Statute of Limitations – California

WHAT IS “THE STATUTE OF LIMITATIONS”?

(P.S. It’s “Statute”, not “Statue”  )

Statute of Limitations - California

Deadline to File Your Lawsuit

Generally speaking, the statute of limitations is a specific law (or “statute”) that states when a lawsuit must be filed. It is a specific measurement of time (i.e., 1 year) that “limits” the length of time one has to file a lawsuit. Lawsuits filed after the passing of this specific amount of time can be challenged and dismissed merely because the time has passed. The amount of time allowed depends on the type of claim. For example, in California, you must file a lawsuit for any losses due to an automobile negligence claim within 2 years of the date you were injured. If you claim someone breached a written contract, you must bring your lawsuit within 4 years. If it was an oral contract, the time is 2 years.  Whatever the type of claim you may have, contact an experienced litigation and trial attorney at once to discuss your claim and the time limits that apply.

Many people are under the mistaken belief that they cannot be sued after the specific time period has expired. This is not entirely correct. You can be sued. And if you do nothing, you will lose and you will also lose the opportunity to assert the defense of an expired statute of limitations. That is, it is an absolute defense- But it Must be Asserted! The obligation to tell the court is your responsibility. The court will assume what is said in the lawsuit is valid if no one shows up to tell them otherwise.

WHEN DOES THE TIME START?

Sometimes this is very easy to spot (such as the date of an accident) and other times it can be difficult to determine exactly. As it pertains to debts, specifically say credit card debt, the creditor has 4 years from the date the written contract was “breached”. Typically the breach occurs when no payment is made. This why it is important to know when you made your last payment. Generally the creditor has a record of your payments, but they are not always reliable. Also remember that the date of your last payment is not your breach date. It is the next date that at payment is due and no payment is made. This is why many advise to not make a payment on an account when the statute of limitations is about to expire, as this may reset the clock and thereby allow the creditor more time to file a lawsuit.

OTHER CONSIDERATIONS

  • Multiple Defendants: When a plaintiff has cause to sue based on knowledge or suspicion of negligence, the statute starts to run as to all potential defendants, even if unidentified.
  • Government Defendants: Must first submit administrative claim within 6 months (tort claims) or 1 year (real property & contract claims) of “accrual” before filing suit.

PARTIAL CHART OF THE “STATUTE OF LIMITATIONS” IN CALIFORNIA

Description Statute
Contract (in writing), 4 years Cal. Civ. Proc. Code § 337
Contract (oral), 2 years Cal. Civ. Proc. Code § 339
False Imprisonment, 1 year Cal. Civ. Proc. Code § 340
Fraud, 3 years Cal. Civ. Proc. Code § 338
Enforcing Court Judgments, 10 years Cal. Civ. Proc. Code § 337.5
Legal Malpractice, 1 year Cal. Civ. Proc. Code § 340.6
Libel, 1 year Cal. Civ. Proc. Code § 340
Medical Malpractice, 1 or 3 years (Depending on when the victim “discovers” the injury) Cal. Civ. Proc. Code § 340.5
Personal Injury, 2 years Cal. Civ. Proc. Code § 335.1
Product Liability, 2 years Cal. Civ. Proc. Code § 335.1
Property Damage, 3 years Cal. Civ. Proc. Code § 338
Slander, 1 year Cal. Civ. Proc. Code § 340
Trespass, 3 years Cal. Civ. Proc. Code § 338
Wrongful Death, 2 years Cal. Civ. Proc. Code § 335.1

Partial List of Exceptions to Statute of Limitations

Tolling statutes, e.g. latent construction defects – 10 years

Defendant absent from state (exception does not apply to non-resident motorists, corporations, limited partnerships and certain others)

Minors – Statute does not start until minor turns age 18 or emanicapted (although exception does not apply in uninsured motorist cases, medical malpractice, certain sexual abuse cases, and government claims generally)

Bankruptcy – puts statute of limitations on “hold”

Voluntary Agreement – The statute of limitations may be extended by voluntary agreement of the parties.

Military service – puts statute of limitations on “hold” in certain circumstances

Delayed Discovery Rule – suspends (delays, lengthens) by not starting the time period until plaintiff should reasonably have discovered the harm and wrongdoing

Interference – Defendant’s conduct contributed to plaintiff’s delay in filing suit.

Insurance Company Non-Disclosure – Insurance company fails to notify plaintiff who is not represented by an attorney.

Christopher Shenfield, Attorney at Law, Burlingame, May 11, 2017.  Questions?  Email or call me to discuss your case!!  Email: chris@shenfieldlaw.com  Tel: (650) 373-2054

 

Rental Property: Should I put it in an LLC?

Apartment buildingPersonal v. LLC Rental Property

Investment property is real estate purchased to buy and sell for a profit or to produce rental income.  Many investors who purchase rental properties own them personally. A more prudent way to own rental property for investment purposes is to form a Limited Liability Company (LLC) to own each property. This method protects it’s owner-member’s personal assets—cash, equity in real estate, primary residence, investment accounts, retirement accounts, etc. – from litigation.  It also allows for more flexible profit distribution and estate planning.

Liability Protection Benefits

If the owner of real estate rental property has a personal creditor, the creditor generally cannot make a claim on real estate owned by an LLC.  Should tenants, guests, or anyone else on the property sustain injuries, and if the rental property is owned in the client’s name, the owner’s personal assets are at risk.

Example: An owner has a rental property occupied by a young couple. The couple has a holiday party.  One of their guests falls down stairs and is hospitalized. The guest sues the owner for her injuries, claiming the stairs were hazardous. If the guest successfully wins the claim against the owner, any judgment in excess of the liability insurance can be satisfied from the owner’s personal assets.

Tax Benefits

An LLC formed with two or more members is classified as a “pass-through” company for tax purposes.  This means the LLC’s income is passed through to its owners and claimed on those owners’ individual tax returns. Hence, it is subject only to capital gains rates on the ownership shares of the member, and not to corporate capital gains taxes.  So there is no double taxation. LLCs with just one owner-member, however, are taxed as a sole proprietorship.  No separate tax return is required.  So the actual tax dollars saved from holding real estate in an LLC, as opposed to personally holding the properties, is zero.  However, if you actively participate in the management of the income property, and your adjusted gross income is less than $150,000, you can write off up to $25,000 in rental losses. Losses may occur, for example, due to depreciation or repair expenses.  The amount of rental losses that you can write off is phased out between $100,000 and $150,000.

For example, if your adjusted gross income is $125,000, you can write off $12,500 in rental losses in the year of the loss. If your adjusted gross income is $150,000 or more, you cannot write off any rental losses in the year of the loss.  Even if the loss is disallowed for that particular tax year, it is not completely lost. When you sell your income property, you can write-off any unused rental losses that have accumulated while you have owned the property.

Estate Planning Benefits

Holding rental property in an LLC has advantages for estate planning. It allows for transfer of ownership in a more seamless manner than if personally owned.

For example, when property owners owning real estate individually wish to gift certain percentages of their real estate to family members, the process can require many trips to the court house to update deeds every time percentages of ownership change. However, when the real estate is LLC owned, the owner can simply issue membership certificates to the family member.  No changes need be made to the deed.

Whether you own twenty properties or one, owning them personally can be a major liability. All your hard work and planning could be wiped out with one misfortune. Understanding the benefits of forming an LLC and the pros and cons of ownership structures are important considerations when purchasing rental property.

If you have any questions about buying or selling investment real estate, please feel free to email your questions to chris@shenfieldlaw.com