New Laws for 2012 Effecting California Real Estate

Here is a preview of some new California Laws for 2012 relating to real estate which I thought you might be interested. The full text of a bill is available at www.leginfo.ca.gov.

Sellers Disclosing Water-Conserving Plumbing Fixtures:The California Association of Realtors 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.

No Fee Bundling for HOA Disclosures: Beginning January 1, 2012, another Fixtures: The California Association of Realtors sponsored bill requires a homeowners 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 HOAs 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 HOAs 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 buyers request, the HOA must provide 12 months of approved minutes of the associations 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.

Strengthening DRE Enforcement: Effective January 1, 2012, the California Department of Real Estate (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.

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.

State Agencies 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 taxpayers occupational or professional license numbers. 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.

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 trustees 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 trustees 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: New legislation protects 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 owners 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.

SOURCE: Robert C. Aronoff, Esq. – Robert@AronoffLaw.com – Phone: 310 471-7770
www.AronoffLaw.com