Latest / The Land Development Podcast with Ryan Glick / Avoiding Costly Legal Mistakes in Real Estate Development with Niv V. Davidovich - TLP188

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Avoiding Costly Legal Mistakes in Real Estate Development with Niv V. Davidovich - TLP188 · The Land Development Podcast with Ryan Glick

• 0:00
  SPEAKER_01: Someone can break into your house while you're gone on vacation.
• 0:05
  SPEAKER_01: And then when you come and the cops come and you say, I've never rented my house before, they'll say, here's the lease.
• 0:12
  SPEAKER_01: Here's some evidence that I paid, or something like that.
• 0:14
  SPEAKER_01: That you can also make up on Adobe or ChatGPT.
• 0:18
  SPEAKER_01: And the cops will literally say, Sorry, it's a civil matter.
• 0:21
  SPEAKER_01: Like, no joke.
• 0:37
  SPEAKER_00: Hey, what's going on, everybody?
• 0:38
  SPEAKER_00: Welcome back to the land development podcast.
• 0:40
  SPEAKER_00: I am your host, Ryan Glick.
• 0:42
  SPEAKER_00: I'm excited today to be joined by Niv Davidovich.
• 0:45
  SPEAKER_00: Niv is the managing partner at Davidovich Stone Law Group.
• 0:49
  SPEAKER_00: Niv, thanks for joining me.
• 0:50
  SPEAKER_01: Hey, thanks for having me.
• 0:52
  SPEAKER_00: Yeah, I'm excited to get into some of the conversation we're going to get into today, just around uh land development law and some of your specialties in that space.
• 1:01
  SPEAKER_00: Um, before we do that, I always like to get some background on my guests, uh, you know, their experience and everything like that.
• 1:08
  SPEAKER_00: What made you want to specialize in real estate law?
• 1:12
  SPEAKER_01: My dad was uh uh an engineer, an MEP engineer.
• 1:16
  SPEAKER_01: So I sort of grew up around development and construction.
• 1:20
  SPEAKER_01: It's a long story about how I ended up being a lawyer, but when I did finally become a lawyer, I worked for a sole practitioner that did some construction and real estate matters.
• 1:32
  SPEAKER_01: So I got my feet wet there.
• 1:34
  SPEAKER_01: And then in 2009 is when I got like my first official job at like a larger firm, and I just sort of ended up in their professional liability area because they liked the fact that I had an engineering degree.
• 1:49
  SPEAKER_01: I think calling it an engineering background would be a bit of a fib because I got the degree but never actually worked as an engineer.
• 1:58
  SPEAKER_01: We'll just keep it at degree.
• 2:00
  SPEAKER_01: Um but they liked that because I could defend engineers and architects and things like that and sort of speak their language, especially with um the fact that I grew up with it.
• 2:11
  SPEAKER_01: And doing that, we were also defending real estate brokers.
• 2:15
  SPEAKER_01: So there was a lot of real estate going on in the practice.
• 2:19
  SPEAKER_01: Then I worked for a uh a smaller boutique firm that just represented public entities and private developers.
• 2:28
  SPEAKER_01: And so there was a lot of construction and the real estate going on over there.
• 2:33
  SPEAKER_01: And during that time, I also started working on some eviction matters here and there.
• 2:38
  SPEAKER_01: When I opened up my own practice, a lot of the clients that I that I was that was getting were people who were in the real estate business.
• 2:47
  SPEAKER_01: And so I decided, well, that works.
• 2:50
  SPEAKER_01: I seem to know about that, and I seem to know a lot of people in the business.
• 2:53
  SPEAKER_01: That's what we're gonna do.
• 2:55
  SPEAKER_00: Nice.
• 2:55
  SPEAKER_00: Well, you did make that move to start your own practice uh at some point in time.
• 2:59
  SPEAKER_00: And what was the driver behind that?
• 3:01
  SPEAKER_00: And did you, when you're going into business for yourself at that point, were there any you know hesitations or you know, making that jump sometimes can be a little nerve-wracking for uh, you know, entrepreneurs and everything?
• 3:12
  SPEAKER_00: What was that experience like for you?
• 3:14
  SPEAKER_01: I sort of remember it very clearly.
• 3:16
  SPEAKER_01: I sat down, I have I have uh thank God, I have five children right now, and we're we're part of an Orthodox Jewish community.
• 3:23
  SPEAKER_01: That means they have to go to private school, which is it's not like you know, crazy white shoe private school, but it's still expensive.
• 3:32
  SPEAKER_00: Yeah.
• 3:33
  SPEAKER_01: So I sat down, I looked at, okay, how much am I making now?
• 3:35
  SPEAKER_01: How much can I reasonably predict am I gonna get in raises and bonuses?
• 3:40
  SPEAKER_01: And then I made a ledger and said, all right, how much does private school cost and how much is that gonna go up every year?
• 3:46
  SPEAKER_01: And I just compare the two and said, Oh wow, I'm gonna be broke in like three years.
• 3:52
  SPEAKER_01: This doesn't work.
• 3:54
  SPEAKER_01: So I realized that I I had to, in order to be able to support my family, go out, go out on my own and have my own business.
• 4:03
  SPEAKER_01: And I think that's probably where I was headed anyway.
• 4:06
  SPEAKER_01: I think most my father had his own business, and everyone in my family mostly, uh at least the men are in business for themselves and entrepreneurial.
• 4:16
  SPEAKER_01: It's just sort of what we do.
• 4:18
  SPEAKER_01: So it was going to happen anyway.
• 4:20
  SPEAKER_01: My my wife, unlike other spouses, who was saying no, just you know, keep your job and be safe, she was pushing me out the door, saying, Go open, start, do it already.
• 4:32
  SPEAKER_01: And of course, yeah, it's very scary because you're going from you know having a steady paycheck to now having to go collect that steady paycheck, and it's not necessarily steady.
• 4:43
  SPEAKER_01: Um, but thank God I I I I would say I had it a lot easier than most because I I left my firm taking some clients with me, and I prepped it for like a year going out and really starting to get clientele.
• 5:00
  SPEAKER_01: So I was able to take a nice little base of people with me when I went out.
• 5:06
  SPEAKER_01: And um, yeah, that that got me got me through.
• 5:10
  SPEAKER_00: Nice.
• 5:10
  SPEAKER_00: Well, I think having that support on the home front is huge as well.
• 5:13
  SPEAKER_00: So I think uh yeah, having your your wife support is uh is a big deal.
• 5:16
  SPEAKER_00: And I don't I think I think sometimes that can uh be very challenging if you don't have that support if you're trying to start a business because it's not always a straight line when you're uh when you're starting and everything.
• 5:26
  SPEAKER_01: I know I I I can't imagine what it would be like if she was either neutral or not supportive, it would make it you know so much harder because you're already scared.
• 5:35
  SPEAKER_00: Right.
• 5:36
  SPEAKER_01: So yeah, and my wife is now our COO, so we work together every day and it's great.
• 5:42
  SPEAKER_00: Oh, perfect.
• 5:43
  SPEAKER_00: Well, let's talk about your company.
• 5:44
  SPEAKER_00: Uh so what what types of uh I guess what types of you know cases or customers or clients do you take on?
• 5:50
  SPEAKER_00: What do you what do you guys work on?
• 5:52
  SPEAKER_01: So we're a landlord only firm.
• 5:55
  SPEAKER_01: We only represent landlords, property managers, real estate developers, uh, that side of the equation of the real estate uh universe.
• 6:04
  SPEAKER_01: And I generally divide that up into four basic buckets.
• 6:10
  SPEAKER_01: One is the landlord tenant issues.
• 6:12
  SPEAKER_01: So we have a very large eviction practice.
• 6:15
  SPEAKER_01: So essentially uh reacquire stolen property, as I like to call it.
• 6:21
  SPEAKER_01: And uh we also have the other side of that, which is defending habitability claims.
• 6:26
  SPEAKER_01: Uh in California, especially, there's been a proliferation, a complete explosion of an increase in tenant habitability claims and other sorts of things for discrimination or harassment, all sorts of things that tenants are complaining about because there's a large number of now uh contingency and free attorneys who will represent tenants in virtually any claim they want to make up.
• 6:55
  SPEAKER_01: And they've been, I used to say falsely empowered, but it's not really falsely anymore.
• 7:00
  SPEAKER_01: They they have been given a great deal of uh of empowerment to the point where, as the representative of the landlord in Southern California, we're now the underdog.
• 7:13
  SPEAKER_01: It used to be very much the opposite, but they're they really have their hands on all the levers of power, which is really crazy.
• 7:23
  SPEAKER_00: Yeah, well, I would say as someone who's not out in that side of the country, so I'm in the Midwest, and but we see articles or news or whatever on it.
• 7:32
  SPEAKER_00: Seems like I see stories about you know squatting and just people and not even just squatting, but just people who aren't necessarily leaving when their their lease is up and things like that.
• 7:42
  SPEAKER_00: Is that really such a big problem out there in California, or do you think it gets overblown by the media quite a bit?
• 7:48
  SPEAKER_01: No, it gets underblown.
• 7:50
  SPEAKER_00: Oh, okay.
• 7:51
  SPEAKER_01: It's a much bigger problem than than is being reported.
• 7:56
  SPEAKER_01: The the media tend to be rather tenant-friendly, except for those really crazy stories about actual squatters.
• 8:06
  SPEAKER_01: But I cannot tell you how many stories we have about people who are are fraudsters.
• 8:14
  SPEAKER_01: They will provide you fake credit, fake cashiers checks that don't um come back bad until a week after they've been deposited.
• 8:27
  SPEAKER_01: And they move in and they haven't paid a dime.
• 8:30
  SPEAKER_01: And but they sometimes they don't even move in.
• 8:33
  SPEAKER_01: They immediately sublet the premises to somebody else.
• 8:36
  SPEAKER_01: And the whole thing is just a fraud.
• 8:39
  SPEAKER_01: And they they do this to uh so actually sometimes they do move in and sometimes they sublet it.
• 8:46
  SPEAKER_01: One way or another, they just do this to be able to get free rent and they know how to work this very stupid system we have where once they're in, once they have possession, we can't call the cops and say these are fraudsters.
• 9:00
  SPEAKER_01: The cops just come and say it's a civil matter, no matter what.
• 9:04
  SPEAKER_01: I've had situations where someone has a fake lease and they're actual squatters, but they have a lease.
• 9:11
  SPEAKER_01: Cops will come and say, sorry, it's a civil matter.
• 9:14
  SPEAKER_01: Someone can break into your house while you're gone on vacation.
• 9:21
  SPEAKER_01: And then when you come and the cops come and you say, I've never rented my house before, they'll say, Here's the lease.
• 9:30
  SPEAKER_01: You know, and here's some evidence that I paid, or something like that that you can also make up on Adobe or ChatGPT, and the cops will literally say, Sorry, it's a civil matter.
• 9:42
  SPEAKER_01: Like, no joke.
• 9:44
  SPEAKER_01: The house that you actually live in, that can happen to you.
• 9:49
  SPEAKER_01: And I feel like that's not the system out in Texas or Florida or anywhere else that's normal.
• 9:58
  SPEAKER_01: And I don't I don't even necessarily blame the cops.
• 10:01
  SPEAKER_01: I feel like a lot of their power has been stripped from them and they've been so used and abused between the media and the courts that for them, there's no incentive, there's no upside to actually enforcing the laws.
• 10:18
  SPEAKER_01: They can only be hurt by it.
• 10:20
  SPEAKER_01: So why would they get involved when they can just say, hey, it's a civil matter, he has a lease, you say it's not real.
• 10:26
  SPEAKER_01: I don't know.
• 10:27
  SPEAKER_00: Yeah, that's that's pretty crazy.
• 10:29
  SPEAKER_00: Yeah, that's pretty crazy that that that stuff goes on.
• 10:32
  SPEAKER_00: And just to think about that as a homeowner as well.
• 10:34
  SPEAKER_00: Uh, you know, a lot of the I know a lot of the developers who are listening in may not deal with tenants.
• 10:40
  SPEAKER_00: Uh they may just subdivide land, sell the lots to builders, and that's kind of their their business model.
• 10:45
  SPEAKER_00: But we do have we do have quite a few uh people listening in who do develop the land but also then do vertical construction and then may lease out, whether it's uh build to rent rentals, or they may lease out or um own maybe apartment buildings and things.
• 11:00
  SPEAKER_00: For for those who are in that business, are there things that as they're getting into this maybe for the first time that they should be thinking about or preparing for to make a case for someone like you stronger with some of the tenants that are coming and signing leases with them?
• 11:17
  SPEAKER_01: I don't think it's about uh making the case stronger.
• 11:21
  SPEAKER_01: I think it's about making sure that you know what the local laws are where it is you're developing.
• 11:27
  SPEAKER_01: Because some people will start developing in places where they don't understand how difficult it is to even just develop and get a permit, because there are places that are just telling developers and real estate owners we don't like you.
• 11:44
  SPEAKER_01: You're not welcome here, we don't want your business or your presence.
• 11:49
  SPEAKER_01: And strangely enough, those are all the places that need homes and housing the most.
• 11:56
  SPEAKER_01: So uh it's it's it's very ironic and just you know, endemic of the stupidity that is going on in the government in places like that.
• 12:05
  SPEAKER_01: But if you don't know what all the rules are at each stage of the game, in other words, what are the rules for getting this entitled through planning and zoning?
• 12:14
  SPEAKER_01: Do I have to worry about anything in this particular jurisdiction?
• 12:18
  SPEAKER_01: Um, what are the rules for then getting a building permit?
• 12:22
  SPEAKER_01: Do you are there other departments who are going to be involved?
• 12:26
  SPEAKER_01: Rather than just following the building code, other than that, what else do I have to do?
• 12:31
  SPEAKER_01: In LA, it's impossible.
• 12:33
  SPEAKER_01: And people who are people who are actual developers are just saying, I'm not going to build anything else in this stupid city because they're telling us they don't want it.
• 12:44
  SPEAKER_01: Meanwhile, the state is going around telling everybody, you need to build more housing.
• 12:48
  SPEAKER_01: And the city's saying, Yeah, we're gonna do it, and then turning around to the people who build and say, not too fast.
• 12:54
  SPEAKER_01: So it's it's it's incredibly stupid.
• 12:57
  SPEAKER_01: Uh, I'll I'll give you some examples of just why you shouldn't do this in California.
• 13:01
  SPEAKER_01: So in California, they passed something literally called the Housing Crisis Act in 2020, theoretically, in order to make it easier to develop more housing.
• 13:15
  SPEAKER_01: But it's really just to develop more affordable housing.
• 13:19
  SPEAKER_01: But let's put that to the side for a second.
• 13:21
  SPEAKER_01: In 2024, they update it and they say, all right, if you're going to demolish any protected units, and protected units means any any unit that's already rent control or any unit that had someone who lived in it in any time in the past five years who's low income.
• 13:39
  SPEAKER_01: Number one, how do you know that?
• 13:42
  SPEAKER_01: How do you know how much income your guy was making other than what he put on the actual application?
• 13:48
  SPEAKER_01: What if that changed during the time?
• 13:50
  SPEAKER_01: What if I'm not the one who's owned it for the last five years?
• 13:53
  SPEAKER_01: What am I supposed to do?
• 13:54
  SPEAKER_01: Go out and get people's tax returns?
• 13:56
  SPEAKER_01: And that's what the city said?
• 13:57
  SPEAKER_01: Yeah, go and get their tax returns.
• 13:59
  SPEAKER_01: Like, oh sure, no problem.
• 14:00
  SPEAKER_01: I'll just go and talk to a tenant who lived here four years ago and ask them for one of the most private documents that they own and they'll just give it to me.
• 14:08
  SPEAKER_01: Yeah, of course.
• 14:10
  SPEAKER_01: I mean, moronic.
• 14:12
  SPEAKER_01: Highly moronic.
• 14:14
  SPEAKER_01: So that's number one, it was virtually impossible to figure out whether or not a unit was protected.
• 14:20
  SPEAKER_01: Second, if you're gonna demolish an old garbage protected unit, you have to give back an affordable unit.
• 14:26
  SPEAKER_01: And worse, and worse, they say if you're gonna demolish uh one of these, you have to pay relocation fees the same as a public entity would pay to demolish units.
• 14:41
  SPEAKER_01: And so the relocation fees went from a local Los Angeles of right now it's 11 to 27 to upwards of 80 to 100,000 or 110,000 per unit.
• 14:55
  SPEAKER_01: So you want to demolish 10 units?
• 14:58
  SPEAKER_01: No problem.
• 14:58
  SPEAKER_01: You got to put an extra million dollars on your pro forma.
• 15:03
  SPEAKER_01: Who's building that building?
• 15:05
  SPEAKER_01: Nobody.
• 15:07
  SPEAKER_01: And this is the Housing Crisis Act.
• 15:09
  SPEAKER_01: Like you're making the crisis worse.
• 15:12
  SPEAKER_00: Isn't it?
• 15:13
  SPEAKER_00: It's it's kind of amazing.
• 15:14
  SPEAKER_00: I feel like I was just talking uh to somebody earlier this week.
• 15:17
  SPEAKER_00: We were talking about the involvement of you know, of the state or the municipality or county or whoever gets involved in making some of these uh these laws and everything.
• 15:28
  SPEAKER_00: And it feels like the more red tape that goes up, the more difficult it becomes and the bigger the problem becomes with housing.
• 15:34
  SPEAKER_00: And, you know, he was making the case of you know, stripping back some of this, giving freedom to the builders to build what the market's asking for.
• 15:42
  SPEAKER_00: Um, but if that's done, especially at the state level, then a lot of those state legislators are, you know, that they get their power from being able to control a lot of that.
• 15:51
  SPEAKER_00: So I wonder, what do you think it is that's getting so many of them to hold on to the idea that the solution to housing affordability is the state?
• 15:59
  SPEAKER_01: Very simple.
• 16:00
  SPEAKER_01: I'll tell you.
• 16:03
  SPEAKER_01: And I understand why people aren't believing the DSA.
• 16:08
  SPEAKER_01: I mean, every everyone I think now is starting to pick up nationally what's going on with the DSA.
• 16:14
  SPEAKER_01: But uh we've been dealing with this for years.
• 16:20
  SPEAKER_01: The Democratic Socialists of America are neither democratic nor socialists nor American.
• 16:26
  SPEAKER_01: They are communists, they're straight up communists, and their goal is to convert all of the United States, not just the places they live, but the entire United States into their communist utopia.
• 16:38
  SPEAKER_01: Because, you know, it's a new idea that's never been tried before.
• 16:42
  SPEAKER_01: So they think they're gonna get it right.
• 16:46
  SPEAKER_01: Their idea is to drive the properties down in value so much that the only buyer left is the government and they can come and take it for 10 cents on the dollar.
• 16:57
  SPEAKER_01: That's of course if they don't just abolish the constitution altogether first and just come steal the properties for free.
• 17:05
  SPEAKER_01: They say it.
• 17:07
  SPEAKER_01: They say we are going to seize the means of production.
• 17:12
  SPEAKER_01: That doesn't just mean they're going to take farms and factories.
• 17:16
  SPEAKER_01: That means they go out and take apartment buildings and they think they can run it better.
• 17:22
  SPEAKER_01: They even pass laws now that say, in, for example, in LA County, in Chicago, they pass laws that say before you sell your apartment building, you have to first offer it to these community land trusts and the tenants themselves.
• 17:38
  SPEAKER_01: Because the tenants, you know, they're all in the real estate business and they know how to manage the building that they live in.
• 17:47
  SPEAKER_01: Crazy.
• 17:49
  SPEAKER_01: First of all, where are they gonna get any money?
• 17:52
  SPEAKER_01: Second, uh, the land trusts also never have any money.
• 17:56
  SPEAKER_01: Their terms for buying something every time I've ever dealt with them is oh, we're gonna put down like$5,000 and we want an escrow period of three and a half years while we go and just try and cobble together the money.
• 18:08
  SPEAKER_01: Just complete insanity.
• 18:10
  SPEAKER_01: I don't understand how they buy anything.
• 18:13
  SPEAKER_01: But forget them.
• 18:14
  SPEAKER_01: Now they're saying the tenants are just gonna get together and buy their own building.
• 18:18
  SPEAKER_01: Like, even if they could, even if they could, do you know how hard it is to manage a building for one person who's in control and can make decisions?
• 18:28
  SPEAKER_01: Now you're gonna take a 10-unit building and hand it over to the 10 tenants who live there so that they can make decisions what by committee?
• 18:38
  SPEAKER_01: And what happens by the way, when one of them doesn't pay the rent?
• 18:42
  SPEAKER_01: The other nine have to evict that guy?
• 18:46
  SPEAKER_01: It's no one's thought this through.
• 18:49
  SPEAKER_01: It's just all fantasy, nice sounding utopia, complete BS.
• 18:58
  SPEAKER_01: And but they think that they can do it better.
• 19:01
  SPEAKER_01: It's it's it's it's a just a bare power play.
• 19:06
  SPEAKER_01: We don't like people who we perceive as being rich.
• 19:10
  SPEAKER_01: By the way, just because you're a developer or you own real estate doesn't mean you're rich.
• 19:16
  SPEAKER_01: They think everyone who owns a four-unit apartment building is Blackstone.
• 19:21
  SPEAKER_01: It's not like that.
• 19:23
  SPEAKER_01: These are just regular mom and pop people.
• 19:25
  SPEAKER_01: Most of the properties are owned by mom and pop people.
• 19:28
  SPEAKER_01: The only reason a lot of those big guys can come in is because you've made it so difficult to be a landlord or developer that the only people who can absorb the risk and divide it out among a lot of different properties are those big guys.
• 19:42
  SPEAKER_01: You're pushing the properties into their hands.
• 19:46
  SPEAKER_01: Everything they say they want to accomplish when they what they do is the exact opposite.
• 19:53
  SPEAKER_01: It's it's preposterous.
• 19:55
  SPEAKER_01: And then there are places, even within California, um, where you have just pockets of normalcy.
• 20:02
  SPEAKER_01: Orange County, you know, Hermosa Beach has a mayor who is a developer, and he wants to see his community thrive.
• 20:10
  SPEAKER_01: So he made it super easy to get permits.
• 20:14
  SPEAKER_01: He said, You want to get a faster permit?
• 20:15
  SPEAKER_01: No problem.
• 20:16
  SPEAKER_01: Charge extra.
• 20:17
  SPEAKER_01: There's an express lane.
• 20:18
  SPEAKER_01: Everyone took the express lane.
• 20:21
  SPEAKER_01: So now the city makes money.
• 20:22
  SPEAKER_01: The developer's happy, he gets his permit faster.
• 20:25
  SPEAKER_01: More things are built in the city, and the city prospers.
• 20:28
  SPEAKER_01: Everybody's happy.
• 20:29
  SPEAKER_01: It's not complicated.
• 20:30
  SPEAKER_01: It really isn't.
• 20:32
  SPEAKER_00: Yeah, well, it makes me wonder, too, you know, with a lot of the cities that have these problems but continue to push the red tape and all these requirements and everything, it's not gonna get any better.
• 20:45
  SPEAKER_00: I mean, it's gonna get worse before it gets better in a lot of those places, it feels like.
• 20:48
  SPEAKER_00: And then to your point, you talk about Orange County and in a lot of parts of the country, right?
• 20:52
  SPEAKER_00: You you end up getting the kind of the suburban area around the metros that have a lot of the growth and have have more of the municipalities that are very growth mindset.
• 21:02
  SPEAKER_00: And it feels like we're gonna start to see, and what we have been seeing, more people moving outward from the city center.
• 21:08
  SPEAKER_00: Do you think that's the path where this goes?
• 21:10
  SPEAKER_00: And I mean, what's the breaking point for some of these big cities?
• 21:13
  SPEAKER_00: Like you talk about LA?
• 21:14
  SPEAKER_01: Something happens, uh, for example, um, you know, like what happened in San Francisco, where it got really disgusting.
• 21:25
  SPEAKER_01: I'm talking about needles on the sidewalk, human feces that you have to maneuver around when you're just walking on the street with your kids.
• 21:36
  SPEAKER_01: And it got to the point where all the uh the tech guys decided we didn't pay all of this money to move and start our entire businesses in this area just to have to essentially live in the ghetto that used to be one of the nicest cities.
• 21:53
  SPEAKER_01: So they paid a stupid amount of money to support.
• 22:00
  SPEAKER_01: Their candidates in the election who were moderate.
• 22:03
  SPEAKER_01: It's not like you have to go out and turn the entire place 180 degrees.
• 22:09
  SPEAKER_01: You just have to elect regular, normal people who believe in the basic tenets of what our country is about.
• 22:18
  SPEAKER_01: A capitalistic market economy and a city that takes care of city-level problems.
• 22:28
  SPEAKER_01: You know, doesn't try to make a big stink out of arresting foreign dignitaries using the local police department.
• 22:35
  SPEAKER_00: Well, what uh I I want to um I think this is going to be a really interesting thing to follow.
• 22:40
  SPEAKER_00: Like the more we we talk about this and we kind of see how a lot of this evolves in some of these different cities and the different areas, I feel like there's there's more people within the development community that are getting more involved in trying to raise this up in their areas.
• 22:54
  SPEAKER_00: Um, because obviously each of us, a lot of the a lot of the change is going to happen in our local markets where we we operate.
• 23:00
  SPEAKER_00: So um making sure people are getting involved and doing what they can to help, you know, some of that change, whether it's city level or state level, but um shifting a little bit into some more uh some of some, I guess, topics that are more specific to developers as they're getting into projects and and doing some project work.
• 23:19
  SPEAKER_00: You know, I've had I've had a few uh attorneys on the show before, and we talk about how you know developers need to get a attorney involved in their project at a certain point in time.
• 23:31
  SPEAKER_00: You know, from your perspective with that, when do you think it makes the most sense for someone to bring an attorney in?
• 23:36
  SPEAKER_00: Because I I feel like funny enough, I feel like you know, developers seem to have a love-hate relationship with with lawyers.
• 23:43
  SPEAKER_00: And uh, you know, it's it's it's you know, I from having some developers on the show, right?
• 23:48
  SPEAKER_00: They'll say it's a love-hate relationship and everything, but I don't think it has to be that way.
• 23:53
  SPEAKER_00: And so from your from your perspective, when does it make the most sense for a developer to bring a lawyer into the mix?
• 23:59
  SPEAKER_00: Day zero.
• 24:01
  SPEAKER_01: And the reason is for all everything we just said, you need to find out all right, can I even do this thing?
• 24:10
  SPEAKER_01: Or are there hidden pitfalls?
• 24:13
  SPEAKER_01: If you don't do that before you start, you're gonna find out about it in the middle of the project.
• 24:20
  SPEAKER_01: And you're not gonna like the results most of the time when you find out about things in the middle of the project.
• 24:28
  SPEAKER_01: And you get delays upon delays upon delays.
• 24:32
  SPEAKER_01: Look, I'm sure that there are places where you don't necessarily need one, where they just want you to build anything, you know, please just come build something.
• 24:45
  SPEAKER_01: We'll give you a permit in a week.
• 24:47
  SPEAKER_01: I'm I'm sure that exists somewhere, but it doesn't exist, and it doesn't exist in the places that people really want to build where there's lots of people and lots of opportunity.
• 24:58
  SPEAKER_01: So you need to find out from a legal perspective, not just from the architect perspective.
• 25:02
  SPEAKER_01: Because the architect can tell you, well, here's what the building codes say, and here's what the local codes say, and here's how much density I can have, and here's how high I can go, and all the other stuff.
• 25:12
  SPEAKER_01: I think an architect is very good at telling you all of that.
• 25:17
  SPEAKER_01: But in terms of what are all the other requirements that I'm going to need to uh execute, and what other hoops am I gonna have to jump through in order to get this to the finish line?
• 25:30
  SPEAKER_01: Really, you do need an attorney for that.
• 25:32
  SPEAKER_01: And you might need more than one attorney.
• 25:34
  SPEAKER_01: You might need someone who's really a land use attorney, and then you might need uh an if if you're gonna build multifamily, you need a landlord tenant attorney who's going to help you navigate through through all of those issues.
• 25:47
  SPEAKER_01: Because it's going to have a direct effect on A, what you can build, B, what you can expect to make, and C, what it's going to cost and how long it's going to take for you to accomplish all of those goals.
• 26:02
  SPEAKER_00: What's the what are some of the things that developers should look for in an attorney?
• 26:06
  SPEAKER_00: You know, if you're, if they're looking, I mean, there's there's options out there, right?
• 26:10
  SPEAKER_00: So if they're going and they're looking for somebody, what are some of those questions or things that they should be looking into for the attorney before they actually choose one?
• 26:17
  SPEAKER_01: Number one, don't this don't necessarily be fooled by price in in either direction.
• 26:24
  SPEAKER_01: Some people are really, really cost sensitive, overly cost sensitive.
• 26:29
  SPEAKER_01: So they're just they're just find whoever's the cheapest guy and I'll go to that guy.
• 26:33
  SPEAKER_01: That's not necessarily a good route to go because you get what you pay for.
• 26:38
  SPEAKER_01: On the other hand, some people think, okay, I'll just go to the firm that's the biggest and the most expensive.
• 26:44
  SPEAKER_01: I'm sure they know what they're doing.
• 26:46
  SPEAKER_01: That's also not true.
• 26:48
  SPEAKER_01: So don't be fooled by price, either high or low.
• 26:52
  SPEAKER_01: Price really doesn't have much to do with it.
• 26:55
  SPEAKER_01: Second, I think it's good to go to someone who has a more well-rounded knowledge base.
• 27:02
  SPEAKER_01: So in our firm, we deal with all of the different landlord issues.
• 27:08
  SPEAKER_01: We're not just an eviction place, we're not just a real estate place, we're not just a transactions place.
• 27:14
  SPEAKER_01: So to finish the answer from before, we do the landlord tenant, but we also do regular real estate law, so buyer and seller disputes and disputes with brokers and things like that.
• 27:23
  SPEAKER_01: And we also deal with construction.
• 27:25
  SPEAKER_01: And then we also deal in administrative issues.
• 27:29
  SPEAKER_01: So we're very used to dealing with issues that straddle more than one area of law, and we can be the counsel for that.
• 27:42
  SPEAKER_01: I'm not necessarily saying that my office is uh knowledgeable in all the areas of land use that a developer might need, but we know enough about it where we can give you a more well-rounded answer with regard to maybe the landlord tenant or other real estate issues that you might come to us with.
• 28:03
  SPEAKER_01: And it's easier for us to talk to the more specialized attorneys in land use or entitlements because we already understand what they're talking about.
• 28:15
  SPEAKER_01: So that's that's one thing I would say.
• 28:18
  SPEAKER_01: And then another is you find someone who understands your actual goals.
• 28:24
  SPEAKER_01: A lot of attorneys are looking to give you legalistic answers, they're trying to tell you only about the theory and this is everything you're not allowed to do, versus giving you practical solutions if they exist.
• 28:38
  SPEAKER_01: Sometimes they don't.
• 28:39
  SPEAKER_01: And sometimes you what you really want is for someone to tell you, you can't do this.
• 28:44
  SPEAKER_01: We looked into it.
• 28:45
  SPEAKER_01: This is not possible.
• 28:46
  SPEAKER_01: Stop wasting your time.
• 28:47
  SPEAKER_01: But but that's very easy to say.
• 28:50
  SPEAKER_01: I think the idea is to go to someone who has a more business mindset and is trying to give you a business answer rather than a legal answer.
• 29:01
  SPEAKER_01: So, for example, sometimes, at least with people who have a little bit higher of a tolerance for risk, we look at questions and say, I'm not gonna ask, are we allowed to do this or do I have to do this?
• 29:16
  SPEAKER_01: We're gonna ask, how much trouble will we get into if we just don't do this or do this thing that we want to do?
• 29:23
  SPEAKER_01: And if the answer is not really much, then we'll just go ahead and do what we want.
• 29:30
  SPEAKER_01: I remember my dad used to tell me this story about like one developer who uh he needed he needed to build something or he needed to get more sidewalk space or something like that.
• 29:40
  SPEAKER_01: And there was a tree, a protected tree blocking the way.
• 29:44
  SPEAKER_01: And the architects were sitting there trying to figure out how do we get around this tree that's you know, blah, blah, blah, blah, blah.
• 29:49
  SPEAKER_01: And you know, and they came up with a plan, and the developer's like, how much is it gonna cost to get around this tree?
• 29:57
  SPEAKER_01: Like, well, it's gonna increase the cost by$500,000.
• 30:01
  SPEAKER_01: He's like, All right, what's the fine for cutting down the tree?
• 30:06
  SPEAKER_01: $10,000.
• 30:07
  SPEAKER_01: He said, Cut the damn tree.
• 30:11
  SPEAKER_01: And no one even thought of that.
• 30:13
  SPEAKER_01: They were just looking at the rules and not thinking about what's the what's the practical solution here.
• 30:20
  SPEAKER_01: If it's$10,000 to cut the tree, you just cut the tree and go ahead and do your job.
• 30:25
  SPEAKER_01: So I try to look at things more from that angle.
• 30:31
  SPEAKER_01: And I I look at litigation that way, I look at development that way, I look at transactions that way.
• 30:37
  SPEAKER_01: Because no one is in this, no one's in this business to try and get real good at development law.
• 30:44
  SPEAKER_01: They're in it to make money.
• 30:46
  SPEAKER_01: So as a lawyer, our council has to be to support that goal, not to support the the goal of wanting to know the law real well.
• 30:57
  SPEAKER_00: How important do you think it is that the council is local to where your project is going to be?
• 31:03
  SPEAKER_01: Very important.
• 31:05
  SPEAKER_01: Very, very important.
• 31:07
  SPEAKER_01: Especially when it comes to interstate things.
• 31:09
  SPEAKER_01: I know a lot of real estate attorneys work interstate deals, and you really have to understand what is going on on the local level, especially when you get to places like LA County.
• 31:22
  SPEAKER_01: So, for example, LA County has 88 cities in it.
• 31:26
  SPEAKER_01: There are about 20 cities and growing that each have their own little rules.
• 31:34
  SPEAKER_01: And you have to know the rules for that little city either when it comes to development or when it comes to being a landlord.
• 31:43
  SPEAKER_01: So when you're a regular real estate attorney, you really just have to know the rules, maybe in your state, maybe in your one or two big cities, if you're in a smaller state.
• 31:55
  SPEAKER_01: Here, it's California's like its own country.
• 31:58
  SPEAKER_01: Even the county is like its own country.
• 32:00
  SPEAKER_01: And then there are 58 counties in the state of California.
• 32:04
  SPEAKER_01: So there are so many local rules.
• 32:08
  SPEAKER_01: And it's gonna be difficult for some attorney in Iowa to start getting involved in this because it'll make your head spin.
• 32:17
  SPEAKER_00: Well, how about how about from your perspective, when you're looking for a good uh client, what does a good client look like?
• 32:24
  SPEAKER_00: So that way, you know, developers out there who are, you know, they're obviously looking for somebody who's gonna be a good attorney to represent them, but also, you know, they want to make sure that they're a good partner to the attorney.
• 32:34
  SPEAKER_00: What does that look like from your perspective?
• 32:36
  SPEAKER_01: Number one, it has to be someone who values what we do.
• 32:40
  SPEAKER_01: Kind of like you said, the love-hate relationship.
• 32:43
  SPEAKER_01: And I find that some people in the real estate business uh are, again, overly price conscious.
• 32:52
  SPEAKER_01: Where they really don't value what it is that a lawyer brings to the table.
• 32:58
  SPEAKER_01: And so they they immediately they go into the relationship thinking this lawyer is gonna try and screw me.
• 33:04
  SPEAKER_01: Because that's that's everything that lawyers do.
• 33:06
  SPEAKER_01: It's it's not true.
• 33:08
  SPEAKER_01: I'm not I'm not saying it's never true, but it's not always true.
• 33:11
  SPEAKER_01: And the people who value our service are the ones that really get the best out of it.
• 33:17
  SPEAKER_01: Because if we feel like our our services are not valued, then we're not gonna put in the same effort.
• 33:24
  SPEAKER_01: And what ends up happening is the person generally doesn't want to pay their bill, and then it just costs a lot more to replace your attorney than it does to just work with the one you have.
• 33:36
  SPEAKER_01: So that's one issue.
• 33:38
  SPEAKER_01: A second issue is you really want someone who is also not making emotional decisions.
• 33:47
  SPEAKER_01: I I spend half of my time, if not more, being a psychologist and trying to bring a conversation out of the out of the realm of emotion and back into the realm of logic and rationality.
• 34:04
  SPEAKER_01: It's it it and I'm not saying there's no room for intuition.
• 34:10
  SPEAKER_01: It's very, very different.
• 34:12
  SPEAKER_01: Intuition and emotions are very different things.
• 34:16
  SPEAKER_01: If you have a good real estate intuition, you might look at a deal and be able to feel, but from an intuitive perspective, that this is a good deal, I'm seeing something that other people don't see.
• 34:28
  SPEAKER_01: That's intuition.
• 34:30
  SPEAKER_01: That's sort of your subconscious brain telling you, based on your experiences, that this is this is a good deal or a bad deal.
• 34:37
  SPEAKER_01: That's very valuable and that's not to be uh underestimated versus emotional decisions.
• 34:44
  SPEAKER_01: Emotional decisions are I'm going to not settle this case because I'm angry at the other side, or I'm going to be uh or I'm frustrated with how the city is reacting to this particular thing that I'm asking for.
• 35:02
  SPEAKER_01: If you're making decisions based on those kinds of feelings, which are very much conscious but completely irrational, you're gonna make bad decisions.
• 35:12
  SPEAKER_01: And so my favorite clients to work with are the people who I can just tell them straight up, look, this is the best thing for your bottom line.
• 35:19
  SPEAKER_01: And they say, okay, one plus one plus one is three.
• 35:22
  SPEAKER_01: That makes sense.
• 35:23
  SPEAKER_01: Let's do that.
• 35:25
  SPEAKER_01: Done.
• 35:26
  SPEAKER_01: Even if they are frustrated, they know how to compartmentalize their feelings from making sure that they keep their goals, their financial goals, front and center.
• 35:37
  SPEAKER_00: Yeah, makes a lot of sense for sure.
• 35:39
  SPEAKER_00: Well, looking at the time, we're at about 36 minutes, so we should go ahead and shift into the last segment, which is a lightning round.
• 35:45
  SPEAKER_00: So, five questions for you here.
• 35:47
  SPEAKER_00: Uh, first one, what's one thing you wish every developer understood about the legal side of a project?
• 35:53
  SPEAKER_01: It's going to take longer and cost more than you thought it was.
• 35:58
  SPEAKER_00: All right, second one.
• 35:59
  SPEAKER_00: What's the most common mistake you see property owners make before calling an attorney?
• 36:03
  SPEAKER_01: Is buying the property, spending money on the architect, developing all the plans, and then calling the attorney and say, okay, well, we almost have our permits.
• 36:13
  SPEAKER_01: Now what?
• 36:14
  SPEAKER_00: So not basically like you said earlier, not calling on day zero, calling too far into the to the project.
• 36:21
  SPEAKER_01: And then finding out from the building department, oh, they want us to do a housing clearance.
• 36:25
  SPEAKER_01: How do we get that?
• 36:25
  SPEAKER_01: It's like, well, strap in.
• 36:28
  SPEAKER_00: Yeah.
• 36:29
  SPEAKER_00: All right, third one.
• 36:30
  SPEAKER_00: What's a development topic you think people underestimate?
• 36:35
  SPEAKER_01: Same issue.
• 36:36
  SPEAKER_01: They're they're not understanding how the other parts of the local government interact with the building department.
• 36:43
  SPEAKER_01: I think developers are hyper-focused on the planning and zoning and the building department, not understanding that in crazy places like Los Angeles, those those departments don't operate independently.
• 36:57
  SPEAKER_01: They have to now, you have to now coordinate your plans with 17 other departments, none of whom like the other department.
• 37:05
  SPEAKER_01: Every the department head of every department in the city of LA thinks they are the mayor.
• 37:11
  SPEAKER_01: And they don't like the other department heads because those guys think they're the mayor.
• 37:17
  SPEAKER_01: And none of them like the actual mayor.
• 37:21
  SPEAKER_01: So they're all fighting with each other, and none of them actually know any of the rules.
• 37:26
  SPEAKER_00: I feel like we could do an entire episode just on that topic.
• 37:31
  SPEAKER_00: Oh man.
• 37:32
  SPEAKER_00: All right, fourth one.
• 37:33
  SPEAKER_00: What's one quality that makes a developer easy to work with?
• 37:36
  SPEAKER_00: This is a little overlap from what we just talked about, but I'll leave it out there anyway.
• 37:40
  SPEAKER_01: Yeah, the the the quality is just to be logical and rational.
• 37:45
  SPEAKER_01: It's it's I cannot overestimate how valuable this ability is.
• 37:52
  SPEAKER_01: Because every single day I get calls you know from my lawyers in court.
• 37:59
  SPEAKER_01: Um and I hear I how many times do I hear this lie?
• 38:04
  SPEAKER_01: I'd rather give you the money than give it to him.
• 38:08
  SPEAKER_01: And I just straight up tell people, no, you don't.
• 38:13
  SPEAKER_01: That's not true.
• 38:14
  SPEAKER_01: How do I know?
• 38:15
  SPEAKER_01: Because I send the bills afterwards, and I'm like, well, we didn't know it was gonna cost this much.
• 38:18
  SPEAKER_01: I'm like, well, I could have settled it for you for half of this.
• 38:22
  SPEAKER_01: You said you'd rather give me the money, but it's a lie.
• 38:25
  SPEAKER_01: They don't really want to give me the money.
• 38:26
  SPEAKER_01: It's just something they say to make themselves feel good.
• 38:30
  SPEAKER_01: So someone who can just do math, it's really that simple.
• 38:35
  SPEAKER_00: All right, last one.
• 38:37
  SPEAKER_00: What's one lesson that you've learned from a difficult uh case that still sticks with you today?
• 38:43
  SPEAKER_00: Collect higher retainers.
• 38:45
  SPEAKER_01: It's it's it's just very difficult sometimes to get people to understand why what we do takes a long time, takes a lot of expertise, and costs what it costs.
• 39:00
  SPEAKER_01: And people don't understand that as lawyers, we're not selling you a product, we're selling you our time and our knowledge.
• 39:06
  SPEAKER_01: We can't guarantee you any particular results.
• 39:09
  SPEAKER_01: But a lot of people think that they're coming to a lawyer to buy a product, which is a result.
• 39:14
  SPEAKER_01: But it doesn't work like that.
• 39:16
  SPEAKER_01: We're not selling cars, we're not selling fruit, we're not selling you real estate.
• 39:22
  SPEAKER_01: We're just selling you our time.
• 39:23
  SPEAKER_01: And sometimes it doesn't work out.
• 39:26
  SPEAKER_01: You know, it would be like hiring a baseball player and then saying, Well, you didn't win the World Series, so we're not paying it at all.
• 39:33
  SPEAKER_00: Well, awesome.
• 39:34
  SPEAKER_00: Uh Nib, what's the best way for people listening in to connect with you and learn more about your company?
• 39:41
  SPEAKER_01: So we have a website, Davidovichlaw.com.
• 39:43
  SPEAKER_01: It's D-A-V-I-D-O-V-I-C-H L A W dot com.
• 39:48
  SPEAKER_01: Feel free to call our offices, 818-661-2420.
• 39:53
  SPEAKER_01: And you can reach me by email directly at Nivniv at Davidovich Law.com.
• 39:59
  SPEAKER_01: Happy to talk to anyone who has any needs in Southern California for litigation, but for transactional, we we actually work nationally.
• 40:07
  SPEAKER_00: Perfect.
• 40:08
  SPEAKER_00: Well, guys, if you look down in the description for this episode, you'll see a link there to the show notes page.
• 40:12
  SPEAKER_00: And on the show notes page will be those links that were uh just mentioned by Niv there.
• 40:17
  SPEAKER_00: Niv, I really appreciate you hopping on here and uh talking through the what it looks like in in Southern California from a legal perspective with development and tenant rights and uh all of that.
• 40:26
  SPEAKER_00: So uh super interesting.
• 40:28
  SPEAKER_00: And I'm I'm sure we could talk about this for hours, but uh oh yes.
• 40:31
  SPEAKER_00: Yes, yes, but better wrap up here.
• 40:32
  SPEAKER_00: So really appreciate it.
• 40:34
  SPEAKER_01: All right, thanks so much for having me.
• 40:35
  SPEAKER_01: It was a lot of fun.
• 40:36
  SPEAKER_00: You bet.
• 40:36
  SPEAKER_00: All right, guys, that's all for this episode.
• 40:38
  SPEAKER_00: If you're not already subscribed, please click that button.
• 40:41
  SPEAKER_00: Otherwise, we'll talk to you next week.