2013 New Real Estate Laws

Extending or Subordinating HCD Affordable Housing Loans

The Department of Housing and Community Development (HCD) has the authority to approve an extension of an HCD loan, subordination of an HCD loan to new debt, or investment of tax credit equity under certain rental housing finance programs, in accordance with specified guidelines. This authority encompasses rental housing development loans, but rental increases for tenants must be limited as specified. The intent of this law is to give the HCD flexibility to maintain the quality of existing affordable rental housing units, including group homes. Read More

Revising License Requirements for Appraisers

Various procedural and administrative changes have been made to the Real Estate Appraisers’ Licensing and Certification Law as administered by the Office of Real Estate Appraisers (OREA), including the following: (1) Prohibits license renewal unless licensee completes education requirements imposed by citation, unless completion date stated in the citation is subsequent to license renewal date (Cal. Bus. & Prof. Code § 11315(d)(2)(D)); (2) Authorizes the OREA to discipline a licensee even if the license has expired or has been surrendered (Cal. Bus. & Prof. Code § 11315.3); (3) Requires an applicant to use LiveScan to submit fingerprint images to the Department of Justice (Cal. Bus. & Prof. Code § 11343(a)). Read More

Increasing Exemptions for Bankruptcy Debtors

The dollar amount exemptions for a debtor in a federal bankruptcy case have been increased, including the following: (1) an increase from $17,425 to $24,060 for real or personal property used as a residence; (2) an increase from $2,775 for one motor vehicle to $4,800 for one or more motor vehicles; (3) an increase from $1,750 to $7, 175 for implements, professional books, or tools of the trade of the debtor or debtor’s dependent; and (4) an increase from $1,150 to $1,425 for jewelry. Read More

Disclosing Gas and Hazardous Liquid Transmission Pipelines

Every contract for the sale of residential real property must contain a specified notice regarding gas and hazardous liquid transmission pipelines. This notice informs buyers that the U.S. Department of Transportation maintains the general location of these pipelines through the National Pipeline Mapping System at www.npms.phmsa.dot.gov. This new requirement is a response to the 2010 pipeline explosion in San Bruno and other tragedies that have occurred. Read More

Pursuing Easement Owner for Maintenance Costs

Starting January 1, 2013, if any easement owner refuses, or fails after written demand, to pay for his or her proportional cost for maintaining the easement as the law requires, the other easement owners can jointly or severally bring an action to recover that cost (or for specific performance) before, during, or after performing the maintenance work. This rule applies to an easement owned by more than one person, or an easement that attaches to more than one parcel of land under different ownership. Read More

Requiring Reverse Mortgage Counseling in Person

The safeguards for a borrower seeking to obtain a reverse mortgage loan have been expanded. Under the new law, the certification must state that the counseling was conducted in person, unless the applicant elected to receive the counseling in another manner. Read More

Subordinating Down Payment Assistance Loans

To help borrowers refinance under the Home Affordable Refinance Program (HARP), the Department of Housing and Community Development (HCD) and the California Housing Finance Agency (CalHFA) are authorized to allow certain loans they administer to be subordinated to refinancing. To be eligible for subordination, a borrower must have a hardship, need subordination to avoid foreclosure, meet the agency’s underwriting requirements, and have insufficient equity to repay the loan. Read More

Helping Distressed Homeowners Keep Their Homes

The California Homeowner Bill of Rights aims to avoid foreclosure where possible to help stabilize California’s housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking. For short sales, a mortgage servicer or lender cannot record a notice of default or notice of sale, or conduct a trustee’s sale, if a foreclosure prevention alternative has been approved in writing by all parties (e.g., first lien investor, junior lienholder, and mortgage insurer as applicable), and proof of funds or financing has been provided to the servicer. This law generally pertains to owner-occupied properties with one-to-four residential units, with certain exceptions. Read More

Anti-Deficiency Protection for Refinance Loans

Homeowners who default on their refinance loans are protected against personal liability for any deficiency following foreclosure. Under existing anti-deficiency law, a borrower is protected from personal liability for a purchase money loan secured by an owner-occupied property with one-to-four residential units. The new law extends that anti-deficiency protection to include any loan used to refinance the purchase money loan, plus any loan fees, costs, and related expenses for the refinance. This new law only applies to refinance loans or other credit transactions used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, that are executed on or after January 1, 2013. Read More

Maintaining Vacant REO Properties

An existing law requiring an owner of vacant residential property acquired through foreclosure to maintain the exterior of the property, was originally set to expire on January 1, 2013, but has now been extended indefinitely. To prevent blighted neighborhoods, this law allows a governmental entity to impose a fine up to $1,000 per day for any violation. If a government entity chooses to impose a fine, it must give the owner notice of the alleged violation and an opportunity to correct commencing within 14 days and completed within 30 days, or less for conditions threatening public health or safety. Read More

Requiring a Summary of Information for Foreclosure Notices

A lender must provide a borrower with a specified summary of information attached to a copy of a notice of default and notice of sale for any property containing one-to-four residential units. The summary must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. The beginning of the notice of default and notice of sale must also state in these 6 languages that the summary is attached. The attached summary does not need to be recorded or published. Read More

Authorizing Statewide Grand Juries to Combat Inter-County Fraud

The California Attorney General is authorized to convene a special statewide grand jury for cases involving fraud or theft that occurs in more than one county as committed by a defendant or a group of defendants acting in concert with one another. This law, which is part of the California Homeowner Bill of Rights, aims to broaden the Attorney General’s power to investigate, issue subpoenas, and issue indictments for multi-jurisdictional mortgage fraud and other financial crimes. Read More

Restricting Cancellation Fees for HOA Documents

An HOA cannot collect a cancellation fee for HOA sales disclosure documents in either of two situations: (1) a request is cancelled in writing by the party who placed the order and work had not yet been performed on the order; or (2) a request is cancelled in writing and the HOA had been compensated for any work performed. Read More

Recording Requirements for Trustee’s Deed in a Condo Complex

A trustee’s deed upon nonjudicial foreclosure of a unit in a common interest development must be recorded within 30 days in the office of the county recorder where the property is located. Any failure to comply with this requirement does not invalidate the trustee’s sale or a sale to a bona fide purchaser. Read More

Allowing Service of Process in Gated Communities

A licensed private investigator must be granted access to a gated community for a reasonable period of time to perform lawful service of process or service of a subpoena. To gain access, the private investigator must identify to the guard the person to be served, display a current driver’s license or other I.D., and provide proof of licensure as a private investigator. Read More

Installing Carbon Monoxide Devices in Hotels

By January 1, 2016, an owner must install a carbon monoxide device in all existing hotel and motel dwelling units intended for human occupancy. By 2014, the Department of Housing and Community Development must adopt building standards for installing carbon monoxide devices in hotels and motels. Read More

Limiting Permit Fee for Solar Energy Systems

A city or county cannot charge a permit fee exceeding the estimated reasonable cost for providing the service for a rooftop solar energy system that produces direct current electricity. A residential permit fee cannot exceed $500 plus $15 per kilowatt for each kilowatt over 15kW unless the city or county provides substantial evidence as specified that a higher fee is reasonable. Similarly, a commercial permit fee cannot exceed $1,000, plus $7 per kilowatt from 51kW to 250kW, plus $5 per kilowatt for each kilowatt above 250kW absent substantial evidence that the fee is reasonable. This law will expire on January 1, 2018. Read More

Disclosing Notice of Default to Prospective Tenants

Every landlord who offers for rent a residential property containing one-to-four units must disclose in writing to any prospective tenant the receipt of a notice of default that has not been rescinded. This disclosure must be made before executing a lease agreement. The written disclosure notice as provided by statute must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. A property manager will not be held liable for failing to provide the written disclosure notice unless the landlord has given the property manager written instructions to deliver the written disclosure to the tenant. This law will expire on January 1, 2018. Read More

Objecting to Landlord’s Claim of Right to Possession After Foreclosure

Under the new law, a prejudgment claim of right to possession will not limit the right of any tenant or subtenant to also file a prejudgment claim of right to possession, or to object to enforcement of a judgment, in any action for unlawful detainer resulting from a foreclosure sale of a rental housing unit. Read More

Extending Post-Foreclosure Protection for Tenants

Existing law requiring a statutory notice when terminating a residential tenant after foreclosure, which was set to expire on January 1, 2013, has been extended to December 31, 2019. The notice is not required in the following situations: (1) the tenant is guilty of unlawful detainer; (2) the tenant and successor-in-interest have entered into a rental agreement; or (3) the tenant who will be receiving the notice was not a tenant at the time of foreclosure. Read More

Easing Escrow Requirement for a Seller’s 30-Day Notice to Terminate Tenancy

Under existing law, a landlord must generally give a month-to-month tenant, who has resided in a dwelling for one year or more, a 60-day notice to terminate tenancy. However, if the landlord enters into a contract to sell, a 30 day-notice to terminate tenancy is sufficient as long as 6 requirements are met, as set forth in our C.A.R. standard form Notice of Termination of Tenancy (NTT). One of the 6 requirements is the landlord opens escrow with an escrow company licensed by the Department of Corporations or a licensed real estate broker. The new law also includes an escrow with a title insurer or underwritten title company. Read More

Restructuring the Department of Real Estate

Effective July 1, 2013, the Department of Real Estate (DRE) will be restructured as part of Governor Brown’s efforts to consolidate governmental entities under the Government Reorganization Plan of 2012. The DRE will become the Bureau of Real Estate under the Department of Consumer Affairs (DCA). The DCA will, in turn, be part of the newly established Business, Consumer Services, and Housing Agency (previously the State and Consumer Services Agency), which will be responsible for licensing and oversight of businesses. Read More

Restricting New Degree Brokers

Under a C.A.R.-sponsored law, the education exemption to the experience requirement for applying for a new real estate broker’s license is more stringent. Under existing law, an applicant must, among other things, be actively engaged in the business of a real estate salesperson for at least two of the last five years. The applicant, however, may petition the DRE for an exemption from the experience requirement if he or she graduated from a four-year college or university with a specialization in real estate. Because “specialization in real estate” is broadly worded, the new law requires that, to satisfy this exemption from the experience requirement, a degree broker’s course of study must have included “a major or minor in real estate.” Read More

Allowing 5 Additional Liquor Licenses Per Year in Certain Counties

The Department of Alcoholic Beverage Control can, for certain counties, issue 5 additional original on-sale general licenses per year for bona fide public eating places with a seating capacity of 50 or more diners. This rule, which expires after 2015, only applies to counties of the 18th class, which are counties with a population of 205,000 to 249,999 people. Read More

Protecting Military Service Members From Foreclosure

The existing California protection for a military service member against foreclosure by a mortgage lender during the period of military service or within three months thereafter, has been extended to nine months thereafter. Exceptions apply to sales made by agreement or court order. This law applies to mortgage loans originated before a service member’s period of military service for which the service member is still obligated. Read More

Capping Mortgage Rates Charged to Military Service Members

If, before entry into the military, a service member has a mortgage or trust deed with an interest rate over 6%, the interest rate must be reduced to 6% or less during that person’s military service and one year thereafter. The lender can, however, seek a court order that military service does not materially affect the military member’s ability to pay over 6%. This new law expands existing law that caps the interest rate for other obligations or liabilities at 6% during military service. Read More

Expanding Notice to Prospective Owners in a Mobilehome Park

Management of a mobilehome park must include in a notice to prospective homeowners that rent limitations under rent control, if applicable, does not apply to homeowners who do not occupy the mobilehome as their principal residence. This notice must be added to the existing “Information for Prospective Homeowners” form that management must provide to a prospective homeowner within 2 business days of receiving an application for residency in a specific space in the park. Read More

Financing Mobilehome Conversions to Resident Ownership

Under existing law, the Department of Housing and Community Development (HCD) has the authority to charge a 3% interest rate for loans funded by the Mobilehome Park Purchase Fund to finance conversions from parks to resident ownership, and to provide low-income housing. The new law allows the HCD to charge less than 3% if the financial stability of the fund is not jeopardized. This new law also authorizes the HCD to provide technical assistance to loan applicants, or to contract with a nonprofit entity to provide technical assistance, and include the cost of the technical assistance to the loan principal. Read More

Applying Replicated Payments to Delinquent Taxes

A tax collector can apply any refund due to a taxpayer to specified delinquent taxes, even if the refund is for a replicated payment (i.e., a payment indicated to apply to a specific tax that has already been paid). The previous exemption for replicated payments has been eliminated. Read More

Increasing Recording Fee by $10 for Fraud Prosecution

A county board of supervisors can adopt by resolution a charge up to $10 as the recording fee for certain real estate instruments. The existing cap on recording fees is $3 per instrument. This new law also expands the types of real estate instruments that may be charged a recording fee, which will include a deed of trust, abstract of judgment, CC&Rs, declaration of homestead, easement, lease, lot line adjustment, mechanics lien, quitclaim deed, notice of default, notice of trustee sale, and others. Read More

Information provided by the California Association of REALTORS®