Thursday, January 19, 2012 3:00 p.m. - 5:00 p.m. Nopales/Ocatillo/ Pinon Rooms Indian Wells Ballroom
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)
II. Legislative Update A. Legislature and state budget developments - Oral update from staff.
B. Member mobilization - Update on Broker Involvement Program, member mobilization issues
III. Sponsored Legislation - 2012 A. AB 392 (Alejo) - Brown Open Meeting Act reform 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. originally sponsored AB 392 to 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. In 2011, AB 1344 (Feuer), which requires the posting of agendas on the internet was signed into law. Due to the passage of that measure and cost considerations, C.A.R. will limit AB 392 to require only cities, counties and school districts to post staff reports related to agenda materials on the city, county or district websites. Removing the requirement for special districts eliminates much of the cost that was assigned to the measure.
B. Degree Broker experience requirements Under current law an applicant for a brokers' license must have either two years of active real estate experience or have graduated from a four-year college or university with a specialization in real estate. The Department of Real Estate (DRE) has interpreted the "degree" provisions to mean any four-year degree. C.A.R.'s Board of Directors directed C.A.R. to SPONSOR legislation to clarify the law to require "degree brokers" to have an undergraduate degree, with either a major or a minor in real estate in order to claim the experience exemption. C. Tax Assessor Appeal Board - Brown Act open meetings Under current law local assessment appeals boards are not required to comply with the Brown Act, which requires that the public be adequately informed about meetings of local agencies and protects the right of the public to participate in those meetings. C.A.R.'s board of directors voted to SPONSOR legislation to require property tax assessment appeals boards to comply with the Brown Act requirements that apply to other government entities. This legislation will protect the right of the public to participate in local board meetings but will still include provisions to allow closed meeting deliberations for things like personnel matters and litigation related discussions.
D. Retrofit Requirements - burdens on transactions Existing law prohibits required energy efficiency retrofits from unreasonably or unnecessarily affecting the home purchase process. This bill will define "unreasonable or unnecessary effects" for the purposes of this existing law to include any additional upfront costs, time delays or retrofits where the cost of implementation cannot be recovered over the life of the retrofit.
E. Debt forgiveness tax safe harbor - pending federal action The federal government enacted the Mortgage Debt Relief Act of 2007 that permitted 3 years of mortgage debt relief by not requiring borrowers to pay income tax on debt forgiven in a "short" sale. In late 2008, the federal government extended this relief through December 31, 2012. Also in 2008, California enacted SB 1055 which provided conformity with the federal statute for the 2007 and 2008 tax years and, in 2010, California enacted SB 401 (Wolk) which extended the income tax debt forgiveness until December 31, 2012, conforming California to existing federal law. C.A.R.'s Board of Directors voted to SPONSOR legislation to extend the existing January 1, 2013 mortgage income debt forgiveness sunset date provided that the federal government first extends their mortgage debt forgiveness sunset date which is also set to expire on January 1, 2013.
IV. Sponsored Legislation - 2011 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, protects 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 7, 2011 (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 January 1, 2011. 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 its loans and cannot require the short seller to provide funds in addition to the sale proceeds.
Status: Signed by the Governor on July 15, 2011 (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.-sponsored SB 510 increases the responsibility and accountability of licensees managing real estate offices by permitting a broker of record to appoint an eligible real estate broker or salesperson to supervise branch office operations, provided that the contract with the office manager is in writing and a notice is delivered to DRE. While principal brokers remain accountable for supervisorial responsibilities, DRE will also be able to hold managers accountable for failure to supervise. This measure was recommended by a DRE Task Force containing REALTOR® members and goes into effect on July 1, 2012. Status: Signed by the Governor on October 9, 2011 (Chapter 709, 2011 Statutes)
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 to expedite minor disciplinary actions without public censure and the lengthy and expensive hearing process, and to allow DRE staff to focus enforcement resources on serious offenders. SB 53 (Calderon) contains the same "cite and fine" provisions as AB 278 and was signed into law by the Governor on October 9, 2011.
Status: Senate Floor Inactive File 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.
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. originally sponsored AB 392 to 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.. In 2011 AB 1344 (Feuer), which requires the posting of agendas on the internet was signed into law. Due to the passage of that measure and cost considerations, C.A.R. has approached the author of AB 392 about narrowing the measure to require only cities, counties and school districts to post staff reports related to agenda materials on the city, county or district websites, thus removing the requirement for special districts, and eliminating much of the cost that was assigned to the measure. 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, 2011 (Chapter 61, 2011 Statutes)
H. DRE Broker experience requirement - pending 2012 introduction Under current law an applicant for a brokers' license must have either two years of active real estate experience or have graduated from a four-year college or university with a specialization in real estate. The Department of Real Estate (DRE) has interpreted the "degree" provisions to mean any four-year degree. C.A.R.'s Board of Directors directed C.A.R. to SPONSOR legislative to clarify the law to require "degree brokers" to have an undergraduate degree, either a major or a minor, in real estate in order to claim the experience exemption.
V. Action Items A. Qualified Ballot Initiative: Prohibits Political Contributions by Payroll Deduction. Prohibitions on Contributions to Candidates. Initiative Constitutional Amendment.* If passed, this measure would prohibit corporations and labor unions from collecting political funds from their employees and members through payroll deductions. The prohibitions in this measure do not prohibit employees from contributing, but rather, requires employers and labor unions to obtain written consent, annually, before political contributions can be collected. This measure would also prohibit corporations and labor unions from making political contributions to candidates and would prohibit government contactors from contributing to government officials who have the power to award or have awarded them a contract.
VI. Reports of Standing Committees A. Housing - John Torres