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The Rent Cap and Just Cause Eviction Law Q&A has been revised by adding eight questions to the introduction primarily addressing the signing and delivery of the RCJC form. These questions explain:
A new question 59 was added to explain that if a termination notice is given in 2019 but the notice period extends into 2020 year then it is legally unclear whether such a notice will be effective unless it complies with the just cause eviction law. If you are the owner of the property, then you are advised to treat the property as already being subject to the rent cap and just cause eviction law. However, for any agent advising a client, they should direct the client to speak with their own attorney.
The California Consumer Privacy Act Q&A has been revised as follows:
Question 30 was added to explain that the C.A.R. form “California Consumer Privacy Act Advisory” (CCPA) will allow a third-party brokerage to provide notice as required by the CCPA. This form will be bundled with the agency form.
Question 31 was added to explain that this notice is to be provided to both the buyer and seller since a third-party brokerage will never be certain if the information it receives is from a covered business. Additionally, the MLS model rules require that all MLS participants and subscribers comply with the CCPA notice requirements.
Question 24 was added to explain that certain covered businesses must register with the Attorney General as “data brokers.” These are businesses that are covered under the CCPA and knowingly collect and sell the personal information of a consumer with whom the business does not have a direct relationship. If a brokerage is a covered business and sells leads that include personal information of people who are not clients of the brokerage, then it would qualify as a data broker and have to register with the Attorney General.
Question 19 was revised to explain that if a business operates exclusively online and has a direct relationship with a consumer from who it collects personal information, then it is only required to provide an email address for submitting requests for information. It is not required to provide two methods for requesting an information and need not provide a toll-free number.
The “Property Management Frequently Asked Questions” Q&A has been revised as follows:
Question 24 was revised to update the maximum application screening fee that may be charged. The law allows for increased fees based on the Consumer Price Index. But it does not specify which consumer price index is to be used in calculating the maximum fee. Assuming the California Department of Industrial Relations All Urban Consumers index is to be used, the permissible maximum as of 2018 would be $49.90.
Question 39 was revised to explain that a tenant requesting an accommodation for a disability may, depending on circumstances, provide evidence of their disability by self-certification including a “credible statement by the individual with the disability.” Evidence of the disability or the disability-related need for the accommodation may also be obtained from a “reliable third party in a position to know.” The landlord should not ask about the individual’s particular diagnosis or medical condition, the severity of the disability, medical records or medical history.
Question 40 was added to explain who can qualify as a reliable third party who is in a position to know about the individual’s disability of the disability-related need for a requested accommodation. In October of 2019 the Fair Employment & Housing council published the Fair Housing Regulations (“FHRs”) which answers this question in detail. The FHR envisions a broad range of persons who may qualify to provide this information as long as they are “in a position to know” about the individual’s disability or disability related need for the accommodation.
Question 46 was revised to explain that effective January 1, 2020, landlords may not discriminate on the basis of source of income which is defined to include any rent paid through federal or state of local assistance, local or federal housing subsidies or vouchers, Veterans Assistance Supportive Housing vouchers (VASH), and Section 8 vouchers.
Section XI “Termination of Tenancy” is preceded with a caveat stating that this section only applies to real property which is exempt from the rent cap and just cause eviction law, and the reader is referred to our Q&A “Rent Cap and Just Cause Eviction Law” for further information.
The Lease/Rental Disclosure Chart has been updated as follows:
The Rent Cap and Just Cause Eviction Law Q&A has been updated as follows:
Two questions have been added to the introductory section regarding CAR’s Rent Cap and Just Cause Addendum (Form RCJC).
The first question offers an important tip when providing the RCJC form to a tenant. If the owner is entitled to the exemption for single family properties or condominiums, then the exemption box in the RCJC form must be checked.
The second question explains that the Interim Notice of Exemption is available for use now before the release of the RCJC in mid-December. This interim form entitles an owner of a single family property or condominium to claim the exemption for such properties.
Question 10 has been revised to include a county by county chart of the maximum permissible rent increases under AB 1482. It cautions that for certain counties the exact amount of the permissible maximum rent increase is unclear. For example, the United States Bureau of Labor Statistics does not publish a CPI for the month of April for San Diego, Riverside or San Bernardino counties, and thus, the CPI percentages shown in the chart are the lowest year over year monthly CPI percentages that the Bureau has published for those respective counties at the time this Q&A was updated. Also, the CPI percentages listed in the chart will become inapplicable once new CPI numbers are published in April 2020.
The Mobilehome Q&A has been updated by adding a new section entitled “Park Management Approval Procedures when Selling a Mobilehome that will Remain in the Park.” Questions 52 through 58 have been added explaining:
The California Consumer Privacy Act Q&A has been revised as follows:
Questions 26 and 27 have been added to explain when a brokerage that is not actually a covered business under the CCPA would qualify as a “third party.”
Question 28 has been added to explain the duties of a third party regarding personal information received from a CCPA covered business.
Question 29 has been added to explain that it is not necessary for a buyer’s agent who receives information through the MLS to contact the seller before providing their own buyer with the MLS listing information.
The “Online Privacy Laws Affecting REALTORS” Q&A has been revised as follows:
Question 25 has been added to explain that a brokerage that is not subject to the CCPA may still be subject to the Online Privacy Protection Act.
Additionally, this Q&A now includes the following questions:
The Lease/Rental Disclosure Chart has been revised regarding Proposition 65 warnings. Commencing July 1, 2019, new regulations will establish safe harbor warnings specifically in regard to residential real property. The regulations allow landlords at their option to warn tenants and occupants by notice at the time of signing the lease and then delivery of the notice in hardcopy or by email each year thereafter. See the Q&A "Proposition 65 Warnings" question #5 for details.
The PACE Programs and Solar Leases Q&A has been updated as follows:
Question 37 was added to explain that effective January 1, 2019, a consumer’s the ability to repay PACE improvements must be verified prior to executing a PACE contract. The new law, AB 2063, attempts to eliminate the possibility that work on the property might begin only for the consumer to find out that their ability to repay has been underestimated.
Additionally, a flow chart has been added which illustrates the process of verifying the ability to repay and executing a PACE contract.
The Proposition 65 Warnings Q&A has been updated as follows:
Question 5 has been added explaining the new safe harbor, effective July 1, 2019, that will specifically apply to residential rental properties. This safe harbor will allow landlords to warn tenants and occupants by notice at the time of signing the lease and then delivery of the notice in hardcopy or by email each year thereafter.
Question 6 has been added explaining that this safe harbor for residential rental properties will not cover every type of exposure to a listed carcinogen. Specifically, it will not cover exposures in enclosed parking facilities and designated smoking areas, which will still require posted signs.
Question 7 has been added explaining that this new safe harbor will not protect the landlord or property manager from claims by service contractors, mail carriers, tenants’ guests and anyone other than the tenant and known adult occupants.
Question 8 has been added to explain the types of hazards a landlord might warn about.
Question 9 has been updated to provide bottom line advice for how a property manager might comply with Proposition 65.
Question 14 has been updated to explain that while scientists from all over the world are in disagreement about whether coffee is bad for you. A judge in California in March of 2018 decided it was. However, proposed regulations soon to take effect will reverse the court decision and remove chemicals in coffee inherent in the roasting and brewing process from the list of Proposition 65 carcinogens.
The 2019 New Laws have been updated to provide clarification regarding when a broker is required and recommended to provide sexual harassment prevention training pursuant to SB 1343. A new section entitled “Who is Required to Take the Training?” has been added as follows:
Who is Required to Take the Training?
Question: I am a broker with five sales agents who are independent contractors. Are the independent contractors required to take the sexual harassment training?
Answer: Currently, no. But if you have any employees at all, even just one employee, then the employee(s) would have to take the training. Additionally, regulations are pending which could require the independent contractors to take this training as well, if adopted.
Bottom Line requirements and recommendations:
As a risk management precaution, we strongly recommend that the responsible broker take the supervisory training along with all other persons who supervise agents or employees. This will include anyone who is in a position to hire, fire, reward or discipline an employee or independent contractor licensee, or who has the responsibility of directing an employee or independent contractor licensee. This recommendation applies regardless of how many employees or independent contractors have been retained.
Question: Can I see a copy of the proposed regulations that will expand the definition of employee to include persons providing services pursuant to contract?
Click here to view the Fair Housing & Housing Council Proposed Final Text of Employment Regulations Regarding Definitions; Harassment and Discrimination Prevention and Correction; and Training
The "Residential Listing and Commission Agreements" Q&A has been updated as follows:
The "Loan Estimate and Closing Disclosure" Q&A has been updated.
The Q&A “Homeowner’s Associations: A Guide for REALTORS” has been updated as follows:
The “Condominium and Other Common Interest Development Disclosures” Q&A has been revised as follows:
The "REO Transactions" Q&A has been updated and re-posted. The following changes have been made:
Question 22(a) has been added to discuss the duty of an REO to maintain a vacant residential property.
Question 45 details various unfavorable terms for buyers that REO lenders may include into a sales contract.
“The Right Business Entity for the RE Professional: FAQ & Chart” has been updated as follows:
Question 24 has been added explaining that a designated broker is not required to maintain both their individual broker’s license and the corporate broker’s license. But in that case, that broker would still be subject to all duties and responsibilities of a licensed broker including keeping current on all continuing education requirements. (B&P Code 10159).
Question 25 has been added explaining that in the event of death or incapacity of the designated broker of a corporation, the corporation may continue to perform licensed activities, but it must submit an application to the DRE for a new designated officer before midnight of the 10th business day after the event so that it may continue to operate until formal approval is received. (B&P Code 10158).
The "Team Name" Q&A has been updated. Question 17 has been added to explain that teams cannot be formed across brokerages (based upon the remarks of the DRE Commissioner in August of 2018).
The "California Homeowner Bill of Rights" (HBOR) article has been updated. On January 1, 2018 certain provisions of the HBOR expired. However, effective January 1, 2019, Senate Bill 818 largely reinstated the HBOR in its pre-January 1, 2018 version without any sunset provisions.
Additionally, the article discusses similar federal protections for financially distressed homeowners under the Real Estate Settlement Services Act, which are in some cases superior to those offered by the HBOR.
The Q&As “The 2018 Tax Reform Law Chart”; “Tax Cuts and Jobs Act – In Brief”; and “Tax Cuts and Jobs Act – Highlights and In Depth” have been updated to reflect IRS and Department of the Treasury final regulations and guidance issued on January 18, 2019.
Brokers and Agents May Be Eligible for the QBI Deduction Above Thresholds
Previously, real brokers and agents with were not eligible for the QBI deduction if their taxable income was above $157,500 for single filers and $315,000 for joint filers, after which there is a phase out over a range of $50,000 (or $100,000 for joint filers). Now they may be. Above the thresholds, the QBI deduction can be based upon the “wage and capital” exemption. Specifically, the available deduction is determined by taking the greater of:
Safe Harbor Enables Many Rental Real Estate Owners to Claim Deduction
Guidance from the IRS and the Department of the Treasury includes a notice on a proposed revenue procedure providing a safe harbor for certain real estate enterprises that may be treated as a trade or business for purposes of the QBI deduction
The proposed revenue procedure, included in Notice 2019-07, allows individuals and entities who own rental real estate directly or through a disregarded entity to treat a rental real estate enterprise as a trade or business for purposes of the QBI deduction if certain requirements are met. Taxpayers can rely on this safe harbor until a final revenue procedure is issued.
For details on this deduction, including answers to frequently-asked questions, as well as information on other TCJA provisions, visit IRS.gov/taxreform.
The "Transfer Disclosure Statement Exemptions" Q&A has been revised as follows:
Question #2 has been updated to reflect the change in the law as of January 1st, 2019, which eliminates the Transfer Disclosure Statement (“TDS”) exemption for multiple trustees where the trust is revocable. There is no trust exemption if the trustee – or trustees – is a natural person who is a trustee of a revocable trust and he or she is a former owner of the property or was an occupant in possession of the property within the preceding year. Thus, in the vast majority of circumstances, a trustee or trustees of a revocable trust will have to complete and deliver a TDS.
The "Transfer Disclosure Statement Law" Q&A has been revised as follows:
Question #5 has been updated to reflect the change in the law as of January 1st, 2019, which eliminates the Transfer Disclosure Statement (“TDS”) exemption for multiple trustees where the trust is revocable. There is no trust exemption if the trustee – or trustees – is a natural person who is a trustee of a revocable trust and he or she is a former owner of the property or was an occupant in possession of the property within the preceding year. Thus, in the vast majority of circumstances, a trustee or trustees of a revocable trust will have to complete and deliver a TDS.
Questions #14 and #17 have been revised to reflect the change in the law as of January 1st, 2019, explicitly requiring delivery of a “completed” TDS and the listing agent’s visual inspection. Specifically, the timing of the right to cancel is triggered by completion of sections I, II AND III (the Listing Agent’s visual inspection portion) of the TDS and delivery to either the buyer or the buyer’s agent.
Questions #16, #20, and #22 have been revised to reflect the change in the law as of January 1st, 2019, which will allow for electronic delivery of the TDS, and specifies that the buyer has a five day rescission right after delivery in electronic form (if the parties have agreed to conduct the transaction by electronic means).
The "Unlawful Detainer: The Eviction Process" Q&A has been revised as follows:
Question #7 has been added. It explains how to count a three day notice under current law. It highlights in red that starting September 1, 2019, weekends and judicial holidays will not be counted at all as part of the three-day period. For example, if a 3-day notice is served on Thursday, then Friday would be day 1. Saturday and Sunday would not be counted. Monday would therefore be day 2 and Tuesday day 3. The tenant would have through Tuesday to pay their rent.
Question #19 has been revised. For tenants who occupy a property that has been foreclosed upon, the right to receive a 90-day notice of termination and a special information notice (C.A.R. Form NTAF), and for the survival of full-term lease rights are current protections under California law but are due to expire at the end of 2019. However, the federal “Protecting Tenants at Foreclosure Act,” on which the California law was modeled, was permanently reauthorized on May 24, 2018. The Protecting Tenants at Foreclosure Act contains nearly identical tenant protections to the California law with the exception of providing the special information notice.
The "Real Estate Licensee’s Duty to Inspect Residential Property" Q&A has been revised as follows:
Question #17 has been added to state that commencing January 1, 2019, whenever a TDS is required then a buyer retains a right to cancel based upon delivery of the listing agent’s visual inspection.
Question #18 has been added to state that the cancellation right is based only upon the delivery of the listing agent’s visual inspection.
Question #19 has been added to state that commencing January 1, 2019, the TDS, and the attached visual inspection whether on the third page of the TDS or on a separate AVID form, are specifically authorized by law to be delivered electronically.
Question #20 has been added to state that the buyer will have three days to cancel if the inspection is delivered in person, or five days if delivered by mail or electronically (assuming it is not delivered in advance of execution of the purchase agreement).
Question #21 has been added to state that the cancellation right based upon delivery of the visual inspection is not waivable.
The "Natural Hazard Disclosure Statement" Q&A has been updated as follows:
Question #9 has been added to indicate that commencing, January 1, 2019, the NHD Statement may be delivered electronically. (Cal. Civil Code Sec. 1103.3(c)). If delivered electronically, the buyer will have five days to cancel the purchase agreement if delivered after execution of the offer to purchase.
The "Presentation of Offers" Q&A has been updated as follows:
Question #9 has been revised. Commencing January 1, 2019, both the obligation of the buyer’s agent to deliver the agency form (AD) to the seller, and the right of the buyer’s agent to deliver the agency form by certified mail when not dealing on a face-to-face basis with the seller, have been eliminated.
The "Agency Disclosure and Confirmation; and Agency Law Summary Chart" Q&A has been revised. As part of the 2019 real estate clean-up law, significant changes were made to the agency disclosure form and the confirmation of agency. These changes go into effect on January 1, 2019. The revised Q&A highlights these changes as follows:
The agency disclosure form
Confirmation of agency form changes
In addition to changes to the agency form, the C.A.R. real estate clean-up law also changed the confirmation of agency form which will now require:
This information will be included in the confirmation along with the same information regarding the brokerage firm. The phrase “Agent” used to indicate the brokerage firm has been eliminated.
The Q&A includes a sample of the new confirmation form as it appears on the first page of the purchase agreement. It warns that in filling out the confirmation, if the brokerage firm is indicated as a dual agent, then all other agents must likewise be indicated as dual agents.
The "Summary Disclosure Chart" has been revised to indicate that commencing January 1, 2019, the “third” agency form (AD) given to the seller from the buyer’s agent is no longer required.
The "Changing Offices: Transfer of Listings, Buyers, and Procedures" Q&A has been revised to reflect changes in the law introduced as part of the C.A.R. sponsored real estate clean-up law. As of January 1, 2019, a responsible broker will no longer be required to physically hold a sales agent’s license. Nor will a sales agent be required to obtain back from a former broker their license, mark out the name and address of the former broker, and write in the name and address of their new responsible broker. Instead, following existing practice, notice of a change of broker affiliation or office address will be provided to the Real Estate Commissioner in a manner specified by the Commissioner which at present relies primarily on the elicensing system or by use of DRE form RE 214 (Salesperson Change Application). Questions #1, #2, #3 and #5 have been modified in light of the new law.
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