C.A.R. Announces New California Laws for 2012
Realegal(r)
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Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS(r).
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New California Laws for 2012
Now that the first half of the 2011-12 legislative session is over,
significant new laws have emerged that may affect REALTORS(r) and their
clients. Below are some of the new laws involving disclosures, licensing,
small claims court, landlord-tenant, and other areas of interest for the
real estate practitioner. The full text of a bill is available at
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www.leginfo.ca.gov.
Sellers Disclosing Water-Conserving Plumbing Fixtures: C.A.R. successfully
sponsored a new law, effective January 1, 2012, revising the Transfer
Disclosure Statement (TDS) to include a checkbox in Section A for the seller
to disclose whether the property has water-conserving plumbing fixtures.
The revised TDS also clarifies at the end of Section B that, by January 1,
2017, a single-family residence built on or before January 1, 1994 must
generally be equipped with water-conserving plumbing fixtures. If, however,
that single-family home is altered or improved on or after January 1, 2014,
the water-conserving plumbing fixtures must be a condition of final permit
approval. Water-conserving plumbing fixtures are low-flow toilets, shower
heads, and faucets under section 1101.3 of the California Civil Code.
C.A.R. intends to release a revised TDS form in November 2011 to comply with
this law. Senate Bill 837.
NHD Companies Disclosing Mining Operations: Starting January 1, 2012, a
company preparing a natural hazard disclosure (NHD) statement for a
prospective buyer, as required for certain transactions, must also disclose
whether the property is located within one mile of a mining operation,
according to map coordinate data from the Office of Mine Reclamation. If a
property is within one mile, the NHD company must give a specified notice
that such mining operations may cause inconveniences. Senate Bill 110.
No Fee Bundling for HOA Disclosures: Beginning January 1, 2012, another
C.A.R.-sponsored bill requires a homeowner's association (HOA) to, upon
written request, give an estimate of the fee for providing a prospective
buyer with the governing documents of the common interest development and
other required HOA disclosures. The fee must be reasonable based upon the
HOA's actual cost for procuring, preparing, reproducing, and delivering the
HOA documents. If the fee is paid, the HOA cannot withhold the required HOA
disclosures for any reason. Moreover, the HOA cannot bundle the fee for
providing required HOA disclosures with any other fees, fines, or
assessments. This law will prevent an HOA's third-party document
preparation company from bundling together both mandatory and non-mandatory
HOA documents, and charging a higher fee for providing all the documents.
The HOA is also prohibited from charging any additional fees for electronic
delivery of HOA documents, which must be available to a requesting party if
the HOA maintains the documents electronically. Additionally, at a buyer's
request, the HOA must provide 12 months of approved minutes of the
association's board of directors meetings (excluding executive sessions).
Delivery of the required HOA documents must be accompanied by a cover sheet
itemizing the documents required by law and those provided. In November
2011, we intend to release a revised C.A.R. standard form Homeowner
Association Information Request that complies with this requirement.
Assembly Bill 771.
Brokers Designating Managers: Under another law that C.A.R. sponsored,
effective July 1, 2012, an employing broker may appoint a licensee as a
manager to supervise the licensed activities, clerical staff, and day-to-day
operations of a branch office or division. An appointed manager who fails
to properly supervise licensed activities will be subject to disciplinary
action by the California Department of Real Estate (DRE). Appointing a
manager, however, does not limit the employing broker's supervisory
responsibilities. The appointment of a manager must be in a written
agreement in which the manager accepts the delegated responsibility. The
employing broker must notify the DRE when a manager has been appointed or
terminated. A licensee cannot be an appointed manager if the licensee holds
a restricted license, is or has been subject to a debarment order, or is a
salesperson with less than two years of full-time real estate experience
within the last five years. Senate Bill 510.
Strengthening DRE Enforcement: Effective January 1, 2012, the DRE will have
greater disciplinary authority to achieve its highest priority of protecting
the public. A licensee will be required to report to the DRE within 30 days
of any of the following: (1) disciplinary action taken by another licensing
entity in California or another state, or by a federal governmental agency;
(2) an indictment or information charging a felony against the licensee; or
(3) a conviction of a felony or misdemeanor, including a plea of guilty or
no contest. Failure to comply with this reporting requirement will be cause
for discipline. The DRE's broader disciplinary authority will also include,
among other things, the ability to automatically suspend the license of
anyone incarcerated after a felony conviction. For disciplinary actions,
the DRE can conclusively presume without a hearing that a licensee's
conviction of murder, rape, lewd and lascivious acts, or a violation of
dangerous drugs or controlled substances laws is substantially related to
the licensee's qualifications, functions, or duties. The DRE will also be
able to enter into a pre-prosecution settlement with a licensee or applicant
instead of issuing an accusation or statement of issues, but the settlement
shall be considered discipline. Additionally, the DRE can request that a
disciplinary order requires the disciplined licensee to pay reasonable
investigation and prosecution costs. Failure to pay can result in
non-renewal of license. The DRE can also require that a restricted licensee
pays the costs for monitoring the licensee and monetary restitution to any
person who sustained damages caused by the licensee's misconduct. Again,
failure to pay can result in non-renewal of license. Senate Bill 706.
DRE Issuing Citations and Fines: Starting January 1, 2012, the DRE can issue
a citation and fine up to $2,500 if, upon investigation, it has cause to
believe that a licensee has violated the DRE rules, or a unlicensed person
has engaged in licensed activities. The person cited can request a hearing
within 30 days from receipt of the citation. The citation and fine will be
in lieu of DRE disciplinary action for the offense cited, and the citation
will not be reported as discipline. However, failure to comply with the
terms of the citation or pay the fine within a reasonable time specified by
the DRE shall result in disciplinary action and non-renewal of license. The
DRE may also apply to a superior court for a judgment in the amount of the
fine and an order compelling compliance. All administrative fines collected
will be deposited into the Real Estate Recovery Fund, which has, under
Senate Bill 706, been renamed the Consumer Recovery Account. Additionally
under this law, if the DRE delays the renewal of a license due to a pending
disciplinary action, the license will not expire until the results of the
disciplinary action are final or the license is voluntarily surrendered,
whichever occurs first. This law also gives the DRE the authority to make
public information confirming the fact of certain investigations or
proceedings regarding a licensee, and to apply for a court order to enforce
a subpoena if a licensee has refused to obey. Senate Bill 53.
Reporting Broker-Owned Escrows and Securities Qualification Exemptions:
Starting July 1, 2012, a broker who conducts escrow activities for five or
more transactions in a calendar year under the broker exemption from the
Escrow Law, or whose escrow activities are $1 million or more in a calendar
year, must file with the DRE an annual report of the number of escrows and
dollar volume. The report must be filed within 60 days after the end of a
calendar year in which the threshold is met. A failure to submit the report
will be penalized at $50 per day for the first 30 days and $100 per day
thereafter, up to $10,000. A broker who fails to pay the penalty may be
subject to license suspension or revocation. All penalties collected will
be deposited into the Consumer Recovery Account under the Real Estate
Recovery Program. Effective January 1, 2012, this law also requires a
broker who files certain information with the DRE for an exemption from
securities qualification to submit a copy of that information to any
investor who gives funds to the broker in connection with a transaction
involving the sale of a series of notes (or undivided interests in a note)
secured by real property under section 10237 of the California Business and
Professions Code. Senate Bill 53.
DRE Suspending Largest Tax Delinquents: Commencing January 1, 2012, both the
State Board of Equalization and the Franchise Tax Board must periodically
make public a list of the 500 persons with the largest tax delinquencies in
excess of $100,000. The lists must include, among other things, each
taxpayer's occupational or professional license numbers. The DRE and other
state governmental licensing entities (with certain exceptions) must suspend
and refuse to issue or renew an occupational or professional license for
anyone on either tax delinquency list. Assembly Bill 1424.
Agents Handling Appraisal Issues: Beginning January 1, 2012, a licensee
cannot knowingly or intentionally misrepresent the value of real property.
Furthermore, a licensee who offers or provides an opinion of value of
residential real property that is used as the basis for originating a
mortgage loan cannot have any direct or indirect interest in the property or
transaction as defined under Regulation Z (at 12 C.F.R. section 226.42(d)).
A licensee or other interested party is also prohibited from using coercion,
extortion, bribery, intimidation, compensation, or instruction to improperly
influence a person preparing an appraisal or valuation for a real estate
transaction. Senate Bill 6.
Increasing Small Claims to $10,000: Commencing January 1, 2012, the small
claims court jurisdiction will generally increase from $7,500 to $10,000 for
an action brought by a natural person. For a claim of bodily injury from a
car accident, the increase to $10,000 will not occur until 2015. The dollar
limit in small claims court for an action brought by a corporation or other
entity will remain at $5,000. Senate Bill 221.
Revising the Notice of Sale: Effective April 1, 2012, a notice of trustee's
sale for the non-judicial foreclosure of one-to-four residential units must
contain specified notices to the owner on how to seek postponement of the
trustee's sale, and to potential bidders on the risks involved in bidding at
trustee auctions. Additionally, a lender or authorized agent must make a
good faith effort to provide up-to-date information about sale dates and
postponements to persons who want this information. The lender must also
provide updated information through the Internet, a telephone recording, or
any other means that allows free access at any time. Senate Bill 4.
Renting Out Condominiums: C.A.R. also successfully sponsored legislation
protecting owners' right to rent out their units in common interest
developments. Starting January 1, 2012, an owner in a common interest
development is exempt from any prohibition in a governing document against
renting or leasing the unit, unless that prohibition was in effect before
the owner acquired title to his or her unit. When renting out a unit, the
owner must give the HOA verification of the owner's acquisition date, and
name and contact information of the prospective tenant. An owner's right to
rent under this law does not terminate for certain transfers of title,
including, but not limited to, probate, spousal, parent-to-child, adding a
joint tenant, and other transfers exempt from property tax reassessment.
For sales transactions, the required HOA disclosures must include a
statement describing any prohibition in the governing documents against
renting or leasing. This law does not apply to rental prohibitions in
effect before 2012. Senate Bill 150.
Tenants Smoking Ban: Beginning January 1, 2012, a residential landlord can
prohibit the smoking of cigarettes and other tobacco products on the
property, including any dwelling unit, building, other interior or exterior
area, or the premises on which the property is located. For new tenants on
or after January 1, 2012, the areas where smoking is prohibited must be
stated in the lease or rental agreement. For preexisting tenants before
2012, a new provision prohibiting smoking is a change in the terms of
tenancy that requires adequate written notice, depending on whether the
tenancy is month-to-month or for a fixed term. Senate Bill 332.
Tenants Displaying Political Signs: Effective January 1, 2012, a residential
tenant can generally display political signs related to elections,
legislative votes, initiatives, and other political matters as specified,
but the landlord can make reasonable restrictions as to location, size, and
duration of display. In a single-family dwelling, a tenant's political
signs can be displayed from the yard, window, door, balcony, or outside wall
of the leased premises. In a multifamily dwelling, a tenant's political
signs can be posted in the window or door of the leased premises. A
landlord can restrict the size of a political sign to six square feet. A
landlord can also prohibit a tenant from displaying political signs that
violate local, state or federal law, or a lawful provision in an HOA's
governing documents. A tenant must remove political signs in compliance
with time limits set by local ordinance, or absent such time limits, the
landlord can reasonably restrict the posting of a sign to 90 days before an
election or vote, and its removal within 15 days after the election or vote.
Senate Bill 337.
Tenants Recycling Rights: Commencing July 1, 2012, a multifamily residential
dwelling of five or more units (or a multifamily residential dwelling or
business that generates more than four cubic yards per week of commercial
solid waste as defined) must arrange for recycling services. The intent of
this law is to address the challenges local governments are facing in
reducing solid waste disposal in multifamily properties. The required
recycling services are to be consistent with state or local laws, to the
extent that these services are offered and reasonably available from a local
service provider. The property owner of a multifamily residential dwelling
may require tenants to source separate their recyclable materials to aid in
compliance with this law. Assembly Bill 341.
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Copyright (c) 2011 CALIFORNIA ASSOCIATION OF REALTORS(r) (C.A.R.)
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