpet and cleaning. How could it happen?

A: It depends on the condition of the apartment at the time you move out. Is it necessary to change the carpet? Is it possible to clean rather than replace? Do you completely clean the place? Sometimes, the landlord will use the deposit to replace the carpet or curtains. To prevent such an unpleasant incident from happening, you had better ask the landlord to inspect the apartment and then give you an inspection checklist when the landlord comes to pick up the keys. If the landlord does not show up, you should take photos or videotape the apartment for evidence to prove that there is no damage on the premises. If the landlord does not return the deposit for no reasonable grounds, you can either write the landlord for the collection or file a complaint against the landlord in the Small Claims Court.

18. Q: I just received from my landlord a letter, notifying me of a rent increase of 50% and asking me to quit the tenancy if I do not agree. Does the landlord has the right to do so?

A: Without the stipulation concerning the rent within the written lease agreement, the landlord may ask for any amount for the rent when the lease becomes mature, if the city you live does not prescribe the law about Rent Control. The landlord has the right to ask for any amount of the rent. You must move out even though you do agree on the rent. You can check with the City Hall in regard with the Rent Control. As to the commercial lease, there is no restriction on the rate of the rent.

19. Q: I signed with my landlord a five-year lease agreement, stipulating that the monthly rent is $1,500. The unit is used for a fashion store. Because the business has not been going well after the first three years, I have been unable to pay the rent for three months, planning to end the business and move out. Unfortunately, the landlord asks me to pay all the rents for the next three years. Are there any grounds for the landlord to make such a demand.

A: If there is a written lease agreement in effect, you breached the contract for not paying the rents unless the landlord seriously breached the contract before you did. The following examples are regarded as a Constructive Eviction: leasing the same premises to a third party, terminating the lease agreement in writing, not allowing you to use the premises, disconnecting the supplies of water and electricity, unsafe conditions, and failure to maintain and repair the premises. But if you unilaterally breach the contract before the landlord does, pursuant to the contract, you are demanded to pay the landlord the unpaid rents for the past three months, which is $4,500, all the rents for the period of time between the date you move out and the date the premises is leased out, and the rent difference if the new rent is different from the old rent. For example, if the landlord finds a new tenant after three months and receives $1,300 for the rent, you should pay the landlord $9,000 ($1,500 x 6 months), together with $6,000 ([$1,500 - $1,300] x 30 months). To avoid such a huge penalty fees, the best way for you is to find a new tenant soon; meanwhile, you should negotiate with the landlord by proposing a lump sum rent payments for 3 to 6 months and forfeiting the security deposit, so you will become free from the legally binding contract, saving you all the troubles in the future.

20. Q: I rent an apartment, the roof of which leaks whenever rain falls. In addition, many parts of the apartment are in need of repair. I notified the landlord of the problems, but the landlord never sends anyone here to fix the house. Can I just stop making rent payment or simply move out?

A: The law clearly prescribes that a residential building must be suitable for residents to live with normal living conditions, in spite of whether the lease agreement stipulates or not. At least, the landlord should guarantee the following: 1) the normal function of the sewage system, 2) the safe operation of the heating system, lighting, and electrical wires, 3) the good condition of the floor, stairway, and corridor, 4) the sanitary conditions of the house and free of termites 5) proper maintenance of the public facilities, and 6) no leak on the roof and no broken windows and doors. Any one of the above-mentioned violations is regarded as an act of Constructive Eviction. The tenant can unilaterally terminate the lease contract and then move out without assuming any legal responsibilities. The tenant may alternately choose to stay. If the landlord still does not send any one to repair the house, the tenant can hire people to do the works. The tenant can deduct the repair and replacement expenses from the monthly rent. As far as the commercial lease agreement is concerned, the above-mentioned residential living conditions do not apply. But if the conditions of the premises are so bad that the tenant cannot normally use the premises, it is also regarded as an act of Constructive Eviction. Please note that if the commercial tenant hires someone to do the repair work, which should have been done by the landlord, the repair and replacement expenses cannot be deducted from the monthly rent, but the tenant can demand the landlord to reimburse the expenses. If the landlord refuses, a complaint may be filed against the landlord in the court of law.

1. What if I’m billed for something I didn’t buy?

Try to settle the problem as soon as possible. If you get a bill for something that you didn’t agree to buy, write to the creditor - the person or company that says you owe a debt. Do the same thing if you don’t believe you received everything you are being asked to pay for. Keep copies of all your letters.

If you can’t work things out on your own, try to find a consumer protection agency that handles the kind of problem you have. Look in the white pages of your telephone directory under “Consumer Complaint and Protection Coordinators.” Or call the state Department of Consumer Affairs for advice. You can hear recorded messages on some consumer questions by calling the department’s toll-free consumer information line at 1-800-952-5210.

You also may want to see a lawyer (see #15), because most debts are based on a contract. This is a legally binding agreement that can be written or spoken. In any case, be sure to do something, because it could turn out that you owe a debt. And you could end up with serious money and legal problems.

2. Can other people find out about my debts?

Yes. If you don’t pay your bills, you can end up with a bad credit rating, which is a report on your financial situation.

Credit ratings are issued by credit-reporting agencies. The three biggest Agencies are Equifax, Trans Union, and Experien (Former TRW). These companies get information about your debts from your creditors, and they make their reports available to other creditors, employers and landlords.

A credit report includes such information as whether you pay your bills on time, have had a foreclosure, owe money as result of a lawsuit, owe taxes, filing for bankruptcy, or were convicted of a crime. Each piece of information stays in the report for seven years. (A bankruptcy usually will be listed for ten years.)

What if a store refuses to give you a charge account because you have a bad credit rating?

The store must give you the name and address of the credit-reporting agency that made the report, and the agency must let you see the report.

If you tell the agency that some of the information in the report is wrong, it must look into the matter. If the agency decides that the report is correct, you may explain your side of the story in writing (up to 100 words). Then, anyone who checks your credit rating will see your explanation. If you ask, the agency also must send your explanation to anyone who received your credit rating for employment purposes in the last two years and to anyone else who received your rating within the last six months.

3. Can I be forced to pay someone else’s debts?

Sometimes you can. For example, if your spouse obtains a necessity of life – such as food, clothing or medical care – and cannot pay for it, you can be made to pay. This may be true for a former spouse, too, if you were married and not separated when your spouse incurred the debt.

In most cases, people under the age of 18 can get out of agreements to buy something. However, you are responsible for the debt if you co-sign a contract or loan agreement for someone under 18 or for anyone else. This means you promise to make the payments if the other person fails to live up to the agreement.

What if you co-sign an agreement for someone who ends up filing for bankruptcy? The other person may not have to pay the debt, but you will. You also may have to pay certain debts, such as medical bills, for your minor child.

4. Can my creditors pester me?

Creditors or bill collection agencies – companies that try to collect past due bills – cannot legally call you over and over on the telephone, or call you at home earlier than 8:00 a.m. in the morning and later than 9:00 p.m. at night. It is also against the law to threaten you with harm or contact you at work after you tell them not to. In addition, the law says that if you write and ask them not to contact you at all, they must stop. Then, they can get in touch with you only to let you know that they are suing you. Be sure to keep copies of all letters you write.

Creditors and collection agencies are not supposed to contact your employer, except to make sure that you are employed or garnish your wage after they obtain judgments against you. And, they cannot send you anything that is meant to look like a legal document when it is not. If you are bothered in any of these ways, you should get in touch with a consumer protection or law enforcement agency. Or you can ask a lawyer for help.

5. Can my property be taken to pay a debt?

Usually, a creditor must go to court and win a lawsuit against you before taking your property. However, let’s say you make a written promise to either pay your debt or give the creditor something you own. The item you promise to give is called the “security,” and the money you owe is called a “secured debt.” If you fail to pay a secured debt, the creditor usually can take the security.

Let’s say you borrow money to buy a car and the car is the security. If you fall behind on payments, the lender can repossess or take back the car without going to court. However, the car must be on public property when it is repossessed.

Even if the car is repossessed, you still might end up owing the lender money. For example, suppose you owe $8,000 on the car when it is repossessed, and the lender gets only $7,000 by selling the car at an auction. Then, you can be sued for the $1,000 that the lender is out – plus any money spent to repossess the car and sell it.

Companies that repair or store items also can take property from you without going to court. For example, if a shop cleans your rug and you do not pick it up and pay for the cleaning, the shop can keep the rug and sell it after a period of time.

6. What happens if I am sued?

If you have a secured debt (see #5), the creditor can sue you for either the security or the amount of money it is worth or both. If you do not have a secured debt, you will be sued for the money you owe.

If you are sued for $5,000 or less, a creditor might decide to take you to small claim court. Neither you nor the creditor can be represented by a lawyer in this court, but you can talk to one beforehand.

Lawsuits for larger amounts are filed in Municipal or Superior court, where it is important to have a lawyer represent you. In any event, do not ignore any court summons that you receive. This is a paper that says you are being sued. If you do not respond to the summons within a certain time (usually 30 days), you automatically lose the case, and a default judgment might be entered. Your property, bank accounts, or wage can be taken.

As soon as you receive a summons, you should:

- Consult a lawyer (see #15).

- Get in touch with the lawyer hired by the person suing you and try to negotiate, or work out a way to settle the dispute.

You can try to negotiate a settlement even after the suit is filed, but you should do so only if you have first responded in writing to the summons.

7. What happens if I lost the lawsuit?

Suppose the lawsuit demanded that you return a secured item. The creditor can get an order from the judge allowing a sheriff or marshal to take the item from you and give it to the creditor. Once this happens, you debt usually is cancelled.

In California, house foreclosure and car repossession do not need court proceedings as long as they give you sufficient notice. If the amount received by the creditor after foreclosure or auction is less than the loan balance, for instance, after your car is sold in the auction, your creditor only receives $10,000, and the loan balance is $15,000, than you are still obligated for the $5,000 difference. This is called “deficiency”.

Maybe the suit demanded money and you did not pay the amount that the judge ordered you to pay. In this case, something you own can be attached, or taken. The property – such as a car or bank account – would be about the same value as the amount of your debt. A car, for example, could be sold, and the creditor would get the money it brings in. You may, however, be able to keep certain items (see #8).

A judge can also order your employer to withhold up to 25 percent of your take-home pay to pay a debt. This is called a “garnishment of wages.”

8. Can I protect my property if I am sued?

If you lose a lawsuit, you also may lose some of your property. However, the law lets you claim some property as exempt, which means that it cannot be taken from you. When you receive a notice that your property is being attached, you have 10 days (15 days if you receive the notice by mail) to deliver a “Claim of Exemption” form to the sheriff or marshall. This form describes the property and explains why it cannot be attached legally. Most sheriff, marshall, and court clerk offices have these forms.

The creditor can either accept your claim or challenge it at a court hearing. At the hearing, you must prove that the property is exempt. If you do not go to the hearing, you automatically lose the exemption. You cannot file a Claim of Exemption if your debt is for unpaid federal income taxes or for a necessity of life such as food, shelter or medical treatment. These debts must be paid.

However, among other things, you and your spouse together can claim exemptions for:

- Up to $75,000 in equity in your home if you are part of a family unit (up to $50,000 if you are single), and up to $125,000 if you are 65 years old or older; disabled, or on a low income.

- A $1,900 equity in one or more cars.

- Up to $5,000 in tools and other items that you need for your work (or up to $10,000 for items used by both spouses who do the same work).

- 75 percent of your salary for the last 30 days or wages that have not yet been paid.

- Up to $5,000 worth of jewelry, heirlooms and works of art.

- Life insurance policies on which you can borrow up to $8,000.

- Up to $1,000 in an inmate’s trust account.

- Up to $2,000 in a bank account in which you social security payments have been directly deposited ($3,000 if payments are directly deposited for both spouses).

In addition, you and your spouse each can claim exemptions for:

- Household furnishings and clothing that your family needs.

- A cemetery plot.

- All or part of retirement, disability and health insurance, workers’ compensation, welfare, unemployment, union and other benefits that are needed to support your family.

9. What if I just need more time to pay my debts?

First, ask your creditors for the time you need. Or ask if you can make a series of small payments over a period of time. If any creditor agrees to one of these arrangements, write a letter to confirm the agreement. Keep a copy of the letter.

You might try using the services of a credit and debt counseling agency, but be sure to shop carefully until you find one that you believe gives good advice. Consumer Credit Counseling Service/Credit Counselors of California, a network of non-profit agencies partially funded by creditors and the U.S. Department of Housing and Urban Development (HUD), often helps people work out plans with their creditors.

Be careful about getting a debt consolidation loan that is used to pay off debts. If the interest is too high, you may end up with a bigger problem. If you do get a loan, however, make sure all the financial statements that you give the lender are true and complete.

You might of course find an experienced attorney to work out deals with your creditors.

10. What if my creditors won't give me more time?

You can file a “Chapter 13 bankruptcy” in the nearest United States Bankruptcy Court. Chapter 13 allows you to stop all collection in exchange for your promise to pay your available funds to creditors under a Chapter 13 plan. The repayment plan allows you to pay your debts over a period of time – between three and five years. At the end of this time, all your debts are cancelled – even if you have not paid them in full – as long as you fully performed your plan.

You could, instead, file a Chapter 7 bankruptcy. This means you ask the bankruptcy court to cancel most or all of your debts because you don’t have enough money or property to pay them off. You must pay a filing fee in bankruptcy court ($185 for Chapter 13, $200 for Chapter 7), either alone or with your spouse. A trustee will be appointed. If you have a Chapter 13 plan, this person collects your payments and pays your creditors. If you file for Chapter 7 instead, the trustee sells any of your property that is not exempt (see #14) and distributes the money it brings in among your creditors, after deducting his/her administration fees and costs. Most of the Chapter 7 cases are non-asset cases, which means no properties is available for trustee to sell.

Once you have filed for Chapter 13 or Chapter 7, the creditors you had before you filed cannot attach you salary or other possessions without bankruptcy court permission. If you lose your job or have a long illness while you are paying off your debts through a Chapter 13 plan, you can switch from Chapter 13 to Chapter 7 at any time. You can also switch from Chapter 7 to Chapter 13 at any time. You can file for Chapter 7 only once in a six-year period. But you can file for Chapter 13 as often as you need to. However, you must have a good excuse if you fail to complete the plan and want to file a second time. You can file for Chapter 13 right after Chapter 7 completed or file for Chapter 7 right after Chapter 13 completed with no time limited.

11. Why should I use a Chapter 13 plan?

You may consider a Chapter 13 plan if you can work out a way to pay off part of your debts over a period of time and still afford the reasonable costs of living.

The law says you can use a Chapter 13 plan if you have a steady income. This means you work for wages, own a small business or receive pension, social security or other benefits. You also must owe less than $807,750 in secured debts, such as a mortgage, and less than $269,250 in other debts such as credit card debts, medical expenses, and gambling debts.

If you qualify for Chapter 13, you and your lawyer must work out a plan for the court to approve. The plan must show how you intend to pay all or part of your debts. Certain debts must be paid in full. These include secured debts, federal or state income taxes that you have incurred in the past three years, and the court, trustee and attorney fees involved in setting up and carrying out the plan.

12. Should I file for Chapter 7 instead?

If you can’t work out any other reasonable way to pay your debts, you might consider Chapter 7. It allows an honest debtor to make a fresh start by having a court discharge, or cancel, most debts. Chapter 7 is a way to get out of debt when you owe more money than you can be expected to pay in a reasonable amount of time.

The law says that an employer can’t fire you or refuse to hire or promote you because you filed Chapter 7. However, Chapter 7 can have a bad effect on your credit rating (see #2) for a long time (it stays in your credit record for 10 years), but you can try to rebuild your credit after you filed a bankruptcy. If you do it right, you can get your credit back in two or three years. Also, Chapter 7 may solve the problems you have now, but it won’t protect you if you can’t pay new bills.

If you choose Chapter 7, you or your lawyer must file a number of forms and papers with the bankruptcy court. These include a list of your debts and property, plus information on your income and how you spend it. The court decides if you are better suited for Chapter 13 than Chapter 7 if requested to do so. In rare situations, the court may decide to dismiss your case.

Also, a judge can refuse to discharge all or some of your debts through Chapter 7. For example, you may not be allowed to have your debts cancelled if you run up a lot of bills on purpose or if you borrow money just before filing with a dishonest motive. There are a lot more Chapter 7 filings than Chapter 13.

13. Will Chapter 7 wipe out all my debts?

No. Chapter 7 does not cancel:

- Secured debts.

- Most income taxes incurred in the last three years.

- All student loans, unless you qualify for a hardship discharge.

- Child and spousal support.

- Any money that you owe as a result of being sued for drunken driving.

Your debts also will not be cancelled if a creditor proves that you lied about how much money you have, tried to hide some of your property or committed fraud. You may choose to reaffirm a secured debt. This means that you decide to pay the debt and keep the security, even though Chapter 7 would otherwise cancel the debt. If you decide not to reaffirm the debt, you need to return the security and your debt will be cancelled.

14. If I file for Chapter 7, can I keep any property?

If your property is exempt, it cannot be used to pay off debts in California. When you file for Chapter 7, you can choose between two sets of exemptions. One set is the same as the one you can use to protect your property from creditors in a lawsuit (see #8). Homeowners generally prefer this set, since it allows a much larger home equity exemption than the other set.

These are examples of things that you and your spouse together can keep if you use the second set of exemptions:

- A $15,000 interest in a home and/or burial plot. If you do not own either one, you can apply the $15,000 elsewhere to keep such non-exempt property as an income tax refund, cash, or stocks. You also have an $800 floating exemption, which means you can apply it to any non-exempt
property.

- A $2,400 interest in one car or other motor vehicle.

- All items worth up to $400 in each of these categories: household furnishings and goods, clothing, appliances, books, animals, crops and musical instruments.

- $1,000 in jewelry.

- $1,500 worth of books or tools that you need to earn a living.

- An unmatured life insurance policy and cash value in a life insurance policy up to $8,000.

- Social security and veterans’ benefits, unemployment insurance money and pension and profit-sharing plans.

15. How can I find a lawyer to represent me?

If you do not know an attorney, ask a relative, a friend, co-worker, employer or businesses associate to recommend one. You may also look in the yellow page of your telephone directory, local newspaper, radio or TV advertisement or commercials.

You may call and make an appointment to see an attorney. A lot of attorneys offers half an hour or first free consultations. If you decide to hire the attorney, make sure you understand what you will be paying for, how much it will cost, are there any hidden fees, and when you will be expected to pay your bill. An attorney experienced in debt counseling and bankruptcy laws is preferable than one does also other kinds of cases, such as immigration, divorces, personal injuries, criminal defense, etc.

What if you do not have enough money to pay for legal advice? You may belong to a “legal insurance” plan that covers the kind of services you need. Or, if your income is very low, you may qualify for free or low-cost legal help. Check the white pages of your telephone directory for a legal services program such as a legal aid society in your county.

1. What is a civil case?

The plaintiff files a complaint in a court of law against the defendant for infringing the rights of the plaintiff and asks for damages from the defendant. The filing of the complaint commences a Civil Action.

2. Some common types of commercial civil actions are:

1) Breach of Contract

The plaintiff and defendant have entered into an agreement, and defendant fails to meet the obligations under the agreement. The contract may be either written or verbal. The breach of contract may be due to a failure to pay for either goods delivered or services rendered, or it may be due to a failure to provide goods on time, services agreed, goods without defects, etc. The court will order the party breaching the contract to pay for the losses. The damages should be equal to either the plaintiff ‘s actual losses incurred by the defendant’s breach of contract or the profits the plaintiff is supposed to make if the contract were not breached by the defendant, plus other litigation-related expenses and attorney’s fees if the contract stipulates that attorney’s fees incurred by the winner of the case be assumed by the loser of the case if either party breaches the contract, or if certain legal actions clearly stipulate that the attorney’s fees be paid by the loser of the suit.

2) Collection

A plaintiff files a lawsuit against a defendant for a delayed payment of goods delivered, a private or bank loan, credit card debts and any other debts, demanding the debtor to immediately pay off the principle and accrued interests.

3) Conversion

The plaintiff claims that the defendant has unlawfully taken possession of the plaintiff’s personal property. The plaintiff is suing for the return of the property and other losses, including all the profits the plaintiff is supposed to make during the unlawful possession by the defendant, the money supposed to collect if the similar goods are leased, attorney’s fees, litigation expenses, damage, etc. CIVIL CASES Qs & As-Page 1 of 8

4) Fraud

The plaintiff contends that the defendant has done something wrong, said something untrue, failed to keep promises, disguised facts, or made any misrepresentations, either one of which makes the plaintiff believe the defendant and incur a loss. The plaintiff may ask for the financial losses, attorney’s fees, litigation costs, damages, etc.

5) Personal Injury and Property Damage

The plaintiff claims that the defendant caused the plaintiff’s injuries through negligence, suing the defendant for medical expenses, damages for suffering, financial losses, etc. The plaintiff claims that the defendant caused the plaintiff’s personal or real property through negligence, suing the defendant for all the losses

6) Unlawful Detainer

An Unlawful Detainer is a civil action in which a landlord/owner brings suit against a tenant to obtain a court order giving the holder of property the right to regain possession of the property from the tenant. Before the complaint is filed, the plaintiff must serve the tenant with a Notice to Pay Rent or Quit. If the tenant refuses to comply with the notice and does not either pay the rent or quit the premises, the plaintiff may then file a complaint of Unlawful Detainer.