vacation-rental

Short-Term Vacation Rentals in Sonoma County

If you operate or wish to operate a vacation rental in the unincorporated areas of Sonoma County, you need to make sure you follow certain rules and regulations. This article will explain what a vacation rental owner needs to do in order to be in compliance with the Sonoma County code and avoid fines and additional fees.

In 2009, the Sonoma County Board of Supervisors passed the first ordinance requiring a zoning permit for vacation rentals in the unincorporated areas of the County. A vacation rental is a dwelling rented for 30 days or less. In adopting Ordinance No. 5908, the Board found that short-term rentals of single-family homes comprised a significant segment of the local tourism economy and generated significant transient occupancy taxes (TOT) for the County and, while the majority of the rentals operated without a problem, there had been numerous complaints regarding excessive noise, parking, litter, and concerns regarding, septic capabilities, security, public safety, and trespass.

In 2022, the Board created a new zone called an X Vacation Rental Exclusion Combining District to either exclude new vacation rentals or cap them at 5% or 10% of single-family homes in certain yet-to-be-defined areas. Ordinance No. 6386 also established standards for the operation of vacation rentals related to the maximum number of guestrooms and occupancy, parking, noise, and other operational standards.

In 2023, the Board passed the ordinance that identified the specific areas where vacation rentals are excluded or capped by the X district. The Board found the purposes of the X district are to exclude or limit the concentration of vacation rentals in areas where there is inadequate road access or off-street parking; where the prevalence of vacation rentals is detrimental to the residential character of neighborhoods; where the residential housing stock is to be protected from conversion to visitor-serving uses; where there is a significant fire hazard; where the residential character is to be preserved; and where the Board otherwise determines it is in the public interest to prohibit vacation rentals. Ordinance No. 6423 rezoned specifically defined areas in the 1st (Sonoma to Bennett Valley area), 4th (Fulton to Cloverdale), and 5th (West County) supervisorial districts to the X district to either exclude or cap vacation rentals in those areas. Those specific areas are described in the Official Zoning Data Base (OXD) of Sonoma County.

Also in 2023, the Board passed an ordinance that created a vacation rental business license program. Under Ordinance No. 6427, a licensee must be a property owner or trustee if the property is held in trust, and all property owners must be natural persons. As such, vacation rentals cannot be owned by business entities such as corporations or limited liability companies (LLCs).

In general, the process for obtaining a permit and license to operate a vacation rental in Sonoma County involves four steps:

  1. The owner of the vacation rental must identify or become a Certified Vacation Rental Property Manager located within 30 miles of the vacation rental and that person must pass a County of Sonoma certification exam to become a certified manager.
  2. The owner must obtain a Transient Vacation Rental Permit (aka Zoning Permit) for the property by submitting complete application forms and application materials and paying the fee to the County of Sonoma.
  3. The owner must secure a TOT number from the Sonoma County Auditor-Controller Treasurer-Tax Collector Department.
  4. Finally, the owner must obtain a Vacation Rental License. A Vacation Rental License lasts for one year and the owner must apply to renew their license annually to continue to run a vacation rental. An owner who has been legally operating a vacation rental before June 15, 2023, must obtain a Vacation Rental License by June 15, 2024.

(https://permitsonoma.org/regulationsandinitiatives/vacationrentals/vacationrentalpermitandlicenseapplication; see also https://permitsonoma.org/vacationrentals)

~Rose M. Zoia is a director and shareholder at Anderson Zeigler. She has been in practice since 1988 and focuses on land use, business formation and transactions, and real estate transactions.

trustee-legal

Trustee’s Duty To Provide Notice Upon Incapacity Of Trustor

WHAT HAPPENS WHEN A TRUSTOR DIES?

Typically, the person or persons who create a revocable living trust hold power to revoke the trust. However, when that person or the last of those persons dies, the revocable trust becomes irrevocable because they can no longer revoke their trust. Once a successor trustee takes over a trust that has become irrevocable due to the settlor’s or trustor’s (the trust’s creator) death, they have a duty to the trust’s beneficiaries to notify them of the trust’s irrevocability and provide them with an accounting. Effective January 1, 2022, California Probate Code Sections 15800 and 16069 are amended by Assembly Bill 1079. The changes affect trustees who assume their role when the settlor becomes incapacitated.

WHAT LEGAL STEPS DOES A SUCCESSOR TRUSTEE HAVE TO TAKE?

Under AB1079, the law now recognizes that, as a practical matter, a trust becomes irrevocable when a settlor becomes incapacitated and no longer has the cognitive ability to revoke the trust. At that point, the law now states that when the person or persons who hold power to revoke the trust are no longer competent, the trustee must provide notice to all the beneficiaries and heirs who would be entitled to notice once the settlor dies. The trustee must provide them with a copy of the trust and any amendments. Within 60 days of the trustee obtaining the necessary documentation, this notice is required to establish that the settlor or trustor is incompetent. The trustee must also provide the beneficiaries with an accounting at least annually or otherwise determined by the trust document.

WHY DO BENEFICIARIES RECEIVE ACCOUNTINGS IF THE SETTLOR IS STILL ALIVE?

Although the beneficiaries are deemed beneficiaries entitled to notice and accounting during the lifetime of an incapacitated settlor, they are not necessarily the present beneficiaries of the income and principal of the trust. The incompetent settlor would still be the primary beneficiary of the trust assets, with the other beneficiaries not inheriting any assets until the settlor’s death.

WHEN SHOULD A SUCCESSOR TRUSTEE STEP IN TO REPLACE AN INCAPACITATED SETTLOR?

If you are the successor trustee for a loved one’s trust, you may have to start administering the trust before your loved one passes away if they become incompetent. It is important to note that the trust document itself determines incompetence or incapacity. Please do not hesitate to reach out to your estate planning attorney for assistance with a trust that may name you as a successor trustee. You may need to step in before someone dies, and it would be prudent to understand your duties.

Contact our office today and schedule a consultation with one of our experienced attorneys.

Catherine J. Banti is a director with the firm of Anderson Zeigler. She has been in practice since 2002, specializing in Estate Planning and Administration, Taxation, General Business Law, Copyright, Trademark and Patent, Real Estate, and Intellectual Property Law

Non-Compete Agreements and Employment Law

In 2023, certain sections of the California Business and Professions Code were amended, voiding many non-compete agreements and potentially impacting certain non-solicitation agreements.

Prior to 2023, it was well-established under California law that, with certain exceptions (including the protection of trade secrets or in connection with the sale of a business or the dissolution of a partnership), non-compete agreements were void as an anti-competitive restraint of “profession, trade, or business.” (B&P Code § 16600(a))

The recent amendments plugged a number of potential loopholes. Subdivision (b) codifies case law that stands for the proposition that limitations such as time and geography do not validate a non-compete agreement.

Subdivision (c) provides that the law is not “limited to contracts where the person being restrained from engaging in a lawful profession, trade, or business is a party to the contract.” In other words, the law contemplates business to business contracts which restrain an employee who is not a party to the contract. For example, a non-solicitation agreement between business A and business B which provides for liquidated damages in the event that one hires the other’s former employee is likely void under section 16600 to the extent that the increased cost the potential employer would have to pay deters it from hiring that employee.

The amendments also clarify that non-compete agreements are unenforceable in California regardless of where they were signed. That means that if an employee signed a non-compete agreement with an out-of-state employer, that agreement would be void if the employee came to work in California and the former employer attempted to enforce the agreement against the employee or their new employer.

Finally, the law requires employers who included a non-compete clause in an agreement since January 2022, to issue individual written notices that the agreement is void by February 14, 2024, to each current employee and former employee affected. Attorney’s fees and a civil penalty are available when an employee brings a successful lawsuit against employers in violation to void the agreement.

Landlord/Tenant – Evictions Basics

Understanding Evictions
Evictions are a complex and sensitive area of law, particularly in California, where tenant rights are robustly protected. As a landlord, understanding the intricacies of this process can be daunting. This article explains landlords’ and tenants’ specific duties and obligations under the law.

Lease Agreements
A lease, whether oral or written, is fundamentally a legally binding exchange of promises, i.e., a contract. It involves periodic payments made by the tenant in return for habitable dwellings provided by the landlord. While contractual in nature, a lease is subject to specific regulations that limit the extent to which certain terms can be negotiated. For example, California law regulates rent increases and further restricts a landlord and tenant from waiving habitability requirements.

Landlord Obligations
A key duty of the landlord is to ensure that the rental property remains habitable. This includes providing essential services such as, for example, running water and heat. When a landlord fails to meet the basic requirements, they may not be legally entitled to collect rent for the period during which the services were unavailable. It is crucial to recognize that habitability is not just a courtesy; it is a legal requirement.

Tenant Responsibilities
On the flip side, tenants are obligated to pay rent, adhere to the terms of the lease, and ensure their actions do not violate the law, cause a nuisance, or pose a threat to the health and safety of others. Failure to meet these obligations can lead to legal action and potential eviction.

Legal Disputes and Unlawful Detainer Actions
When disputes escalate to the point where legal intervention is required, the matter typically falls under the jurisdiction of the unlawful detainer department of the Superior Court in the county where the property is located. Unlawful detainer is more commonly known as an eviction. An unlawful detainer court specifically handles cases related to lease disputes.

California’s Focus on Tenant Rights
In California, the eviction process is procedurally intensive and governed by a strict set of laws. This includes everything from the precise language required in termination notices to the execution of a judgment for the landlord’s possession, if the landlord prevails. The state places a strong emphasis on protecting tenant rights, making it imperative for landlords to meticulously follow legal procedures during an eviction.

Navigating the Process
Evictions are more than just legal procedures; they involve real people and their homes. As such, they should be approached with care, understanding, and a thorough knowledge of the law. If you are a landlord facing the difficult decision to evict a tenant it is crucial to understand your rights and responsibilities. Likewise, if you are a tenant facing eviction, it is critical to be aware of your rights. Our law firm specializes in these matters and can provide the guidance and support you need throughout the process.

Navigating the Corporate Transparency Act: What Businesses Need To Know

Beginning January 1, 2024, many businesses will be affected by a new federal reporting requirement known as the Corporate Transparency Act (the “Act”) that requires certain companies to report their beneficial owners. The report is called a BOI report, or beneficial ownership information report.

Who are Reporting Companies:
The Act broadly applies to “reporting companies” including corporations, limited liability companies (LLCs), and entities organized under U.S. laws.  This includes foreign companies registered to do business in the U.S.

Who is Exempt:
Businesses are exempt from submitting a BOI report if they employ over 20 full-time U.S. employees, have a U.S. office in which they regularly conduct business, and report over $5 million in U.S. income.  In addition, there are 23 specific types of companies that are exempt from the reporting requirements.

Who is a Beneficial Owner:
Reporting companies must disclose beneficial owners who are individuals with at least a 25% ownership interest, or those individuals who exercise substantial control over the company.

What is Substantial Control:
An individual exercises substantial control over the company if it (1) is a senior officer, (2) has the authority to appoint or remove officers or a majority of directors, (3) is an important decision-maker, or (4) has any other form of substantial control over the company.

Who is a Company Applicant:
Businesses created or registered after January 1, 2024, will need to report its company applicant(s).  The company applicant is the individual who directly filed the document that created the company filed with the California (or other state’s) Secretary of State and, if there is one, the person who directed the filing of the document.

What is the required Reporting Information:
The reporting company needs to provide its name, fictious business or trade name (DBA), address of the principal place of business in the U.S., and the name of the state in which it was formed. Beneficial owners and company applicants need to provide their legal name, date of birth, residential street address, identifying number from, e.g., a non-expired driver’s license or passport, and a copy of the non-expired identification.

What is the Timing:
Companies that already exist as of January 1, 2024, must file their initial disclosure by January 1, 2025. Companies created or registered between January 1, 2024, and January 1, 2025, have 90 days after receiving notice of their creation or registration to file their BOI report. Companies created or registered on or after January 1, 2025, will have 30 days from the date of notice of their creation or registration to file their report. Companies must file an updated BOI report within 30 days of any change to the information provided.

What about Trusts:
Individuals may be deemed beneficial owners if they hold ownership interests (substantial control or 25%) in a reporting company through a trust or similar arrangement. This can include trustees, beneficiaries with current specific rights, and grantors with revocation rights. Holders of a future interest through inheritance are excluded.

What are the Penalties for Noncompliance:
Non-compliance can result in significant fines and penalties but correcting inaccurate information within 90 days may offer a safe harbor.

Conclusion:
Understanding and complying with these changes is essential. Reach out to us for guidance as you prepare for this regulatory shift.

Employment Severance Agreements

Many employers include confidentiality and non-disparagement clauses in severance agreements.  However, at both the State and federal levels, certain confidentiality and non-disparagement language may render an entire severance agreement unenforceable.

In California, it is an unlawful employment practice for an employer to prevent an employee from disclosing information about unlawful acts of harassment, discrimination, or retaliation in the workplace in “any agreement related to an employee’s separation from employment… .” The law requires the following language to be included in a severance agreement:

“Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”

California law also requires severance agreements with releases of liability to contain language advising employees to consult with counsel and provide a period of time of not less than five days to do so. An employee may choose to sign a severance agreement in less than the five-day period, but they must do so in a “knowing and voluntary” manner and not induced by the employer’s “fraud, misrepresentation, or threat to withdraw or alter the offer.”

Federally, the National Labor Relations Board (“NLRB” or “Board”), found unlawful confidentiality and non-disparagement clauses in a severance agreement with the following language:

Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.

Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.

The Board held that the confidentiality clause was illegal because it prohibited employees from sharing the terms of the severance agreement with “any third person.” Federal labor protections, the Board stated, “extend to employee efforts to improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employee employer relationship.”  “These channels include administrative, judicial, legislative, and political forums, newspapers, the media, social media, and communications to the public that are part of and related to an ongoing labor dispute. The Board took particular issue with the fact that the confidentiality clause prohibited the employee from “discussing the terms of the severance agreement with his former coworkers who could find themselves in a similar predicament facing the decision whether to accept a severance agreement.”

The Board ruled that the non-disparagement clause was overbroad in that it covered any labor-related issue, dispute, or employment condition concerning employment. The Board also found the non-disparagement clause excessive in its application because it encompassed not only the employer but also its officers, directors, employees, agents, and representatives. Finally, the Board pointed out that the non-disparagement clause lacked a time limit, which suppressed all forms of communication indefinitely.   

The Board held that even offering such terms in a severance agreement “has a reasonable tendency to restrain, coerce, or interfere with the exercise of Section 7 rights by employees.”   

The Board’s decision did not comment on employers’ rights to safeguard trade secrets, or confidential and proprietary information. Arguably these can be protected through a narrowly tailored confidentiality clause. On the other hand, the decision strongly suggests a confidentiality clause with a blanket prohibition on discussing an agreement’s terms will be deemed unlawful. Also, a non-disparagement clause that narrowly defines “disparagement,” that limits the scope of disparagement to “past employment,” and/or that contains a reasonable temporal restriction may survive scrutiny.

At the federal level, it is important to remember that the rights discussed by the NLRB do not apply to management personnel and supervisors. However, an analysis is often needed to determine whether a worker qualifies as an excluded manager or supervisor.

There is no authority yet as to whether the California Government Code’s language quoted above would be sufficient to satisfy the federal requirements. Nevertheless, both the California Government Code and the NLRB’s decision highlight the importance of carefully crafting and reviewing severance agreements to ensure compliance with the law while safeguarding the interests of both employers and employees.

 

1. Government Code § 12964.5
2. Government Code § 12964.5
3. Government Code § 12964.5
4. McLaren Macomb and Local 40 RN Staff Council, Office and Professional Employees, International Union (OPEIU), AFL–CIO. Case 07–CA–263041
5. McLaren at pp. 5, 6.
6. McLaren at p. 9.
7. National Labor Relations Act (NLRA), specifically Section 7, bars employers from taking action that have a reasonable tendency to inhibit or coerce employees in their ability to discuss their employment terms and conditions with colleagues and others. The NLRB has long identified this right as the core of Section 7’s protected activities.

WHAT IS A LAWYER RETAINER? A GUIDE FOR CALIFORNIANS

There are 1.3 million lawyers in the United States, but not all lawyers are the same. Attorneys become licensed to work in a specific state, focus on a particular area or areas of the law, and manage our firms differently.

When you begin speaking to attorneys, one topic you should always ask about is the cost. The lawyer you hire should be able to explain their fee structure clearly. One phrase you might hear is a “retainer.”

This guide will help you understand what a lawyer retainer is and what it means for you.

WHAT IS A LAWYER RETAINER?

There are several ways a lawyer can charge for their services. This includes a flat fee, an hourly rate, a contingency arrangement, and a retainer. A retainer is a fee the lawyer requires you to pay before they begin representation.

Once you pay the fee, your lawyer will begin working on your case. As their office bills you, the billed amount gets subtracted from the retainer fee paid. Your lawyer may require you to deposit more money as the balance depletes so that you always have a positive balance. Once your case is completed, any remaining balance on your account gets refunded to you.

WHEN IS A RETAINER FEE CHARGED?

Typically, the more complicated a case is, the more likely a lawyer will require a retainer. There are also some areas of law where you’re more likely to pay a retainer than others. Corporate, estate planning, real estate, and intellectual property lawyers all commonly request a retainer for services. But then other lawyers, such as personal injury lawyers, tend to work on contingency. This means they get paid fees only when you recover damages.

CAN I PAY BEFORE I NEED A LAWYER?

Yes, this is what many businesses are advised to do. You never know when you may need a lawyer, or if you may need to use one frequently. Having a lawyer on retainer means that they are primed and ready to go at the request of an email or phone call. This can allow you to act and respond quickly to legal matters and can help avoid more significant negative consequences later on.

WHAT HAPPENS TO THE MONEY?

Lawyers are required to keep a separate escrow account called a trust account for all advance fees collected. The lawyer will withdraw money from the trust account once the lawyer works on your case and bills the account.

BENEFITS OF A RETAINER AGREEMENT

Lawyers appreciate a retainer agreement because they can confidently work on a case knowing they will get paid. This type of arrangement works well for clients because it lets them determine an anticipatory budget for their case.

RETAIN A CALIFORNIA LAWYER TODAY

If you need to hire an attorney and they begin talking about a lawyer retainer, don’t panic. This is a standard method of billing, especially in California. Use this time to discuss the complexity of your case and the anticipated amount of work.

When you are ready to hire a lawyer, contact them and prepare to pay a retainer. You can then relax, knowing you have a legal expert looking out for your best interests.

Contact our office today and schedule a consultation with one of our experienced attorneys.

Michael J. Fish is “Of Counsel” with the firm of Anderson Zeigler. He is a past chair of The State Bar of California Mandatory Fee Arbitration Committee and the Marin County Bar Association Client Relations Committee and the current Chair of the SCBA Mandatory Fee Arbitration Committee.