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Sunday, December 16, 2012

New 2013 California Laws affecting Landlords, Real Property Owners, and RE Agents

Landlord Must Disclose Notice of Default to Prospective Tenants: Starting January 1, 2013, 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units must disclose in writing to any prospective tenant the receipt of a notice of default that has not been rescinded.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. If a landlord violates this law, the tenant can elect to void the lease and recover one month’s rent or twice the amount of actual damages, whichever is greater, plus all prepaid rent. If the lease is not voided and the foreclosure sale has not occurred, the tenant may deduct one month’s rent from future amounts owed. 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. Senate Bill 1191.

Restrictions Against Cancellation Fees for HOA Documents: Beginning January 1, 2013, 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. Moreover, an HOA must refund all fees collected for HOA documents if a request is cancelled in writing and work had not yet been performed on the order. Additionally under this new law, the HOA cover sheet itemizing the HOA sales disclosures must be in at least 10-point type. Our C.A.R. standard form Homeowner Association Information Request (Form HOA) complies with this requirement. Assembly Bill 1838.

Landlord May Dispose Abandoned Personal Property Less Than $700: Commencing January 1, 2013, the total resale value of personal property left behind by a tenant after termination of a tenancy that the landlord must sell at a public auction (rather than dispose of or retain for his or her own use), has been increased from $300 to $700, if certain procedures are followed. This law, however, also prohibits a landlord from assessing any storage cost if the tenant reclaims personal property within 2 days of vacating the premises. The statutory notices of Right to Reclaim Abandoned Property have been revised to reflect these changes. Furthermore, a landlord’s notices of termination of tenancy and pre-move out inspection must contain specified language that former tenants may reclaim abandoned personal property left on the premises, subject to certain conditions. Assembly Bill 2303.

Tenant Entitled to a 90-Day Notice to Terminate After Foreclosure: Effective January 1, 2013, a month-to-month tenant in possession of a rental housing unit at the time the property is foreclosed must be given a 90-day written notice to terminate under California law. For a fixed-term residential lease, the tenant can generally remain until the end of the lease term, and all rights and obligations under the lease shall survive foreclosure, including the tenant’s obligation to pay rent. However, the landlord can give a 90-day written notice to terminate a fixed-term lease after foreclosure under any of the following four circumstances: (1) the purchaser or successor-in-interest will occupy the property as a primary residence; (2) the tenant is the borrower or the borrower’s child, spouse, or parent; (3) the lease was not the result of an arms’ length transaction; or (4) the lease requires rent that is substantially below fair market rent (except if under rent control or government subsidy). The purchaser or successor-in-interest bears the burden of proving that one of the four exceptions has been met. This law does not apply if a borrower stays in the property as a tenant, subtenant, or occupant, or if the property is subject to just cause rent control. This law will expire on December 31, 2019. This new California law is similar, but not identical, to the 90-day termination notice requirement under the federal Protecting Tenants at Foreclosure Act (12 U.S.C. § 5201, et seq.) (as extended by the Dodd-Frank Wall Street Reform and Consumer Protection Act), which is set to expire on December 31, 2014. Assembly Bill 2610.

Settlement Agreement Cannot Prohibit DCA Complaint: As of January 1, 2013, a license regulated under the Department of Consumer Affairs (DCA), or an agent of the licensee, must not include or permit inclusion in a settlement agreement of a civil dispute, a provision prohibiting the other party from contacting, filing a complaint with, or cooperating with the DCA, or a bureau, board, or program within the DCA. The licensee is also prohibited from including or permitting a provision for the other party to withdraw a DCA complaint. A provision as described is void as against public policy. A licensee violating these requirements is also subject to disciplinary action. This new law also provides that any DCA board or bureau that takes disciplinary action against a license based on a complaint or report that is also the subject of a civil action that has been fully settled monetarily, cannot require a licensee to pay any additional sums to someone who was a plaintiff in the civil action. The DCA has the authority to adopt a regulation exempting settlement agreements for certain causes of actions from these requirements. Real estate licensees will be regulated under the DCA commencing July 1, 2013. Assembly Bill 2570.

Smoke Alarm Requirements for Home Improvers and Landlords: Starting not next year but January 1, 2014, for all dwelling units intended for human occupancy for which a building permit is issued for alterations, repairs, or additions for more than $1,000, the issuer of the building permit will not sign off on the completion of work unless the owner demonstrates that all smoke alarms (previously “smoke detectors”) required for the dwelling unit are devices approved by the State Fire Marshal. Also starting January 1, 2014, to be approved and listed by the State Fire Marshal, a smoke alarm must display the date of manufacture, allow a place for the date of installation to be written, incorporate a hush feature, incorporate an end-of-life warning, and, for battery-operated devices, contain a non-removable 10-year battery. These rules may be superseded by a local rule or ordinance that is more stringent than state law. For properties rented or leased, an owner is generally responsible for testing and maintaining smoke alarms in an apartment complex or other building starting January 1, 2013 and in a single-family residence starting January 1, 2014, and also responsible for installing additional smoke alarms as needed to comply with building standards starting January 1, 2016. Senate Bill 1394.

Protections for Homeowners in Mobilehome Parks: A long time coming for some of our members, a mobilehome park must, starting January 1, 2013, provide a personal property mobilehome owner with a specified notice in the rental agreement for space, and before February 1 every year thereafter. The new notice sets forth the mobilehome owner’s rights and responsibilities, including the right to a 90-day notice of any rent increase, the right not to waive any rights in a rental or sales agreement, the right to just cause termination, the right to sell the home in place in the park, the right not to sell the home to the park, the right not to pay any transfer or selling fee, and the right not to use the park-approved broker or dealer. Assembly Bill 2150.

Lender Must Provide Summary 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. The Department of Corporation (DOC) must provide a standard translation of the statement free-of-charge on its website at www.corp.ca.gov. This requirement takes effect on April 1, 2013 or 90 days after the DOC issues the summary translations, whichever is later. Under existing foreclosure procedures, notices of default and notices of sale must be mailed to borrowers by registered or certified mail as specified. Assembly Bill 1599.

Davis-Stirling Common Interest Development Act Has Been Reorganized: Effective not next year but on January 1, 2014, the Davis-Stirling Common Interest Development Act that regulates condominiums, townhomes, and planned developments, among others, has been comprehensively reorganized. The goal of the reorganization was to give unit owners and volunteer board members a more logical and user-friendly format. Certain sections that were unclear have been clarified, and terminology has been standardized. The California Law Revision Commission took a conservative approach to making substantive changes to the law, which include, without limitation, providing relative authority of governing documents, providing procedures for amending a common interest declaration, prohibiting a self-interested director from voting on specified matters, and requiring an HOA to release a lien recorded in error within 21 days. Assembly Bill 805.

New Requirements for Brokers Who Sell Notes: Starting January 1, 2013, a real estate broker who engages in a transaction involving the sale or offer to sell a note secured by real property, or the sale of an undivided interest in a note secured by real property, must generally comply with new requirements. Some of the new requirements are substantially similar to current requirements for brokers exempt from securities qualification under Cal. Bus. & Prof. Code section 10238(h), including requirements involving loan-to-value and appraisals. In addition, a broker must obtain and retain for four years a specified statement of the note purchaser’s qualifications of income or net worth. The broker must also make reasonable efforts to ensure that a loan is a suitable and appropriate investment, based on the client’s financial situation and investment objectives. This new responsibility is included in the disclosure statement applicable to negotiating for a client to make a loan or buy notes under Cal. Bus. & Prof. Code § 10232.4. Senate Bill 978.

Anti-Discrimination Protections For Religious Grooming and Breastfeeding: Commencing January 1, 2013, the protection against religious discrimination under the California Fair Employment and Housing Act (FEHA) has been expressly expanded to require an employer or other covered entity to make reasonable accommodations for an individual’s religious grooming or dress practice. Religious grooming or dress is to be broadly construed, and includes head, facial, and body hair, head or face coverings, religious clothing, jewelry, artifacts, or other items that are part of the observance of a religious creed. Segregating an individual is not a reasonable accommodation of someone’s religious grooming or dress practice. No accommodation for religious grooming or dress is required if it violates another law that protects civil rights. Additionally, the FEHA protection against sex discrimination has been expanded by way of a declaration, not a change in existing law, that requires an employer or other covered entity to make reasonable accommodations for breastfeeding or medical conditions related to breastfeeding. Senate Bill 1964 and Assembly Bill 2386.

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