State bill watch 2014

The local real estate industry is affected by state legislation every year. The California Association of REALTORS® (C.A.R.) estimates that 130 of the 800 new laws enacted last year directly or indirectly affect real estate practice or are of interest to REALTORS®. This year there are over 1200 bills under consideration. It is important for agents and consumers to be aware of these legislative changes.

This past April, 2200 REALTORS® from all over the state poured into Sacramento for Legislative Day and met face-to-face with state legislators to express support or opposition for the various real estate-related bills making their way through committees. Southwest Riverside County Association of REALTORS® (SRCAR) sent a local contingent led by Gene Wunderlich, Government Affairs Director for SRCAR.

C.A.R. identified a number of bills as “hot issues” and prepared one-page briefs on these bills. Here some brief descriptions on a few key bills from those briefs and from a verbal report given by Wunderlich to SRCAR

SB 391: Recording Tax — OPPOSE

The California Homes and Jobs Act of 2013, introduced by Mark DeSaulnier (D-Concord) is an attempt to provide an ongoing stream of revenue dedicated to affordable housing development in the wake of the 2011 dissolution of California’s 425 redevelopment agencies. The bill proposes a $75 recording fee “on every real estate instrument, paper, or notice required or permitted by law to be recorded.”

Documents recorded in the course of a standard sale – already subject to a documentary transfer tax – are excepted. Potential impact is an additional $3500-5000 per transaction.

CAR opposes the bill on the grounds that it places a tax unfairly on property owners who need to record a document and provides no guidelines on the prioritization of affordable housing needs or the distribution of funds. The bill was tied to SB 30 (providing short sale debt relief for tax purposes).

SB 1439 / AB 2405: Ellis Act Restrictions – OPPOSE

The Ellis Act – successfully sponsored by C.A.R. in 1985 – prevented local governments from passing laws restricting the ability of landlords to go out of business and provided protections (advance notice to tenants, relocation assistance, extended notice for seniors and disabled) when landlords choose to go out of business.

SB 1439 introduced by Mark Leno (D-San Francisco) seeks to empower local government (City and County of San Francisco) to restrict landlords from taking rental units off the market unless every owner of that rental property has owned that property for at least five consecutive years.

AB 2405 introduced by Tam Ammiano (D-San Francisco) would prevent landlords from ever going out of business and applies statewide.

C.A.R. opposes both bills that prohibit the feree use of private property in rent control jurisdictions, provide no exceptions or relief for property owners with financial or personal hardships. The passage of these bills would force long-time owners to proactively evict tenants before putting properties on the market. Owners forced to sell by economic hardship will find fewer parties interested in ownership, have fewer options. Rental property values are projected to decline in such situations.

AB 2416: Age Liens on Property – OPPOSE

Tradespersons – who contribute to property improvement work through labor, skill or services – have the right to record a mechanic’s lien against a property for payment of that work. This bill, introduced by Mark Stone (D-Scotts Valley) would expand that concept to include any property owned by the employer, even property with no connection to the dispute.

C.A.R.’s opposition is based on the denial of due process to property owners and the possible endangerment of mortgage finance availability. An employee’s wage dispute could cloud the title on ALL property owned by an employer and with no hearing on the issue.

AB 2039: Auction Company Liability – SUPPORT

This bill is sponsored by C.A.R. and was introduced by Assembly Member Al Maratsuchi (D-Torrance) and seeks to prevent real estate auction companies from indemnifying themselves from costs, liabilities, damages resulting from their auction actions and shifting liability for their mistakes to sellers and listing agents when the lender sends short-sale properties to auction to validate their value.

C.A.R.’s position is that the current practice forces homeowners to release the auction company from liability and unfairly holds homeowners and REALTORS® responsible for others’ mistakes. Auction companies should be held responsible for actions and mistakes made in the regular course of doing business.

AB 1513 (Fox): Squatters — SUPPORT

This bill is for a pilot project that would make squatting a felony (defining the unlawful entering and possession of real property) and providing local agencies authority to evict such unlawful occupants. Two cities are named (Palmdale and Lancaster), but other cities can apply to be included.

AB 2018 (Bocanegra): CalBRE “Team Names”

Provides clarification in the regulation of “team” names by CalBRE.

AB 2136 (Daly): Electronic Transactions — SUPPORT

This bill states that electronic messages of an “ephemeral” nature are not sufficient to constitute a written contract or be part of the permanent record. Such short-lived communications must be reduced to a durable, retainable form to be considered a “document.”

AB 2169 (Cooley): Agent status as Contractors — SUPPORT

This bill seeks to clarify the relationship of agents to brokers as independent contractors versus employees and that this status remains a legal option.

AB 2430 (Malenschein): CID Document Bundling: SUPPORT

This measure provides for more specific document delivery and disclosure standards and tightens the anti-bundling provisions (condominium sales and HOA documents). HOA’s and third parties cannot charge more than it costs to produce the documents.

AB 2540 (Dababneh): Email Collection by CalBRE

Requires licensees to maintain and provide a valid e-mail address as part of licensing requirements. Authorizes the Bureau of Real Estate to collect e-mail addresses as part of contact information.

SB 1091 (Gagliani): Central Rulemaking Registry — SUSPENDED

This bill would require state agencies to submit pre-rule making publications to the California Regulatory Register and for the register to serve as central repository for all regulatory and rule-making documents. The website would be searchable and subscribable. Suspended for further research into cost impact.

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