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2007 New Laws Passed By the…
Tags: board member, california legislature, common interest development, common interest developments, deficiencies, disclosures, environmental hazards, financial interest, hoa, homeowner associations, homeowners associations, january 1, law amends, lead based paint, major components, new laws, operating budget, realtors, stirling, unit basis,Pages: 8
Language: english
Created: Mon Nov 6 08:44:03 2006
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2007
New Laws Passed By the California Legislature Affecting REALTORSŪ
Common Interest Developments and Homeowners' Associations
AB 2100* This new law amends the Davis-Stirling Act to require additional reporting
HOA on reserves for a common interest development, and to extend disclosures for
Disclosures self-dealing by homeowner associations (HOAs). Specifically, this law
requires (1) the pro-forma operating budget to include any deficiency in
reserve funding on a per unit basis; (2) a statement of the HOA when the
HOA defers or decides not to repair/replace major components; (3) a
statement of any outstanding loans by the HOA; (4) a reserve funding plan
indicating how the HOA will fund any deficiencies in reserve funding; (5)
distribution of the reserve funding plan to all members.
Furthermore, this law slightly revises the disclosure form regarding
assessments and reserve funding. Finally, this bill also provides that certain
disclosures and voting rules be followed when a HOA is dealing with
contracts between the HOA and a board member (or an entity controlled by
board member or an entity in which a board member has material financial
interest), regardless of whether the HOA is a corporation. (Formerly, these
rules for disclosures and voting only applied to HOAs which were
corporations).
The provisions of this new law become effective January 1, 2007, except for
the distribution of the reserve funding plan, which becomes effective January
1, 2009.
Environmental Hazards/Issues
AB 2861* This new law increases the penalty for repeat violations of lead-based paint hazard laws.
Specifically, any violation after the first would become a misdemeanor with a fine of up to
Lead- $5,000 and/or six months imprisonment.
Based
Paint Under current law, local enforcement agencies can issue a cease and desist order to the owner
Violations when there is a lead hazard created by an "activity" at the premises. A violation of this order is
an infraction which is punishable by a fine of up to $1,000. Under the new law, the second or
any subsequent violation would be a misdemeanor which is punishable by a fine not to exceed
$5,000, or by imprisonment in county jail for up to six (6) months, or both.
This law which amends California Health & Safety Code § 105256 becomes effective on
January 1, 2007.
SB 841* Existing law requires a person that owns, leases, controls, operates, or maintains any
building or structure in, upon, or adjoining any mountainous area or forest-covered lands,
Firebreaks brush lands, or grass-covered lands, or any land that is covered with flammable material, to
for State maintain around and adjacent to the building or structure a firebreak of at least 30 feet.
Responsibility
Areas This new law, which is applicable to state responsibility area lands under the authority of
the Department of Forestry and Fire Protection,authorizes a state or local fire official, at his
or her discretion, to permit an owner of property to construct a firebreak or implement
appropriate vegetation management techniques, to ensure that defensible space is
adequate for the protection of a hospital, adult residential care facility, school, aboveground
storage tank, hazardous materials facility, or similar facility on the property. This law
authorizes the firebreak to be for a radius of up to 300 feet from the facility, or to the
property line, whichever distance is shorter.
This law, which goes into effect January 1, 2007, adds Section 4291.3 to the Public
Resources Code.
Landlord/Tenant
AB 1169* This law reestablishes the sixty (60) day notice which is required by landlords to give to
residential tenants on periodic leases (e.g., month-to-month lease) when the tenants have
60-Day Notice been living in the property for at least one year. This law maintains the exception of a thirty
to Terminate (30) day notice for certain qualifying properties for sale.
Lease
Currently, the law requires thirty (30) days notice for the landlord or the tenant to terminate
a month-to-month tenancy. Under the new law, for residential leases the landlord will be
required to provide sixty (60) days notice to terminate any periodic leases, such as a
month-to-month rental, if all tenants and residents have been in the property for at least one
year. In cases where any tenant or resident has been residing in the property for less than
one year, then thirty (30) days notice is sufficient.
Additionally, thirty (30) days notice can be given when all of the following conditions have
been met:
(1) the dwelling is a separately alienable unit (e.g. condo, single family residence,
townhouse; but not a duplex, triplex or other multi-unit property);
(2) the owner of the unit is being sold to a bonafide purchaser for value;
(3) escrow has been established with a licensed escrow agent or licensed real estate
broker;
(4) the buyer is a natural person (or persons);
(5) notice is given within 120 days after escrow is opened;
(6) notice was not previously given to the tenant; and
(7) the buyer intends to live in the property for at least one full year.
This law adds California Civil Code § 1946.1 which becomes effective on January 1, 2007,
and is set to sunset on January 1, 2010 unless extended by the California Legislature.
Licensing
AB 790* This new law strengthens prohibitions against real estate agents from falsely claiming
membership in trade organizations or falsely claiming to have special designations or
Falsely Claiming certifications. Generally, this law prohibits knowingly authorizing, directing, conniving at
to be a or aiding in the publication, advertisement or distribution of any material false statement
REALTORŪ or representation concerning a designation or a certification, including trade organization
membership. The Real Estate Commissioner is authorized to suspend or revoke a real
estate license for this violation.
Currently, the law provides that willful misuse of trade names, including "realtor", are
subject to discipline by the Real Estate Commissioner by revoking, suspending or
denying a license. The new law strengthens the law on what is prohibited. The
Commissioner may revoke, suspend or deny a license if anyone KNOWINGLY:
(1) authorized;
(2) directed;
(3) connived at; OR
(4) aided in
the publication, advertisement, distribution, or circulation of any material false statement
or representation concerning his or her:
(A) designation or certification of special education;
(B) credential; OR
(C) trade organization membership.
This law amends California Business & Professions Code § 10177.
The provisions of this new law become effective on January 1, 2007.
AB 2429* This statute increases the minimum requirements for a salesperson to obtain a real
estate license. Generally, conditional salesperson licenses will no longer be available
Changes to for new licensees. A salesperson must take a minimum of three real estate classes
Real Estate before obtaining a real estate license, but the exemptions for attorneys and others
Licensing qualified to take the broker exam remain in effect.
Requirements
Currently, the law allows two methods for obtaining a real estate salesperson license.
The first requires the applicant to take three real estate classes and then pass the
salesperson exam to receive a four year license. The second allows the applicant to
take one real estate class, and then pass the salesperson exam to receive a
"conditional" license which is valid for 18 months. During that time period, the
conditional licensee must finish the additional two real estate classes. The new law
removes the option for a conditional license for all applications starting October 1, 2007.
The exception for attorneys and others qualified to take the broker exam will still apply.
This law amends California Business & Professions Code §§ 10151, 10153.3, 10153.4,
and 10153.5 and repeals California Business & Professions Code § 10153.9.
The provisions of this new law do not take effect until October 1, 2007.
Loan Issues
SB 1609* This new law provides protection to consumers who obtain reverse mortgages. This law
prohibits certain self-serving dealing activities by companies providing reverse mortgages,
Reverse requires certain additional disclosures for reverse mortgages, and also requires a translation
Mortgages of the contract for a reverse mortgage to the language in which primarily negotiated.
This law requires lenders and mortgage broker to perform certain acts, and also prohibits
certain practices when selling reverse mortgages:
(1) PROHIBITS requiring the purchase of an annuity as condition for the reverse mortgage;
(2) PROHIBITS offering an annuity or referring the borrower to another for an annuity prior to
loan closing or before the end of buyer's right to rescind;
(3) REQUIRES referring the borrower to housing counseling agency;
(4) PROHIBITS accepting a full application for a reverse mortgage before the borrower
receives housing counseling;
(5) MODIFIES the disclosure notice;
(6) REQUIRES the lender to provide a list of independent loan counselors;
(7) REQUIRES the contract to be translated into Spanish, Chinese, Tagalog, Vietnamese, or
Korean if the reverse mortgage is primarily negotiated in that language.
The provisions of this new law become effective on January 1, 2007.
AB 2602* This new law determines who is entitled to the benefits when a real estate
Trust Fund broker collects trust fund money related to a loan and puts that money into a
Interest on bank or similar financial institution.
Loans
Currently, the law has a provision which indicates that when a real estate broker receives
trust fund money related to a loan and puts that money into a non-interest bearing account of
a bank or similar financial institution, then the broker is entitled to the benefits from having the
funds at that institution.
The new law does the following:
(1) defines "financial institution" for the purposes of the current law; and
(2) provides that the broker can receive the benefits (including financial benefits) when
putting such trust funds into an interest-bearing account, if the lender has authorized this in
writing.
However, the second provision of this law applies only to loans on commercial properties
(other than residential 1-4 unit properties) when the lender is an "institutional investor" under
California Financial Code § 50003.
This law which amends California Financial Code § 854.1 and adds California Financial Code
§ 854.2 becomes effective on January 1, 2007.
Miscellaneous
AB This new law is essentially clean-up legislation which increases the jurisdictional limit in small
2618* claims court to $7,500 on certain issues which were left unchanged when general limits
increased from $5,000 to $7,500. This law conforms the jurisdictional limits of a number of
Small actions in small claims court, including some common interest development actions, and
Claims landlord-tenant claims.
Court
The areas where small claims court jurisdiction was previously limited to $5,000 and was
increased to $7,500 are the following:
(1) specified acts of discrimination, including boycotting, blacklisting, violence, and the threat of
violence;
(2) specified enforcement actions relating to common interest developments for declaratory,
injunctive or writ relief in conjunction with monetary damages;
(3) specified actions in landlord-tenant law;
(4) a claim or counterclaim in a class action lawsuit;
(5) complaints to the PUC (Public Utilities Commission) through its website;
(6) complaints to the PUC against any electrical, gas, water, heat or telephone company;
(7) specified juvenile law claims against a minor, or a minor's parents.
This new law become effective on January 1, 2007.
SB 1613* This new state law imposes a prohibition on the use of a cellular phone when driving a motor
vehicle unless the phone is designed and configured to allow hands-free listening and
Restrictions talking, and used in that manner. A number of exceptions to this prohibition include:
on Cellular
Telephone (1) contacting a law enforcement agency of public safety entity for EMERGENCY
Usage in PURPOSES;
Motor
Vehicles (2) calls by an EMERGENCY SERVICES PROFESSIONAL in an authorized emergency
vehicle; and
(3) certain digital two-way radios when driving a commercial vehicle until July 1, 2011.
The fine for a first offense is $20 and for any subsequent offense is $50. Any infraction is
not be considered a violation point for DMV purposes (i.e., won't impact auto insurance).
This law which adds California Vehicle Code §§ 12810.3 and 23123 becomes effective on
July 1, 2008.
AB This new law extends the safety requirements for construction of new pools (or remodeling of
2977* existing pools) to spas. Furthermore, this law changes what is acceptable for the safety
features. This law also adds a new disclosure requirement to be given to consumers by
Pool & contractors/builders when obtaining a permit to work on a pool or spa.
Spa
Safety Currently, the law requires certain safety features whenever a building permit is issued for
construction of a new swimming pool at a private, single-family house. Such pools must have
one of the following five features:
(1) a pool enclosure;
(2) a safety pool cover;
(3) exit alarms on doors providing direct access to the pool;
(4) self-closing, self-latching device with a release mechanism on doors providing direct access
to the pool; OR
(5) other means of protection, if the degree of protection is equal or greater than any of the four
previously specified devices.
Under the new law, this safety feature provision would be applicable to construction of a new pool
or spa, or remodeling to a pool or spa (when a permit is required). For spas, items (1) and (2)
must have a locking feature. Furthermore, two additional safety measures are allowed:
(6) removable mesh fencing meeting standards of the American Society for Testing and Materials
(ASTM); OR
(7) swimming pool alarms meeting ASTM standards.
Furthermore, this law would require that the building inspector ensure that the standards are met
and that the safety feature is working correctly before approving the permit.
In addition, the consumer notice currently given when constructing new pools will be required for
new spas, and work on pools or spas requiring a permit. Finally, this law also updates the
backup safety systems (e.g., suction outlets are to have anti-entrapment covers), and requires
the Building and Standards Commission to update the building code for swimming pools and
spas by January 1, 2010.
This law which amends California Health & Safety Code §§ 115922, 115924 and 115928
becomes effective on January 1, 2007.
Subdivisons/Developments
SB 1052* Currently, the Subdivision Map Act authorizes either the developer or any tenant in the
property to appeal decisions or actions by an advisory agency relating to a tentative map on
Subdivision subdivisions that are conversions. Such appeals must be filed within ten days of any
Appeal decision, and is then heard by either the appeals board or the legislative body (if there is no
Process appeals board) within thirty (30) days. Under the new law, if the legislative body does not
have a regularly scheduled meeting within thirty (30) days, then the appeal can be heard at
the next regular meeting after the notice of the appeal, so long as such period does not
exceed sixty (60) days. Furthermore, the new law restates that each decision made by the
legislative body under this section of the law must be supported by consistent findings of
fact.
This law amends California Government Code § 66452.5. This new law becomes effective
on January 1, 2007.
AB 782* This new law changes the criteria for "blight" for redevelopment purposes. This law
removes one of the criteria as sufficient for blight by itself the condition that the land
"Blight" is characterized by subdivided lots of irregular form and shape, and inadequate size
Defined for for proper usefulness and development.
Redevelopment
Purposes Currently, the law defines "blight" and "predominantly urbanized" for the purposes of
redevelopment. Under those definitions, redevelopment agencies are empowered to
reduce the effect of blight. Under existing law, four physical factors and five economic
factors of blight are laid out. The four physical factors are:
(1) buildings where living or working would be UNSAFE OR UNHEALHTY;
(2) factors that prevent or substantially hinder the ECONOMICALLY VIABLE USE or
capacity of buildings or lots;
(3) adjacent or nearby uses which are INCOMPATIBLE with each other and prevent
economic development; and
(4) lots of IRREGULAR FORM and SHAPE, and INADEQUATE SIZE for proper
usefulness and development.
Under current law, "blight" was a combination of at least one of the four physical
factors and at least one of the five economic factors. In addition, the fourth physical
factor was sufficient by itself for "blight".
This last basis for "blight" has been removed under the new law. Furthermore, this
same physical factor is no longer a criterion for "predominantly urbanized".
This law which amends California Health & Safety Code §§ 33030 and 33320.1
becomes effective on January 1, 2007.
Tax Issues
SB 1607* This new law clarifies certain exemptions from property tax reassessments. Most
importantly, it clarifies that the exemption for transfers between grandparents and their
Property Tax grandchildren will be liberally construed. This law also clarifies the "welfare exemption" and
Reassessment the "veterans' organization exemption" and makes a minor change for applications for the
Exemptions exemption for property owned by local governments.
Currently, the law has an exclusion from reassessment for transfers between a parent and a
child (Proposition 58), and also between a grandparent and a grandchild (Proposition 193).
The former was previously given a liberal interpretation, and this law gives the same liberal
interpretation to the latter (i.e. transfers between a grandparent (GP) and a grandchild).
Specifically, the following transactions, among others, have been deemed to be exempt:
(1) a transfer from a legal entity wholly owned by the transferor to himself, and then to the
transferee (e.g. a transfer from GP's corporation to GP to GP's grandchild);
(2) a transfer from a transferor to the transferee, and then to the transferee's legal entity
wholly owned by the transferee.
A legal entity for the above purposes includes corporations, partnerships, trusts, and other
legal entities.
This new law which amends California Revenue and Taxation Code §§ 214, 214.8, 254.4,
254.6 and 1840 becomes effective on January 1, 2007.
AB 2962* This new law provides an alternative to the current California withholding tax requirement upon
transfer of real property of paying three and one-third percent of the sales price on real estate
California on non-exempt transactions. Under this law, if withholding is required, the seller can opt to
Withholding pay the top-tier (under corporate or individual state tax laws) on any recognized gain on the
Tax sale of the real property.
Alternative
Upon Currently, the law requires the payment of three and one-third percent (3 1/3%) as withholding
Transfer on the transfers of real estate on properties which do not qualify for an exemption. Some of
the more common exemptions, among others provided in the statute, are:
(1) sale of a PRINCIPAL RESIDENCE;
(2) sale as part of a 1031 EXCHANGE;
(3) LOSS on the sale of property;
(4) sales price of $100,000 OR LESS;
(5) a CORPORATION with a permanent place of business in CALIFORNIA.
Under the new law, if the transferor is not exempt from withholding at the time of the
sale/transfer, the transferor can opt to withhold the maximum tax rate (under either individual
tax rates or corporation tax rates) on the actual gain on the transferred property instead of the
three and one-third percent. Such withholding would be done under penalty of perjury which
would be subject to the penalty of the greater of (i) $500 or (ii) 10% of amount required to be
withheld, in addition to the withholding plus any interest, fees and other penalties.
This law amends California Revenue & Taxation Code §§ 18662 and 18668 and goes into
effect on January 1, 2007.
Time Shares
AB This new law increases the disclosures required on the sale or lease of time-share interests, as
3020* well as providing other safeguards in the sale or lease of these interests. Specifically, the new
provisions require more stringent certifications on proposed time-share budgets including the right
Time of the Real Estate Commission to review such budgets, and specify certain reserve requirements
Shares related to unsold inventory by the developer, and allow an association greater powers to collect
delinquent assessments in a time-share facility.
Currently, the law requires time-share developers and exchange companies to disclose certain
information to purchasers and prospective purchasers of time-share plans and exchange
programs. Specified time-share plans offered for sale in California, or created and existing in
California must also pay certain fees, register, and provide certain notices and disclosures for all
oral and written communication. These time-share plans require a public report by the Real
Estate Commissioner.
Under the new law, anyone offering to sell or lease must make certain information available prior
to signing any contract, and must provide a copy of that information prior to any transfer of
interest. This information includes:
(1) the CCRs for the time-share plan;
(2) the articles of incorporation (or association) of the time-share association (TSA);
(3) bylaws of the TSA;
(4) other rights and responsibility for owners; AND
(5) the current budget and financial statement for the time-share plan.
This law also specifies:
(1) when regular and special assessments become delinquent;
(2) the costs that may be charged when delinquent; AND
(3) how notices are to be provided for increases in regular and special assessments.
Furthermore, this law would require that the developer certify the budget in a specified manner to
the Real Estate Commissioner in order to comply with the law, and that certification of these
budgets would be limited to certain qualified persons. Finally, this bill also tighten procedures for
the developer to provide assurances (written contracts that obligate the developer to pay
shortfalls for operating expenses when inventory remains unsold) for the time-share development.
This law amends California Business & Professions Code §§ 11211.5, 11226, 11238, 11240,
11241, 11242, 11267 and 11275, and adds California Business & Professions Code §§ 11216.1,
11242.1 and 11265.1.
Most of the provisions of this new law become effective on January 1, 2007, but the provisions
relating to delinquent regular and special assessments of a time share became effective
immediately on September 22, 2006