Laws affecting Realtors

Foreclosure: Right of First Refusal Following Trustee's Sale of One to Four Single Family Property

Foreclosure: Tenant's, prospective owner-occupants and non-profit's right of first refusal following trustee's sale of one to four single family property. No bundling of such properties at a trustee's sale.

First, this law grants tenants, prospective owner-occupants, nonprofit affordable housing providers, community land trusts, limited-equity housing cooperatives, and public entities a 45-day window to purchase residential property through foreclosure if they can match (in the case of tenants) or exceed (in the case of other purchasers) the last and highest bid made on residential one to four single-family homes at the foreclosure auction.  Second, this law prohibits sales of bundled properties at foreclusure auctions. Third, it increases local govenments' authority to assess fines on owners of blighted propeerties acquired at foreclosure sales.

C.A.R opposed this law as it creates a complicated and lengthy bidding and foreclosure sale process, causing uncertainty within the foreclosure transaction process.

This Law:

1) Forbids a foreclosure trustee from bundling properties for sale at a foreclosure auction, instead requiring that each property be bid on separately.

2) Provides an eligible bidder 45 days after a home foreclosure auction to make an offer for the home that exceeds the highest bid.  Defines "eligible bidder" to include: a) A tenant in the home, a prospective owner-occupant, or a nonprofit in which a propective owner-occupant or eligible tenant is a voting member or director. b) An eligible nonprofit based in California whose primary activity is developing and preserving affordable rental housing, a limited partnership for which an eligible nonprofit is the managing general partner; or a limited liability company in which eligible nonprofit corporation is the managing member. c) A community land trust or a limited-equity housing cooperative. d) The state, the University of California, a county, city,...

Community Water System Exemption - Senate Bill 974

Water: Community Water System Exemption

Senate Bill 974: California Environmental Quality Act: Small Disadvantaged Community Water System: Exemption - This measure will help impacted communities gain access to clean and safe drinking water.  This bill offers a modest but important exemption to very limited community water supply projects that will help certain residents obtain clean and reliable water. C.A.R. supported this measure as it will provide an exemption in CEQA to help expedite small community water projects.

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Exemption from Reassessment Retained for Rebuilt Property Destroyed by Disaster up to 120% of Value of Original

In a Governor-declared disaster an exemption from reassessment will be retained for reconstructed improvements which are comparable to the improvement replaced if similar in size, utility, and function and within 120% of value of original property.

This law allows owners of property substantially damaged or destroyed in a Governor-declared disaster to reconstruct comparable improvements onsite with a return to the former improvement's base year value.  While existing law effectively allows this in a form of a new construction exclusion, this law adds a new provision specific to post-disaster reconstruction following a Governor-recognized event and allows a more generous comparability definition.  Specifically, it defines the term "comparable" using the same 120% definistion used when a victim of a major disaster decides to reconstruct replacement property on site of the damaged property.  Under this definition, reconstructed improvements will be found comparable to the improvement replaced if similar in size, utility, and function and withing 120% of value.  This law applies to real property damaged or destroyed by misfortune or calamity on or after January 1, 2017.

Assembly Bill 2013 is codified as Tax and Revenue Section 70.5. Effective January 1, 2021.

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Price Gouging: Increases the Scope of What Constitutes Price Gouging in the Sale of Goods or Services.

crime of price gougingThis law amends the crime of price gouging to 1) include where a person, contractor, business, or
other entity to charge a price that is more than 50% greater than either the amount the seller paid for the goods or the seller’s costs in selling or providing the goods or services; and 2) provide that the protections against price gouging may also apply to a timeframe prior to a date as set in the proclamation or declaration. It does not affect provisions of Penal Code 396 pertaining to the price of rental housing.

This law expands the crime for price gouging to also include selling or offering to sell those goods or services for a price 10% greater than the price charged immediately prior to a date set by the proclamation or declaration of emergency.  It makes it a crime for a person, contractor, busines, or other entity who did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency to charge a price that is more than 50% greater than the seller's existing costs, as specified.  It authorizes the Governor or the Legislature to extend the duration of these prohibitions for periods greater than 30 days, and during the extension, authorize specified price increases that exceed the otherwise permissible amount, as specified.

Senate Bill 1196 is codified as Penal Code 396.  Effective January 1, 2021.

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Foreclosure and Forbearance Protections: Small Landlords and Homeowners

Urgency legislation that took effect immediately on August 31, 2020.  Requires servicers to comply with applicable federal guidance regarding COVID-19 forbearance.  Servicer must comply with special notice and information requirements if a forbearance is denied.

A mortgage servicer shall comply with applicable federal guidance regarding borrower options following a COVID-19 related forbearance as provided by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Housing Administration of the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or the Riral Development division of the United States Department of Agriculture.

With respect to a nonfederally backed loan, a mortgage servicer is required to review a customer for a solution that is consistent with the guidance to servicers as provided by the above entities. However, It is the intent of the Legislature that a mortgage servicer offer a borrower a post forbearance loss mitigation option that is consistent with the mortgage servicer's contractual or other authority.

A borrower who is harmed by a material violation of this law may bring an action to obtain injunctive relief, damages, restitution, and any other remedy to redress the violation and reasonable attorney’s fees and costs to the prevailing party.

If the mortgage servicer denies a forbearance request, they are required to explain why if the request was made before April 1, 2021. The servicer must specifically identify any curable defect in the written notice; Provide 21 days from the mailing date of the written notice for the borrower to cure any identified defect; Accept receipt of the borrower's revised request for forbearance before the aforementioned 21-day period lapses and; Respond to the borrower's revised request withing five business days of receipt of the revised request.

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Housing: Residential Entitlements Extended

Requires cities and counties to evaluate the impact of government actions on the cost of housing and associated impacts to minority communities and extends by 18 months, the time frame for the expiration, effectuation, or utilization of a housing entitlement for any housing entitlement that was issued prior to, and was in effect on, March 4, 2020, and will expire prior to December 31, 2021.

The California Building Industry Association writes in support, "This important measure has two critical components. First, it encourages local governments to consider the impacts their zoning decisions have on communities of color, and second, extends the expiration date of building permits or other entitlements necessary for, or pertaining to, a housing development project. This proposed legislation recognizes the extreme health and financial devastation due to this pandemic-induced recession has had on Californians and proposes a measured and time-limited response.

This law extends by 18 months any applicable time frame for any “housing entitlement.” This extension applies to any such entitlement issued prior to and effective on March 4, 2020, and that will expire prior to December 31, 2021.

“Housing entitlement” is defined in the statute to include:

  • A building permit, including extension of any applicable time frame within which an applicant must request issuance of a building permit;
  • “A legislative, adjudicative, administrative, or any other kind of approval, permit, or other entitlement necessary for, or pertaining to, a housing development project issued by a state agency”;
  • “An approval, permit, or other entitlement issued by a local agency for a housing development project that is subject to [the Permit Streamlining Act]”;
  • “A ministerial approval, permit, or entitlement by a local agency required as a prerequisite to issuance of a building permit...

Residential Property Insurance. Fire Insurance - Consumer Protections

Assembly Bill 2756 Residential Property Insurance - This measure seeks to provide greater information to consumers on their homeowner policies. Additionally, it includes provisions which mandate 10% building code upgrade coverage for replacement cost coverage policies which will work to ensure more homes are rebuilt and existing housing stock is maintained when disaster strikes.

C.A.R. supported this measure as it provides more transparency to homeowners on information related to their home insurance policy.

Assembly Bill 3012 Residential Property Insurance -  This measure among other provisions, provides that certain information be included in a notice of nonrenewal of a homeowners insurance policy, clarifies that a policyholder shall receive the full amount of what would have been recoverable if the home were to be rebuilt at the original location, clarifies that policies which include additional living expenses (ALE) shall not limit claims if the home is uninhabitable, but not destroyed.  Additionally, the bill states that a policyholder is entitled to a payment of 30% (up to $250,000) of the stated policy limit for contents coverage in the event of a total loss without itemization and directs the FAIR plan to create a clearinghouse of policy information that should be made available to admitted insurers to encourage them to offer policies to FAIR plan customers.

C.A.R. supported this measure as it will help to alleviate the home insurance crisis that many Californians in wildfire prone areas face.

Senate Bill 872 ...

Fire: Defensible Space: Creation of Ember-Resistant Zone within Five Feet of a Structure

Establishes, upon appropriation, an ember-resistant zone within five feet of a structure as part of the defensible space requirements for structures located in specified high fire hazard areas.  Requires removal of material from the ember-resistant zone based on the probability that vegetation and fuel will lead to ignition of the structure by ember.  

However, CAL Fire will NOT changer defensible space inspection practices and forms or enforcement to to implement the requirement for an ember-resistant zone until the director makes a written finding that the legislature has approrpriated sufficient resources to do so, which the director will post on CAL Fire's website, that the Legislature has appropriated sufficient resources to do so.  Moreover, this law is to be "based on regulations" by CAL Fire, and the promulgation of these regulations is "contingent upon an appropriation by the Legislature in the annual Budget Act of another stature for this purpose."

Current law requires a person who owns, leases, controls, operates, or maintains an occupied dwelling or structure to maintain a defensible space of 100 feet from each side of the structure.  This bill would require more instense fuel reductions between 5 and 30 feet around the structure and create an ember-resistant zone within 5 feet of the structure to help reduce ember ignitions.

1)  An ember-resistant zone shall include any attached deck.

2)  Required the Department of Forestry and Fire Protection (CAL FIRE) to not change defensible space...

Deeds: Extended Revocable Transfer on Death Deed Law

Law authorizing simple procedure for transfer of property upon death is extended for one year.

The California Law Revision Commission issued its report on the Revocable Transfer on Death Deed (RTDD) in November 2019, recommending that a number of changes be made to the RTDD process,
but that overall the RTDD should be extended for another 10 years and that the CLRC do a further
study prior to that 10-year sunset. (CLRC, Revocable Transfer on Death Deed: Follow-Up Study (Nov. 2019).) However, given the COVID-19 pandemic, the Legislature’s focus has been on the health emergency and its very difficult economic onsequences.

It has not been on other less urgent matters, including the future of the RTDD and the CLRC report. To ensure that the RTDD can continue until the Legislature can fully review the CLRC report and recommendations, this law extends the January 1, 2021 sunset for one additional year, until January 1, 2022.

Senate Bill 1305 is codified as Probate Code; Section 5600 et seq.

More readings about Laws Affecting Realtors

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Disclosure and Point-of-Sale Compliance - Wildfire Defensible Space and Vegetation Management Laws, and Home Hardening

Disclosure: Disclosure and point-of-sale compliance re wildfire defensible space and vegetation
management laws, and home hardening.

This is a not a 2021 new law. It was passed last year. However, we are including it here because its most signicant provisions become effective January 1, 2021.

Requires delivery of a statutory disclosure re home hardening for homes in designated high fire areas built before 2010, and that seller list specied retrofits.

wild fire areasRequires seller of property located in designated high fire areas to provide buyer with documentation stating that the property is in compliance with local law pertaining to defensible spaces or local vegetation management laws. If there is no such local law, the seller shall provide documentation of compliance with state law, assuming the seller obtained such documentation within six months prior to entering into the transaction. But if neither of the above,the seller and the buyer must enter into a written agreement in which the buyer agrees to obtain documentation of compliance with defensible
space or a local vegetation management ordinance after close.

These disclosure requirements will apply to any property in which the Transfer Disclosure Statement is required to be delivered. TDS exemptions and cancellation rights apply.

Disclosures re Home Hardening Beginning January 1, 2020, if a seller, after completion of construction, has obtained a nal inspection report regarding compliance with, among other things,
home hardening laws...

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