Ring in the New Laws

By Sonia M. Younglove

The January/February Legal column discussed several new laws affecting REALTORS®. But wait! There are more.

>> Mortgage Foreclosure Consultants Law Amended: AB 180, which doesn’t go into effect until July 1, 2009, makes several changes to the foreclosure consultant law. Two significant changes are a new $100,000 surety bond requirement and foreclosure consultant registration with the Department of Justice. More information about this and the other new laws is available on your Association’s Web site (car.org) in the Legal Q&A section.

>> Landlords, REO Lenders, and Abandoned Animals: AB 2949, which went into effect Jan. 1, 2009, requires a person who discovers an abandoned animal in or about the premises of real property that has been vacated at the time of—or immediately preceding—the termination of a lease, rental agreement, or foreclosure of the property to immediately contact animal control. The law provides, in part, that:

• Any person or private entity with whom a live animal is deposited must immediately notify animal control officials for the purpose of retrieving the animal.

• The person in possession of the abandoned animal is subject to all local ordinances and state laws that govern the proper care and treatment of those animals.

• The person or private entity, or the successor property owner, that notifies animal control officials to retrieve the animal will not be considered the “keeper” of the animal.

>> Disposition of Personal Property Left on Commercial Property: AB 2025 went into effect Jan. 1, 2009. This law assists commercial property landlords with the disposition of personal property remaining on the premises at the termination of a tenancy. If the landlord reasonably believes that the total resale value of the personal property is the lesser of $750 or $1 per square foot of the premises occupied by the tenant, the landlord may retain the property for his or her own use or dispose of it in any manner; otherwise, it must be sold at a public sale. The law requires that a “Notice of Right to Reclaim Abandoned Property” be sent to the person the landlord reasonably believes to be the owner of the personal property (other than the former tenant).

>> DRE Disciplinary Action for Inflating BPOs: SB 1737, which went into effect Jan. 1, 2009, authorizes the Department of Real Estate (DRE) to suspend or bar from any position of employment, management, or control, for up to 36 months, a real estate salesperson, a real estate broker, or an unlicensed person, if the DRE finds either of the following:

• The suspension or bar is in the public interest, and the person knew or should have known he or she violated the Real Estate Law or its regulations, and has caused material damage to the public.

• The person was convicted of, or pleaded not guilty to, any crime, or was held liable in any civil action, or any administrative judgment by any public agency, if that crime or civil or administrative judgment involved any offense such as dishonesty, fraud, or deceit, or any other offense reasonably related to the qualifications, functions, or duties of a person engaged in the real estate business.

The law prohibits persons suspended or barred under the authority described above from participating in any real estate-related business activity of a finance lender, residential mortgage lender, bank, credit union, escrow company, title company, underwritten title company, real estate salesperson, or real estate broker from engaging in any business activity on the premises where a real estate salesperson or real estate broker is conducting business. (Note: This section is intended to stop the practice of avoiding DRE jurisdiction by switching to work in a real estate-related capacity with a company or individual licensed under a different state regulator, such as Department of Corporations, Department of Financial Institutions, or Department of Insurance, or a federal regulator.)

This law also authorizes the DRE to suspend or revoke the license of a licensee who provides an opinion of value of residential real property (BPO), in connection with a short sale, that does either or both of the following:

• Manipulates the lien holder to reject the proposed debt forgiveness sale.

• Acquires a financial or business advantage, including a listing agreement that results from the inaccurate opinion of value of the property.

Finally, under the law (added Section 10177.6 of the California Business & Professions Code), a person who acts in dual roles as an agent in a sales, lease, or exchange transaction and as the arranger of financing must, within 24 hours, disclose those roles in writing to all parties to the sale, lease, or exchange, and to any related loan transaction.

>> Tax Exemption for Mortgage Debt Forgiveness: California law, SB 1055, which went into effect Sept. 25, 2008, conforms California Revenue and Tax Code Section 17144.5 to the federal Mortgage Forgiveness Debt Relief Act of 2007 with the following exceptions:

(1) The maximum amount of acquisition indebtedness is $800,000 for couples filing jointly and $400,000 for individual filers;

(2) The maximum amount of debt relief income that can be forgiven is $250,000 for couples filing jointly and $125,000 for individual filers; and

(3) California’s debt relief statute applies to property sold on or after Jan. 1, 2007, and before Jan. 1, 2009.

Q: What are the penalties when a non-licensee acts as a real estate licensee?

A: California Business & Professions Code Section 10139 indicates that a person (other than a corporation) acting as a real estate broker or salesperson who is not licensed is subject to a fine of $20,000 and/or imprisonment in the county jail for up to six months. A corporation is subject to a fine of $60,000.

Sonia M. Younglove, Esq., is C.A.R. senior counsel.