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2017 New Laws

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2017 New Laws Affecting REALTORS®

Member Legal Services
Tel (213) 739-8282
Fax (213) 480-7724
October 5, 2016



This chart summarizes new laws passed by the California Legislature and the U.S. Congress that may affect REALTORS® in 2017. For the full text of a law, click onto the legislative number or go to http://leginfo.legislature.ca.gov/ for California laws or http://www.gpo.gov/fdsys/ for federal laws. A legislative bill may be referenced in more than one section.

Topic

Description

Advertising -

Uniform Standards
Effective 1/1/18

Beginning January 1, 2018, all first point of contact solicitation materials must include:
1) the name and number of the licensee and
2) the responsible broker’s “identity,” meaning the name under which the broker is currently licensed by the BRE and conducts business in general or is a substantial division of the real estate firm. The broker’s license number is optional.


There is no longer an exception for advertisements in print or electronic media; or for newspapers and magazines. However, “for sale,” “open house,” rent, lease, and directional signs that contain no licensee information or only the broker’s information are OK.

 

The purpose of this law is to create uniform advertising standards across a variety of media and types.

 

Current Law

Current law states that an agent will include their own license number on first point of contact solicitation materials but need not include either their name or their broker’s name. Moreover, current law excludes from the license number requirement “for sale” signs placed on or around a property intended to alert the public the property is available for lease or purchase; advertising in print and electronic media; advertising in any newspaper or periodical; and classified rental advertisements reciting the telephone number or address of the property offered for rent.

 

New law

Under the new law, effective in 2018, a licensee must disclose on all solicitation materials intended to be the first point of contact with consumers both their name and license number, and additionally, the solicitation must contain the responsible broker’s “identity,” meaning the name under which the broker is currently licensed by CalBRE and conducts business in general or is a substantial division of the real estate firm. (The broker’s license number is optional). The new law also eliminates most of the exceptions and broadens the types of advertising it applies to including:

  • Business cards
  • Stationery
  • Advertising flyers
  • Advertisements on television, in print, or electronic media
  • “For sale,” “open house,” lease, rent or directional signs when any licensee identification information is included
  • Any other material designed to solicit the creation of a professional relationship between the licensee and a consumer

 

Limited Exception
However, the new law retains an exception for “for sale,” rent, lease, “open house” and directional signs. These signs need not include the agents’ or associate brokers’ names or license numbers as long as either:

1) The responsible broker’s identity appears (which includes the broker’s name, but the broker’s license number is optional). Under this exception there can be no reference on the sign to an associate broker or licensee.

or
2) There is no licensee identification information at all.

 

This exception also applies to the general rule of disclosing a licensee’s status, such as broker, agent or REALTOR, in all advertising. But keep in mind that under the N.A.R. Code of Ethics Standard of Practice 12-5, any advertisement of real estate services or listed property in any medium must disclose the name of the firm in a reasonable and readily apparent way. So even though a licensee who is not a REALTOR may post under the new law a completely generic “for sale” sign, REALTORS should, at the very least, include the name of the firm on a “for sale” sign.

 

The “responsible broker’s identity” is defined to mean the name under which the responsible broker is currently licensed by CalBRE and conducts business in general or is a substantial division of the real estate firm. The inclusion of the responsible broker’s license identification number is optional.

 

Uniform Advertising Standards Purpose
The purpose of this law is to create uniform advertising standards across a variety of media and types. Presently, advertising rules vary greatly depending on the type and medium of advertisement. “For sale” signs, print and electronic media, business cards, classified rental advertisement, etc..., rely on different rules with a variety of exceptions. This law attempts to create a unified standard with very limited exceptions.

 

The new rules also more closely align the requirements of team name and agent-owned DBA advertising with other types of advertising. Team name and agent-owned DBA advertising rules were changed slightly on August 29, 2016 to require only the inclusion of the broker’s name but not the broker’s license number. See the description of this new law under the heading for “Advertising Team Names.”

 

Rent or Lease Signs

Previously the law excepted classified rental advertisements which recite only the telephone number at the premises of the property offered for rent or the address of the property offered for rent. The new law allows an exception for rental and leasing “signs” as long as no identifying licensee information appears in the solicitation (or only the broker’s name appears). Arguably, the exemption for rental classified ads no longer exists, and in place, there is an exemption for rent and lease signs.

 

AB 1650 codified as Business and Professions Code §10140.6.
C.A.R. sponsored legislation. This law goes into effect on January 1, 2018.

Advertising

Team Names

Effective 8/30/16

Effective August 30, 2016, on team name and agent-owned DBA advertising, only the responsible broker’s name must be displayed alongside the team name or agent-owned DBA. The display of the responsible broker’s license number is optional.

 

This new law, which took effect on August 30, 2016, corrects a drafting error that required to be displayed in all team name and agent-owned DBA advertising both the responsible broker’s name and license identification number.

 

The new law, to correct that error, requires only the responsible broker’s name. The display of the responsible broker’s license identification number in team name or agent-owned DBA advertising is optional.

 

The responsible broker’s name means the name under which the responsible broker is currently licensed by CalBRE and conducts business in general or is a substantial division of the real estate firm.

 

SB 710 codified as Business and Professions Code §10159.7.
C.A.R. sponsored legislation. Effective August 30, 2016.

Broker Associates

Searchable Information
Effective 1/1/18

Beginning January 1, 2018, CalBRE’s public licensee information, as provided on CalBRE’s website, will indicate whether a licensee is an “associate licensee” and, if the associate licensee is a broker, will identify each responsible broker with whom the licensee is contractually associated.

 

Additionally, this law requires the responsible broker to immediately notify CalBRE in writing whenever a broker-associate is hired or terminated.

 

Currently, data on CalBRE’s website allows the public to verify licensing information pertaining to “Brokers” and “Salespersons.” This data enables the public to determine through an internet search who the responsible broker is for any particular salesperson. However, there is no way for the public to search for and view similar information pertaining to broker-associates. Moreover, brokers are required to report to CalBRE whenever a salesperson who is licensed under them is either hired or terminated. However, there is no similar reporting requirement regarding broker-associates.

 

This law closes this deficiency by:

  1. Identifying who a broker-associate is contracted with (when not acting under his or her own license)
  2. Making this information searchable by the public on the internet through CalBRE’s public licensee information and
  3. Requiring the responsible broker to immediately notify CalBRE whenever a broker-associate is hired or terminated.

 

Technically this law requires CalBRE to disclose on its web site whether a licensee is an “associate licensee,” meaning whether the licensee is working under a responsible broker as either a salesperson or a broker-associate. And if the associate licensee is also a broker, then the CalBRE data must further identify each responsible broker with whom the associate licensee is contracted. Note that nowhere in this law is the phrase “broker-associate” actually used. Instead, the law relies upon indicating whether a license is an “associate licensee” and whether that person is also a broker. Other parts of this law refer to a “broker acting as a salesperson.”

 

AB 2330 codified as Business and Professions Code §§ 10083.2 and 10161.8. C.A.R. sponsored legislation.
This law goes into effect on January 1, 2018.

Climate Change

Goal of 40% Reduction of GHGs Below 1990 Levels

Effective 1/1/97

California aims to reduce greenhouse gas emissions to 40% below 1990 levels, but extends the target date by 10 years from 2020 to 2030.

 

Currently, the California Global Warming Solutions Act of 2006 designates the State Air Resources Board (ARB) as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. Currently, the ARB is required to approve a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020 and to adopt rules and regulations in an open public process to achieve the maximum, technologically feasible, and cost-effective greenhouse gas emissions reductions.

 

This new law requires the state board to ensure that statewide greenhouse gas emissions are reduced to 40% below the 1990 level by 2030. It is estimated that current policies will likely only achieve half of the 2030 goal. The board will use its current authority to adopt regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions and to require the reporting and verification of statewide greenhouse gas emissions and to monitor and enforce compliance with the act.

 

Presently, the state board is required to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions. Additionally, this new law requires the state board to make available, and update at least annually, on its Internet Web site the emissions of greenhouse gases, criteria pollutants, and toxic air contaminants for each facility that reports to the state board and air districts, and requires the state board, at least once a year at a hearing of the Joint Legislative Committee on Climate Change Policies, to present an informational report on the reported emissions of greenhouse gases, criteria pollutants, and toxic air contaminants from all sectors covered by the scoping plan.

 

The new law creates the Joint Legislative Committee on Climate Change Policies consisting of at least 3 Members of the Senate and at least 3 Members of the Assembly and would require the committee to ascertain facts and make recommendations to the Legislature and to the houses of the Legislature concerning the state’s programs, policies, and investments related to climate change.

AB 197 and Senate Bill 32 codified as Government Code §§ 39510 and 39607; and Health and Safety Code §§ 38506, 38531, 38562.5, 38562.7 and 38566.
Effective January 1, 2017.

 

Common Interest Developments -

Owner to Provide Contact Information to HOA

Effective 1/1/17

 

Requires the owner of a separate interest in a common interest development to annually provide the association with specified written information for the purpose of receiving notices from the association.

 

  1. Requires an owner of a separate interest to, on an annual basis, provide written notice to the association of all of the following:

     

    • The address or addresses to which notices from the association are to be delivered;
    • An alternate or secondary address to which notices from the association are to be delivered;
    • The name and address of an owner’s legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest; and
    • Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.

       

  2. Requires an association to solicit annual notices of each owner and, at least 30 days prior to making certain required disclosures, enter the data into its books and records.
  3. Specifies that if an owner fails to provide the information specified in the above provision, the property address shall be deemed to be the mailing address to which notices are to be delivered.

 

SB 918 codified Civil Code § 4041. Effective January 1, 2017.

 

Disciplinary Action Records

Petition Process to Remove Disciplinary Action Records from Public Profile after 10 Years

Effective 1/1/18

Beginning January 1, 2018, a licensee may petition CalBRE to remove a past disciplinary action record from his or her online profile after 10 years. CalBRE retains discretion to grant the petition.

 

Current law requires that a discipline notice against a licensee's name in CalBRE’s online database be reported indefinitely, even if the licensee has been rehabilitated and the license penalty (i.e., suspension or restriction) has been removed.

 

This new law creates a process by which a licensee, upon written request accompanied by a specified fee, may request removal of a disciplinary action from his or her online profile. After the passage of at least 10 years of the posting of the violation, and upon the demonstration (evidence) of rehabilitation, CalBRE can consider and grant on a case-by-case basis the removal of the violation from its online database. All violations would continue to be maintained offline on the licensee’s permanent record.

 

This law allows the licensee to present evidence of rehabilitation indicating that the notice is no longer required to prevent a credible risk to members of the public utilizing licensed activity of the licensee. The commissioner, in evaluating a petition, would be required to take into consideration other violations that present a credible risk to the members of the public since the posting of discipline requested for removal.

 

AB 1807 codified as Business and Professions Code §10083.2. C.A.R. sponsored legislation. The effective date of the petition process is January 1, 2018.

 

Disclosures

Death of Occupant Rule Clarified

Effective 9/25/16

The existing law concerning disclosure of death of an occupant is clarified to say that the death of an occupant, or the manner of death, occurring more than three years prior to an offer to purchase is not a material fact which requires disclosure.

 

This law clarifies that an owner or his or her agent, or the selling agent are not required to disclose the death of an occupant upon the real property or the manner of death where it occurred more than three years prior to the offer to purchase or rent, since it is not a material fact. Previously, the law only stated that no cause of action could arise for failing to disclose such.

Additionally, this law clarifies that no disclosure is required where an occupant of that property was living with human immunodeficiency virus (HIV) or died from AIDS-related complications.

 

AB 73 codified as Civil Code § 1710.2. Urgency law to take effect September 25, 2016.

 

Disclosures
Liability Protections of Environmental Hazards Booklet Extended to Landlords

Effective 1/1/17

 

Liability protections for delivery of the Residential Environmental Hazards booklet extended to include leases of more than one year.

 

This law clarifies that the liability protections for delivery of the Residential Environmental Hazards booklet extend to leases of more than one year’s duration. Under Civil Code 2079.7 when a seller or broker elects to deliver this booklet the information is deemed legally adequate to inform the transferee regarding common environmental hazards such as asbestos, formaldehyde, hazardous waste, household hazardous waste, lead, mold and radon, and additional general information on these issues is not required (unless the broker or seller has actual knowledge). This protection now includes leases of more than one year. The delivery of this booklet is optional.

The booklet is intended for “consumers” and is described as a “consumer information booklet.” Nonetheless the new law would make its protections applicable to “real property” which includes all commercial and vacant land properties, but not multi-unit residential rentals of five units or more.

 

AB 1750 codified as Civil Code § 2079.13.
C.A.R. sponsored legislation. This law goes into effect on January 1, 2017.

 

Employment
Family Leave

Effective 1/1/18

 

Wage replacements under California’s Paid Family Leave program are increased from the current level of 55% to either 60% or 70% depending on the employee’s income. This law also eliminates the program’s previous one week waiting period for claims. The change takes effect in 2018.

 

Currently, California's Paid Family Leave program provides employees with 55% of their wages for up to six weeks.

This new law will allow people who earn up to 33% of the average weekly wage to be paid 70% of their salary while on paid family leave, creating a new classification for low-income workers who make about $20,000 or less annually.

Employees who earn more than 33% of the average weekly wage will get 60% of their salary during paid family leave, capped at about $1,100 a week.

Additionally this law removes the 7-day waiting period for these benefits.

AB 908 codified as Unemployment Insurance Code §§ 2655, 2655.1 and 3303.

This law goes into effect on January 1, 2018.

Employment
$15 Minimum Wage

Effective 1/1/17

Minimum hourly wage to increase to $15 by 2022 (or 2023 for businesses with 25 employees or less). The Governor retains authority to pause increases depending on the economy or budget (known as the “off-ramp provisions”). After the minimum wage reaches $15 per hour for all businesses, the minimum wage will increase by up to 3.5% per year based on inflation.

 

On January 1st of 2017 the minimum wage will rise to $10.50 per hour for businesses with 26 or more employees. On January 1st of each year thereafter, the minimum wage will rise until reaching $15 per hour per the following schedule:

 

  • 2017, the minimum wage will increase to $10.50 per hour.
  • 2018, the minimum wage will increase to $11 per hour.
  • 2019, the minimum wage will increase to $12 per hour.
  • 2020, the minimum wage will increase to $13 per hour.
  • 2021, the minimum wage will increase to $14 per hour.
  • 2022, the minimum wage will increase to $15 per hour.

 

For businesses with 25 or fewer employees, the above schedule is delayed at each step by one year.

 

Off-Ramp Provisions

The Governor can choose to pause any scheduled increase for one year if either economy or budget conditions are met. The increase to $10.50/hour is not subject to off-ramps. The initial determination of the Governor must be made by August 1st of each year prior to a January increase. The Governor makes the final determination by September 1st depending on the economy or the budget.

 

  1. Economy

    The Governor has the ability to pause an increase if seasonally adjusted statewide job growth for either the prior 3 or 6 months is negative and retail sales receipts for the prior 12 months is negative.

  2. Budget

The Governor has the ability to pause an increase if any year from the current budget year to two additional years is forecasted to be in deficit when including the next scheduled increase. Pursuant to Proposition 2, a multiyear forecast is adopted as part of the annual Budget Act. A deficit is if the operating reserve is projected to be negative by more than 1 percent of annual revenues, currently about $1.2 billion. The budget off-ramp can only be used twice.

 

Inflation Indexing

Wages will be adjusted annually for inflation (as measured by the National Consumer Price Index) beginning the first January 1st after small businesses are at $15/hour. There is a floor of 0 percent (no decreases) and a ceiling of 3.5 percent. Any inflation adjusted increase will be rounded to the nearest 10 cents. The off-ramp provisions do not apply once the state gets to $15/hour.

 

SB 3 codified as Labor Code §§ 245.5, 246, and 1182.12.

This law goes into effect on January 1, 2017.

 

Employment

Mandated State Retirement Savings Program Enrollment

Effective 1/1/17

This law requires employers with five or more employees that do not offer specified retirement plans to arrange for their employees to enroll for payroll deduction contributions into a state retirement savings program called “Secure Choice” (short for “The California Secure Choice Retirement Savings Program”). No employer contribution is required. It will be implemented per a schedule according the size of the employer after the California Secure Choice Retirement Savings Investment Board (“the board”) makes a report to the Governor and Legislature affirming various requirements.

 

This law requires eligible employers that do not offer specified retirement plans to allow their employees to enroll for payroll deduction contributions to a retirement savings program. The law provides that employers retain the right at all times to set up and offer their own qualified retirement plans. The law neither requires companies to contribute their own money nor makes state taxpayers liable.

 

This law applies to any employer that has five or more employees, and includes an employer of a provider of in-home supportive services as an employer in some circumstances. An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, is exempt from the requirements of the Secure Choice program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.

 

Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form. If an employee does not opt out, they will then contribute a portion of their salary or wages to a retirements savings account which would be set initially between 2% and 5%. The board may thereafter escalate contributions but not above 8%.

 

This law requires the board, prior to opening the program for enrollment, to make a report to the Governor and Legislature affirming that certain requirements have been met.

 

After the board opens the Secure Choice program for enrollment, any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.

 

  • Within 12 months after the board opens the program for enrollment, eligible employers with more than 100 eligible employees and that do not offer a retirement savings program shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
  • Within 24 months after the board opens the program for enrollment, eligible employers with more than 50 eligible employees and that do not offer a retirement savings program shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
  • Within 36 months after the board opens the program for enrollment, all other eligible employers that do not offer a retirement savings program shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.

 

SB 1234 codified as Government Code §§ 100000, 100002, 100004, 100008, 100010, 100012, 100014, 100032, 100034, 100036, and 100043, to add Sections 100046, 100048, 100049, and 100050; and Welfare and Institutions Code § 12302.2.

This law goes into effective on January 1, 2017.

 

FHA Condo Regulations

Owner Occupancy Percentage lowered and Recertification Process Made Less Burdensome.

The effective date will be no later than 11/27/16

 

 

 

FHA’s minimum owner-occupancy ratio for condo associations is reduced from the current 50 percent to 35 percent. FHA is ordered to streamline the entire recertification process for condo associations and make compliance “substantially less burdensome.”

 

The new law requires FHA to reduce its minimum owner-occupancy ratio from the current 50 percent to 35 percent, unless the FHA can provide justification for a higher percentage.FHA’s regulations must be changed within 90 days of enactment. Specifically, in order for a condominium project to be acceptable for FHA insurance, only 35 percent of all family units (including units not covered by FHA-insured mortgages) need be occupied by the owners as a principal residence or a secondary residence (as such terms are defined by the Secretary), or must have been sold to owners who intend to meet such occupancy requirement.

 

Additionally, FHA is required to streamline the entire recertification process for condo associations and make compliance “substantially less burdensome.” The law requires FHA to consider, among other things, lengthening the time between certifications for approved properties, and allowing updating of information rather than resubmission. Condo experts predict this alone could convince significant numbers of associations to return to the FHA fold, thereby opening up sales and purchases to thousands more condo units.

            
This law also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.

 

HR 3700 codified as 42 USC 1437. N.A.R. and C.A.R. backed. This law was enacted July 29, 2016. The provisions discussed will come into force no later than October 27, 2016.

Housing

“Junior Accessory Dwelling Units”

Effective 9/29/16

Authorizes a city or county to provide by ordinance for the creation of Junior accessory dwelling units within an existing dwelling.

 

Existing law authorizes a local agency to provide by ordinance for the creation of 2nd units in single-family and multifamily residential areas.

 

This law authorizes a city or county to provide by ordinance for the creation of junior accessory dwelling units in single-family residential zones. It requires the ordinance to include, among other things, standards for the creation of a junior accessory dwelling unit, required deed restrictions, and occupancy requirements. It prohibits an ordinance from requiring, as a condition of granting a permit for a junior accessory dwelling unit, additional parking requirements.

 

AB 2406 codified as Government Code § 65852.22. Supported by C.A.R. Effective on 9/29/2016.

Housing

“Accessory Dwelling Units”

Effective 1/1/17

Renames “Second Units” as “Accessory Dwelling Units” (ADUs).

Reorganizes existing law to apply a clear standard for the ADU permit review process regardless of whether a local government has adopted an ordinance or not. Additionally, eases some of the barriers to the development of ADUs

 

This law reorganizes existing law to apply a clear standard for the ADU permit review process regardless of whether a local government has adopted an ordinance or not. If a local government has an ADU ordinance, that ordinance must include specified provisions for standards such as parking, setback, and zoning requirements. If a local agency has not adopted an ordinance, it must review the application pursuant to these same standards. An application must be ministerially reviewed and approved or disapproved within 120 days after receipt. This law makes several changes to ADU standards including 1) Increased floor area of an attached ADU must not exceed 50% of the existing living area, up from 30%. 2) no passageways shall be required in conjunction with the construction of an ADU 3) Setback requirements are limited 4) Standards for off-street parking replacement spots are provided, and it is specified that a local agency may reduce or eliminate parking requirements for any ADU located within its jurisdiction.

 

AB 2299 codified as Government Code 65852.2. Supported by C.A.R. Effective date is January 1, 2017.

 

[SB 1069 incorporates additional changes proposed by AB 2299. It revises the requirements for the approval or disapproval of ADU applications when a local agency has not adopted an ordinance. It aims to ease regulatory barriers for homeowners. It amends Government Code §§ 65582.1, 65583.1, 65589.4, 65852.150, 65852.2 and 66412.2. Effective January 1, 2017.]

 

Landlord/Tenant

Bedbugs Disclosure

Effective 7/1/17 and 8/1/18

 

Introduces new disclosure requirement for new tenants commencing July 1, 2017 and for existing tenants commencing January 1, 2018. Landlord is prohibited from showing or renting vacant units if the landlord “knows” it has a current bed bug infestation. However, there is no duty on a landlord to inspect a dwelling unit or the common areas of the premises for bed bugs if the landlord has no notice of a suspected or actual bed bug infestation. Requires landlords to provide copies of pest control reports to tenants whose units have been inspected and other tenants if infestation in common area is confirmed.

 

Current law imposes various obligations on landlords who rent out residential dwelling units, including providing each new tenant who occupies the unit with a copy of the notice provided by a registered structural pest control company if a contract for periodic pest control service has been executed.

 

Disclosure Obligations

 

On and after July 1, 2017, prior to creating a new tenancy for a dwelling unit, a landlord must provide a written notice to the prospective tenant. And beginning January 1, 2018 this notice must be given to all other tenants. The notice must be in at least 10-point type and must include at least the following:

First, general information in substantially the following form:

 

Information about Bed Bugs

 

Bed bug Appearance: Bed bugs have six legs. Adult bed bugs have flat bodies about1/4of an inch in length. Their color can vary from red and brown to copper colored. Young bed bugs are very small. Their bodies are about1/16of an inch in length. They have almost no color. When a bed bug feeds, its body swells, may lengthen, and becomes bright red, sometimes making it appear to be a different insect. Bed bugs do not fly. They can either crawl or be carried from place to place on objects, people, or animals. Bed bugs can be hard to find and identify because they are tiny and try to stay hidden.

 

Life Cycle and Reproduction: An average bed bug lives for about 10 months. Female bed bugs lay one to five eggs per day. Bed bugs grow to full adulthood in about 21 days.

 

Bed bugs can survive for months without feeding.

 

Bed bug Bites: Because bed bugs usually feed at night, most people are bitten in their sleep and do not realize they were bitten. A person’s reaction to insect bites is an immune response and so varies from person to person. Sometimes the red welts caused by the bites will not be noticed until many days after a person was bitten, if at all.

 

Common signs and symptoms of a possible bed bug infestation:

 

  • Small red to reddish brown fecal spots on mattresses, box springs, bed frames, mattresses, linens, upholstery, or walls.
  • Molted bed bug skins, white, sticky eggs, or empty eggshells.
  • Very heavily infested areas may have a characteristically sweet odor.
  • Red, itchy bite marks, especially on the legs, arms, and other body parts exposed while sleeping. However, some people do not show bed bug lesions on their bodies even though bed bugs may have fed on them.

 

For more information, see the Internet Web sites of the United States Environmental Protection Agency and the National Pest Management Association.

 

Secondly, the notice must includethe procedure that the tenant must follow to report suspected infestations to the landlord.

 

Additional Disclosure Obligations

 

Whenever a pest control operator conducts inspections of a unit (including surrounding units), the landlord must notify the tenants of those units in writing of the operator’s findings. This notice must be made within two business days of receipt of the pest control operator’s findings. (A pest control operator means an individual holding a Branch 2 Operator, field representative, or applicator license from the Structural Pest Control Board.)

 

However, for confirmed infestations in common areas, all tenants shall be provided notice of the pest control operator’s findings.

 

Landlord is prohibited from showing or renting vacant units if the landlord “knows” it has a current bed bug infestation.

 

This law prohibits a landlord from showing, renting, or leasing to a prospective tenant any vacant dwelling unit that the landlord knows has a current bed bug infestation. If a bed bug infestation is evident on visual inspection, the landlord is considered to have notice.

 

Additionally, this law does not impose a duty on a landlord to inspect a dwelling unit or the common areas of the premises for bed bugs if the landlord has no notice of a suspected or actual bed bug infestation.

 

A landlord may not engage in any retaliatory conduct against a tenant who has notified the landlord of finding or reasonably suspecting a bed bug infestation on the property.

 

Tenants must cooperate

 

This law requires tenants to cooperate with the inspection to facilitate the detection and treatment of bed bugs, including providing requested information necessary to facilitate the detection of bed bugs to the pest control operator. It permits entry into a tenant's unit selected by the PCO to conduct inspection for bedbugs and permits entry for follow-up inspections of surrounding units until bed bugs are eliminated, as long as the entry complies with requirements for advance notice and other provisions of Civil Code Section 1954.

 

In general, this law espouses various policy goals regarding the control of bed bugs including the importance of cooperation among landlords, tenants and pest control operators; the importance of early detection; best practices among pest control operators; and the importance of tenants to cooperate by reducing clutter, washing clothes and the like.

 

AB 551 codified as Civil Code §§ 1942.5, 1954.1 and 1954.600 et seq.

 

The requirement to provide disclosures to new tenants is effective July 1, 2017 and January 1, 2018 for all other tenants. Other provisions of law are effective on January 1, 2017.

Landlord/Tenant

Commercial Leasing Disclosures re CASp Report

Effective in part 9/17/16*

This law requires a lessor to state on a commercial lease whether or not the property has been inspected by a Certified Access Specialist (CASp). Additionally, if the property has been issued an inspection report by a CASp, indicating that it meets applicable standards, the commercial property owner or lessor shall provide a copy. If no report has been issued, then a specific disclosure statement would be required. Prior to signing the lease, the prospective lessee has the right to review an inspection report issued by a CASp, if one exists, and may cancel lease within 72 hours after signing based on the report. This law goes into effect immediately as of 9/16/2016, with one exception.

 

Existing law requires a commercial property lessor to state on every lease form or rental agreement executed on or after July 1, 2013, whether the property has been determined by a CASp to meet all applicable construction-related accessibility standards. This new law will require a statement as to whether or not the property has been inspected by a CASp specialist for leases executed on or after January 1, 2017.

 

*This law is an urgency statute and goes into effect immediately. Interpreting this law conservatively, all of the requirements described below went into effect immediately, the day after signature by the Governor, on September 17, 2016.

 

If the subject premises have been issued an inspection report by a CASp, indicating that it meets applicable standards, the commercial property owner or lessor shall provide a copy of the current disability access inspection certificate and any inspection report to the lessee or tenant within seven days of execution of the lease.

 

If the premises have not been issued a disability access inspection certificate, then this law requires a statement on the lease form or rental agreement as follows:

 

“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.”

 

This law also establishes a presumption that making repairs or modifications necessary to correct violations of construction-related accessibility standards that are noted in a CASp report is the responsibility of the commercial property lessor unless otherwise agreed upon by the parties to the lease.

 

It grants a prospective lessee the opportunity to review any CASp report prior to execution of the lease, and if the report is not provided at least 48 hours prior to execution of a lease or rental agreement, the prospective lessee has the right to rescind the lease or agreement, based upon information in the report, for 72 hours after execution.

 

AB 2093 codified as Civil Code §1938. This law went into effect immediately on 9/17/2016 with the exception of the requirement of indicating whether the property has been inspected by a CASp specialist for leases executed on or after January 1, 2017.

 

Landlord/Tenant

Unlawful Detainer

Reporting

Effective 1/1/17

No public access to Unlawful Detainer records permitted unless the plaintiff/landlord prevails within 60 days of filing. Previously, it was the defendant/tenant who had to prevail within 60 days of filing to bar such access.

 

Existing law permanently restricts access to unlawful detainer action public records if the defendant (that is, the tenant) prevails within 60 days after the UD complaint is filed.

 

This law would allow public access to unlawful detainer records only if 1) the plaintiff (that is, the landlord) prevails within 60 days from the filing of the complaint or 2) by order of the court when judgment is entered for the plaintiff after trial more than 60 days since filing of the complaint. There are other limited exceptions that allow for access. Additionally, if a proof of service of summons in a UD action had not been filed within 60 days and the action was dismissed as a result, that record would also not be available to the public. Likewise, a default that is later set aside will also be unavailable. Lastly, a court could bar access to court records in the action if the parties so stipulate.

 

The practical effect of this law will be to make permanently unavailable to public view many unlawful detainer filings even where the landlord’s initial complaint was justified.

 

This law contains a statement of findings and declarations which explain its purpose including a statement that,“It is the intent of the Legislature to amend existing statutes regarding open access to public records by making permanently unavailable to the public civil case records in unlawful detainer proceedings in which the plaintiff does not prevail within 60 days of filing instead of unlawful detainer proceedings in which the defendant prevails within 60 days of filing.”

 

AB 2819 codified as Code of Civil Procedure §§ 1161.2 and 1167.1.

Effective date is January 1, 2017.

 

Landlord/Tenant

Water Submeters

Effective date 1/1/18

This law requires that submeters be installed on all new multifamily residential units or mixed commercial and multifamily units, and requires that landlords bill residents of these new units for the increment of water they use. This requirement will come into effect pursuant to standards which may only be proposed and adopted after January 1, 2018.

 

When a multi-unit property has submeters installed prior to 2018 and the landlord elects to charge a tenant separately for water service, then all of the requirements of this new law must be complied with commencing January 1, 2018. However, this law does not affect existing properties without submeters where tenants are billed separately through ratio-allocation utility systems (RUBS).

 

Existing law requires the installation of a water meter when new water service is requested. This new law requires each water purveyor that provides water service to a newly constructed multiunit residential structure or newly constructed mixed-use residential and commercial structure for which a water connection is submitted after January 1, 2018, to ensure each individual unit be metered or submetered as a pre-condition for new water service. The landlord of the newly constructed structure shall be required to install and read the submeters unless the water purveyor agrees to install and/or read them.

 

For these newly constructed units, the landlord will be required to bill residents for water service in accordance with this law. For properties with submeters installed prior to January 1, 2018, in which the landlord elects to charge a tenant separately for water service, this law must be complied with commencing January 1, 2018.

 

Notice and Disclosure, Limitations and Meter Accuracy
If a submeter is used to charge a tenant separately for water service, this law imposes various requirements on landlords. It requires a landlord to make disclosures to the tenant prior to the execution of the rental agreement. It specifies that as part of the monthly bill for water service, a landlord may only bill a tenant for volumetric water usage, a portion of any recurring fixed charge billed to the property by the water purveyor, an administrative fee, and a late charge. It specifies that payments are required to be due at the same point in each billing cycle, and that each bill must include and separately set forth certain information. This law would prohibit a landlord from charging certain additional fees.

This law also requires a landlord to maintain and make available in writing to a tenant, the date the submeter was last inspected, tested, and verified, the data used to calculate the tenant’s bill, and the location of the submeter. It requires a landlord to investigate and, if warranted, rectify certain problems or a submeter reading that indicates constant or abnormal water usage.

 

Entry

A landlord is permitted to enter a dwelling unit for purposes relating to a submeter or water fixture.

 

Late Fee and Eviction

A tenant may be charged late fees of up to $7 if more than 25 days late, or up to $10 in each subsequent bill if any amount remains unpaid. But the total late fee in any 12-month period cannot exceed 10% of the total amount that remains unpaid.

If the water bill remains unpaid for 180 days after the date upon which it is due or the amount of the unpaid water bill equals or exceeds two hundred dollars ($200), the landlord may terminate the tenancy with the service of a three-day notice to perform covenant. Water service charges under this law cannot be claimed as additional rent, meaning, that a three-day notice to pay rent or quit should not be used to demand payment of the water bill.


Ratio-allocation system and certain other submetering systems are exempt

This law does not apply to a ratio utility system where submeters are not used to charge a tenant separately for water service. “Ratio utility billing system” means the allocation of water and sewer costs to tenants based on the square footage, occupancy, or other physical factors of a dwelling unit.

 

A submetering system that measures only a portion of a dwelling unit’s water usage, including, but not limited to, a system that measures only hot water usage, shall not be subject to this chapter if the system was first put in service before January 1, 2018.

 

This law only applies to:

(1) Dwelling units offered for rent or rented in a building where submeters were required to be installed pursuant to a building standard proposed by the Department of Housing and Community Development after January 1, 2018 and thereafter adopted by the California Building Standards Commission.

(2)All dwelling units where submeters are used to charge a tenant separately for water service on or after January 1, 2018.

 

Local ordinances grandfathered in if in effect before 2013

 

This law does not preempt an ordinance that regulates the approval of submeter types or the installation, maintenance, reading, billing, or testing of submeters and associated onsite plumbing if the ordinance or regulation was adopted prior to January 1, 2013.

 

SB 7 codified as Civil Code §§ 1954.201 et seq., Health and Safety §17922.14, and Water Code §§ 517 and 537 et seq.

The bill would provide that these provisions shall become operative on January 1, 2018.

 

Licensing

Eliminates References to “Salesmen”;

Issuance of License for Person Previously cited

Effective 1/1/17

 

“Real estate salesman” is now renamed “real estate person” in the real estate law.

 

Prohibits issuance of a real estate license to a person who was cited for the illegal practice of real estate and either the terms of the citation have not been complied with or an unpaid fine remains outstanding.

 

The Real Estate Law includes outdated terminology that does not reflect both genders. This law makes some necessary technical corrections, which include eliminating references to “salesman” and “salesmen” and instead replacing those with “salesperson” and “salespersons,” respectively.

 

Presently, the commissioner may issue a citation to a person who appears to be practicing real estate without a license. Presently, the law prohibits a license from being renewed if an unpaid fine remains outstanding or the terms of a citation have not been complied with. This new law would additionally prohibit a license from being issued under those circumstances.

 

AB 685 codified as Business and Professions Code §§ 6742, 10003, 10007, 10008, 10009.5, 10010, 10011, 10012, 10013, 10014, 10015, 10016, 10023, 10024, 10027, 10074, 10080.9, 10082, 10132, 10133.1, 10136, 10137, 10140.5, 10143.5, 10144, 10161.5, 10161.8, 10178, 10179, 10186.2, and 11212, and Corporations Code § 31210.

C.A.R. sponsored legislation. This law goes into effect on January 1, 2017.

 

Licensing

Outdoor Advertising Exemption

Effective 1/1/17

An “outdoor advertising representative,” defined as an employee of a corporation that holds an outdoor advertising business license, is exempt from BRE licensing requirements when arranging for lease or transfer of real property which is solely for the placement of an advertising display and where the owner or operator of the advertising display meets minimum insurance requirements.

 

An “outdoor advertising representative” is excluded from BRE licensing requirements in connection with specified transactions.

An “outdoor advertising representative” means an employee of a corporation or a limited liability company or a general partner of a partnership that holds a license issued by the Department of Transportation to engage in the business of outdoor advertising, arranging for the lease or transfer of real property by his or her employer or an interest in real property solely for the placement of, access to, or operation of, an advertising display and appurtenances thereto.

 

In every transaction involving the transfer, lease, or use of real property for the operation of an advertising display negotiated by an outdoor advertising representative, the owner or operator of the advertising display shall maintain liability insurance coverage for death, bodily injury, and property damage arising out of, or in connection with, its acts, omissions, or operations on the real property. The amount of the insurance coverage shall not be less than five hundred thousand dollars ($500,000) per person or one million dollars ($1,000,000) per occurrence for personal injury and five hundred thousand dollars ($500,000) for property damage. It must be issued by an insurance carrier authorized to sell such insurance in California.

 

AB 1381 codified as Business and Professions Code §§ 10133.45 and 11317.2. Effective date is January 1, 2017.

 

Licensing

Retired Status

Effective 1/1/17

Any board under the Department of Consumer Affairs (DCA), including the Bureau of Real Estate, may establish the category of "retired" licensees.

 

This law would authorize any of the boards within the DCA to establish by regulation a system for aretired category of license for persons who are not actively engaged in the practice of their profession or vocation.This law does not require boards to offer a retired license.

Aretired license may be issued to a person with either an active license or an inactive license. However, it cannot be issued when licensee was placed on inactive status for disciplinary reasons. Retiredlicensees cannot engage in any activity for which a license is required, unless the board, by regulation, specifies the criteria for aretiredlicensee to practice his or her profession. This law would not apply to a board that has other statutory authority to establish aretiredlicense.

 

AB 2859 codified as Business and Professions Code §

464. Effective date is January 1, 2017.
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Loans

Homeowner Bill of Rights Extended in Part to Successor in Interest after Death of Borrower

Effective 1/1/17

Extends provisions of the Homeowner’s bill of rights to a successor in interest after the borrower has died. This law is in effect only until January 1, 2020.

 

Existing law gives a borrower various rights and remedies against a lender, servicer and others in regards to foreclosure prevention alternatives, including loan modifications, under the California Homeowner Bill of Rights.

 

This law, until January 1, 2020, prohibits a mortgage servicer, upon notification that a borrower has died, from recording a notice of default until the mortgage servicer requests reasonable documentation of the death of the borrower from a claimant, among other things. A claimant is a person claiming to be a successor in interest, who is not a party to the loan or promissory note. The law provides a reasonable period of time for the claimant to present the requested documentation.

 

A mortgage servicer is required, within 10 days of a claimant being deemed a successor in interest, to provide the successor in interest with information about the loan and to allow a successor in interest to assume the deceased borrower’s loan or to apply for foreclosure prevention alternatives on an assumable loan. Such a successor in interest who assumes an assumable loan and wishes to apply for a foreclosure prevention alternative has the same rights and remedies as a borrower under specified provisions of the California Homeowner Bill of Rights.

 

SB 1150 codified as Civil Code § 2920.7. Effective date is January 1, 2017.

 

Mobile Homes

Three Year Temporary Waiver Program for Taxes and HCD Charges

Effective 1/1/17

Requires waiver of all vehicle license registration fees (VLF) by the Department of Housing and Community Development (HCD) against a person who is not currently the registered owner of a manufactured home or mobilehome prior to transfer of title. If the manufactured home or mobilehome is subject to local property taxation (LPT) then the HCD must issue a conditional transfer of title and would require a county tax collector to issue a tax liability certificate with only partial payment of the taxes owed. This window for waiver of charges and taxes expires at the end of 2019.

 

Due to the sometimes informal nature of mobilehome sales, buyers and sellers may not be aware that delinquent taxes and fees prevent title from transferring. This law creates an abatement program to address the situation where a buyer has already purchased a mobilehome, but is unable to transfer title into his or her name due to delinquent fees or taxes. Nonpayment of VLF constitutes a lien on the mobilehome in favor of the state. Nonpayment of LPT means the county tax collector may pursue collection of the delinquent LPT in the same manner as other delinquent taxes on the unsecured roll. Both of these scenarios prevent HCD from amending the title into the new owner's name. If the buyer cannot pay the delinquent charges associated with the home, and the seller does not agree to pay or cannot be located, then the buyer cannot obtain legal ownership.

 

Beginning January 1, 2020, this law will make it unlawful for any person to use for occupancy any manufactured home or mobilehome that does not conform to the registration requirements of the department, if the department provides notice to the occupant of the registration requirements and any registration fees due.

 

AB 587 codified as Civil Code § 798.15, Health and Safety Code §§ 18092.7, 181161.1, 18550 and 18550.1 and Revenue and Taxation Code § 5832. Effective date is January 1, 2017.

Notary Public Maximum Fees

Effective 1/1/17

Maximum fees that can be charged by a notary public for taking a proof of deed will increase from $10 to $15.

Currently, the law sets maximum fees that may be charged by a notary public for many services at $10. This new law increases the maximum permissible charge from $10 to $15 on the following services:

  • Taking an acknowledgment or proof of a deed, or other instrument, to include the seal and the writing of the certificate
  • Certifying a copy of a power of attorney


AB 2217 codified as Government Code §8211. This law goes into effect on January 1, 2017.

 

PACE Liens

Detailed Financial Disclosure and 3-Day Rescission Right

Effective 1/1/17

A property owner may not participate in a PACE lien program without delivery of a detailed financial disclosure document received before contractual consummation. The disclosure document contains a variety of notices and warnings including a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation. The property owner also retains a 3-day rescission right detailed in a statutory form. Statements as to increased value of the property cannot be made unless based on a valuation as specified.

Existing law requires home loans to be accompanied by the Truth in lending RESPA Integrated Disclosure (TRID), which is intended to allow an "apples to apples" comparison shopping of various loan products. However, PACE transactions are technically not loans and are not required to be accompanied by a TRID disclosure. Current law gives delinquent PACE assessments “super-priority” status, as part of the tax bill, over other recorded obligations; lenders require these “super liens” to be paid off before any new financing can be obtained.

This measure will require a TRID-like disclosure be provided to a property owner participating in a PACE program, a 3 day right of rescission, and a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation.

This law prohibits making monetary or percentage representations of increased value to a property owner regarding the effect the financed improvements will have on the market value of the property unless the estimate of market value is based upon either “an automated valuation model,” a broker price opinion or an appraisal by a licensed appraiser.

AB 2693 codified as Government Code § 53328.1 and Streets and Highways Code §§5898.15, 5898.16 and 5898.17.
This law goes into effect on January 1, 2017.

PACE Liens

FHA permits limited subordination with disclosures.
Effective 9/17/16

FHA permits properties encumbered with a Property Assessed Clean Energy (PACE) obligation to be eligible for FHA-insured mortgage financing, whether for new purchases or refinancing, under certain circumstances. If the PACE lien is to remain, then property sales contract must include all terms and conditions of the PACE obligation by closing. Effective September 17, 2016.

Under FHA guidance, for a property to be eligible for FHA-insured mortgage financing, PACE obligations may be superior or subordinate, but may not fully accelerate. The FHA guidance stresses that PACE obligations must be treated as and follow the same rules as other special tax assessments levied by municipalities. In that vein, FHA will allow that only delinquent payments may take priority over a mortgage. A delinquency on a PACE obligation cannot trigger acceleration of the entire loan. In the event of a sale, including a foreclosure, the PACE obligation will run with the land, and the new homeowner will be responsible for payments on any outstanding PACE amounts.

For PACE-encumbered property to be considered for FHA-insured mortgage financing, the mortgagee must verify that the following requirements are met:

  • Must be treated like a special assessment
  • Only delinquent special assessment payments may take priority over a mortgage.
  • PACE obligations must freely and automatically transfer upon sale.
  • PACE obligations must be recorded on the land records
  • Outstanding PACE obligations must run with the land

New Disclosure and Appraisal Requirements

Under the FHA guidance, when a PACE-encumbered property is sold, the property sales contract must indicate whether the seller will satisfy the PACE obligation at or before closing or whether the obligation will remain with the property. If the obligation will remain with the property, the property sales contract must include and incorporate all terms and conditions of the PACE obligation. Additionally, if the obligation will remain with the property, the appraiser must analyze and report the impact of the PACE-related improvements on the value of the property.

Based on guidance from the Federal Housing Administration issued in Mortgagee Letter 2016-11. This guidance went into effect on September 17, 2016.

TAX

Parcel Tax Vote Notification

Effective 1/1/17

Requires notice of a new parcel tax to the owner, if that owner does not reside within the jurisdictional boundaries of the taxing entity.

 

Under current law, resident property owners receive notice of proposed parcel taxes with receipt of their ballot pamphlet while non-resident property owners do not receive any notice whatsoever.

 

This new law requires that non-resident owners be provided with notice of a new parcel tax which includes (1)The amount or rate of the parcel tax in sufficient detail to allow each property owner to calculate the amount of the tax to be levied against the owner’s property. (2)The method and frequency for collecting the parcel tax, and the duration of time during which the parcel tax will be imposed. (3)The telephone number and address of an individual, office, or organization that interested persons may contact to receive additional information about the parcel tax.

 

AB 2476 codified as Government Code §54930. This law goes into effect on January 1, 2017.

 

Team Name Advertising

Effective 8/29/16

Effective August 29, 2016, on team name and agent-owned DBA advertising, only the responsible broker’s name must be displayed alongside the team name or agent-owned DBA. The display of the responsible broker’s license number is optional.

 

This new law, which took effect immediately on August 28, 2016, corrects a drafting error that required to be displayed in all team name and agent-owned DBA advertising both the responsible broker’s name and license identification number.

The new law, to correct that error, requires only the responsible broker’s name. The display of the responsible broker’s license identification number in team name or agent-owned DBA advertising is optional.

 

 

The responsible broker’s name means the name under which the responsible broker is currently licensed by CalBRE and conducts business in general or is a substantial division of the real estate firm.

 

SB 710 codified as Business and Professions Code §10159.7.
C.A.R. sponsored legislation. Effective August 29, 2016.

Water Use

Fines may be imposed for “excessive water use”

Effective 1/1/17

Requires each public/private urban retail water supplier to define “excessive water use” by a residential customer and permits these water suppliers to fine residential customers up to $500 per 748 gallons (100 cubic feet) of water used above the defined local standard for excessive water use during a drought emergency.

 

This law declares that during prescribed periods of drought emergencies, excessive water use by a residential customer in a single-family residence or by a customer in a multiunit housing complex is prohibited. It requires each urban retail water supplier to establish a method to identify and discourage excessive water use and that entity is authorized to issue a fine of up to five hundred dollars ($500) for each hundred cubic feet of water, or 748 gallons, used above the excessive water use threshold established by the urban retail water supplier in a billing cycle. Any fine imposed must be added to the customer’s water bill and is due and payable with that water bill. The system for issuing fines does not apply unless the urban water supplier is fully metered. But once all of the water supplier’s residential water service connection are being billed based on metered water usage, it will apply.

 

SB 814 codified as Water Code §§ 365, 366 and 367. January 1, 2017 is the effective date.

 

 

Copyright© 2016, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Permission is granted to

C.A.R. members only to reprint and use this material for non-commercial purposes provided credit is

given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the

express written permission of the C.A.R. Legal Department. All rights reserved. Written by Robert

Bloom, Esq.


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