Thursday September 22, 2011 3:00 p.m. - 5:00 p.m. Sacramento Convention Center
Mission Statement: The mission of the committee is to monitor and supervise the state implementation of C.A.R. public policy in legislation and regulation; and to evaluate policy recommendations that arise in C.A.R.'s four public policy committees: Transaction and Regulatory, Taxation and Government Finance, Land Use and Environmental, and Housing. The Legislative Committee reports to the Executive Committee and the Board of Directors. (January 2010)
Presiding: Steve White, Chair Wendy Furth, Vice Chair
Liaisons: Ruth Hayles, Executive Committee Mike Riley, Executive Committee William Brown, NAR
Staff: Alex Creel Stan Wieg
I. Introduction and Welcome - Steve White
II. Legislative Update A. Legislature and state budget developments – Oral update from staff. B. Member mobilization – Update on Broker Involvement Program, member mobilization issues and a recap of Legislative Day.
III. Sponsored Legislation
A. SB 150 (Correa), CID right to rent There has been a trend among some homeowner associations to adopt restrictions that limit the ability of unit owners to rent their dwellings in Common Interest Developments (CIDs). The imposition of these rental restrictions diminishes an owner’s property rights by removing options that were available when the unit was purchased. C.A.R. sponsored SB 150, a re-introduction of C.A.R.’s AB 2259 (Mullin) of 2008, to protect the right of a CID owner to rent his or her unit, if that right existed at the time the owner purchased the unit. Status: Signed by the Governor on July 8 (Chapter 62, 2011 Statutes)
B. SB 458 (Corbett), Anti-Deficiency C.A.R .initially sponsored SB 458 to revisit the “anti-deficiency” issue of SB 1178 (Corbett, 2010), which was vetoed by Governor Schwarzenegger. As introduced SB 458 would have extended existing anti-deficiency protections to cover the refinance of purchase money mortgages, and new debt (cash out) incurred to acquire, construct or improve the home. C.A.R. and the lender groups reached an agreement to amend SB 458 to instead expand the provisions of existing law (SB 931 of 2010) which became effective this year. SB 931 requires a first mortgage holder to accept an agreed upon short sale payment as full payment for the outstanding balance of the loan, but does not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens effectively providing that any lender that agrees to a short sale must accept the agreed upon short sale payment as full payment of the outstanding balance of all loans. In addition, this measure clarifies that this rule applies only to residences. Amendments were later added to SB 458 which would prohibit a mortgage holder from requiring the short seller to provide funds, in addition to the sale proceeds from the property, in exchange for the note holders’ written consent to a short sale. Status: Signed by the Governor on July 15 (Chapter 82, 2011 Statutes)
C. SB 510 (Correa), DRE manager proposal Under current law, the Department of Real Estate (DRE) is only permitted to hold the broker of record accountable for failure to supervise, even if the broker of record has delegated supervisorial responsibility to an office manager. C.A.R. is sponsoring SB 510 which would establish a designated office manager requirement for those licensees managing real estate offices. Under this legislation, a broker of record would be permitted to appoint an eligible (2 years of experience) real estate broker or salesperson to supervise branch office operations, provided that a contract detailing the duties and responsibilities to be performed by the office manager is in writing and a notice is delivered to DRE. While principal brokers would remain accountable for their supervisorial responsibilities, DRE would also be able to discipline managers for failure to supervise. This measure was recommended by a DRE Task Force containing REALTOR® members and would go into effect on July 1, 2012. Status: To Governor
D. AB 278 (Hill), DRE Citation and Fine authority Currently, in order to subject real estate licensees to discipline for any violation, they must go through the Department of Real Estate’s (DRE) administrative hearing process. Notice of discipline, no matter how minor the infraction, is published in the DRE bulletin or on the DRE website widely circulated among real estate agents. AB 278 would allow the DRE to issue a “civil citation” with a maximum fine of $2,500 for minor infractions. Licensees would be permitted to contest the citation through the current hearing process if they wish. The action would not be published in the DRE bulletin, unless there is a contested hearing and judgment, although it could still be discovered in the public record. C.A.R. is sponsoring this legislation so DRE field staff can take immediate action on minor infractions without having to complete the lengthy and expensive hearing process. Amendments to this measure have raised the maximum fine from $1,000 to $2,500 in order to reconcile this bill with a similar provision in SB 53. Status: Senate Floor
E. AB 771 (Butler), CID disclosure fee limitation Home Owner Associations (HOAs) are required by law to provide specific documents to prospective purchasers of homes in common interest developments (CIDs). Current law prohibits HOAs from charging fees in excess of what is “reasonable” based on the actual cost of processing and producing these documents. HOAs are increasingly delegating document preparation to outside third party vendors or contractors who, under a 2007 court decision, are not subject to this fee limitation. This delegation of responsibility by HOAs sometimes results in home purchasers being forced to pay additional fees for other documents which are “bundled” with the required documents. AB 771 says that ONLY the fees for the required documents can be charged upon receipt, effectively prohibiting the “bundling” of fees for other documents with fees for the required documents. The bill also creates a form, which must accompany the documents, detailing the documents that are required. This will eliminate any uncertainty for the prospective purchaser as to exactly which documents are being provided. Status: Signed by the Governor on September 1 (Chapter 206, 2011 Statutes)
F. AB 392 (Alejo), Brown Open Meeting Act reform Held on Appropriations Suspense file The Brown Act currently requires local government entities to post their agendas 72 hours in advance of scheduled meetings; however, there is no requirement that staff reports be similarly posted. The Brown Act can be satisfied by posting a hard copy of the agenda at a location accessible to the public. This can present a formidable obstacle for individuals and organizations attempting to follow the actions of local governments. C.A.R. is sponsoring AB 392 which would require all local government entities governed by the Brown Act to post their agendas as well as staff reports relating to agenda items on their website (if they have a website – the measure does not require the establishment of a website) allowing individuals and organizations to more easily track proposed government actions. Status: Assembly Appropriations Committee
G. SB 837 (Blakeslee), TDS tweak for water conservation SB 407 (Padilla), signed into law by the Governor in 2009, requires that all residential properties be retrofitted with low-flow toilets, shower heads and faucets starting with remodels in 2014, all remaining homes by 2017. Additionally, all commercial properties and multi-family homes will need to be retrofitted by 2019. C.A.R. sponsored SB 837 to add language to the Transfer Disclosure Statement (TDS) notifying the purchaser of a property of these impending requirements. The inclusion of this information in the TDS will ensure that sellers and buyers are aware of these water efficiency retrofit requirements and provide disclosure liability protection to REALTORS®. Status: Signed by the Governor on June 30 (Chapter 61, 2011 Statutes)
H. DRE Broker experience requirement - pending 2012 introduction C.A.R.’s Board of Directors directed C.A.R. to pursue legislative opportunities, as they arise, to clarify the law to require "degree brokers" to have an undergraduate degree in real estate or two years of "general real estate" experience. C.A.R. is actively seeking an opportunity to insert the proposal in appropriate legislation; if legislative opportunities do not present themselves in 2011, C.A.R. will "SPONSOR" legislation to achieve the change in 2012.
IV. Reports of Standing Committees - Standing policy committees report to Legislative Committee on actions involving state law or policy. Note that federal issues will be reported by the same committees to the Federal Committee. Please see the Agenda Summary posted for each Policy Committee for more detailed information on agenda issues.
A. Housing – Alan Okamoto B. Land Use and Environmental – Greg Haas C. Taxation and Government Finance – Patricia Bouie-Hinds D. Transactions and Regulatory - Steve Rosco E. DRE Commissioner Selection Task Force – Steve White