Archive for the ‘Real estate laws’ Category
Wednesday, July 23rd, 2014
Kudos to the California Bureau of Real Estate for a smart new rule that could get unethical agents into trouble more quickly. One of the biggest problems in the real estate industry in California is that agents who are accused of committing unethical acts, or those who break laws or rules, were subject to a lengthy process of administrative hearings. The agent or broker could continue to work in the industry for a long time until it was found they actually did something wrong (and many claims are not even investigated because there is not enough people-power to do so – but that is a story for another blog).
Here are the highlights of the new rule, which was announced this month:
1. Citations issued more quickly. The new rule, referred to as “cite and fine,” will give the BRE the authority to issue citations and assess fines prior to hearings. The rules apply to both real estate professionals and those who practice real estate without licenses (those without licenses will likely be subject to higher fines). Fines will go up to $2500.
Here is how the new rule will work. Once a complaint is filed, the administrators will conduct an investigation, audit or examination of records. Action will be taken depending on the type and degree of the violation. Most minor offenses (such as failure to include the agent’s BRE license number on first point of contact marketing materials) will be subject to fines.
2. Offender names will be available via public record. Names of those who are cited and/or fined will not appear on the BRE website or under the licensee’s record, it will appear in the public records for anyone who chooses to submit a request through the Public Records Act.
3. Money collected from fines will go to a good cause. All the money collected by the BRE from offending licensees and non-licensees will go into a fund that helps victims of real estate fraud. Again – kudos to the BRE.
This new citation and fine system is a step in the right direction toward the prevention of rules and ethics violations in the real estate industry. Hopefully the BRE will continue to refine policies AND licensing and training requirements. I will keep my hopes up that this is the first in a succession of positive moves to make the real estate industry more professional and respected.
Sunday, January 8th, 2012
With a new year there are new laws, so here is my annual list of some of the new real estate laws you may want to be aware of going into this new year:
Landlord Right to Prohibit Smoking. California Senate Bill 332 gives landlords the right to prohibit smoking in their residential rental properties, including outside areas. The non-smoking areas of the property must be designated in the lease agreement. Existing tenants must be provided 30 days notice if a landlord wishes to impose these restrictions on current leases. Law effective January 1.
Foreclosure Postponement Notice Requirement. Senate Bill 4 requires specified notices of how to postpone a foreclosure sale be provided to owners who receive foreclosure notices. Lenders seeking foreclosure are required to make a good faith effort to provide such information to those who seek it. Law effective April 1, 2012.
Owners Right to Rent Condominium. Senate Bill 150 allows an owner of a unit in a common interest development to rent or lease out the property despite homeowner rules to the contrary, as long as the rules were not in effect before the owner took title. Law effective January 1.
HOA Restrictions Against Excessive Fees. Senate Bill 771 requires HOAs (home owner associations) to limit the costs of preparing and delivering HOA documents and disclosures. Once the HOA estimates a fee for doing so, and the fee is paid, it cannot tack on unreasonable fees beyond the estimate, nor can it threaten to withhold release of the information to sellers until extra fees are paid. Law effective Januart 1.
Restricting Actions of HOA Boards. Senate bill 563 requires HOA boards to provide at least 2 days notice to owners for HOA meetings, with the exception of emergency meetings. Boards are not permitted to take action on any business items outside of a meeting, with the exception of those that have been delegated to managing personnel or others. Law effective January 1.
School Residency Attendance Can Be Established Via Parent Workplace. Under Senate bill 381, residency requirements for specific school districts may now be established by parent workplace, if at least one parent/legal guardian of the pupil is “physically employed within the boundaries of that district at least 10 hours per school week.” This is determined by the district, and “may” be allowed should the district choose to do so. This law was already in place, but is now extended through July 1, 2017.
Small Claims Court Judgment Increase. Under Senate bill 221, small claims judgments are now increased from $7500 to $10,000 if the claim was brought by a natural person (if brought by a corporation the limit is still $5,000). Law effective January 1.
Real Estate Agent Licensing/Discipline Changes. There are numerous changes to discipline in regards to real estate agents, including those related to license suspension for failure to pay taxes, and the requirement to report any disciplinary actions and escrow activities to the DRE. Senate Bills 53, 706. Laws effective January 1.
For a complete list of all new 2012 laws go to www.leginfo.ca.gov for California laws or http://www.gpo.gov/fdsys/ for federal laws.
Monday, October 24th, 2011
There has been plenty of recent housing news that could effect the value of your home, so here are some of the latest updates:
Bill to allow visas to foreign home buyers. Congress is considering a bill that would allow foreign homebuyers to purchase residential property in the U.S., in an effort to stimulate the housing market. Buyers would need to spend at least $500,000 to obtain the visas, and would be allowed to split the money and purchase more than one home, as long as one property was at least $250,000. The buyers resident visa would be in place for as long as the buyer owned the home, and the buyers will have to live in their U.S. home for at least six months out of the year.
Mortgage rates may be lowered. The Federal Reserve is considering lowering the mortgage rates again, as the current low rates do not seem to be stimulating housing and the economy. They plan to purchase more mortgage backed securities, with the goal that banks will be able to help homeowners with refinancing and stimulate purchasing, without causing inflation. Since most of the problems with refinancing involve problems with fees or restrictions, will this really help? This could create more mortgage rate risk for the Fed, and realistically how many people will it help? It certainly won’t do anything for the millions of underwater homeowners. It seems to me this is digging a deeper grave, but I am not a mortgage expert so I will leave this to those who are, but my gut feeling says this is not the best solution.
Next generation of homeowners have little confidence in housing. A new study released by Federal Reserve Bank of Boston has found that the younger generation is less willing to purchase homes. Older respondents seemed to be more confident about homeownership after large declines, while younger participants felt opposite. Older respondents saw the drop in the market as cyclical, with the expectation of recovery, whereas their younger peers view the current situation as more permanent. Could this have an effect on housing in the long term?
Study says bank owned property sales may not peak until 2013. The latest study claims that we will see a lot more foreclosures, and therefore many more bank owned homes, until 2013. Bank of America Merrill Lynch analysts claim that although we will not see price drops as steep as those of 2008, we could see a 10% increase in these REO (bank-owned) properties from 2012 to 2013. For more details of the study click here.
State court voids home sale…could this happen across the country? A Massachusetts state court recently ruled that a home recently sold post-foreclosure was improperly sold, as the lender did not hold the title. The sale was found to be void. So what happens to the new owners? Certainly there will be a big lawsuit against the title companies. But if this becomes the standard who is going to want to purchase a post-foreclosure home? Home buyers rely on title companies to convey clear title…so isn’t this punishing the purchasers and not just the bank? After all, if the title company certifies title is clear and escrow closes, how would a homeowner have any reason to know that there was a problem with the title? I’m not even going to speculate as to how badly this would fare for housing and the economy in general.
HUD homes for only $100 down: In the spirit of stimulating housing purchases, HUD has decided to offer buyers the chance to purchase a HUD REO (lender owned home) for only $100 down…yes, you read that right, one hundred dollars. Of course there are restrictions: the home must be a HUD home (a home that is the result of a foreclosure on a FHA home loan), the sale must be for list price, FHA guidelines apply (you have to qualify for a loan), and the state of your purchase must be one that is listed. To find out more search the internet for HUD’s $100 downpayment program orvisit their site.
Wednesday, October 19th, 2011
You may or may not have heard that as of July 1, 2011 carbon monoxide detectors must be installed in every single family residence. So, what is your liability if you are a seller – do you have to install them before the close of escrow?
While it is true that carbon monoxide detectors must be located in every home, it is not a requirement to install them in order to close escrow. However, the seller is responsible for disclosing in the Transfer Disclosure Statement (TDS) whether or not the home has carbon monoxide detectors installed.
Keep in mind that if you do not install them in your home you are technically in violation of the law – but whether that would actually be enforced is anyone’s guess (I suspect local law enforcement officers have better things to do).
If you are a buyer and would like the seller to install the detectors during escrow you can ask your agent to write that into your contract. If you are a seller, my advice to you is to spend the money on carbon monoxide detectors and forget about it – there are some great deals if you check. I recently purchased a set of two for about $20.
Tuesday, July 19th, 2011
Governor Brown just signed a new law relating to short sales that will protect California homeowners. Senate Bill 458 prevents first and secondary lien holders from being allowed to pursue homeowners for deficiency amounts after short sales. This is great news for homeowners who need to short sell their properties.
The old law prevented primary lien holders from coming after borrowers upon the close of short sale escrow for deficiencies (the difference between the amount the property sold for and the amount owed to the lender), but it did not include subsequent lien holders. If a borrower had two mortgages on the property (many have a second mortgage or line of credit), the short sale could close and the borrower could later be subject to collection efforts from the subsequent lien holder. That is no longer the case, and the law is effective immediately.
The new law should make the short sale process a bit easier and less risky for homeowners, likely leading to more short sales in lieu of foreclosures and bankruptcies.
Tuesday, July 5th, 2011
Recently I heard of a desperate homeowner who was told to file bankruptcy in order to prevent foreclosure. But will this really work?
Foreclosure postponement reasons are outlined in the California Civil Code (section 2924 g (c) (2)), and can include mutual agreement, operation of law (such as charges of fraud against the lender), discretion of a trustee, request of a beneficiary and bankruptcy.
Many believe that filing for bankruptcy actually stops foreclosure, but the truth is that it merely puts a stay on all debt collection actions, for up to one year. This means that actions such as foreclosure cannot proceed until the debt is resolved by the homeowner, or until the lender obtains permission from the court to continue with the sale of the property.
If a homeowner can work out a plan to pay debt owed to the lender on the home than bankruptcy could be a good option. It gives the homeowner time to restructure obligations and devise a plan for paying them. In such a case a postponement could be beneficial. But if you are trying to find a way to stop foreclosure, bankruptcy is not such an option.
My advice is to speak with a bankruptcy attorney to see if this is a viable option for you. You need to understand all of the consequences of a bankruptcy, as well as your state laws, and you need to explore other options as well before filing. I also advise speaking with your accountant to see if there are other ways to structure your obligations.
Friday, November 5th, 2010
Starting January 1, 2011 there will be some new laws effecting buyers, sellers, homeowners and renters, as well as foreclosures. To read the full text of the laws you can go to http:// www.leginfo.ca.gov. Here they are in a nut shell.
Short Sale Deficiencies Not Allowed. Lenders may not go after borrowers for the short sale deficiencies any longer after January 1. Once the lender has given written permission to accept the short sale price it is bound to accept that price as payment in full of the obligation. This law applies to first trust deeds only, in residential 1-4 unit properties, and still permits the lender to seek damages for fraud or waste committed by the borrower in relation to the sale. Senate Bill 931.
Home Inspection Report Energy Audit Inclusion. Buyers will be allowed to ask that an energy audit be included in their home inspection report, according to the standards of the Home Energy Rating Systems (HERS). Assembly Bill 1809 and California Civil Code Section 2079.10.
Adverse Possession Claim Restriction. A person or entity may not initiate a claim for adverse possession (taking of property of another) without certified proof that all taxes–state, county and municipal–have been paid for the five year period the property has been occupied and claimed. Assembly Bill 1684.
Mortgage Loan Originator (MLO) Enforcement. One who acts as a MLO without a license endorsement as such will be guilty of a crime. Senate Bill 1137.
Post-Foreclosure Tenant Protection. Tenants remaining on property after a foreclosure sale must receive a notice of tenant’s statutory rights. There is another part of this bill that also protects residential tenants’ credit. Senate Bill 1149.
Tenant Protection and Domestic Violence. A landlord cannot terminate a tenancy based on domestic violence that occurred or is alleged against the tenant or his/her household members. There are some exceptions. A landlord is also required to change exterior locks on leases entered into after January 1, 2011 upon written request of the tenant and within 24 hours of a request. For details and exception see Senate Bill 782.
Real Estate Fraud Protections. There are several new laws pertaining to foreclosure consultants, mailed solicitations and grant deeds, and for renting out dwellings without owner permission. See Assembly Bills 2325, 1373 and 1800.