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Statutory Update For ALL standard releases, leases, rules, regs, setlement agreements

Thumbnail image for labor-day-on-heavy-horses-2.jpgPark owners rely on enforceable settlement agreements and release clauses in a variety of circumstances in park operations. Many documents contain a "1542 Release." This includes, for example, all settlement agreements and releases.

California park owners who negotiate, propose and accept settlement agreements and other such transactional documents need to update their agreements as per the amendments effective January 1, 2019 in California law. See, Civil Code §1542.

We will want a "1542 release" because it is a "general" release which is intended to ensure that we are forever parting company and extinguishing all claims, disputes and controversies, both known and unknown. Civil Code §1542 prevents the releasing party from making future claims in the event of 'buyer's remorse' or discovery of some new dispute. Including a verbatim quote of Civil Code §1542 and a waiver of its provisions is to ensure that the releasing party consciously releases unknown claims that may be later discovered to exist.

Effective January 1, 2019, Section 1542 has been amended to read:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

The changes made to the previous Section?

A general release does not extend to claims which that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which and that if known by him or her, must would have materially affected his or her settlement with the debtor or released party.

Other than technical grammatical alterations, the amended section 1542 adds "releasing party" and "released party" alongside "creditor" and "debtor." It also changes "must have materially affected" to "would have materially affected" regarding the creditor's or releasing party's decision to settle.

Update your forms and use this new language to avoid claims that the releases in your documents no longer comply with the required language for release of all claims.

As for pre-2019 documents, the rights vested which exist antcedent to 2019 remain the existing law. The amendment reiterates and declares the adjusted language is declarative of existing law. Updating intact and extant contracts is not required to continue to be able to rely on your releases. If you update, extend, or renew, such occasions are opportunities to make all applicable updates and revisions. For example, checking on overhauling the arbitration clause remains a high priority. For example, if the mobilehome tenancy rental agreement has a clause (for arbitration as authorized by Civil Code §798.25.5) calling for sharing the costs, it is probably invalid and needs to be addressed.

Clients: Call if any questions or comments. Ask for the 2019 Annual Client Letter.

Warmest Regards,

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