SB 223*
Regulation of Real Estate Appraisers
Additional prohibitions have been imposed on real estate appraisers when involved in transactions where the appraiser’s compensation depends on the valuation of the real estate. All persons involved in a real estate transaction, under the new law, are prohibited from unduly influencing real estate appraisers.
Under current law, the Office of Real Estate Appraisers governs licensing and certification of real estate appraisers. Current law prohibits the compensation of the appraiser being based on the commission generated on:
- Sales;
- Purchases; or
- Transfers.
Under the new law, the compensation of the appraiser cannot be based on the VALUATION of the property for the following types of transactions:
- Sales;
- Purchases;
- Transfers;
- Financing; or
- Development.
Furthermore, the new law prohibits parties with an interest in the real estate transaction from improperly influencing a real estate appraiser. Certain requests are deemed not to be improper influencing:
- asking to CONSIDER additional, appropriate PROPERTY INFORMATION;
- requesting further DETAILS or EXPLANATION of the determined VALUE; or
- inquiring into CORRECTING ERRORS.
This law amends California Business & Professions Code § 11323, and adds California Civil Code § 1090.5. The provisions of this new law went into effect on October 5, 2007.
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AB 763*
Conversion From Rental Property to Condo
This new law changes the penalties when certain notices are not provided to tenants when converting properties into common interest developments.
Under current law, any governmental agency is prohibited from approving a final map for a subdivision under the Subdivision Map Act when residential real property is being converted into a common interest development (condos) unless the governmental agency finds that the developer has complied with certain notice requirements to tenants.
Under the new law, if the developer does not provide notice to any prospective tenant, after the approval of the final map, that the property may subsequently be sold as a separate unit, then the developer must pay each prospective tenant who actually became a tenant the following:
- Actual moving expenses not to exceed $1,100; and
- the first month’s rent on the tenant’s new rental unit immediately after the tenant moves, not to exceed $1,100.
However, the governmental agency cannot deny the conversion based on the developer not giving the prospective tenant this notice.
Certain other technical changes have been made regarding findings required by the legislative body to approve the tentative and final map.
This law amends California Government Code §§ 66427.1, 66452.5, 66452.9, 66459 and 66499.37, and adds California Government Code §§ 66452.11 and 66452.12. The provisions of this new law become effective on January 1, 2008.
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AB 691*
Common Interest Development Managers
This new law modifies the requirements to be called a “certified common interest development manager” and also extends the regulation of such managers from January 1, 2008 until January 1, 2012.
Under current law, common interest developments are governed by the Davis-Stirling Act (California Civil Code §§ 1350 et seq.). Current law requires common interest development (CID) managers to meet certain requirements in order to be a “certified CID manager”. In addition, all CID managers are required to provide certain information annually to the board of directors of the CID:
- whether or not the manager is a “CERTIFIED CID manager”;
- the name, address and telephone number of the PROFESSIONAL ASSOCIATION that certified the manager;
- the LOCATION of the manager’s PRIMARY OFFICE;
- whether the fidelity INSURANCE of the manager covers the current year’s OPERATING & RESERVE FUNDS; and
- whether the manager has a REAL ESTATE LICENSE.
All of these provisions were set to expire on January 1, 2008.
Under the new law, these provisions relating to CID managers remain effective until January 1, 2012. In addition, qualifications as a “certified CID manager” after July 1, 2003 include the additional optional education elements (which come under general management skills):
- management and administration of architectural standards;
- professional conduct and standards of practice; and
- conflict avoidance and dispute resolution mechanisms.
This law amends California Business & Professions Code §§ 11500, 11501, 11502, 11502.5, 11504, 11505 and 11506 and become effective on January 1, 2008.
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SB 528*
Agenda for HOA Meetings
Common interest developments that are managed by an association are required to have open meetings which any member of the common interest development may attend. Certain items (such as contracts with third party vendors, litigation issues, and discipline of current members) can be discussed in closed executive sessions. The association is required to provide a notice for the meeting indicating the time and place at least four days in advance of the meeting.
Under the new law, the association meeting notices must also include an agenda for the meeting. Generally, the association can discuss only those items on the agenda at its meetings, unless the meeting is an emergency meeting.
The exceptions to this limitation are as follows:
- an OWNER in the common interest development who is NOT A BOARD MEMBER speaking on items not on the agenda;.
- board members, or an agent of the board (e.g. a managing agent) from ADDRESSING QUESTIONS or ISSUES RAISED BY AN OWNER (non-board member);
- board members PROVIDING RESOURCES FOR FACTUAL INFORMATION to agents of the board;
- board members REQUESTING A REPORT AT A FUTURE MEETING from an agent of the board;
- board members directing an agent of the board to perform ADMINISTRATIVE TASKS as part of common interest development requirements;
- upon VOTE by a TWO-THIRDS MAJORITY of the board that the issue is an EMERGENCY ISSUE which could not have been included in the agenda.
This law amends California Civil Code § 1363.05 and goes into effect on January 1, 2008.
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AB 243*
Disciplinary Actions Against Contractors
Under current law, contractors licensed under the Contractors’ State License Law are subject to discipline by the Contractors’ State License Board. The provisions provide for certain timeframes for the Board to take disciplinary actions:
- 4 YEARS for patent acts or omissions by contractors;
- 10 YEARS for latent acts or omissions by contractors;
- 2 YEARS for misrepresentations or omissions made by contractors in obtaining or renewing a license; and
- DURING THE WARRANTY PERIOD for breach of an express, written warranty.
Under the new law, one timeframe has been changed, and a new timeframe has been added:
- 18 MONTHS AFTER THE WARRANTY PERIOD for breach of an express, written warranty; and
- 2 YEARS for criminal convictions related to the qualifications, functions and duties of a contractor.
For the timeframes specified above for misrepresentations and omissions and criminal convictions, the timeframes start upon the discovery by the registrar of the misrepresentation, or the conviction.
This law amends California Business & Professions Code § 7091 and goes into effect on January 1, 2008.
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AB 976*
Discrimination by Landlord
Based on Immigration or Citizenship
Under existing state law, landlords may not discriminate against residential tenants based on various characteristics, including age, disability, gender, medical condition, race, color, religion, marital status, sexual orientation, ancestry and national origin. Certain exceptions do apply, such as senior housing facilities and owner-occupied properties.
Under the new law, landlords of residential real property cannot use IMMIGRATION or CITIZENSHIP status as criteria for tenants, occupants, prospective tenants or prospective occupants. Specifically, landlords and agents of the landlord may NOT:
- make ANY INQUIRY into immigration or citizenship status; nor
- require any (prospective) tenant or occupant to MAKE A STATEMENT about immigration or citizenship status.
Furthermore, the statute also prohibits local governments from adopting any ordinances or regulations which would require a landlord or any agent of the landlord of residential real property from:
- Inquiring;
- Compiling;
- Disclosing;
- Reporting;
- Providing information on;
- Prohibiting to offer accommodations; or
- otherwise taking any action
based on the immigration or citizenship status of any tenant, prospective tenant, occupant, or prospective occupant.
This law does not prohibit the landlord from requesting information or documentation to verify the identity or the financial qualifications of a tenant or occupant.
This law which adds California Civil Code § 1940.3 goes into effect on January 1, 2008. [Note: this statute is added to the landlord/tenant law and was not included under the Unruh Civil Rights Act–California Civil Code § 51.]
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AB 804*
New Escrow Fee for Escrows Regulated by DOC
Many escrow companies handling real estate transactions are licensed with the California Department of Corporations (DOC). Some escrow companies, such as title insurers, are licensed by the Department of Insurance (DOI), and others, such as broker-controlled escrows, are licensed by the Department of Real Estate (DRE). Under existing law, the DOC-licensed escrow companies are not entitled to any fee, commission or compensation which is contingent on performing any act, condition or instruction prior to the close and completion of escrow, except for a disbursement agreed upon by all parties.
Under the new law, escrow companies can charge an additional fee for administering an escrow when either (1) the escrow has been postponed for two months from the most recent closing date agreed by the parties, or (2) the escrow has been cancelled if the following conditions are met:
- the postponement or cancellation was CAUSED BY the PARTIES;
- the fee was indicated in at least 8 POINT BOLD TYPE on the FRONT PAGE of the escrow instructions; and
- the PARTIES have INITIALED those INSTRUCTIONS.
Furthermore, it is now a violation of the escrow licensing laws if the escrow company violates any provision of RESPA. The new law requires that an escrow company provide an closing audit report within105 days or written notice of terminating its license. Finally, this law requires escrow companies to make minor changes to their disclosures.
This law amends California Financial Code §§ 17210.2, 17346, 17406 and 17600, and adds California Financial Code §§ 17421.5 and 17425. The provisions of this new law become effective on January 1, 2008.
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SB 433*
Automatic Homestead
Under existing law, homeowners are protected for a certain amount of equity in their residence by a declared homestead, or the “residential exemption” (also known as the automatic homestead). Even when homeowners do not file a declared homestead on their residence, the residence may be protected from sale by the “residential exemption” under California Code of Civil Procedure §§ 704.710 – 704.850. In order to qualify for the protection of the “residential exemption”, either the homeowner with the judgment against him or her, or the homeowner’s spouse must have lived in the property at the time the lien attached to the residence, and either the homeowner or their spouse were required to reside in the residence continuously since then. For purposes of these statutes, a spouse did not include a married person following entry of judgment of legal separation of the married couple.
Under the new law, the “residential exemption” applies even though the homeowner does not live in the property, if either (1) a separated spouse or (2) a former spouse:
- Resides in the Property, or
- Exercises Control over Possession of the Property.
The changes to the law do not allow any debtor to have more than one property as a homestead. Additionally, the law does not change the rule that only the homestead of one of the spouses is considered to be exempt, if the debtor and the spouse reside in separate homesteads.
This law amends California Code of Civil Procedure § 704.720 and the provisions of this new law become effective on January 1, 2008.
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AB 839*
Real Estate License Renewal for Persons in the Armed Forces
Under current law, certain members of the military who have a real estate license are given an automatic extension of time to get a renewal of their license. In order to qualify, the licensee must notify the Real Estate Commissioner within six months of active duty. The military licensee is not required to renew his or her license until the earlier of engaging in real estate business, or one year after termination of military service. The exclusive list of members of the military includes only members of the following:
- United States Army;
- United States Navy;
- United States Air Force;
- Marine Corps;
- Merchant Marine in times of war;
- Coast Guard; and
- Public Heath Service (officers only) detailed by proper authority of the Army or Navy.
Under the new law, one additional military organization has been added:
This law amends California Business & Professions Code § 10460 and goes into effect on January 1, 2008.
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AB 1153*
Mobilehome Dealer Licensee Fingerprinting Required
Under current law, manufacturers, distributors, dealers and sellers of mobilehomes, manufactured homes, or commercial coaches are required to get a license or a temporary permit from the Department of Housing and Community Development (HCD). The provisions provide for the applicant to furnish all information as reasonably required, including proof of successful examination, proof as a manufacturer, distributor, dealer or salesperson, and information relating to the applicant’s character, honesty, integrity and reputation.
Under the new law, the applicant must submit fingerprints and related information to DOJ, which will submit that information to the FBI for federal criminal history information. DOJ will then submit federal and state criminal history to HCD. HCD will also request subsequent arrest notification from the DOJ for each applicant.
This law amends California Health & Safety Code §§ 18050 and 18070.3 and goes into effect on January 1, 2008.
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AB 840*
Real Estate Licensee Discipline
Under existing law, the DRE has the ability to suspend or revoke a license, or to deny the application for a license for various specified reasons under California Business & Professions Code §§ 10176 and 10177. One of those reasons is “a felony or a crime involving moral turpitude” in which the Court of Appeals in Petropoulos v. Department of Real Estate (2006) 142 Cal. App. 4th 554, interpreted to mean that a misdemeanor must involve “moral turpitude” in order for the DRE to take disciplinary action.
Under the new law, the “moral turpitude” element has been eliminated and replaced with a crime “substantially related to the qualifications, functions, or duties of a real estate agent”. The felony element remains unchanged. A corresponding change has also been made for mineral, oil and gas licensees regulated by the DRE.
This law amends California Business & Professions Code §§ 10177 and 10562 and the provisions of this new law become effective on January 1, 2008.
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SB 538*
Difference Between Mobilehome and Manufactured Home
This new law clarifies the difference between “mobilehomes” and “manufactured homes”, and also creates a new category for “multifamily manufactured home.” The law also changes the permissible scope of work for a General Manufactured Housing Contractor (C-47).
Under existing law, the terms “mobilehomes” and “manufactured homes” are used interchangeably in many California statutes.
Under the new law, the differences between “mobilehomes” and “manufactured homes” are clarified, and a new category of “multifamily manufactured home” is added. This change is intended to provide additional benefits from lenders and others in the housing industry for “manufactured homes” which might not be available for “mobilehomes”.
All single-family factory-constructed housing built on or after June 15, 1976, that is in compliance with the standards of the United States Department of Housing and Urban Development promulgated under the federal National Manufactured Housing Construction and Safety Standards Act of 1974
(42 U.S.C. § 5401 et seq.) are “manufactured homes,” and not “mobilehomes.”
Furthermore, this new law also changes what is the permissible scope of work allowed by a General Manufactured Housing Contractor for these separate categories. Finally, this law also authorizes the Department of Housing and Community Development to adopt regulations relating to commercial modular homes.
This law amends California Health & Safety Code §§ 18000, 18007, 18008, 18008.7 and 18028, and adds California Business & Professions Code § 7026.11. This law also amends the heading of Part 2 of Division 13 of the California Health & Safety Code. The provisions of this new law become effective on January 1, 2008.
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AB 446*
Notice Required Prior to Mobilehome Removal
Under current law, a mobilehome park, generally, cannot force the removal of a mobliehome when it is sold to a third party during the homeowner’s rental agreement or in the sixty (60) days following the park’s providing certain notices. When the homeowner makes a sale to a third party, the mobilehome park may require removal of the mobilehome to upgrade the quality of the park if (1) it is not a mobilehome as defined, (2) it is over a specified age, or (3) it is in significantly rundown condition.
Under the new law, the mobilehome park may not require removal of the mobilehome upon the sale of the mobilehome to a third party unless the mobilehome park has provided to the homeowner a notice which indicates the specific reasons that the mobilehome may be removed.
This law amends California Civil Code § 798.73 and goes into effect on January 1, 2008.
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SB 385*
Loan Regulation
This new law provides more authority to the Commissioner of the Department of Real Estate, the Commissioner of the Department of Corporations, and the Commissioner of the Department of Financial Institutions to regulate subprime and other non-traditional mortgages. As part of this increased regulation, this law also requires principals who make eight or more loans of their own money in a year to become licensed with the Department of Real Estate.
Under current law, California financial institutions are primarily regulated by the California Department of Financial Institutions. Others entities also engaged in making or brokering residential mortgage loans, include real estate brokers who are regulated by the Department of Real Estate, and residential mortgage lenders who are regulated by the Department of Corporations under either the California Finance Lenders Law, or the California Residential Mortgage Lending Act.
Under the new law, each of the agencies governing residential loans (all under the purview of the state Secretary of Business, Transportation and Housing) will have authority to adopt guidelines which are consistent with the following policies and statements:
- the Interagency Guidance on Nontraditional Mortgage Product Risks issued in September 2006 by federal agencies;
- the Statement of Subprime Mortgage Lending issued in June 2007 by federal agencies;
- the guidance on nontraditional mortgage products risks issued in November 2006 by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators; and
- the Statement of Subprime Mortgage Lending issued in July 2007 by the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators and the National Association of Consumer Credit Administrators.
Such guidelines will provide stricter provisions on residential loans on 1 - 4 unit family residences for interest-only loans, negatively amortizing loans, and adjustable mortgage loans. (Such provisions might include some of the requirements which apply to predatory lending under California Financial Code § 4973 for these types of non-traditional residential loans. The guidelines will likely require the lender to verify to make sure that the consumer can repay the obligation, and provide clearer statements of future likely payments, and may include criminal penalties for failure to do so.)
Furthermore, the new law brings certain private lenders under the purview of the Department of Real Estate. Lenders who lend more than eight (8) loans in a given calendar year without using a real estate broker will be required to have their own real estate broker’s license.
This law amends California Business & Professions Code §§ 10131.1 and 10245, adds California Business & Professions Code § 10240.3, adds California Financial Code §§ 215.5 and 22171, and adds California Government Code § 13984.
The provisions of this new law become effective on January 1, 2008.
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AB 980*
Private Transfer Fees - Recording and Disclosure Requirement
Under current law, a developer can impose a private transfer fee for subsequent sales of the real property. The developer often creates a separate entity to receive these fees and uses these fees for environmental compliance, or to mitigate ongoing costs incurred with the development of the property. These fees must be disclosed under current law.
Under the new law, these private transfer fees now require a separate document to be recorded with the county recorder’s office entitled “Payment of Transfer Fee Required” in at least 14-point bold type. This recorded document must include all of the following information:
- the NAMES of all CURRENT OWNERS subject to the transfer fee;
- the LEGAL DESCRIPTION of the parcel and the ASSESSOR’S PARCEL NUMBER (APN):
- the AMOUNT or PERCENTAGE of the fee;
- EXAMPLES OF CALCULATIONS of the transfer fee;
- the DATE and CIRCUMSTANCES of EXPIRATION, if such transfer fee expires;
- the PURPOSE for which the fees will be used;
- the ENTITY to whom the fee will be paid, and CONTACT INFORMATION; and
- the SIGNATURE of an authorized REPRESENTATIVE of the entity receiving the fee.
If the fee is imposed prior to January 1, 2008, then the recorded document must be filed by December 31, 2008 in order to enforce collection of the private transfer fee after January 1, 2009.
Furthermore, this law also requires a separate disclosure of this private transfer fee if a Transfer Disclosure Statement is required (under California Civil Code §§ 1102 et seq.) which includes the following information:
- NOTICE that the private transfer fee is required on any subsequent transfer of the property;
- the AMOUNT based on the asking price:
- a DESCRIPTION of HOW the fee is CALCULATED;
- NOTICE that the final amount may be DIFFERENT if based on a percentage basis;
- the ENTITY to whom the fee will be paid;
- the PURPOSE for which the fees will be used; and
- the DATE and CIRCUMSTANCES of EXPIRATION, if such transfer fee expires.
This law adds California Civil Code §§ 1098, 1098.5 and 1102.6e and goes into effect on January 1, 2008.
Note: CAR has created a new disclosure form (Notice of Transfer Fees - NTF) to be released in November 2007 to enable our members help their clients comply with newly enacted California Civil Code § 1102.6e.
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SB 559*
Property Tax Reassessment
Exemption Applied Retroactively for Domestic Partners
This new law retroactively applies the exemption from reassessment for transfers of real property between registered domestic partners back through January 1, 2001. However, no refunds on property taxes will be provided for such reassessment reversals.
Under current law, most transfers of real property trigger a reassessment to the fair market value upon such transfer. Certain transfers are exempt, including iinterspousal transfers, and certain parent to child transfers. A prior law indicated that transfers between registered domestic partners would be exempt starting on January 1, 2006.
Under the new law, any transfer made of real property made between January 1, 2001 and January 1, 2006 between registered domestic partners would retroactively be exempt from property tax reassessment. In order to reverse the reassessment, the recipient of the real property transfer must submit an APPLICATION for reversal of the reassessment by June 30, 2009. The State Board of Equalization must prepare a form for such reversal, and the county may charge a fee related to the administrative costs with such applications. NO REFUNDS on property taxes already paid will be provided based on the reassessment reversal.
This law amends California Revenue & Taxation Code § 62. The provisions of this new law become effective immediately. (It was signed by the governor on October 12, 2007.)
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