It’s the Law Now
  

By Sonia M. Younglove

Both the California and federal legislatures have been busy in 2008 drafting new laws including several emergency legislative efforts that were effective immediately and others that went into effect January 1, 2009. In this column and in the March column, we will spotlight key new laws affecting your business. Read on for a brief summary of several of the laws.

Real Estate Licensee Advertising

>> SB 1461 (effective July 1, 2009) requires a real estate licensee to disclose his or her Department of Real Estate license number on all “solicitation materials intended to be the first point of contact with consumers” and on real property purchase agreements when acting as an agent in those transactions. The statute defines “solicitation materials intended to be the first point of contact with consumers” to include:

• business cards,

• stationery,

• advertising flyers,

• and.other materials designed to solicit the creation of a professional relationship between the licensee and a consumer.

Excluded from the definition are the following:

• an advertisement in print or electronic media,

• “for-sale” signs and specified classified rental advertisements.

This law amended California Business and Professions Code Section 10140.6. The real impact of this new law is on licensees involved in real estate sales transactions. Under another law—California Business and Professions Code Section 10236.4—mortgage loan brokers already were required to include their license number on “a solicitation for borrowers or potential investors.” However, mortgage loan brokers don’t have the exclusion from print or electronic media that real estate licensees doing sales have under this new law (e.g., newspaper, magazine, or online ads).

Proximity to Farm or Ranch Disclosure

>> AB 2881 (effective Jan. 1, 2009) imposes this new disclosure requirement on the Notice of Intention, which is the application for a public report by a developer. In addition, an expert (defined as “licensed engineer, land surveyor, geologist, or expert in natural hazard discovery”), when responding to a request for a natural hazards disclosure statement, must determine whether the residential property is located within one mile of farm or ranchland and provide the statutory notice to that effect. California Civil Code Section 1103.4(a) limits a seller’s and real estate agent’s liability when using an expert to provide all the required information for the natural hazards disclosure statement.

Foreclosure Notice/Procedure Impacting Tenants and Owner/Occupants

>> SB 1137 (effective July 8, 2008, and Sept. 9, 2008—for the new notice under Section 2924.8) contains several important new provisions impacting lenders, owners, and tenants involved in the foreclosure process. First, newly added Civil Code Section 1923.5 prohibits the lender (or the trustee) from recording a notice of default until 30 days after either making contact with the borrower or satisfying certain due diligence requirements of attempted contact. The contact with the borrower in person or by telephone is to “assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” The borrower has a right to a subsequent meeting within 14 days and must be provided with a telephone number to contact HUD for referral to a certified housing counseling agency. This section applies only to loans for an owner’s principal residence made from Jan. 1, 2003, to Dec. 31, 2007.

Second, newly added Civil Code Section 2924.8 requires the posting of a special notice along with the posting of the notice of sale on residential property if the billing address for the mortgage note is different from the property address. This special statutory notice printed in six languages (see Section 1632) must also be mailed to the property in an envelope addressed to the “Resident of property subject to foreclosure sale.”

Third, a foreclosing lender or the purchaser at a foreclosure sale must maintain the vacant residential property or be subject to a $1,000 per day per violation fine. “Failure to maintain” means failure to care for the exterior of the property, such as permitting excessive foliage growth that diminishes the value of surrounding properties, failure to prevent trespassers or squatters from remaining on the property, and failure to prevent mosquito larvae growth in standing water or conditions that create a public nuisance.

Fourth, a foreclosing lender must now give the tenant a 60-day notice to terminate the tenancy instead of the previous 30-day notice required under newly added Code of Civil Procedure Section 1161b. However, this 60-day notice doesn’t apply to the owner—or any party to the note—who is occupying the foreclosed property. The owner or party to the note need be given only a three-day notice to quit.

Q: I’m on the board of a homeowner’s association (HOA) and heard there’s a new law about notifying the HOA of a foreclosure sale on a unit. Is that true?

A: Yes. SB 1511, which amended Civil Code Section 2924b effective Jan. 1, 2009, permits an HOA to record a request that a mortgagee, trustee, or any person authorized to record a notice of default regarding any of the separate interests governed by the HOA, mail to the HOA a copy of a trustee’s deed (on any unit) within 15 business days after recordation of the trustee’s deed.

The request by the HOA must include the legal description or the assessor’s parcel number of the separate interest as well as the name and address of the association and a statement that it is an HOA. The request must be recorded before the filing of a notice of default. Note that failure of the mortgagee/lender/trustee to mail a copy of the trustee’s deed to the HOA does not affect title to the real property.

Written by Sonia M. Younglove, Esq., C.A.R. senior counsel.