A neutron walks into a bar and asks “How much for a drink?”  The bartender replies “For you, no charge.”

When it comes to zero-emission vehicles, the State of California has established some ambitious goals: by 2025, the State hopes to see 1.5 million zero-emission vehicles on our roads, and 5 million by 2030.  There are currently only roughly 18,000 public EV charging stations in California, but the California Energy Commission has estimated that some 250,000 stations will be needed to support the 2025 zero-emission goal.

To encourage the installation of EV charging stations on commercial properties, the Legislature has enacted Section 1952.7 of the Civil Code, which became effective on January 1, 2017. It is important to note that this law does not mandate that landlords install or maintain EV stations.  The stated intent of the law is remove “obstacles” to the installation of EV stations, by rendering unenforceable any lease provision that either “prohibits or unreasonably restricts” the tenant’s ability to install and use an EV station.  In this article, I suggest some modifications to the landlord’s lease that would survive scrutiny under Civil Code Section 1952.7.

The law applies to any lease that is executed, renewed, or extended on or after January 1, 2015. The law does not apply to a property where charging stations already exist for use by tenants in a ratio that is equal to or greater than two available parking spaces for every 100 parking spaces at the commercial property, or where there are fewer than 50 parking spaces.  (There are analogous statutes for common-interest developments, found at Section 4745 of the Civil Code, and for residential properties, at Section 1947.6 of the Civil Code, but this article is limited to discussing commercial properties.)

Subject to the limitations discussed below, a commercial tenant has the right to install the same number of EV stations as they have been allocated parking spaces under the terms of the lease.  If the lease does not allocate a specific number of parking spaces to the tenant, the maximum number of EV stations allowable is determined by multiplying the total rentable square feet at the property by a fraction, the denominator of which is the total rentable square feet at the property and the numerator of which is the rentable square feet of the Tenant’s premises.

The statute does not operate to override the parties’ agreement, as stated in the lease, on “reasonable” restrictions on the installation of EV stations, and specifically recognizes the following terms as being permissible limitations on the tenant’s rights:

  • Reasonable Monthly Fee
    If the installation of the EV station has the effect of granting the tenant a reserved parking space and a reserved parking space has not allotted to the tenant under the lease, the landlord may charge “a reasonable monthly rental amount” for the parking space.  Civil Code Section 1952.7 gives no guidance as to what would constitute a “reasonable monthly rental amount,” but I think it is safe to assume that the landlord can charge their going rate for reserved spaces (or if the landlord is not then charging a fee for reserved parking, an amount equal to the fair market value of such spaces).
  • Landlord Approval Rights and Conditions
    Assuming the lease requires the landlord’s approval for installation of an EV station (which a typical well-drafted commercial lease would, particularly if a multi-tenant building is involved—see my recommendations below) such approval “shall not be willfully avoided or delayed” and any approval or denial of an application must be in writing. The landlord may condition its approval of the  tenant’s installation of an EV station upon compliance with reasonable requirements, such as the following:

    •  The EV installation must comply with the applicable terms of the lease (provided that such provisions are consistent with the provisions of Civil Code Section 1952.7);
    • The EV installation must comply with all applicable legal requirements;
    • The EV installation must comply with the landlord’s reasonable standards;
    • The tenant must bear all responsibility for the costs of installing the EV station and its infrastructure including the cost of permits, supervision and construction;
    • The tenant must be responsible for any electrical usage, damage, maintenance, repair, removal or replacement of the EV station; and
    • The tenant must maintain a policy of liability insurance in the amount of “one million dollars ($1,000,000), and shall name the lessor as a named additional insured under the policy with a right to notice of cancellation and property insurance covering any damage or destruction caused by the charging station, naming the lessor as its interests may appear.”   Tenant must provide proof of this insurance within 14 days of the landlord’s approval of the EV installation.

Prudent landlords are encouraged to update their lease forms in a manner that takes advantage of the fact that Civil Code Section 1952.7 will honor “reasonable” restrictions on a tenant’s right to install an EV station.  Some commentators have recommended that the landlord form lease should now include a new, lengthy provision in the body of the lease that addresses all the conditions that the landlord may impose in response to a tenant request to install an EV station; that approach strikes me as unnecessary (as attorneys, we hear complaints that our form leases are already too long), and as an invitation to the tenant to exercise a right (namely, the installation of an EV station) that might not have otherwise occurred to the tenant.

I suggest that the best practices for a landlord in light of Civil Code Section 1952.7 are as follows:

  • Ensure that the form lease contains a comprehensive “alterations” provision (this is the provision that typically limits the tenant’s ability to alter its premises or the balance of the property without the landlord’s consent).  A well-drafted “alterations” provision will prohibit the tenant from making modifications to the parking areas, thus triggering the need for landlord consent and granting the landlord to impose reasonable conditions on that consent.
  • Address the specifics of EV station installation in a new provision to appear in the rules and regulations exhibit to the lease; while adding the new provision will make the lease longer, I have found that additions to the rules and regulations generally are less objectionable to (and generally given little scrutiny by) tenants and landlords alike. Those terms should include all the protections listed in the “Landlord Approval Rights and Conditions” provision above (if not already addressed in the “alterations” provision of the Lease), and perhaps the following protections as well: (i) establish a maximum number of parking spaces that may be converted to EV stations, for the entire property, (ii) establish (or reserve the right to establish later) a monthly rate per space; (iii) reserve the right to designate particular areas of the parking facility for installation of the EV stations, and the right to relocate those stations in the event of future development of the property;  (iv) make it clear that any parking spaces used for EV stations are included in the total parking allocated to the tenant; (v) confirm the tenant’s obligations relating to the removal of the EV station. Finally, consider adding a sentence such as the following, to the end of the provision: “Tenant agrees that the terms and conditions set forth in this Section ___ are reasonable and not violative of any rights conferred on Tenant pursuant to California Civil Code section 1952.7 or any similar or successor law governing the installation or use of electric vehicle charging stations.”
  • As a condition to proceeding with the installation of the EV station, require the tenant to sign a formal amendment to the lease that contains all the protections suggested in the preceding paragraph.

Electric vehicles are an ever-increasing presence here in California.  If you are the owner or manager of commercial property here, you will eventually have to deal with tenant requests for the installation of EV stations.  This is an area that an experienced and knowledgeable lawyer can add a lot of value; I encourage you to get ahead of the issue and have your lawyer update your lease forms now.

DISCLAIMER:  This article does not constitute legal advice.  Readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.

BIOGRAPHY:  Tom Stewart is a named partner of Stewart Ward & Josephson LLP.  He specializes in commercial real estate transactions, and can be reached at tstewart@swjllp.com; 916-569-8121.

Copyright © 2019 Stewart Ward & Josephson LLP, All rights reserved.


“An ‘as is’ provision may therefore be effective as to a dilapidated stairway but not as to a missing structural member, a subterranean creek in the backyard or an unexploded bomb buried in the basement, all being known to the seller.” Lingsch v. Savage, 213 Cal.App.2d 729, 735-36 (1963)  


One question that we real-estate attorneys hear frequently from our clients is “What do I need to disclose to the prospective buyer about the property?”  To answer that question, one needs to understand the three legal bases for the disclosure obligation: the common law, statutes, and the purchase contract itself.


We have inherited from the English the body of law and jurisitic theory that was in force at the time of the American Revolution; that system is known as the common law.  In California, it is well established that in any real property sale transaction, the seller has a common-law duty to disclose to the buyer facts that: (i) are known or accessible only to the seller, (ii) materially affect the value or desirability of the property, and (iii) are not known to or within the reach of the diligent attention and observation of the buyer.  (See Holmes v. Summer, 188 Cal.App.4th 1510, 1518-19 (2010).)  (This duty applies to both commercial and residential transactions, but this article is limited to commercial transactions.)
It is often debatable as to whether a given fact needs to be disclosed in order to satisfy this common-law duty, as the circumstances of each property and each transaction are unique.  There are, however a number of judicial decisions that provide guidance; here are just a few examples of facts that are likely to be material:

• known building-code violations
• the improvements are built on fill
• the improvements were built without permits and in violation of zoning regulations
• the structure has been condemned
• water infiltration in the soil
• raw land is fill
• net income for property has been overstated
• third-party inspection reports for the property
• notices from a government official or other third parties alleging some adverse condition on the property
• any claim made by the seller to any insurance company regarding any condition of or occurrence at the property
• any unusual circumstance or event near the property, including criminal activity, disease, industrial accident, casualty or other act of God, and soil subsidence or slide
• any unusual noise, disturbance or other condition seasonally or generally affecting the property, but not apparent during the marketing period.

If you are a seller pondering whether you are required to disclose a given fact, it can be useful to imagine yourself in the buyer’s position and ask “is this a piece of information that would affect my decision to buy this property if I were the buyer?”  Clearly, the best practice is, when in doubt, disclose (yes, that is easy advice for a lawyer to dispense, but it is nonetheless wise counsel).  And it is best to make the disclosure as early as possible in the transaction—preferably before the execution of the purchase contract, and in all events well before the expiration of the buyer’s due-diligence period.  Those disclosures should be made in writing, of course, and it is prudent to obtain the buyer’s written acknowledgement of receipt.

The scope of the common-law disclosure obligation is indeed broad, but it does not extend to obvious defects or those defects that the buyer could discover by a reasonably prudent inspection.  Note, too, that the seller’s obligation is limited to disclosing facts, and does not require the seller to educate the buyer on the ramifications of those facts.  For example: if the seller discloses the existence of an easement, it is up to the buyer alone to determine the effect that easement will have on the value and desirability of the property.  Similarly, the seller has no duty to explain the consequences of the property being located in a flood zone.

Bear in mind that the common-law duty is distinct from the duties that arise from statutes or the purchase contract (discussed below) – even if you have disclosed all information mandated by the statutes or the purchase agreement, you may not have satisfied the common-law obligation.


The California legislature has imposed an ever-expanding list of disclosure obligations on sellers, but the majority of those obligations apply only to transfers of real property involving one to four dwelling units.  However, because the commercial-property disclosure obligations are scattered throughout many different codes, and often lumped in with the residential requirements, it is no simple thing to list all the necessary disclosures that apply to a commercial seller.  To further complicate matters, there are also disclosure obligations imposed by local jurisdictions (see, for example, the East Bay Municipal Utility District’s Consolidated Regional Private Sewer Lateral Ordinance, which applies to the cities of Alameda, Albany, Emeryville, Oakland, and Piedmont, and took effect on May 24, 2019).

Here are some of the most commonly required disclosures for commercial-property sales:

• FEMA special flood hazard areas (Cal. Gov. Code § 8589.3)
• Flood inundation zones (Cal. Gov. Code § 8589.4)
• High fire hazard severity zones (Cal. Gov. Code §51183.5)
• Earthquake fault zones (Cal. Pub. Res. Code § 2621.9)
• Seismic hazard zones (Cal. Pub. Res. Code § 2694)
• Wildland fire risk areas (Cal. Pub. Res. Code § 4136)
• Known hazardous substances (Cal. Health & Safety Code § 25359.7)
• Delivery of California’s Commercial Property Owner’s Guide to Earthquake Safety (Cal. Government Code §§ 8875.6 and 8893.2)

The California Association of Realtors has published a “Seller Disclosure Chart” that is an easy-to-use reference guide for determining the applicability of the California statutes to various transactions: https://www.car.org/en/riskmanagement/disclosure-charts/sales-disclosure-chart.  This is the most comprehensive disclosure guide I have found; I encourage you to consult it often.

Occasionally, I see seller-oriented purchase contracts in which the buyer is purportedly waiving its right to receive the disclosures dictated by California statutes.  Those waivers are not likely to be upheld by a judge, as I believe they contravene public policy, and I would advise a seller against relying on them.


Parties are free to, and in fact do often, negotiate disclosure obligations which exceed both the statutory and common-law duties; these disclosures are typically expressed as representations and warranties by the seller.  For example, in the absence of a representation or warranty by the seller that the property complies with all zoning, the seller is not required to disclose a nonconforming use caused by change in the zoning ordinance–unless the seller has actual knowledge of nonconforming nature of use (because of the common-law duty).  However, if the seller makes an affirmative representation about zoning, the seller has assumed the burden of investigating zoning and disclosing to the buyer the existence of a nonconforming use.  This burden can be reduced back down to the common-law level of obligation by restricting the representation to the actual present knowledge of Seller, without duty of investigation or inquiry.

Because of the complexity and severity of the potential consequences of a badly written clause (which can include rescission of the contract as well as an action for damages), the representations and warranties provision in a purchase agreement is often one of the most difficult for the parties to reach agreement on.  There is far from universal agreement about how extensive seller’s representations and warranties should be, and the issue typically comes down to the relative bargaining strength of the parties.  However, as a general rule of thumb, I think a fair guiding principle is that the seller should not be obligated to make representations and warranties as to facts that can be readily ascertained by the buyer or verified by third parties.  For example, if a buyer seeks assurances that the property in question is a legal parcel that complies with the California Subdivision Map Act—which is a legitimate concern–the party most appropriate to provide such assurances is the local city or county, by means of certificate of compliance, rather than the seller.  Similarly, it is appropriate to ask that the seller represent that, except as disclosed, there are no leases affecting the property, since the seller is uniquely qualified to supply that information.


Comprehensive “as-is” and other exculpatory provisions have become almost universal in purchase agreements in recent years; however, while those provisions are useful to limit the scope of the seller’s contractual disclosure obligations, they will not necessarily reduce the seller’s common-law disclosure duty.  The principal (and entirely defensible) purpose of a comprehensive “as-is” provision is to reinforce the notion that the buyer is obligated to independently inspect the property, and a well-crafted provision can assist the seller in defending against a claim that the seller failed to disclose defects that the seller should have known about but did not due to the seller’s failure to inspect.  However, there is a very strong public policy in California against the enforcement of any contractual provision that is intended to eliminate or minimize a party’s liability for fraud or other wrongful acts.  Even the best-written contract will not protect a seller who knowingly defrauds a buyer.  (See the quote from Lingsch v. Savage above, and California Civil Code section 1668, which states “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”).


The property information to be disclosed, and the timing and method used to disclose such information, are topics of great import to buyers and sellers alike.  This is an area that an experienced lawyer can add a lot of value, but it is also advisable that any seller take the time to understand its disclosure obligations under the common law, the statutes, and the purchase contract itself.  A little common sense goes a long way in this process—but in all events, do remember to tell the buyer about the unexploded bomb in the basement.

DISCLAIMER:  This article does not constitute legal advice.  Readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.

BIOGRAPHY:  Tom Stewart is a named partner of Stewart Ward & Josephson LLP.  He specializes in commercial real estate transactions, and can be reached at tstewart@swjllp.com; 916-569-8121.  





Copyright © 2019 Stewart Ward & Josephson LLP, All rights reserved.





Sacramento: We Are Finally On The Radar!


As we celebrate another banner year of commercial real estate with the 26th annual Broker of the Year awards, we also should take note of some of the accolades recently bestowed upon our fair city: Top “Game Changing” Northern California City: Sacramento (Sunset Magazine, February 2018); America’s stealthy farm-to-fork capital (Thrillist, January 2018); Ranked 5th on the Forbes list of best cities for job seekers (Forbes, May 2017), beating out every other California city. Bloomberg News recently noted a “flood” of San Franciscans seeking less expensive housing into Sacramento, which has contributed to both Sacramento’s multi-family rent increases (the 2nd highest percentage increases in the nation, just behind Tacoma, Washington) and a rise in housing costs (which costs rose 10% compared to 2016 prices). We even had an academy award nominated movie, “Lady Bird”, which featured our fair city. (We were beaten out by a movie about a fish! Go figure.) The Wall Street Journal called Sacramento “California’s Newest Real-Estate Hot Spot” (WSJ, May 2017), proclaiming that “Sacramento, Calif., long seen as a fairly bland government town, is in the midst of a real estate boom.”

So, what has caused all of this “buzz”? Certainly, the development of the Golden 1 Center and “DoCo” (including the uber hip Sawyer Hotel) was a major catalyst, but Sacramento also has bevy of other “cool” and “hip” projects that make national investors stand up and take notice, including the Ice Blocks project by Heller Pacific, with its heavy timber construction; the new B Street Theatre at the Sophia, which was financed through a $29 million public-private partnership with the California Infrastructure and Economic Development Bank; and the Barn in West Sacramento and the Milagro Centre in Carmichael with their unique designs and concepts. Centene Corporation, one of the largest health care companies in the country, executed a 175,000 square foot lease in Rancho Cordova in 2017 (one of the largest in the Sacramento area last year), and is contemplating a headquarters site in North Natomas, all of which will bring much needed high paying jobs to the Sacramento region.

Aside from retail, office and industrial development, Sacramento real estate is thriving in arts and tourism as well. In addition to the new B Street Theatre at the Sofia, the City of Sacramento will soon invest about $189 million in renovations and expansions of the Sacramento Convention Center, Memorial Auditorium and the Community Center Theater, all of which will continue to bolster Sacramento as a tourism and arts destination. Adding to the enthusiasm for Sacramento is the future development of the Railyards, the largest infill project in the United States.

All of the above translates to an excitement and energy that is palpable, and promises to result in increased interest in Sacramento commercial real estate for years to come. Stewart Ward & Josephson is proud to be an integral part of serving the commercial real estate and banking community, and to have participated in the growth of this great city, by representing many of the principals in the projects previously mentioned. We congratulate all of tonight’s award recipients, and look forward to another exciting year in commercial real estate for 2018.

Getting better, cheaper results from your lawyer in real estate transactions


Lawyers are expensive, and good lawyers are very expensive. That information comes as no surprise to you, but did you know that there are techniques a client can use to reduce legal costs in commercial real estate transactions? Clients often focus on a given lawyer’s hourly rate when considering the ultimate cost of legal services, which is understandable and appropriate, but the hourly rate is only one factor – there are lots of strategies that a savvy client can employ to keep costs down while at the same time increasing the likelihood of a faster, better deal outcome.

The lawyers in our firm have a combined experience of more than 70 years in handling commercial real estate and business transactions, and what follows is some of our hard-earned wisdom about how to work with lawyers for an optimal result:


No lawyer can be an expert in all areas of the law; there’s simply too much law for any one lawyer to know these days. While a purported “general practice” attorney who handles all sorts of matters might charge a lower rate than a lawyer with lots of experience in commercial real estate transactions, it’s a false economy. A lawyer with proven, relevant experience knows which issues to focus on and which to ignore, and what the customary compromises are, whereas an inexperienced one will often obsess over the wrong issues. So, using an experienced attorney could result not only in saving hours of legal time, it will likely yield an outcome whereby the issues on which the experienced practitioner focused have positive economic consequences in the future.


Are you interested in being highly protected, or do you just want a quick review? What are the critical issues for you? Clients often say “Don’t kill the deal—but I want to be protected!” That sort of statement does not give meaningful direction to the attorney. A better approach is to identify the issues that are really critical – e.g., a financing contingency in a purchase and sale agreement or a specific “drop dead date” for delivery in a lease.


Since letters of intent are typically nonbinding, clients often gloss over the finer points of such documents, with the expectation that they can always renegotiate the unfavorable provisions later.

Our experience is that such an approach is risky, and often leads to acrimony; no one likes to be re-traded on deal points, and re-trading can undermine the trust that is essential to making transactions go smoothly. We think a better approach is to either insist that the provision be written in a manner that is acceptable to the client, or, at minimum, add language that allows some wiggle room. For example, if the tenant in a lease negotiation insists on attaching to the letter of intent a list of exclusions from operating expenses, the landlord should either take the time to surgically modify the list of exclusions, or add equivocating language such as “the attached list of exclusions remains subject to Landlord’s review” or “subject to review by Landlord’s counsel.”


It’s surprising how often clients are stingy with background information and deal terms. The best course of action is to anticipate what the lawyer will need, and provide it at the outset. An obvious and common example is amendments to leases and purchase and sale agreements. The lawyer can’t prepare the amendment unless provided with the existing documents. If the deal involves a letter of intent, or other correspondence, provide those documents to the lawyer. If you are asking the lawyer to document a deal for which there is no letter of intent, it is a good practice to take the time to think through all the business terms and provide the lawyer with a comprehensive, written outline. The alternative is that you can pay a lawyer to ask a long list of strictly factual questions such as “Who, precisely, is the Tenant?” “Are you charging a Security Deposit?” “Is there a Guarantor?” “Is it Landlord-controlled buildout, or a Tenant-controlled build-out?” No matter how smart your lawyer is, she is probably not a mindreader, so it’s most cost-effective to anticipate what facts she will need to do the best job for you.


Sophisticated clients generally know how much leverage they have in a transaction at the outset, and have a good sense of how a given issue is typically resolved. Occasionally, however, we see clients who might be inclined to stake out a position that, in our view, is overly aggressive. In that circumstance, we generally counsel them to moderate their position to bring it in line with what we would view as a customary outcome. In our experience, it’s simply more cost effective to reach a fair resolution early in the deal. For example, it’s not generally reasonable for a tenant under a long-term lease to have an early termination option. Because it would be rare landlord who would grant such an option without compensation, the most efficient approach is to offer the landlord a fair buy-out payment in consideration for the option (typically, the unamortized balance of the tenant improvements, commissions and other landlord costs, plus interest and some additional compensation, such as several months of rent).

Using the above tips likely will both reduce your legal fees and ensure a smoother transaction, resulting in a successful result for all parties.


This article does not constitute legal advice. Readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.


Tom Stewart is a partner of Stewart Ward & Josephson LLP, and has more than 30 years of experience in handling commercial real estate transactions. tstewart@swjllp.com; 916-569-8121.

Winnie Ward is a partner of Stewart Ward & Josephson LLP. She specializes in office, retail and industrial commercial leasing, as well as real property acquisition and divestment. Ms. Ward currently serves as a Director at Large on the Board of Directors for the Association of Commercial Real Estate. wward@swjllp.com; 916-569-8161.

Gregg Josephson is a partner of Stewart Ward & Josephson LLP, and specializes in corporate and finance matters, representing numerous financial institutions, borrowers, corporations and developers. gjosephson@swjllp.com; 916-569-8131.

Three departing Downey Brand partners plan commercial real estate, transaction lending practice

The Sacramento Business Journal – Apr 2, 2014

Three partners from Downey Brand LLP will launch a new firm called Stewart Ward & Josephson LLP on April 7.

Tom Stewart, Winnie Ward and Greg Josephson are among eight partners who announced plans Tuesday to leave Sacramento’s largest law firm. The other group of five lawyers, including former Downey Brand managing partner Jeff Koewler, are still making final arrangements for their new firm.

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Write it down, take a picture: It’s finally spring in Sacramento – Mar 21, 2014

If you believe the commercial real estate economy in Sacramento is finally in recovery mode, and you’re predicting much brighter days lie just ahead, you’re in good company…

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