New Real Estate Laws That Protect California Homeowners, Buyers and Tenants in 2012

Condo Rentals

Starting January 1, owners of units in a common-interest development, usually a condominium, must be allowed to rent or lease their units unless it was restricted before they took ownership. Senate Bill 150 was designed to counter new homeowner association (“HOA”) rules put in place to stem the tide of tenant-occupied properties. It does not apply to rental restrictions prior to January 1. Condo owners must provide to their HOA proof of their purchase date and contact information for their tenants. Certain changes of title, e.g. probate, spousal, parent-to-child, adding a joint tenant, and other transfers exempt from property tax reassessment, do not reset the date of ownership.

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Excessive HOA Fees

Homeowners associations can only charge the actual cost to procure, prepare, reproduce and deliver HOA disclosures and governing documents when a home is being sold, according to Assembly Bill 771, which takes effect January 1. HOA’s routinely receive written requests for such documents in a real estate transaction, but, in the past few years, some HOAs have supercharged those fees and tacked on “junk” fees as well. The new law requires that HOAs give estimates of their fees up front, and it prohibits an HOA, or a third party, from tacking on other fees, fines, assessments, or nonessential documents, as a precondition of providing the HOA documents. The HOA also cannot charge extra fees for electronic delivery if the HOA maintains the information that way.

Tenant Smoking Ban

Landlords can now ban tobacco smoking in, or around, any residential property, including the outside common areas, as of January 1. Senate Bill 332 requires the new provision be in writing as part of the rental agreement or lease. For existing tenants, landlords must give written notice of a change in the terms of the tenancy, with at least 30 days’ notice, depending on the terms of the rental.

Foreclosure Sale

Senate Bill 4 requires that a notice of trustee sale, which lays out the date and location of a foreclosure auction, must provide more user­ friendly information about how to seek a postponement. The notices also must specify the risks for potential buyers of a foreclosure. The law, effective April 1, requires a bank, or their authorized agent, to provide timely information to anyone via the Internet, telephone recording, or other free services, about sale dates and postponements.

Conservation Plumbing Fixtures

Sellers must disclose to potential buyers whether their home has water-conservation plumbing fixtures. The change to the California Civil Code, effective January 1, edited the transfer disclosure statement to include a checkbox for such fixtures, Including low-flow toilets, shower heads and faucets. It also alerts home buyers about the following water-conservation requirements for single-family homes: As of January 1, 2017, homes built on or before January 1, 1994, must have water-conserving devices. Homes altered or improved on or after January 1, 2014 must include water-conserving plumbing fixtures as a condition of final permit approval.

Small Claims Jump to $10,000

Judges can now award up to $10,000 in a small claims action. Prior to January 1, the limit was S7,500 in small claims jurisdictions for a claim brought by a “natural person.” Small claims for injuries in an auto accident do not increase until 2015, and a small claims action brought by a business entity remains at $5,000, according to Senate Bill 221.

Real Estate Agent Discipline

Several laws impact real estate licensees.

• The Department of Real Estate requires all agents or brokers to report, within 30 days, any disciplinary action taken by another state or federal agency, felony indictments or charges, and convictions of any felony or misdemeanor.
• Real estate brokerages who conduct their own escrow activities under a DRE license must provide a written annual report to the DRE with the number of escrows and dollar volume it handled.
• Agents and brokers who fail to pay their taxes could have their licenses suspended. The State Board of Equalization and the Franchise Tax Board will periodically release a list of the 500 largest tax delinquencies of more than $100,000, and the DRE is required to suspend or refuse to renew a state license for anyone on either list.

Several other laws took effect this week. For details about those or any other California laws, visit www.leginfo.ca.gov.