2011 New Laws
Protection of Tenants Who Are Victims of Domestic Violence:
Effective January 1, 2011, a residential landlord cannot terminate a tenancy based on domestic violence (evidenced by police reports or a restraining order) committed against the tenant or members of the tenant’s household by a non-tenant of the same dwelling unit. If the protected tenant subsequently allows the restrained person to visit the property, or the landlord reasonably believes the restrained person poses a threat to others, the landlord may serve a three-day notice to cure or quit. This new law also requires that, for new leases, a landlord change the exterior locks of a protected tenant’s dwelling unit within 24 hours after the tenant provides a written request and supporting court or police documentation.
No Short Sale Deficiencies:
Effective January 1, 2011, a seller’s first trust deed lender cannot obtain a deficiency judgment against the seller after a short sale. Providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan. This law applies to first trust deeds secured by one-to-four residential units, but does not restrict the lender from seeking damages for fraud or waste by the borrower.
Restriction on Adverse Possession Claim:
Effective January 1, 2011, a claim for adverse possession requires, among other things, certified records of the county tax collector showing that all state, county, or municipal taxes have been timely paid for the five-year period the property has been occupied and claimed.
Protections Against Real Estate Fraud:
Effective January 1, 2011, new laws protecting consumers from real estate fraud shall include the following: (1) residential mortgage loan auditors shall be subject to the foreclosure consultant laws; (2) certain statutory disclosures must be included in any mailed solicitation that offers to provide a copy of an owner’s grant deed or other title records for a fee; and (3) criminal punishment for renting out a residential dwelling without the owner’s consent shall be increased from six months imprisonment plus a $1,000 fine to one year imprisonment plus a $2,500 fine.
Enforcement of Mortgage Loan Originator (“MLO”) Requirements:
Effective January 1, 2011, anyone acting as a Mortgage Loan Originator (MLO) without an MLO license endorsement will be guilty of a crime punishable by six months imprisonment, plus a $20,000 fine. Furthermore, a broker cannot employ or compensate a real estate licensee for MLO activities unless that licensee has a license endorsement.
Energy Audit in Home Inspection Report:
Effective January 1, 2011, a home inspection and inspection report may, upon a client’s request, include an audit of the energy efficiency of a home, according to the standards of the statewide program Home Energy Rating Systems (HERS). REALTORS® are also strongly encouraged to give the newly released HERS booklet to residential buyers, because doing so provides a valuable shield from liability.
Other Laws: Other new laws that affect real estate include revisions to the mechanics’ lien law (Senate Bill 189); clarification that the prohibition against discrimination of tenants based on source of income pertains to lawful and verifiable income (Senate Bill 1252); extension of the CalVet Home Loan program to include 2-to-4 residential units (Assembly Bill 2087); and lien enforcement by a municipal utility district for a tenant’s delinquent charges.
New Laws for 2010
60-Day Notice to Evict Residential Tenants:
The law requiring a landlord to provide a 60 day notice to terminate a residential tenancy if the tenant has resided in the unit for a year or more is extended indefinitely.
New Protections for Tenants in Foreclosed Properties:
Under this new law, the foreclosing lender or post-foreclosure purchaser must give a Abona fide@ month-to-month tenant a 90 day notice to vacate instead of the previous 60-day notice. A Abona fide@ tenant is any tenant other than the borrower/owner (or his/her child, parent, or spouse) with a tenancy that is the result of an Aarms length@ transaction with rent not substantially lower than fair market rent. If the Abona fide@ tenant is on a lease, then the full lease term must be honored, unless the unit is sold to a buyer who intends to occupy the property, in which case a 90 day notice can be given.
Residential Utilities; Landlord Default:
Utility companies must give written notice to tenants at least 10 days prior to terminating a utility service when the landlord=s utility account is in arrears, and must make the utility service available to the tenant when the tenant assumes responsibility for future charges under the account.
Homestead Exemption Limits Increased:
This new law changes the statutory homestead exemptions from: (a) $50,000 for a single person, (b) $75,000 for a member of a family unit, and (c) $150,000 for a person who is elderly, disabled, or 55 years of age or older with a gross annual income of $15,000 or less (or $20,000 or less if married), to (a) $75,000, (b) $100,000, and (c) $175,000, respectively.
Homebuyer Tax Credit Extension and Expansion:
This new law extends the first time homebuyer tax credit and expands it to qualified non first time homebuyers.
Appraisal Management Companies – Registration:
Appraisal management companies must register with the Office of Real Estate Appraisers and be subject to the Real Estate Appraisers= Licensing and Certification Law.
Advance Fees for Loan Modification Work Prohibited:
This new law prohibits any person (including licensed real estate brokers and attorneys) who works for compensation on mortgage loan modifications related to residential real property containing one to four dwelling units to charge or receive any compensation until after the person has fully performed each and every service the person contracted to perform.
Foreclosure – Notice of Default; Notice of Sale; Short Payoffs:
This new law: (a) limits application of a 30-day pre-recording Notice of Default period to owner-occupied residential real property of 1-4 units; (b) extends the time required between recording a Notice of Sale to the sale date from 14 to 20 days; (c) requires that a beneficiary deliver a short pay demand statement within 21 days after receipt of a short payoff request.
Mortgage Loans – Reg Z Advertising:
Under this new law, the Federal Reserve Board has adopted rules to prohibit prominent deceptive and misleading practices in advertisements for closed end mortgage loans.
Legal Aid for Human Needs:
Effective July 1, 2011, this new law requires that the Judicial Council develop one or more model pilot projects in selected courts for three year periods in order to provide free legal counsel for low income parties in civil matters involving critical issues affecting basic human needs, such as housing related matters, domestic violence and civil harassment restraining orders, probate conservatorships, personal guardianships, elder abuse, or parental actions for sole legal or physical custody of a child.
New Laws for 2009
Notice to Tenants & Owner-Occupants Regarding Foreclosure:
Under this new law, the foreclosing lender must give the tenant a 60-day notice to vacate instead of the previous 30-day notice. For Section 8 tenants, the notice period is not changed and remains 90 days. The 60-day notice period does not apply to the owner or any party in occupancy of the foreclosed property who signed a Note. They need only be given a 3-day notice to vacate:
Tenants and owner-occupants must also receive written notice of the foreclosure once a notice of sale has been posted.
Lender Foreclosure Requirements:
A lender cannot file a Notice of Default until 30 days after contact is made with the borrower (or due diligence requirements to contact the borrower are satisfied) to “assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” The lender must advise the borrower of the right to request a meeting and provide the borrower the toll-free phone number of a HUD-certified housing counseling agency.
Termination of Tenancy by Tenants Who Are Crime Victims:
This new law authorizes a tenant to terminate his/her own tenancy by notifying the landlord in writing that he/she or a household member was a victim of domestic violence, sexual assault, or stalking, and intends to terminate the tenancy. The tenant must attach to the notice a copy of a temporary restraining order, an emergency protective order, or a specified written report by a peace officer.
Abandoned Animals on Vacated Real Property:
This new law requires a person or entity that discovers an abandoned animal on real property that has been vacated upon termination of a lease, or after foreclosure, to immediately contact Animal Control for the purpose of retrieval and care.
Disposition of Personal Property Left on Commercial Real Property:
This new law provides that if the landlord reasonably believes that the total resale value of personal property remaining on commercial real property after termination of a tenancy is the lesser of $750 or $1 per square foot of the premises, the landlord may retain the property or dispose of it in any manner.
Owner/Tenant Responsibilities in High Fire Hazard Severity Zone:
Owners and tenants of certain types of occupied dwelling structures located within very high fire hazard severity zones must significantly reduce ignition risk by maintaining defensible space around the structures.
Discrimination Issues; Expansion of Scope of Disability-Related Protection:
The Americans with Disabilities Amendments Act of 2008 (“ADAAA”) expands the definition of a covered disability, expands the definition of “major life activities,” and expands the definition of “major bodily functions,” thereby expanding the scope of protection previously provided by the ADA.
Liquidated Damages / High-Rise Condos:
This new law allows a seller of a high-rise condo with a price over $1 million to recover, under specified circumstances, 6% of the sales price in liquidated damages if the buyer defaults on the purchase contract, unless the buyer proves the amount of liquidated damages is unreasonable in relation to the seller’s actual damages.
DRE License Number on Ads and Purchase Agreements:
This law requires a real estate license holder to disclose his or her DRE license number on all “solicitation materials intended to be the first point of contact with consumers” and on real property purchase agreements.
New Laws for 2008
No Discrimination by Landlords Based on Immigration or Citizenship:
Under this new law, residential landlords cannot use immigration or citizenship status as criteria for prospective tenants or prospective occupants. Specifically, landlords and agents of landlords may not make any inquiry into immigration or citizenship status.
Notice to Tenants when there is a Planned Conversion to Condominiums:
Monetary penalties will be imposed on property developers if notices are not given to tenants when converting properties into common interest developments/condos. If the developer fails to provide notice to a prospective tenant (after the approval of the final map), the developer must pay money damages to each prospective tenant who actually becomes a tenant of a subsequently subdivided property.
Loan Regulation/Mortgage Loan Brokerage Issues:
This new law increases regulations regarding subprime and other non-traditional mortgages. Various agencies governing residential loans will have new authority to adopt stricter guidelines. Also, principals who make eight or more loans of their own money within a calendar year without using a real estate broker must become licensed with the Department of Real Estate.
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 property tax refunds will be provided for such reassessment reversals.
Regulation of Real Estate Appraisers:
Under this new law, the compensation of an appraiser cannot be based on the valuation of a property for the following types of transactions: Sales; Purchases; Transfers; Financing; or Development. The new law also prohibits parties with an interest in the real estate transaction from improperly influencing a real estate appraiser.
Common Interest Development Managers:
Current law requires common interest development (CID) managers to meet certain requirements in order to be a “certified CID manager” and to provide certain information annually to the board of directors of the CID. This new law extends these provisions through January 1, 2012, and requires that qualifications as a “certified CID manager” include new education elements for management skills.
Agenda for Home Owner Association (HOA) Meetings:
Under this new law, HOA meeting notices must include an agenda for the meeting. Generally, the HOA can only discuss items on the agenda at its meetings, unless the meeting is an emergency meeting.
Automatic Homestead Law:
Under this new law, the “residential exemption” (also known as the “automatic homestead”) applies even though the homeowner does not live in the property if either a separated spouse or a former spouse resides in the property or exercises control over possession of the property.
Regulations Regarding Notary Publics:
This new law affects notary publics. The identity of the person making the acknowledgment, or taking an oath or affirmation, must be based on “satisfactory evidence” and no longer on “personal knowledge.” The certificate of acknowledgment must be executed under penalty of perjury. A “Power of Attorney” document now requires a thumbprint.
Restrictions on Cellular Telephone Usage in Motor Vehicles:
Effective July 1, 2008, use of a cellular phone when driving a motor vehicle is prohibited unless the phone is designed and configured to allow hands-free listening and talking, and is used in that matter. This law will be in California Vehicle Code §§12810.3 and 23123.