Agenda Summary - Legislative CommitteeThursday, January 26, 2006
1:00 p.m.   5:00 p.m.
Anaheim Marriott Hotel
Anaheim, CaliforniaPresiding:
Steven Hanleigh, Chair
Liz Fitzgerald, Vice Chair
Steve Goddard, Vice Chair
Irma Vargas, Committee Liaison
Jeannette Way, Committee Liaison
Gary Thomas, NAR RepresentativeC.A.R. Staff
Alex Creel
Stan WiegI. Opening Remarks - Steven HanleighII. Overview of Legislative and C.A.R. Policy ProcessIII. 2005 Sponsored Legislation

A. AB 223, Negrete McLeod -- Risk Management Continuing Education Course –
Prior to license renewal every licensee must take 4 required courses (agency, ethics, fair housing, and trust fund management) as 12 of their 45 hours of continuing education. C.A.R sponsored AB 223 to designate as part of that 45 hours, a 3 hour mandatory continuing education course in Risk Management. The proposal was a recommendation of the Errors and Omissions Task Force and grew out of the fact that the current market has undergone dramatic changes. It also requires existing licensees to keep current with the increasingly complex demands of documentation, newly required disclosures and thenewest options available to shield themselves from avoidable liability. Finally, having taken Risk Management training may entitle a licensee to lower cost “E&O” insurance coverage. This measure will go into effect July 1, 2007.Status: Signed by the Governor on September 6, 2005 (Chapter 183, Statutes of 2005)B. AB 323, Gordon -- 60 day advance notice of suit against real estate licensee. Employing brokers are sometimes surprised by a lawsuit because they were unaware of the underlying dispute, and would have resolved it had they had the opportunity. As sponsored by C.A.R., this measure will create a statutory requirement for 60 days notice of a claim to a broker who is a prospective defendant before a lawsuit can be filed.  The key goal of the proposal is to attempt to allow an employing broker to intervene in a dispute before the parties have to retain their own lawyers and become committed to litigation.  - held in committee (see below - litigation defense pools)C. AB 1444, Horton -- Certificate of Merit in E&O lawsuits - Creates a “certificate of merit” requirement for lawsuits against real estate licensees. A certificate of merit is a statutory requirement that a potential plaintiff must have his or her casereviewed by an expert in the field before it can be filed as a lawsuit.  Engineers and Architects have successfully used this certification requirement, reporting that they have reduced the number of “ill-advised” claims against their members. Held in committee.D. SB 435, Hollingsworth -- Density Bonus – In 2004, C.A.R. successfully sponsored a bill to improve the use of the state’s density bonus law. In 2005 C.A.R. sponsored SB 435 to provide that the law will be more easilyunderstood, implemented and functional by: applying the law to all forms of common interest developments; assuring that units built as a result of a density bonus may also extend to moderate income ownership housing and states that localities can recoverany initial subsidy for moderate income units upon sale. Status: Signed by the Governor on October 4, 2005E. SB 530, Kehoe -- Protecting Insurance Claims History from settled claims – Sponsored in order to create a change in underwriting systems forthe tracking of losses by insurers so as to allow a 60 day “window” period in which to resolve a claim before it can be counted against a broker’s or real estate firm’s claims/loss history, provided the settlement does not resultin payment by the insurer, and the licensee has had no more then 4 other incidents within the previous year. If the claim is resolved within the 60-day period the real estate office would then be able to preserve a clean claims history and thus a lower premium. The mandatory version of the bill held in committee; reconsideration pending in January 2006F. SB 326, Dunn -- Build by Right extension to single family homes. C.A.R. previously co-sponsored a measure providing that low and moderate rental housingdevelopments of 100 units or less can not be denied a permit if they comply with local government development standards and receive a negative declaration  or a mitigated declaration under the California Environmental Quality Act. SB 326 expands thislaw to duplexes, triplexes, and fourplexes, and expands the state Anti-Nimby law to charter cities. C.A.R. embraces policy that allows property owners the right to develop their property with the certainty that local government cannot change the rules inthe process. Status: Signed by the Governor on October 6, 2005G. SB 712, Canciamilla -- Anti-NIMBY Attorney Fees Sunset repeal - Two years ago C.A.R. was successful in amending the state’s Anti-Nimby law, which allows the successful plaintiff (developer) to recover attorney fees when he or she prevails in court demonstrating to the court that a local government arbitrarily denied the plaintiffs residential development that was in compliance with the local government’s development standards.  This bill extends the sunset to December 31, 2008. Status: Vetoed by the Governor on October 7, 2005.IV. 2006 Sponsored Legislation

A. AB ___, Repeal of Conditional License. The net effect will be to require salesperson applicants to complete 3 courses rather than only Real Estate Principals, prior to taking the license exam.B. SB ___, Hollingsworth, Density Bonus (co-sponsor). The Motion was to sponsor legislation limiting local governments’ ability to investigate and determine theeconomic feasibility of new housing developments where one or more of the units would be built using the density bonus law.C. SB ___, Written Standards for Development (co-sponsor). A bill to require cities and counties to adopt and publish clear and objective development standards (e.g., zoning code requirements) and to prohibit any change in those standards after the building application is deemed complete.D. SB ___, Dunn, Housing Element Law - Attorney Fee Sanctions. A bill giving homebuilders and other interested parties the ability to recover attorney fees when successful in challenging local governments’ compliance with the housing element law.E. AB ___, Jones, Self Insurance Defense Pools (successor to AB 323, Gordon, of 2005). The bill is anextension of the policy initiative begun in AB 323 and SB 530 and would allow real estate licensees to set up informal self insurance and litigation defense pools on an office by office basis without being in the insurance business.V. Reports of StandingCommittees and Task Forces

A. Commercial Investment Committee - Gil Bordenave
B. Property Management Committee - Curt Cournale
C. Taxation Committee - Raymond Karpe
D. Common Interest Development Committee - Donna Crowder
E. Housing Opportunity Committee - Nancy Troxell
F. Land Use and Environmental Committee - James Irving
G. Local Governmental Relations Committee - Mel Wilson
H. Manufactured Housing Committee - Scott Swendiman
I. Real Estate Finance Committee - J. Michael Roberts
J. Equal Opportunity - Cultural Diversity - Kelvin Wong
K. Eminent Domain Task Force - William Jansen
L. Consumer Services Task Force - Robert BaileyVI.  Pest Control Issues Update - The Structural Pest Control Board may soon be presented with a proposal to require pest inspectors to disclose whether they are paid by commission on the work ordered as the result of an inspection. C.A.R. has historically not opposed the conflict of interest inherent in a pestcontrol company profiting from the work that results from its own inspector's report. However, C.A.R. has not taken a position on the situation of the inspector himself individually being paid by commission on the work ordered. Should C.A.R. "weigh in" on this issue when or if it is placed on the Structural Pest Control Board's agenda?VII.  Local Business License Taxes * - Please see included issues briefing paper that reviews possible strategies to address the proliferation of business license taxes that unfairly burden Realtors. Action optional.VIII. Department of Real Estate

A. DRE Report – The statistical report of the Department will be available at the Commissioner’s Forum on Friday at 1:00 in the Marriot Hotel.B. Licensee Identification – Update on recommendations to the department in regard to requirements for licensee identification. The DRE is still considering the recommendations, including the rules for license numbers on business materials.  Preliminarily, the DRE has concluded that enabling legislation will be required in order to impose the requirement on all licensees. In all likelihood, the legislation will not be accomplished until 2007; delaying the time schedule proposed by C.A.R. about a year.C.Continuing Education Reforms – Update on DRE response to the reforms urged by C.A.R. at the last meeting.  Some recommendations, like the requirement of an examination in every course, would require legislation and cannot be implemented immediately by legislation. Other recommendations, such as Realtor® input on exam questions and a limitation on “short cut” courses are already in process.IX.  Broker Experience Requirements* Please see included Issues Briefing Paper on the possible imposition of an experience requirement for so-called “degree” brokers which sit for the examination based upon completion of a 4-year college degree rather than experience as a salesperson.X.  Tenancies in Common – Update An update on developments regarding the use of shares in a tenancy in common (TIC) as exchange property for an IRC 1031 exchange.XI. "Open MLS" Proposed Initiative – Update on the status of a proposed ballot initiative to create a statewide single-provider “Open” multiple listing service. The open system is to be put out to bid by the State of California for an exclusive 10-year franchise, and the system would be open to the public.  XII. OtherXIII. Legislation of Others

AB 549 (2001) California Energy Commission Existing Building Project, AB 1459, Canciamilla and SB 422, Simitian - Small Claims Court Jurisdiction - Existing law specifies that the jurisdiction of the small claims court includes various actions in which the demand does not exceed $5,000. These bills would increase the small claims court jurisdiction over actions up to $7500. C.A.R. supported these bills because it makes it easier for consumers to resolve disputes in an inexpensive and informal forum.
  
Status: (AB 1459) Signed by the Governor on October 6, 2005 (Chapter 618, Statutes of 2005); and (SB 422) Signed by the Governor on October 6, 2005 (Chapter 600, Statutes of 2005) Position: SupportSB 655, Ortiz - Naturally Occurring Asbestos - The bill would require the State Geologist to compile maps identifying asbestos hazard zones, and submit them to the State Mining and Geology Board and all affected cities, counties, and state agencies for their comment and review. Once themaps are finalized they will be distributed to all agencies, cities, counties and county recorders that have jurisdiction over lands containing an area of asbestos hazards. Each city and county will be required to consider the information provided in theasbestos hazard maps when preparing the safety element of its general plan. C.A.R. opposed this measure seeking amendments to avoid: creating new liability for licensees; duplication of existing local disclosures; and assure that accurate maps required. C.A.R.’s amendments were accepted setting up workable disclosure rules. With these amendments, C.A.R. dropped its opposition.  Status: Assembly Floor
Position: Watch as AmendedSB 728, Escutia - Title Solicitor License. This bill would prohibit a person from marketing title insurance unless the person holds a valid certificate of registration as a title solicitor issued by the commissioner. C.A.R. opposes the regulatory scheme because it creates a new license that might sweep up in-house escrow coordinators, real estate licensees engaged in office administration or the conduct of escrows on their own transactions, simply because they recommend or facilitate the purchase of title insurance. C.A.R. also opposes the bill’s requirement fornew disclosure language about title company selection in transaction documents.  Status: Senate Floor Third Reading.  Position: Oppose Unless AmendedSB 943, Torlakson - Toxic Map Sites Reporting.  Existing law requires sellers to supply certain disclosures about material defects in property and disclosures about natural hazards. It also provides that if information is provided by public agencies or by specified experts relating to the sale of real property, neither the seller nor listing or selling agent is liable for any error, inaccuracy, or omission, if ordinary care was exercised in obtaining and transmitting the information. Current law also requires an expert requested to deliver a report or opinion on the real property to determineif the property is within specified areas. This bill would add to those specified areas of disclosure any environmental hazard sites located within a one-half mile radius of the property. C.A.R. opposes this measure because this bill unnecessarily dilutesthe value of existing disclosures by adding an additional 6 categories of disclosures (ranging from gas stations to CERCLA sites), and unnecessarily increases transaction costs.  Status: Dropped in Senate Judiciary Committee Position: Oppose UnlessAmendedXIV. Adjournment