Limiting Risk

This issue of California Real Estate magazine contains articles about the 17-day contingency period, an ill-fated open house that involved a smoldering candle and a well-intentioned agent, and how to land on your feet when your office closes.

In the best of times, it’s a risky business that we are engaged in; in the worst of times … I don’t need to tell you.

One of the major objectives of C.A.R. is to limit the liability of agents—or at least to help mitigate it to a reasonable limit—and make agents aware of the potential for liability. Your dues dollars, in part, go toward these efforts, many of which occur at the legislative level and require lobbying by C.A.R. Governmental Affairs staff.

Most recently, C.A.R. Governmental Affairs staff successfully worked with Assembly Speaker Emeritus Fabian to reach a compromise on AB 2678 (Nuñez), a bill that would have required energy audits and improvements at the point of sale on all homes. This requirement was removed due to the effective lobbying by thousands of REALTORS® at the June 4 Legislative Day in Sacramento.

The issue that this bill hoped to address was boosting the energy efficiency of homes in an effort to adhere to a state mandate to reduce green house emissions—a very real concern. However, this bill was the wrong solution. The California Energy Commission reports that approximately 70 percent of California’s existing housing stock was constructed prior to 1978, when home energy-efficiency standards were adopted. These pre-1978 homes use up to 50 percent more energy for heating and cooling than new homes. However, C.A.R.’s research data conclude that only 22 percent of the homes built before 1980 (the homes most in need of retrofit) will change hands between now and 2020.

Adding an energy audit at the point of sale is an unfair burden to place on a buyer and seller in a difficult market. These inspections can cost $400 and the mitigation can incur costs as high as several thousand dollars. Adding these costly and time-consuming point-of-sale requirements could have jeopardized your transactions with outstanding energy mitigation costs.

In a good or challenging market, C.A.R. strives to ease any additional burdens on the real estate transaction. We will continue to be there to make a difference in our members’ lives.

William E. Brown