LAPD collecting care packages for our troops in Iraq

Supporting Our Troops, One Care Package at a Time

WHAT: Care package collection for our Military troops

WHEN: Now through June 28, 2008

WHERE: All LAPD Community Police Stations in the Valley

-Red Bins have been placed each lobby for donations.

WHY: For the Troops is a California 501(c)(3) non-profit corporation. (Federal Tax Identification #20-8099782). Care packages are sent to our front line troops in Iraq and Afghanistan.

In order to send items to our troops, please see the Troops Wish List below and take your items to your local Community Police Station where a Red Bin has been placed in the lobby for collections. Items will be collected until June 28, 2008 at which time the care packages will be prepared and mailed. For further information please visit http://www.forthetroops.us/.

Wish List:

Gum, White Athletic Socks, Candy, Baby Wipes, Nuts, Travel Size board games, Potato Chips (in cylinder cans), Computer USB Flash Drive Memory Sticks, Trailmix, Pop Tarts, Q-Tips, Canned Tuna Fish, Pipe Cleaners, Crystal Light powder, AA and AAA Batteries, Pre-sweetened Powdered Gatorade, Letters of Appreciation, Granola, Power Bars, Movies-DVD’s, Beef Jerky (No Pork, Please!), Music -CD’s, Crosswords, Word Search, Suduko Small Handheld Games, Non Prescription Medications (aspirin, Advil, eye drops, foot powder, sunblock, anti-itch cream, chapstick, and cold/allergy medications.)

For more information, or questions, please call Sgt. Fentress in the Community Relations Office (818) 374-7690

Ira Glass - The Giant Pool of Money

Hats off to Ira Glass and This American Life/NPR collaboration on the story of what some have called The Great American Home Ownership Deception Scheme (this title only tells part of the story), but what Ira titled more descriptively, “The Giant Pool of Money”. Ira really knows how to tell a story in human terms. It will be worth your while to find a hour to sit down, relax, and listen to:

355: The Giant Pool of Money - From Ira Glass and This American Life

A special program about the housing crisis. We explain it all to you. What does the housing crisis have to do with the collapse of the investment bank Bear Stearns? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money.
http://www.thislife.org/Radio_Episode.aspx?episode=355

tip to calculated risk 

C.A.R. urges YES on Proposition 98 and NO on Proposition 99

C.A.R. is urging REALTORS® to support Proposition 98 and oppose Proposition 99 when they vote in the upcoming statewide primary election in June.

Local governments are increasing their utilization of eminent domain to seize private property for use by OTHER private entities.

C.A.R., the leading voice for private property rights in California, is fighting this unacceptable and unfair practice.

In January 2008, C.A.R.’s Board of Directors adopted a FOR position on Proposition 98 and an AGAINST position on Proposition 99. Both propositions will be on the June 2008 statewide ballot. Proposition 98 would impose an outright ban on the use of eminent domain to take any private property – including homes, business and farms – for another private use.

One of the many benefits of Proposition 98 is that it prohibits future imposition of rent control and inclusionary zoning. Local governments will not be allowed to impose any new rent control – as units are vacated, rent controls will be lifted.

Another initiative on the same ballot is Proposition 99, which C.A.R. is OPPOSING. Proposition 99 is designed to maintain the status quo by only offering protection from eminent domain to owner-occupied single-family residences if the owner has lived for at least one year.

Proposition 99 is particularly dangerous because it is NOT real reform, and UNDOES Proposition 98 if both were to pass and Proposition 99 garnered more votes.

C.A.R. strongly urges REALTORS® to VOTE YES on Proposition 98 and NO on Proposition 99.

Foreclosures in Southern California Neighborhoods

Here’s a handy tool from the Los Angeles Times to search foreclosure trends by zip code throughout Southern California in the first quarter of 2008.

From Wall Street Journal, Where Housing Is Headed.

Countrywide foreclosures: http://www.recontrustco.com/#props 

Contingencies and Contingency Removal

Copyright© 2008, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.


INTRODUCTION

Under contract law, a contingency provides a party to the contract the ability to condition performance on the occurrence or non-occurrence of another event.  For example, a buyer may condition performance under the real estate purchase contract on the outcome of the buyer’s inspection.  If the buyer is dissatisfied with the results of the inspection, then the buyer may cancel the contract without being held in breach of contract.  Another common example:  the buyer under a real estate purchase contract may condition performance on obtaining a specific loan (e.g., not to exceed 7.5% fixed rate and not to exceed 1 point).  After making a good faith effort to obtain such a loan, if the buyer is not approved for such a loan, then the buyer may cancel the agreement without being held in breach of contract.  A buyer of vacant land may want a contingency on city approval of building plans. (more…)

The state of real estate

PMI Releases Spring 2008 Risk Index
WALNUT CREEK, Calif., April 10 /PRNewswire-FirstCall/ — PMI Mortgage Insurance Co., the U.S. subsidiary of The PMI Group, Inc. (NYSE: PMI), today released its Spring 2008 U.S. Market Risk Index(SM), which ranks the nation’s 50 largest metropolitan statistical areas (MSAs) according to the likelihood that home prices will be lower in two years.

~~~~~~~~~~~~~~~~~~~According to their chart, in Los Angeles there is a 77% chance that home prices will be lower in two years. How much lower is the next question. See PMI’s Spring 2008 Economic and Real Estate Trends(SM) (ERET)

Nonprime Mortgage Conditions in the United States
DECEMBER 2007 DATA - Subprime and Alt-A

The spreadsheets:
http://newyorkfed.org/regional/subprime.html
The mortgage maps for the subprime and alt-a data:
http://newyorkfed.org/mortgagemaps/

355: The Giant Pool of Money - From Ira Glass and This American Life

A special program about the housing crisis. We explain it all to you. What does the housing crisis have to do with the collapse of the investment bank Bear Stearns? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money.
http://www.thislife.org/Radio_Episode.aspx?episode=355

Will real estate prices continue to fall? etc.

Yes, I think real estate prices will continue to fall another 15%-20% over the next 6-9 months in most areas of Los Angeles county.

Now for some fun mortgage mess linkage:

From the Federal Reserve Bank of New York
Dynamic Maps of Nonprime Mortgage Conditions in the United States
http://www.newyorkfed.org/mortgagemaps/
(tip to http://calculatedrisk.blogspot.com/ )

The maps show the following information for subprime and alt-A loans for each state and most of the counties and zip codes in the United States:

• Loans per 1,000 housing units
• Loans in foreclosure per 1,000 housing units
• Loans real estate owned (REO) per 1,000 housing units
• Share of loans that are adjustable rate mortgages (ARMs)
• Share of loans for which payments are current
• Share of loans that are 90-plus days delinquent
• Share of loans in foreclosure
• Median combined loan-to-value ratio (LTV) at origination
• Share of loans with low credit score (FICO) and high LTV at origination
• Share of loans with low- or no documentation
• Share of ARMs with initial reset in the next 12 months
• Share of loans with a late payment in the past 12 months

Foreclosure Resources for Consumers
If you are having difficulty making your mortgage payment, one of the most important things you can do is seek assistance. The following resources provide information and links to agencies and organizations that may be able to help you.

http://www.federalreserve.gov/pubs/foreclosure/default.htm

Find a reputable housing counselor. Call 888-995-4673, a counseling service provided by the Homeownership Preservation Foundation.

If you’ve fallen behind on your monthly mortgage payments, we may be able to help. Here you’ll find information on access to free credit counseling and the many options that are available to help you resolve your situation.
https://www.mortgagehelp.radian.biz/borrower/

Are you having trouble paying your mortgage? Nothing is worse than doing nothing. Call the Homeowner’s HOPE™ Hotline: 1.888.995.HOPE.
http://www.hopenow.com/

Foreclosure Resources for Consumers
If you are having difficulty making your mortgage payment, one of the most important things you can do is seek assistance. The following resources provide information and links to agencies and organizations that may be able to help you.

NY Times Op-Ed Columnist
The Dilbert Strategy
By PAUL KRUGMAN

“You now understand the principle behind the Bush administration’s new proposal for financial reform, which will be formally announced today: it’s all about creating the appearance of responding to the current crisis, without actually doing anything substantive. ”

Bankers out of jobs, from the LA Times online:
UBS unveils $12B loss, write-downs of $19 billion
He predicted the U.S. banking industry is set to see its first contraction in overall revenues in more than forty years. “This will inevitably lead to staff reductions, and we expect to see the U.S. banking industry shed about 200,000 jobs in the coming 12 to 18 months,” Marenzi said.

look for this title: Volcker Says Fed’s Bear Loan Reaches Edge of Legal Power April 8 (Bloomberg) – Former U.S. Federal Reserve Chairman Paul Volcker speaks in New York about practices leading to the current financial market crisis, the role of the Federal Reserve in preventing and dealing with such crises and the need for changes in market regulation. Volcker speaks to the Economic Club of New York. (Source: Bloomberg)

Actually, this is a better link to the video: Volcker: BSC bail out at “the very edge” of FED’s…..

http://video.google.com/videosearch?q=volcker%3A+bsc+bail+out&hl=en&sitesearch=

Why short sales don’t work

Here is a typical short sale scenario: A client wants to see a property that has reduced in price by $100,000, now priced at $375,000. We go look at the property, client wants to make an offer for $375,000.

Before writing the offer, I check with the title company to find out what leins are recorded, if a notice of default and/or sale is recorded against the property. This property shows a first for $525,000 recorded June 2006 and a second for $52,500 recorded June 2006. Notice of default was recorded in March 2008. So you can figure that they owe very close to what they originally borrowed, $577,500. I check the history of listings for the property. It was originally listed in June 2007 for $600,000.

Many of these loans have mortgage insurance, so the bank is assured of getting up to 80% of that loan if they foreclose. If your offer is for less than 80% of the loan (in this case, 80% of the first $525,000 is $420,000) , then the bank has no reason to want the offer for $375,000, nor to respond. On loans with substantial downpayments, and not subject to mortgage insurance, I suppose lenders are more receptive, but I have not come across a short sale situation where the property was initially purchased with a 20% or more down payment.

If you see a property price drastically reduced and it’s a short sale, don’t bother with it. That’s the listing agent taking drastic measures to get some action (offers) for the property before the listing contract period ends.

The problem with short sales is that you have four players in the transaction with different motivations; 1. owner has a home with a market value much less than what he owes, he’s very motivated to get out from under the loan, 2. lender who can get up to 80% of the loan if there is mortgage insurance and will not take any less, better to foreclose, 3. agent hired by owner to sell the property, will cut price drastically to get offers, 4. buyer who is attracted by the low price. There is no way to bring these four together.

I have submitted many, many offers for short sale properties and not one of them was accepted. The lenders will lead you on for months but never accept the offer. They are a huge waste of time.

Equity Sharing

Equity Sharing


Member Legal Services
Tel 213.739.8282
Fax 213.480.7724
March 11, 2008 (revised)

Copyright® 2008 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.

INTRODUCTION

Investments in real property can take all types of forms.  Multiple investors can form a syndication, partnership, limited partnership, or LLC, where none of the parties live in the property and the property is rented to tenants.  Another common equity sharing arrangement, which is the subject of this article, involves one party (the owner-occupant) occupying the property and the other (investor) putting up the bulk of the financing.  Both the owner-occupant and the investor can receive tax benefits and share in the profit according to their investments as described in their equity sharing agreement.  First-time homeowners are the typical owner-occupant while the investor can be a family member, a seller, or any real estate investor.Q 1What is equity sharing?

A  It is a form of ownership and investment that allows two or more parties to share an interest in real property.  It is frequently used in situations where, because of the high cost of housing, one party, the investor, puts down the bulk of the downpayment, and the other, the owner-occupant (also caller the “occupier”) puts down little or no downpayment but agrees to pay a monthly amount consisting of “rental payments,” mortgage payments, taxes, and other specified charges, and lives in the dwelling.  The owner-occupant may pay all of the mortage costs as “rent” or may pay two different amounts, one portion representing the rent and the other representing mortgage, which would include interest for which he or she could receive a tax deduction.

Depending on the specific terms of the contract, there are many tax and ownership advantages. Beware, however, because there are many potential tax and financial pitfalls in an equity sharing agreement that is loosely worded.

Since the owner-occupant does not own 100 percent of the property, he or she must pay a “fair market rental” to the investor for living in the dwelling. The rent paid by the owner-occupant should be proportional to the percentage interest that the owner-occupant has, and should be based on the fair market rental value determined in good faith. Ideally, they have both signed the note and trust deed and are also on title.  The rental paid to the investor is taxable income, and the interest paid on the mortgage is tax deductible. On the other hand, the investor also pays the remaining fraction of the mortgage each month based on his or her proportional share of ownership and can deduct the interest as an expense of the property, subject to passive loss and other restrictions. (more…)

Foreclosure - Woodland Hills home $509,900 F1528

Foreclosure, bank owned, 3 bedroom, 2 bath, 2097 sf home on a 6141 sf lot in Woodland Hills.

This property has had a fire in the kitchen area, enter with caution. High ceilings, separate family and living room, fireplace located in the family room and large kitchen with tile counter tops. Close to freeways, transportation and shopping.

Call Maggie Knowles at 818 693-9799 and reference #F1528 for more information and pictures.

Get automatic email notification for ALL Encino, West Hills, Tarzana, North Hollywood, Chatsworth, Porter Ranch, Calabasas, Agoura Hills, Oak Park, Woodland Hills, West Hills, Shadow Hills, Granada Hills, Studio City, Sherman Oaks, Toluca Lake and Burbank homes for sale matching your criteria in the mls by clicking here.

 

Foreclosure - Woodland Hills home $615,000 F1531

Foreclosure, bank owned, 3 bedroom, 3 bath, 1975 sf home on a 6250 sf lot in Woodland Hills south of Ventura Blvd. Kitchen includes newer counters, wood cabinets, stainless steel appliances. Baths include tile flooring, granite counters with modern fixtures.

Call Maggie Knowles at 818 693-9799 and reference #F1531 for more information and pictures.

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Foreclosure - Woodland Hills home $525,000 F1530

Foreclosure, bank owned, 2 bedroom, 1 bath, 1353 sf home on a 6250 sf lot in Woodland Hills south of Ventura Blvd. Remodeled bedrooms central air, hardwood and tile floors, large kitchen with granite counters, covered patio, laundry area.

Call Maggie Knowles at 818 693-9799 and reference #F1530 for more information and pictures.

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Foreclosure - Woodland Hills home $515,000 F1529

Foreclosure, bank owned, 3 bedroom, 3 bath, 1676 sf home on a 7823 sf lot in Woodland Hills.

Spacious home, gated & private, updated kitchen, baths; newer doors and windows. Light and bright, family room with fireplace. Formal dining, private park-like yard.

Call Maggie Knowles at 818 693-9799 and reference #F1529 for more information and pictures.

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Foreclosure - Burbank home $529,000 F1400

Foreclosure, bank owned, 3 bedroom, 3 bath, 2159 sf house on a 6250 sf Bur3-zoned lot in Burbank.

Previously remodeled with marble flooring, wood flooring, newer kitchen cabinets with granite counters and newer garage roll-up door. Addition stated in previous sale - done with permit, buyer to investigate.

Call Maggie Knowles at 818 693-9799 and reference #F1400 for more information and pictures.

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The Home Ownership Deception Scheme

Recently, I saw/heard this on a panel discussion online regarding the housing market (and I’m sorry I can’t find a link to the video) - it went like this:

The mortgage crisis has never been about home ownership. There are 6 major players in this scheme, the home ownership deception scheme.

1. Brokers, 2. Lenders, 3. Investment Bankers, 4. Rating Agencies - and the ones they lure 5. Investors and 6. Borrowers

(you could think of 1-4 as fishermen and 5 and 6 as fish)

1 thru 4 have no skin in the game and they are working for Wall St. and have made off with billions of dollars.

After the high tech boom, the housing market was the next investment vehicle that Wall St. was going to push.

Before 2007, real estate was the best investment in America. How does Wall St. take advantage of that? They package mortgages together and sell them at a higher return. “They can’t lose, they’re the best investment in the world!” There was a high demand, but there was one problem - there wasn’t enough product (borrowers - there were only so many people who had 20% down, high credit ratings, etc.)

Where do you get more product (borrowers)? Start creating products that a wider market can qualify for. So first came the A. sub-prime loans, then came the B. high-rate “strangulation” ARMS (interest rate only goes up, not connected to LIBOR or Prime Rate) where payments will double no matter what happens in the market and principle is never paid down, then came C. a negative amortization product (where principle grows and is never paid off), then came D. Option ARMs, then came E. no doc loans. (I may have missed some data regarding these loan products, but you get the idea.)

The point is, the loan products are defective by definition. When you recognize that these are defective products and this is orchestrated to generate billions of dollars out there for the four players in the middle (1 thru 4 above), then what’s the solution?

Foreclosure - Encino home $379,900 F1221

Foreclosure, bank owned, 3 bedroom, 2 bath, 1706 sf home on a 4848 sf lot in Encino. Living room with tile floors. Dining room with fireplace and wood floors. Huge bathroom with spa tub. Private backyard with built in BBQ and spa.

Call Maggie Knowles at 818 693-9799 and reference #F1221 for more information and pictures.

Get automatic email notification for ALL Encino, West Hills, Tarzana, North Hollywood, Chatsworth, Porter Ranch, Calabasas, Agoura Hills, Oak Park, Woodland Hills, West Hills, Shadow Hills, Granada Hills, Studio City, Sherman Oaks, Toluca Lake and Burbank homes for sale matching your criteria in the mls by clicking here.

Foreclosure - Encino home $450,000 F1222

Foreclosure, bank owned, 2 bedroom, 1 bath, 772 sf home on a 6000 sf lot in Encino. Small doll house in good condition.

Call Maggie Knowles at 818 693-9799 and reference #F1222 for more information and pictures.

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Foreclosure - Chatsworth home $464,900 F1216

Foreclosure, bank owned, 5 bedroom, 2 bath, 1889 sf home on a 7502 sf lot in Chatsworth. Cul-de-sac location with pool and backyard with covered patio. Breakfast nook, formal dining room, and formal living room with fireplace.

Call Maggie Knowles at 818 693-9799 and reference #F1216 for more information and pictures.

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Foreclosure - Burbank home $489,900 F1215

Foreclosure, bank owned, 4 bedroom, 2 bath, 1846 sf home on a 7370 sf lot in Burbank. Large den with a fireplace. Large corner lot provides privacy and curb appeal. Across from a park in a nice neighborhood.

Call Maggie Knowles at 818 693-9799 and reference #F1215 for more information and pictures.

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Foreclosure - Burbank home $449,000 F1214

Foreclosure, bank owned, 2 bedroom, 1 bath, 748 sf home on a 5654 sf lot on a tree lined street in Burbank. Partially remodeled, Craftsman porch, huge backyard, room for expansion. Two car garage. Kitchen open to living room/dining combo. Basement with updated electrical and lighting plus an unpermmited quarter bath.

Call Maggie Knowles at 818 693-9799 and reference #F1214 for more information and pictures.

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Foreclosure - Burbank home $349,900 F1213

Foreclosure, bank owned, 2 bedroom, 2 bath, 1064 sf home on a 5576 sf lot in Burbank. Fix or tear down and build. Unique property with floor to ceiling rock fireplace large kitchen with tile counters and two remodeled bathrooms with tile. Added bonus room. Buyer to check for any permits. No garage. There is a two story large home being built across the street. BUR*2 zoning.

Call Maggie Knowles at 818 693-9799 and reference #F1213 for more information and pictures.

Get automatic email notification for ALL Encino, West Hills, Tarzana, North Hollywood, Chatsworth, Porter Ranch, Calabasas, Agoura Hills, Oak Park, Woodland Hills, West Hills, Shadow Hills, Granada Hills, Studio City, Sherman Oaks, Toluca Lake and Burbank homes for sale matching your criteria in the mls by clicking here.

Taxation of Foreclosures, Deeds in Lieu of Foreclosure, and Short Sales

January 8, 2008 (revised)

Copyright© 2008, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) Permission is granted to C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.


Introduction

It has been some time since the real estate industry, on a large scale basis, has had to deal with foreclosures, deeds in lieu of foreclosure, short sales and other distress sales of real property. Unfortunately, distress sales of real property, resulting from a convergence of tightening credit, falling property values, and the consequences of prior lending practices, are all too common currently and do not appear likely to end any time soon.

Seemingly adding insult to injury, owners of real property facing a distress sale, and generally already under financial strain, may be unpleasantly surprised to learn that two types of income can result from a foreclosure, deed in lieu of foreclosure, or short sale: capital gains, and relief of indebtedness income. Both types of income can trigger unexpected taxes for the owner. (more…)

16 New Laws 2008 Affecting California Real Estate

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.

~^~^~^~^~^~^~^~^~^~^~^~^~^~^~

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:

  • National Guard.

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.)

 

TAX BREAK FOR MORTGAGE DEBT FORGIVENESS

Source: California Association of REALTORS

President Bush signed into law today a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).

For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer’s principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648.