2011

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A new age for fair housing

A new age for fair housing somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Nov 1, 2011 | Laws and Regulations, Real Estate | 4

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Do you think the Occupy Wall Street movement will have any impact on the housing market?

No. (64%, 99 Votes)
Yes! (19%, 30 Votes)
Maybe if it were better organized. (17%, 26 Votes)

Total Voters: 155

The right to fair housing for all in America is a relatively new development in our nation’s history.

Until the late 1950s, the code of ethics for the national real estate trade union insisted that real estate agents ought not advertise or sell homes in white neighborhoods to individuals of any other “race or nationality,” lest they compromise property values and diminish the standard of living.

Federal Housing Administration (FHA) underwriting guidelines mandated institutional redlining practices, directing underwriters to ensure properties were occupied by members of the same racial and social classes in order to maintain neighborhood stability.

It was not until the late 1960s, at the apex of the Civil Rights Movement, that these discriminatory practices in the public and private housing sectors were fully addressed and eliminated. Born from the successes of America’s most powerful and significant social movement, government protected rights to fair housing were canonized in the Federal Fair Housing Act (FFHA), the Equal Credit Opportunity Act (ECOA) and the Community Reinvestment Act, to name a few.

As civil rights became a sacred fiber in the fabric of America’s social contract, and the nation’s housing policy proliferated, home sales volume grew steadily and led to great prosperity in the housing industry for the following thirty years or so. That is, until now. [For a critique of U.S. housing policy, see the March 2011 first tuesday article, The home mortgage tax deduction: inducing debt and stifling mobility.]

The great fair housing movement of the 1960s was certainly a step in the right direction for protecting everyone’s right to shelter in America, regardless of race. However, the efforts of activists, civil rights leaders and legislators were quickly subsumed into the money-making machine by lenders and the Wall Street rentiers. [For more information on the rentier class, see the September 2011 first tuesday article, Rentiers and debtors: why can’t they get along?]

Fair lending for all, coupled with a robust federal housing policy, merely meant more grist for the lenders’ mill and thus more opportunities for profit. While members of minority groups began borrowing and buying homes at rates equal to their white, middle-class counterparts, the loans were more expensive and highly predatory.

In 2006, at the height of the subprime lending practices that created the housing bubble, 52.9% of black homebuyers financed their purchase with a subprime mortgage, 47.3% of Hispanics went leveraged with a subprime loan while a mere 26.1% of white homebuyers purchased a home with subprime financing. [Data courtesy of the Joint Center for Political and Economic Studies.]

Thus, the last 30 years of “fair” housing policy culminated in a bubble fueled by a covert and systemic form of discrimination vis-à-vis predatory loans of the adjustable rate mortgage (ARM) and subprime variety. One could say the victories of the Civil Rights Movement in America and the Federal Fair Housing Act have been effectively neutralized by rentiers’ exploitative efforts to extract as much profit as possible from everyone, especially rising minorities.

This is the “fairness” the housing industry currently operates under: equal exploitation for all.

Now, with Occupy Wall Street (OWS), we have another social movement on our hands that has the potential for changing the landscape of the housing industry and creating a new age of fair housing. This vision of fair housing is based on the fundamental notion of equitable shelter for Americans at a fair price (including the financing) without the profligate speculation and profiteering from greedy Wall Street investors.

As one of the OWS protestor’s signs read, Stop speculating on our homes!

first tuesday take: Whether or not the OWS movement has discernable goals or definable demands, one thing is clear: they are sending a message that they have wised-up, they are mad as hell and they are not going to take it anymore.

The Civil Rights Movement of the 1960s changed the landscape of the real estate market forever due to a dramatic paradigm shift in the notion of fair housing. OWS deserves a closer look by real estate professionals as it may well be another catalyst for change of epic proportions.

If it is, it will be crucial for brokers and agents to understand the political victories of the OWS protestors to better serve the homebuyers of tomorrow. [For first tuesday’s take on real estate trade union involvement in the OWS movement, see the October 2011 first tuesday article, Unions occupy Wall Street — where are the Realtors?]

re: “Occupy Wall Street: A New Wave of Fair Housing Activism?” from the Huffington Post

Related topics:
occupy wall street (ows), rentiers

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A property on which dog- or cockfights take place is a nuisance

A property on which dog- or cockfights take place is a nuisance somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Nov 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law classifies any property used to conduct dog- or cockfighting as a nuisance and allows for the eviction of any tenant who conducts dog- or cockfights on the property.

California Civil Code § 3482.8, California Code of Civil Procedure § 1161
Added and Amended by S.B. 426
Effective: January 1, 2012

Any property used for the purpose of dog- or cockfighting will be declared a public nuisance.

Any tenant who occupies a property, which he maintains as a public nuisance by conducting dog- or cockfights on the premises, may be evicted.

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new laws 2011, nuisance

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APR threshold raised for determining higher-priced jumbo loan impound requirement

APR threshold raised for determining higher-priced jumbo loan impound requirement somebody Fri, 09/22/2023 - 10:19 pm

Posted by Giang Hoang-Burdette | May 10, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This regulation implements the new laws established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

APR threshold raised for determining higher-priced jumbo loan impound requirement

12 Code of Federal Regulations 226.35(b)(3)
Amended by H.R. 4173
Effective: April 1, 2011

A jumbo loan secured by a borrower’s principal residence with an annual percentage rate (APR) 2.5% (raised from the prior 1.5% threshold) or greater than the average prime offer rate for a comparable loan is considered a higher-priced mortgage subject to mandatory impound requirements.

This regulation does not apply to bridge loans with a term of 12 months or less, or reverse mortgages.

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new laws 2011

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Alternative arbitration provision in lease agreement unenforceable by property owner when third party is involved

Alternative arbitration provision in lease agreement unenforceable by property owner when third party is involved somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Apr 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Mobilehome tenants in a mobilehome park collectively sued the park owner for not adequately maintaining the mobilehome park’s common facilities. The mobilehome park owner sought to compel arbitration with the tenants who initialed the arbitration provision in their lease agreements, claiming those tenants who waived their right to trial were obligated to arbitrate the dispute. The tenants claimed the arbitration provision was unenforceable since all tenants involved in the dispute did not sign the arbitration provision in their lease agreements, and sending some claims to arbitration and others to litigation created a risk of conflicting rulings arising out of the same dispute. A California court of appeals held the dispute between the mobilehome tenants and the mobilehome park owner was to be resolved solely through litigation since enforcing the arbitration provision initialed by only some of the tenants would risk conflicting rulings regarding the same dispute. [Abaya v. Spanish Ranch I, L.P. (2010) 189 CA4th 1490]

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arbitration,

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Antideficiency protection extended to second trust deed discounts

Antideficiency protection extended to second trust deed discounts somebody Fri, 09/22/2023 - 10:19 pm

Posted by Giang Hoang-Burdette | Aug 29, 2011 | New Laws, Real Estate | 5

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law clarifies the antideficiency protections available to one-to-four unit residential property owners following a short sale.

Code of Civil Procedure §580e
Amended by SB 458
Effective: July 15, 2011

A note secured solely by any type or priority of trust deed encumbering a one-to-four unit residential property, owner occupied or not, and sold under a lender’s short sale consent for an amount less than the debt (called a short sale) is now nonrecourse paper subject to antideficiency protection, if:

title to the property is transferred to the buyer via a recorded grant deed or quitclaim deed; and
the net proceeds of the sale are received by the lender in compliance with the lender’s written conditions for their short sale consent.

The same rules apply if a short sale occurs on a property for which the note is further secured by other property in addition to the one-to-four unit residential property, called cross-collaterization. In this case, the lender and all other parties with an interest in the trust deed lien on the property are barred from recovering further under the note secured by the trust deed on the one-to-four unit residential property.

A lender cannot collect any other compensation for a short sale consent beyond the net proceeds they agreed to accept and received from the short sale.

The above protections cannot be waived by the borrowers and owners of the property.

This antideficiency protection does not extend to:

corporations;
limited liability companies (LLCs);
limited partnerships (LPs);
political subdivisions of the state;
trust deeds or liens securing debt issued by the Commissioner of Corporations; or
trust deeds or liens made by a public utility.

Editor’s note — While much was made of this in real estate trade union circles, its basic effect on the market will at best be negligible. This law does not provide antideficiency protection against second trust deeds UNLESS a written short sale consent exists with that second trust deed lender. The likelihood of any second trust deed lender waiving their recourse rights by entering into a short sale consent is even more remote now that there is no way for the lender to collect on the money due after the short sale closes.

Owners will now better understand what they’re in for should the second lender refuse to cooperate. It’s more advantageous for a recourse second (not a purchase-assist note) money lender to force the first trust deed holder to foreclose and wipe out the second trust deed. They simply sue the owner/borrower directly on the note which is no longer secured. [For more information about the changes to antideficiency which took effect earlier this year, see the November 2010 first tuesday Legislative Watch.]

Also interesting to note is that the prohibition against waiver only specifically applies to the antideficiency protection for individuals with short sale consent voluntarily entered into by their mortgage lender(s). However, lenders may, at their whim, waive their right reserved to them to pursue money due from corporations, LLCs, LPs, etc., when discounting a note these entities signed.

Related topics:
new laws 2011

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Approved tentative subdivision map expirations extended 24 months

Approved tentative subdivision map expirations extended 24 months somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Dec 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

These rules amend the Subdivision Map Act by extending the expiration date of approved tentative subdivision maps which expire within a 2 ½ year window period.

Government Code §65961, 66452.23

Added by A.B. 208
Effective: July 15, 2011

The expiration date of an approved tentative subdivision map is extended an additional 24 months, if the tentative subdivision map had not expired on or before July 15, 2011 and will expire before January 1, 2014.

The 24-month extension does not cancel any previous extension(s) the local agency may have granted before July 15, 2011. Any extensions granted by a stay in litigation or a development moratorium are not counted when determining whether the tentative map expires before January 1, 2014 to qualify for the two-year extension.

After an approved tentative subdivision map subject to this two-year extension is recorded, the period during which the local agency cannot impose new conditions for a building permit is shortened from five years to three years. Upon issuance of a building permit for an approved tentative map given a two-year extension, the local agency may levy a fee or impose a condition requiring the payment of a fee.

Editor’s note – The urgency for enactment of this revision of the Subdivision Map Act reflects the need for subdividers to preserve their past efforts in getting parcels approved for mapping without incurring ever more costs and fees to reapply and start the process all over again while waiting for the California real estate economy to recover. Single family residential (SFR) housing starts in California began their plummet in 2005 starting with 155,322 starts and look to bottom in 2012 around 20,000 starts. [For more information on housing starts in California, see the first tuesday Market Chart, CA single- and multi-family housing starts.]

Related topics:
new laws 2011, single family residence (sfr), subdivision

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Arbitrator’s awards: no judicial review unless so stated in arbitration clause

Arbitrator’s awards: no judicial review unless so stated in arbitration clause somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Apr 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A homebuyer entered into a purchase agreement to buy a home. The purchase agreement included an arbitration provision, which the homebuyer initialed. After the close of escrow, the homebuyer discovered the home had severe structural damage. The buyer sued his selling broker for failure to disclose known material facts about the residence’s defects. The broker compelled arbitration of the dispute under the arbitration provision initialed by the homebuyer in the purchase agreement. The arbitrator rendered an award in favor of the homebuyer, imposing liability on the broker. The broker sought to vacate the arbitrator’s award, claiming the award was subject to judicial review since the arbitrator misinterpreted California law when rendering the award and the arbitration provision in the purchase agreement stated an arbitrator’s award must be rendered in accordance with substantive California law. The homebuyer claimed the arbitrator’s award was not subject to judicial review since the arbitrator did not act with fraud or exceed his powers in rendering the award, and the arbitration provision in the purchase agreement did not call for judicial review of the award. A California court of appeals held the arbitrator’s award in favor of the homebuyer and against the broker was not subject to judicial review for failure to comply with California law since the arbitration provision in the purchase agreement did not explicitly and unambiguously state an arbitrator’s award was subject to judicial review. [Gravillis v. Coldwell Banker Residential Brokerage Company (2010) 182 CA4th 503]

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Babies and mortgages, mingle with discretion

Babies and mortgages, mingle with discretion somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Jun 14, 2011 | Laws and Regulations, Real Estate | 3

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

The U.S. Department of Housing and Urban Development (HUD) is taking action against mortgage companies who discriminate against expectant mothers applying for a loan or home mortgage insurance.

Multiple investigations of lending practices last July triggered HUD’s recent action to enforce the Federal Fair Housing Act (FFHA), which prohibits discriminatory actions in housing based on a variety of factors, including an individual’s sex or familial status. HUD’s investigations revealed pregnant women or their families were denied a loan or delayed in the process of obtaining one. Lenders cited their reason being the expectant mother and her household would not have the sufficient income to make mortgage payments due to the mother’s maternity leave.

In a recent settlement agreement between HUD and national mortgage lender Cornerstone Mortgage Company, the lender agreed to:

compensate a woman $15,000 who claimed she had been denied a mortgage loan even though she was on paid maternity leave and planned to return to work;
create a $750,000 fund for other borrowers who claimed the lender discriminated against them due to their pregnancy or maternity leave at the time of their loan application process;
notify all borrowers of their right to seek compensation if they had experienced discrimination due to their pregnancy or maternity leave;
pay up to 100 claimants $7,500 each, and for every claimant after that, pay a prorated share of the $750,000 fund; and
adopt a new policy which clarifies lending practices towards borrowers on maternity or parental leave.

first tuesday take: Prohibited discriminatory practices are unacceptable when carried out by lenders who are in the business of making mortgages. However, for the family involved, the current landscape of anemic job recovery and real estate pricing woes solicits prudent financial planning by the family itself.

Fair lending laws such as the federal Equal Credit Opportunity Act (ECOA) and the California Unruh Act prohibit discriminatory lending practices towards individuals regardless of their race, color, religion, national origin, sex, marital status or age. Under those protections, lenders may not deny a loan if a woman is expecting, on maternity leave or of childbearing age. [For more information on recent mortgage lending practices with expectant parents, see the August 2010 first tuesday article, Expectant parents may not qualify for a home loan.]

Lenders are held to this legal justice towards prospective borrowers, no questions asked – but what about a borrower’s financial justice towards himself?

Raising a child is an added expense on top of other financial obligations, so if an expectant parent or family is looking to buy a home, it is imperative for them to realistically determine whether they are financially competent to handle the costs of homeownership no matter how underpriced and great a bargain the property may be. Flexibility provided by renting may well be the prudent housing decision.

Important questions for prospective homebuyer-parents facing a birth need to consider are:

Will the household income during maternity or parental leave be sufficient to make and continue mortgage payments, in spite of lender loan approval?
If the expectant parents plan to return to work after the birth, how long will it be until they do?
Will the added costs of raising a child (ex: food, healthcare, childcare, etc.) significantly stress the household budget?
Are cash reserves or resources sufficient to cover any emergency expenditure due to the birth?

Wanting to own a home to house your family is commendable if job and family conditions are stable and will remain local. Go ahead and bring the baby home. Just avoid bringing the bundle of joy to household finances that will go underwater for failure to consider the risks posed by foreseeable costs associated with birth. You are not able to control the real estate market but you do have control over the welfare of your family.

Buyer’s agents working with buyers need to pay attention to the financial commitment they are negotiating on their client’s behalf by simply asking questions, including those noted above.

RE: “HUD Acts Against Pregnancy Discrimination in Home Mortgages” from the U.S. Department of Housing and Urban Development

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Co-owner must deny access to other owners for adverse possession

Co-owner must deny access to other owners for adverse possession somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Dec 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Several co-owners held title as tenants in common to a parcel of land. From the date of the purchase, one co-owner solely occupied the property, cleared the land of weeds annually and paid all property taxes. The other co-owners never occupied the property or contributed to its maintenance or taxes. The occupying co-owner sought to quiet title to the property in his name, claiming his sole occupation, clearing of the weeds and payment of taxes demonstrated exclusive ownership sufficient to give notice of intent to ouster and establish adverse possession of the property. The other co-owners claimed the occupying co-owner did not demonstrate exclusive ownership and intent to oust the non-occupying co-owners’ interest in the property since being the sole occupier, clearing the weeds and paying the taxes was not sufficient demonstration of adverse possession. A California court of appeals held the occupying co-owner did not establish adverse possession by occupying the property, clearing the weeds and paying the taxes since in order to establish adverse possession a co-owner must not only occupy, maintain and pay taxes on the property, but also exclude the other co-owners from the property by telling them to stay off, erecting a fence or engaging in other conduct which denies them access to the property. [Hacienda Ranch Homes v. The Superior Court of San Joaquin County. (2011) 198 CA4d 1122]

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adverse possession,

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Construction of active solar energy systems does not trigger reassessment

Construction of active solar energy systems does not trigger reassessment somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Nov 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This code clarifies the exclusion of an active solar energy system from being considered new construction which triggers property reassessment.

Updated 8/1/14

California Revenue & Taxation Code §73
Added by A.B. 15
Effective: June 28, 2011

The construction or addition of an active solar energy system on a property does not qualify that property as “newly constructed,” and thus does not trigger reassessment of the appraised value of the property for ad valorem taxes.

The definition of an active solar energy system has been further clarified as a system that — upon construction as part of a new property or as an addition to an existing property — uses solar devices to collect, store or distribute solar energy.

The exclusion of an active solar energy system from new construction is effective until the property undergoes a change in ownership. It applies to property tax lien dates for the 1999-2000 fiscal year through the 2015-2016 fiscal year.

The exclusion is effective until January 1, 2017. Any active solar energy system that is excluded from being considered new construction before January 1, 2017 will continue to be excluded after January 1, 2017 until the property undergoes a change in ownership.

This legislation has been partially superseded. The solar energy exclusion now extends to 2025. [See: Tax exclusion for solar energy construction extended]

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new laws 2011, property assessment

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Conveyance of title from one spouse to another for refinancing does not transfer ownership of community property

Conveyance of title from one spouse to another for refinancing does not transfer ownership of community property somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Mar 2, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A married couple decided to refinance their home, which was community property. Due to the wife’s poor Fair Isaac Corporation (FICO) score, the wife conveyed her legal interest in title to her husband in order to obtain a lower interest rate on refinancing, expecting her husband to reconvey her interest in title after refinancing. The husband refinanced the home, but refused to deed back her legal title to the property. The wife sought to recover her legal interest in the property on dissolution of the marriage, claiming she retained her right to ownership of the home as community property since she did not transfer her community property right to ownership when she transferred her legal interest in title for the purposes of refinancing. The husband claimed his wife did not retain her community property right to ownership since she relinquished her right to ownership of the property when she delivered legal title. A California court of appeals held a spouse who transfers legal title in community property to their spouse in expectation that legal title will be returned upon refinancing of the property retains their community property right to ownership since the transfer of legal title to another spouse for the purpose of refinancing does not terminate the spouse’s community property ownership rights. [In re Marriage of Fossum (2010) 192 CA4th 336]

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community property

See all new real estate laws passed in the 2011-2012 state and 2011 federal legislative sessions.

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December 2011 LWs

December 2011 LWs somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Dec 2, 2011 | New Laws, Real Estate | 1

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Topics:

Maximum gross value increased for transfers of real estate by affidavit or petition of succession
Approved tentative subdivision map expirations extended 24 months
Foreclosed apartment conversions to meet low-income housing element
Broker NHD liability for mine operations limited when relying on expert’s report
Notice of trustee’s sale to include risk warning and sales schedule data

Reported by Jeffery Marino

This law increases the maximum gross value for real estate transferred by affidavit or petition to the successor of an estate.

Calif. Probate Code § 7660

Amended by A.B. 1305
Effective: January, 1 2012

Maximum gross value increased for transfers of real estate by affidavit or petition of succession

Real estate with a maximum gross value of $50,000 may be transferred by affidavit to the successor of a deceased California property owner’s estate, thus avoiding probate.

The real estate interest included in a total estate with a maximum gross value of $150,000 may be transferred by petition to the successor of a deceased California property owner’s estate, likewise avoiding probate.

Editor’s note — “Maximum gross value” refers to the fair market value (FMV) of the real estate at the time of the property owner’s death not accounting for the amount of any liens or encumbrances on the property, commonly called the owner’s equity.

Both an affidavit of succession and a petition of succession are methods of avoiding probate. Where an affidavit of succession is a simple form, a petition must be circulated to all interested parties and a hearing must be scheduled.

Reported by Tara Tran

These rules amend the Subdivision Map Act by extending the expiration date of approved tentative subdivision maps which expire within a 2 ½ year window period.

Government Code §65961, 66452.23

Added by A.B. 208
Effective: July 15, 2011

Approved tentative subdivision map expirations extended 24 months

Reported by Mary Balash

This law adds requirements a city or county must fulfill to convert foreclosed multi-family properties to low-income housing to meet housing element quotas.

Foreclosed apartment conversions to meet low-income housing element

Government Code 65583

Amended by A.B. No. 1103
Effective January 1, 2015

Effective January 1, 2015, a city or county may convert foreclosed multi-family rental housing properties to housing for low- and very low-income households to meet up to 25% of their housing element quota, provided an equal number of multi-family rental units are constructed for low- and very low-income households.

Reported by Mary Balash

This law adds requirements for natural hazard reports prepared by experts and used by sellers’ brokers/agents to make property disclosures to prospective buyers.

Broker NHD liability for mine operations limited when relying on expert’s report

California Civil Code 1103.4

Added by S.B. No. 110
Effective: January 1, 2012

Beginning January 1, 2012, for a seller’s broker or seller to limit his liability to a prospective buyer when relying upon an expert’s natural hazard disclosure (NHD) report to make timely property disclosures, the NHD report issued is to note whether the property is located within one mile of a mine operation. If it is, the NHD report must include the following wording:

NOTICE OF MINING OPERATIONS:

This property is located within one mile of a mine operation for which the mine owner or operator has reported mine location data to the Department of Conservation pursuant to Section 2207 of the Public Resources Code. Accordingly, the property may be subject to inconveniences resulting from mining operations. You may wish to consider the impacts of these practices before you complete your transaction.

Editor’s note — Current first tuesday students and purchasers of first tuesday Forms-on-CD 4.3 may download a FREE copy of the updated Notice Addendum (Airport, Farmland, San Francisco Bay or Mining Operation) [See first tuesday Form 308] and digitally fill, print and save it. Log in to your student homepage at www.firsttuesday.us using your eight-digit Department of Real Estate (DRE) license number or T-number and click, “first tuesday Forms Downloads and Updates.”

Reported by Mary Balash

This law requires the notice of trustee’s sale (NOTS) to include a disclosure to potential bidders of the risk of loss involved in bidding, and advice to the property owner about the sources of information on scheduled and postponed sales.

Notice of trustee’s sale to include risk warning and sales schedule data

California Civil Code 2924f

Added by S.B. No. 4
Effective April 1, 2012

Beginning on April 1, 2012, a recorded and posted Notice of Trustee’s Sale (NOTS) will inform bidders of the risks associated with the foreclosure sale of a one-to-four unit single family residence (SFR). The disclosure to bidders is to contain the following wording:

[BEGIN] NOTICE TO POTENTIAL BIDDERS: If you are considering bidding on this property lien, you should understand that there are risks involved in bidding at a trustee auction. You will be bidding on a lien, not on the property itself.

Placing the highest bid at a trustee auction does not automatically entitle you to free and clear ownership of the property. You should also be aware that the lien being auctioned off may be a junior lien. If you are the highest bidder at the auction, you are or may be responsible for paying off all liens senior to the lien being auctioned off, before you can receive clear title to the property.

You are encouraged to investigate the existence, priority, and size of the outstanding liens that may exist on this property by contacting the county recorder’s office or a title insurance company, either of which may charge you a fee for this information. If you consult either of these resources, you should be aware that the same lender may hold more than one mortgage or deed of trust on the property. [END]

Also beginning on April 1, 2012, a recorded and posted Notice of Trustee’s Sale (NOTS) will inform property owners of information regarding postponement of sale. The disclosure to property owners is to contain the following wording:

NOTICE TO PROPERTY OWNER:

The sale date shown on this notice of sale may be postponed one or more times by the mortgagee, beneficiary, trustee, or a court, pursuant to Section 2924g of the California Civil Code. The law requires that information about trustee sale postponements be made available to you and to the public, as a courtesy to those not present at the sale. If you wish to learn whether your sale date has been postponed, and, if applicable, the rescheduled time and date for the sale of this property, you may call [telephone number for information regarding the trustee’s sale] or visit this Internet Web site [Internet Web site address for information regarding the sale of this property], using the file number assigned to this case [case file number]. Information about postponements that are very short in duration or that occur close in time to the scheduled sale may not immediately be reflected in the telephone information or on the Internet Web site. The best way to verify postponement information is to attend the scheduled sale. [END]

Any lender, beneficiary, trustee or authorized agent will provide current information regarding sales and postponements. The information is to be provided free of charge by internet, phone recording accessible 24 hours a day, seven days a week or other menus that provide access.

Failure to comply with these rules does not alone invalidate a trustee’s sale.

Editor’s note- See January 2012 first tuesday Form of the Month.

Related topics:
low-income housing

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Easement disputes allow a lis pendens to be recorded describing the property holding the appurtenant right to use the easement

Easement disputes allow a lis pendens to be recorded describing the property holding the appurtenant right to use the easement somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Feb 2, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A property owner’s parcel of real estate was encumbered by an expired easement, the use of which was enjoyed by a neighboring property owner. The neighboring property owner continued to use the easement for ingress and egress for more than five years after it expired and claimed to hold a prescriptive easement. The owner of the property encumbered by the easement sought to quiet title and recorded a lis pendens describing the neighboring property which clouded its owner’s title. The neighboring property owner sought to vacate (expunge) the lis pendens and clear his title, claiming the recording of the lis pendens describing property not encumbered by the easement was improper since the disputed easement did not affect the title or possession of the property. The owner of the property encumbered by the easement claimed the lis pendens on the neighbor’s property with the right to use the easement was proper since the neighboring property owner enjoyed the easement as an appurtenant right relating to the possession of the neighbor’s property. A California court of appeals held a lis pendens recorded by the owner of property encumbered by an easement, describing the property entitled to the use of the easement for ingress and egress, is proper since the neighboring property owner’s claim to a right to an easement is an appurtenant right attached to the ownership of the neighbor’s property. [Park 100 Investment Group II v. Ryan et al (2009) 180 CA4th 795]

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Electrical vehicle charging station installation and use in a CID defined

Electrical vehicle charging station installation and use in a CID defined somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Oct 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This new law regulates the responsibilities of homeowners’ associations (HOAs) and homeowners on the installation and use of electrical vehicle charging stations in common interest developments (CIDs).

California Civil Code §1353.9
Added by S.B. 209
Effective: January 1, 2012

The covenants, conditions and restrictions (CC&Rs) for a common interest development (CID) may not effectively prohibit or restrict the installation or use of an electrical vehicle charging station (station) in the CID.

CC&Rs may however place reasonable restrictions on a station, providing the restrictions do not significantly increase the station’s cost or significantly decrease the station’s efficiency or performance.

If the installation or use of a station requires approval, the CID’s homeowners’ association (HOA) must consider the application for approval in the same manner the HOA would consider an application for architectural modification to the CID. The HOA’s approval or denial of the application must be in writing. If the HOA fails to deny the application in writing within 60 days from the receipt date of the application, the application will be considered approved (unless the delay is due to the HOA’s reasonable request for more information).

The following provisions apply if the station is in a common area or an exclusive use common area:

1. A homeowner must obtain the CID’s approval to install a station and the CID must approve the installation if the homeowner agrees in writing to:

comply with the CID’s architectural standards for station installation;
employ a licensed contractor for the installation;
within 14 days of approval, provide an insurance certificate which insures the CID under the homeowner’s insurance policy; and
pay for the station’s electricity costs.

2. The homeowner and each successive homeowner of the station’s parking stall is responsible for:

costs for damage to the station or areas common or adjacent which result from work done on the station;
costs for work done on the station until it is removed from the common area;
costs for electricity; and
disclosure to prospective buyers of the station’s existence and the responsibilities associated with the station.

3. The homeowner and each successive homeowner must at all times maintain an umbrella liability coverage policy of $1,000,000 which insures the CID and covers the homeowner’s responsibilities defined in the provision above, with a right to notice of cancellation.

An HOA which violates this new law will be liable for actual money losses and pay a civil penalty of no more than $1,000.

Editor’s note – The duty of the homeowner described in the second provision above to disclose the station to prospective buyers is best fulfilled with the Transfer Disclosure Statement (TDS). The TDS represents, to the best of the seller’s knowledge, the conditions of the property.

Related forms: first tuesday Form: 304 Condition of Property – Transfer Disclosure Statement (TDS)

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Electronic transmission regulations for the HOA meetings of a CID

Electronic transmission regulations for the HOA meetings of a CID somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Dec 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This legislation amends the Common Interest Development Open Meeting Act by establishing procedures of electronic transmission for the homeowners’ association (HOA) board meetings of a common interest development (CID).

Civil Code §1363, 1363.05, 1365.2
Added by S.B. 563
Effective: January 1, 2012

The board members of a common interest development (CID)’s homeowners’ association (HOA) may not conduct a meeting via electronic transmission.

However, electronic transmission may be used to conduct an emergency meeting, under the condition all board members give written consent — filed with the minutes of the board meeting — to conduct the emergency meeting via electronic transmission. Written consent may be transmitted electronically.

A meeting conducted via electronic transmission may include a teleconference in which a majority of board members, in different locations, are connected by electronic means through audio, video or both. A board member is considered to be present at a teleconference as long as he is able to hear the other board members speaking on the issues of the meeting.

All HOA members are entitled to attend a teleconference, or a portion of the teleconference, if the meeting is open to HOA members. The notice of a teleconference must inform HOA members of at least one physical location to attend, except if the meeting is being held in executive session and is thus closed to HOA members. At least one board member must be present at the location and the teleconference, or a portion of the teleconference, must be audible to HOA members present at the location.

HOA members may consent to be notified of meetings held by board members in executive session via electronic transmission. The notice must indicate the time and place of the executive session.

Teleconferenced meetings must continue to protect the rights of all members and comply with the regulations provided by the CID Open Meeting Act.

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Expiration of an option to purchase real estate clarified

Expiration of an option to purchase real estate clarified somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Aug 29, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

These laws eliminate a time gap that allowed a recorded notice of an option to purchase property to unnecessarily cloud title after the option itself expired.

Civil Code § 884.010
Added by S.B. 284
Effective: January 1, 2012

If no conveyance, contract or other instrument is recorded to give notice an option to purchase property has been exercised or extended, a recorded option expires as follows:

six months after the option expires as reflected by the terms in the recorded option; or
six months after the date the instrument that creates or gives constructive notice of the option is recorded, if the recorded option does not state an expiration date.

On January 1, 2013 this section will be repealed and replaced with the following:

Civil Code § 884.010
Added by S.B. 284
Effective: January 1, 2013

If no conveyance, contract or other instrument is recorded to give notice an option to purchase property has been exercised or extended, the option expires as follows:

six months after the option expires according to its terms, if the expiration date of the option can be determined from the recorded instrument; or
six months after the date the instrument that creates or gives constructive notice of the option is recorded, if the expiration date of the option cannot be determined from the recorded instrument.

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FARM: What to look for when shopping for a condo

FARM: What to look for when shopping for a condo somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Jan 4, 2011 | Buyers and Sellers, FARM Letters, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Use this FREE first tuesday FARM letter copy in your marketing! Have a topic you’d like us to write about? Email editorial@firsttuesday.us and let us know!

When you are shopping for a condominium unit, you are essentially shopping for a community. Living in a common interest development (CID) as a member of a homeowners association (HOA) offers certain benefits and requires specific responsibilities not otherwise present when owning a single-family residence (SFR). Before you commit to a CID, it is important to explore the operating budget of the HOA, the membership fees and any future assessment obligations that come along with your condo.

In order to generate revenue, HOAs charge members with regular assessments and special assessments. Regular assessments fund reserves and the operating budget to pay for the cost of maintaining the structure and common areas of the neighborhood. Special assessments are levied when the cost of repairs or replacements exceeds the amount available through reserves and regular assessments.

You can use the HOA’s pro forma operating budget as a starting point for analyzing what financial impact an HOA will have on your annual income. This review will disclose:

an estimate of the revenues from assessments and anticipated expenses during the fiscal year covered by the budget, noting the delinquencies;
a summary of the HOA’s cash reserves, itemizing:
- estimated repair and replacement costs of each component of the structure owned by the HOA;
- the cash reserves needed to pay for the repairs or replacements; and
- the cash reserves available to pay for repairs or replacements; and
any anticipation by the HOA’s board of directors as to whether special assessments will be required in the future for reserves, repairs and maintenance.

You can also request a statement of the HOA’s policies for enforcing collection of delinquent assessment payments. It is important to know, before purchasing a condo unit, if:

the HOA records a Notice of Default (NOD) and proceeds with a trustee’s foreclosure, which can be cured by the payment of delinquencies and small foreclosure costs; or
the HOA hires an attorney and files a lawsuit, which can amount to much higher personal costs.

Researching the inner workings of an HOA before you purchase a condo unit is of paramount importance. An HOA is obligated to provide the owner of a CID unit any documents they request within ten days of the request. Work with your agent to obtain this information from the seller to ensure you make a well-researched decision.

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Financially illiterate homebuyers in distress – agents to the rescue!

Financially illiterate homebuyers in distress – agents to the rescue! somebody Fri, 09/22/2023 - 10:19 pm

Posted by Connor P. Wallmark | May 18, 2011 | Buyers and Sellers, Economics, Fundamentals, Real Estate | 1

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

For many prospective homebuyers, the details of mortgage financing are just about as foreign and obscure as quantum physics. According to a recent survey by Zillow Mortgage Marketplace, prospective homebuyers answered basic mortgage finance questions incorrectly 46% of the time.

More specifically:

44% admitted they were not confident in their comprehension of the mortgage process;
57% did not understand how adjustable rate mortgages (ARMs) work;
34% were not aware loan terms vary from lender to lender, lender fees are negotiable and different lenders charge different fees for appraisals and credit reports;
55% did not know mortgage rates are constantly fluctuating;
45% believed they should always purchase mortgage discount points (prepaid interest) regardless of the length of time they intended to keep their home;
37% were under the impression that pre-approval for a loan is synonymous with obtaining permanent financing; and
42% believed Federal Housing Administration (FHA) loans are only available to first time homebuyers.

first tuesday take: The lack of financial proficiency in a majority of prospective homebuyers is nothing new, and the above survey results are consistent with the conclusions of the Federal Reserve Bank of Atlanta in their April 2010 paper, Financial Literacy and Subprime Mortgage Delinquency: Evidence from a Survey Matched to Administrative Data.

However, these survey responses patently reiterate the need for agents to come to the homebuyer’s assistance when the homebuyer is blindly navigating the labyrinthine corridors of mortgage lending institutions.

Do not expect lenders to clear the murky waters of misunderstanding on behalf of homebuyers. This would be akin to entrusting a sheep to the care of a ravenous wolf. Agents must be quick to remind homebuyers that the financial goals of the homebuyer are diametrically opposed to that of the lender, who is in an inherently adversarial position when considering the best financial interests of the homebuyer.

Thus, the homebuyer must be well-equipped with an understanding of mortgage financing before entering what is essentially a battle (albeit one that is disguised as a pleasant, affable meeting with the lender’s loan officer). And while it is always prudent for the homebuyer to independently brush up on mortgage fundamentals to cement his personal understanding, the buyer’s agent who negotiated the purchase (which likely requires purchase-assist financing to close) is a financial ally who is duty bound to the homebuyer to steer him through the financing process. Remember, when a homebuyer hires a real estate licensee, he does so with the expectation the agent will help him get the best home available – and for the least amount of money, which implicitly includes mortgage financing.

The first step of the agent’s financial guidance would take the form of a casual counseling session to gauge a homebuyer’s understanding of the nature and impact of a mortgage. Nothing about loans is standard. It is that misconception held by some agents which lenders exploit at great cost to the homebuyer, a common situation which is entirely avoidable by a well-informed agent and buyer.

Next, depending on the homebuyer’s level of financial aptitude as determined during the counseling session, the agent can discuss the fundamental aspects of mortgage financing the homebuyer is unsure about, such as:

the mathematics of renting versus owning [For a discussion comparing the costs of renting and owning, see the June 2010 first tuesday article, Renting vs. buying: the GRM.];
down payment requirements on both conventional and private mortgage insurance (PMI) or FHA-insured financing options;
the positive and negative attributes of fixed rate mortgages (FRMs) and adjustable rate mortgages (ARMs) [For more information on the FRM vs. ARM comparison, see the May 2011 first tuesday article, The iron grip of ARMs on California real estate.];
the use of a mortgage inquiry worksheet when interviewing the lender’s representative to get a handle on the various loan terms, conditions and costs offered by the lender [See first tuesday Forms 320 and 320-1]; and
what a monthly housing payment comprises — principal, interest, taxes and insurance, known as PITI. [For more commentary on the need for selling agents to educate their buyers about the mortgage decisions they make, see the September 2010 first tuesday article, The era of the financially illiterate homebuyer.]

In regards to the commonly held belief that loan terms are static from lender to lender, a prudent agent must advocate for the homebuyer to apply for pre-approval ASAP with several lenders on starting the home buyer’s hunt for a home. After receiving pre-approval, the homebuyer is then to submit loan applications to multiple lenders on opening escrow on the eventual purchase. Just as they would for any substantial purchase, prudent homebuyers should interview numerous lenders to determine the unique financing options offered by each, and compare the cost estimates received from each lender. The difference between one lender’s loan package and another’s can easily equal tens of thousands of dollars over the life of a mortgage.

After multiple applications have been submitted, the homebuyer can then compare and ultimately close on the loan with more advantageous terms. This keeps dollars in the homebuyer’s pocket – and, most importantly for the industry, breeds goodwill for his agent and others. [For more information on aggressively shopping around for a mortgage, see the May 2010 first tuesday article, Shop, shop, shop until you drop.]

Re: “Homebuyers Still Clueless About Mortgages” from the National Mortgage Professional.

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HOA liable for failure to promptly maintain sewer lines in a CID

HOA liable for failure to promptly maintain sewer lines in a CID somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Aug 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

The owner of a residential unit in a common interest development (CID) managed by a homeowner’s association (HOA) notified the HOA of multiple plumbing incidents occurring on the property. The HOA obtained a plumber to service the drain line to the owner’s unit following each incident. Later, the HOA obtained a plumber to service the development’s main drain line but did not cure the defect causing the backups. A backup in the drain line later produced a plumbing incident which caused flooding damage to the owner’s unit. The owner made a demand on the HOA for money to compensate for property damages caused by the flooding from the backup of the drain, claiming the HOA neglected to promptly and consistently maintain and repair the development’s common area plumbing as stated in the covenants, conditions and restrictions (CC&Rs). The HOA rejected the demand, claiming the HOA obtained a plumber to service the development’s common drain line and management had the right to judge the method of maintenance and repair of the development’s common areas without imposing liability. A California court of appeals held the HOA was liable for losses incurred by the owner for the flood damage caused by the backup in the CID’s drain line since the HOA’s duty owed to the owners of units to maintain and repair common areas is a nontransferable duty contained in the CC&Rs governing an HOA. [Affan v. Portofino Cove Homeowners Association (2010) 189 CA4th 930]

Editor’s note – The general rule of thumb governing the management of CIDs is that common areas are covered. In the case of Affan v. Portofino Cove Homeowners Association, the HOA was liable for the flooding damages caused since it was a result of neglect and disrepair in a plumbing line serving the common areas of the development. Yet, the same holding remains true in the event damages are caused by a plumbing line which exclusively serves only an owner’s unit. In this event, the common areas are covered rule applies since the plumbing line, though servicing only one unit, is considered a part of the entire common area plumbing system. [Dover Village Association v. Jennison (2010) 191 CA4th 123]

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How an owner in a residential CID rents or leases his unit to a tenant

How an owner in a residential CID rents or leases his unit to a tenant somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Sep 1, 2011 | New Laws, Property Management, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

These rules state the conditions under which owners of condominium units in a residential common interest development (CID) may lease units to tenants.

Civil Code §1360.2, 1373
Added by S.B. 150
Effective: January 1, 2012

These regulations apply only to CC&Rs, or other governing documents of a common interest development, which become effective on or after January 1, 2012.

A provision in the covenants, conditions and restrictions (CC&Rs) or other governing documents of a common interest development (CID) which prohibits the renting or leasing of a CID unit to residential tenants will only be enforceable against the owner of a unit if:

the provision was effective when the owner acquired title; or
the owner agreed in writing to be subject to later amendments prohibiting renting or leasing a unit.

The right to rent or lease all or part of an owner’s unit to a residential tenant is not terminated when the owner’s transfer of the unit:

is exempt from a reassessment by the county assessor [Calif. Revenue and Taxation Code §§62, 480.3]; or
is exempt from requirement of the use of a Transfer Disclosure Statement (TDS). [CC §1102.6(b), (e), (f) and (g)]

Before renting or leasing the unit, the owner must provide the homeowners’ association (HOA) with verification of the date the owner acquired title to his unit and the name and contact information of the prospective residential tenant or the prospective tenant’s representative.

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It’s payback time (not for homeowners)

It’s payback time (not for homeowners) somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Sep 29, 2011 | Laws and Regulations, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

The Federal Housing Finance Administration (FHFA) is finally calling foul on the likes of Goldman Sachs, Bank of America (BofA) and others who sold toxic mortgage-backed bonds (MBBs) to mortgage titans Fannie Mae and Freddie Mac.

Rather than marshal what is now considered a garden-variety securities claim to recover mortgage investment losses, the FHFA is tapping its vast resources to invoke lesser-known rules from the canon of securities law. As dictated by the Securities Act of 1933, before any security can be initially sold to the public, the seller must file a registration statement and a prospectus that details the risk characteristics of the investment.

According to the well-worked Securities Act, if either of these documents contains any misrepresentation of the security’s profile, the seller is liable for the purchaser’s losses — the FHFA’s silver bullet.

Most securities claims do not rely on this powerful provision from the Securities Act since it only applies to the initial purchase. The preponderance of MBB fraud claims in recent years concern purchases on the secondary market where the virtual game of hot potato results in a continuous evasion of the risk of any loss.

The FHFA, however, is poised for success with their claim since they purchased MBBs in the initial offerings from BofA and others via Freddie Mac and Fannie Mae.

The actual amount of potential losses recoverable is difficult to determine at this point, but the claim is related to a $200 billion acquisition of MBBs. If the FHFA prevails in its claim, it will be entitled to recover the difference between the price paid for the securities at the time of purchase and the fair market value (FMV) at the time the claim was filed, plus interest.

Considering the current valuation of the FHFA’s MBB holdings, this could mean another round of huge losses for mortgage lenders.

first tuesday take: Sometimes the road to retribution is long. first tuesday has been reporting law suits and settlements brought against lenders for years — decades even — none of which have made a difference in their modus operandi. However, the reregulation of late has definitely begun to do so with much more mortgage borrowing (consumer) protection coming from the Federal Reserve (the Fed) and the newfangled Bureau of Consumer Protection.

first tuesday began its reporting on mortgage lender misbehavior with the landmark case Wellenkamp v. Bank of America (1978), a case which eliminated mortgage lender interference with property sales. Wellenkamp was quickly rendered moot by congressional deregulation of mortgage lenders. [For the most recent report on lender settlements, see the July 2011 first tuesday article, Payday cometh. . .for BofA’s investors.]

While the FHFA stands to recover some losses, and BofA may have to cut another check (probably through a settlement rather than costly litigation), their respective balance sheets will most likely remain unchanged. BofA will continue to be profitable (though insolvent) and Fannie Mae and Freddie Mac will by design continue to decline until privatized or overrun by the private mortgage insurance (PMI) sector. [For more information on the endurance of the Big Banks, see the July 2011 first tuesday article, Too big to fail or too rich to fail?]

Many pundits believe that the time for a great wave of MBB-related lawsuits is nigh, bringing with it the promise of vindication for the listless millions of underwater homeowners who fell prey to the predatory lending practices (mostly of the inherently deceptive adjustable rate mortgage (ARM) variety) perpetrated during the Millennium Boom.

For now, brokers and agents waiting to see the mighty banking giants fall at the hands of the GSEs (our government) would do better to focus their gaze on the economic tsunami of this jobless Lesser Depression that will undoubtedly decimate the ranks of those without a robust forward-oriented business plan.

re: “U.S. Takes Hard Line in Suits Over Bad Mortgages” from the New York Times

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LLC annual fee based on apportionment of gross income

LLC annual fee based on apportionment of gross income somebody Fri, 09/22/2023 - 10:19 pm

Posted by Giang Hoang-Burdette | Jan 12, 2011 | Investment, New Laws, Real Estate | 1

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

The following revisions clarify apportionment of income for purposes of determining annual limited liability (LLC) fees due to the Franchise Tax Board (FTB) from multi-state LLCs.

Revenue and Taxation Code §25136
Amended by S.B. 858
Effective: For taxable years beginning January 1, 2011

For purposes of calculating the annual limited liability company (LLC) fee due to the Franchise Tax Board (FTB) from a multi-state LLC doing business in California, the calculation of gross income can be made:

by electing to be taxed under a single sales factor; or
by making no election, resulting in the LLC being taxed under property, payroll and double sales factors.

If a multistate LLC elects to be taxed under a single sales factor, the gross income upon which the annual fee is based is apportioned to California for:

services received in California;
the sale of intangible property used in California;
the sale of marketable securities if the buyer is in California;
the sale, lease, rental or licensing of real property located in California; and
the rental, lease or licensing of tangible personal property located in California.

If a multistate LLC does not make an election to be taxed under a single sales factor, the gross income upon which the annual fee is based is apportioned to California for:

income-producing activity performed in California; or
the greater proportion of income-producing activity is performed in California, based on performance costs.

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Landlord payment for goods or services over $600 to be reported to the IRS

Landlord payment for goods or services over $600 to be reported to the IRS somebody Fri, 09/22/2023 - 10:19 pm

Posted by Giang Hoang-Burdette | Mar 8, 2011 | New Laws, Property Management, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law was repealed as of April 13, 2011.

Internal Revenue Code §6041
Added by H.R. 5297 and H.R. 3590
Effective: January 1, 2011 and January 1, 2012, as indicated below

Effective January 1, 2011:

When any person other than a corporation who is a landlord or property manager pays $600 or more to any one individual or entity during the year for wages or services, or makes disbursements related to the rental property, they must report the payment to the Internal Revenue Service (IRS) on the appropriate IRS form, generally the 1099-MISC.

The report must include the:

total amount of the payment;
recipient’s name;
recipient’s address; and
recipient’s federal taxpayer identification number (which the recipient is to supply the person reporting on demand).

The following landlords are exempt from this reporting requirement:

active military or intelligence personnel if a substantial amount of their rental income is from the temporary rental of their principal residence;
individuals whose rental income is less than a minimum amount (to be set by future regulations); and
hardship cases (as determined by future regulations).

Effective January 1, 2012:

Profit corporations will also be subject to this reporting requirement.

Additionally, individuals or profit corporations who, in their trade or business, pay $600 or more for the purchase of real or personal property must report the payment to the IRS.

Editor’s note —These new laws do not require the withholding of taxes from these payments, merely the IRS reporting of payments. This 1099-MISC reporting requirement makes landlords (and all other individuals or profit corporations in business) the unpaid auditing arm of the IRS.

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Legislative Gossip

Legislative Gossip somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Dec 7, 2011 | Pending Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Legislative Gossip Years: 2009 / 2010 / 2011 / 2012 / 2013

Last Updated: December 7, 2011

Here’s a list of the 2011 Legislative Session’s bills and Department of Real Estate Regulations which may substantially affect how you do business as a real estate licensee. Bills are sorted by topic, and we provide you with the bill number, the status, and a brief description of the bill. Reports on passed bills can be found on our Legislative Watch page. This list is updated every month.

Status Legend:

INTRO = Date the bill was originally introduced for consideration. Bill is still being considered, but not yet law.
AMENDED = Date the bill was last amended. Bill is still being considered, but not yet law.
ENROLLED = Bill approved by both houses and pending the governor’s signature.
PASSED = Bill signed by the governor and passed into law.

Appraisers and appraisal
SB 6	PASSED 10/09/11	This bill prohibits a DRE licensee from providing an opinion of value on real estate if his compensation is dependent on the value of the real estate. This bill further codifies the prohibitions against influencing appraiser valuations as previously addressed in DRE releases and the Dodd-Frank Act.
Department of Real Estate and Licensing
DRE Reg	PASSED 10/26/11	Appraisal influence:This regulation adds the existing list of activities which constitute improper appraisal influence into the DRE Regulations, and adds additional activities which are considered improper appraisal influence to the existing, non-exclusive activities.
DRE Reg	PASSED 10/26/11	The bar order and broker supervision:This regulation clarifies a broker’s duty to have direct supervision over the activities of his agents. It specifies how and to whom delegation of a broker’s supervisory activities may be made. Editor’s note — individuals prohibited from participating in real estate activities are now ‘debarred’. Does this lift the real estate industry to that of the legal industry…?
DRE Reg	PASSED 08/31/11	Good standing:This regulation redefines a license in “good standing” as one which has never been suspended, revoked or restricted as a result of disciplinary action. Licenses which expire but are renewed within the statutory grace period are still considered in “good standing”.
DRE Reg	PASSED 10/26/11	Trust funds:This regulation clarifies trust fund activities which violate the fiduciary duties a broker owes to a client.
DRE Reg	PASSED 09/10/11	Nicknames:This regulation allows DRE-licensed individuals to use nicknames in their real estate practice, provided it is accompanied by their last name and DRE license number.
SB 53	PASSED 10/09/11	This bill gives the DRE Commissioner the authority to issue citations to unlicensed persons engaging in activities requiring a DRE license, including desist and refrain orders and administrative penalties up to $2,500. This bill additionally imposes a reporting requirement for DRE licensees who engage in escrow activities equaling or exceeding $1,000,000 in any one calendar year. Further, this bill requires a broker engaging in a sale which may be subject to securities law to issue a statement to the DRE commissioner and to any potential investors in the security whether the sale of the security has been qualified or exempted from securities law.
Governments and property
AB 328	INTRO 02/10/11	This bill would reduce the amount of compensation paid to a property owner in an inverse condemnation case by an amount proportionate to his own percentage of fault in the damage of the property.
SB 744	AMENDED 07/13/11	Water submeter installations:This bill would require manufacturers of water submeters to notify the county sealer of the installation of a water submeter at the time it is installed or placed in service. It also provides that a water submeter used in a multi-unit residential structure is considered to be placed in service only after its installation.
Landlording
AB 265	AMENDED 05/03/11	This bill would allow a residential tenant guilty of unlawful detainer to redeem a tenancy and remain on the rented premises, providing the tenant pay the any rent due, court costs and the landlord’s attorney’s fees in the unlawful detainer action.
AB 317	AMENDED 04/25/11	This bill would make a mobilehome space which is not the sole residence of the occupant exempt from local rent control ordinances.
Mortgages: general, defaults, foreclosures and loan modifications
FHA Proposal	INTRO 01/20/12	This proposal would reduce the maximum allowable seller concessions to reflect industry norms. The proposal calls for a 30 day public comment period and analysis before a final rule is issued.
SB 2	INTRO 12/06/10	This bill would extend the prohibition on brokers collecting advance fees for loan modification services from January 1, 2013 to January 1, 2015, and additionally prohibit brokers from collecting advance fees for negotiating or arranging short sales.
SB 4	PASSED 09/06/11	This bill requires the notice of trustee’s sale on a one-to-four unit single family residence to include provisions notifying bidders at a trustee’s sale of the risks involved in bidding at a trustee’s sale. This bill additionally requires a separate notice be sent to the homeowner of that property informing the homeowner how to obtain information about the postponement of the trustee’s sale.
Taxation
AB 188	PASSED 09/01/11	This bill extends a deceased disabled veteran’s property tax exemption to his unmarried surviving spouse who is confined to a hospital or care facility, provided the property was the spouse’s principal residence on the date of her confinement.
AB 261	PASSED 09/21/11	This bill provides that all tax-defaulted property sold by a county tax collector will be free and clear of all debts and easements of any kind.
AB 368	INTRO 02/14/11	This bill would reduce the minimum annual tax in the first six years of any corporation, limited partnership, limited liability partnership or limited liability company commencing business in the state between January 1, 2012 and January 1, 2018.

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Maximum gross value increased for transfers of real estate by affidavit or petition of succession

Maximum gross value increased for transfers of real estate by affidavit or petition of succession somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Dec 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law increases the maximum gross value for real estate transferred by affidavit or petition to the successor of an estate.

Calif. Probate Code § 7660

Amended by A.B. 1305
Effective: January, 1 2012

Real estate with a maximum gross value of $50,000 may be transferred by affidavit to the successor of a deceased California property owner’s estate, thus avoiding probate.

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new laws 2011

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No recovery of lost development profits on a seller’s breach when profits are speculative

No recovery of lost development profits on a seller’s breach when profits are speculative somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Mar 2, 2011 | Investment, Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A real estate investor entered into a purchase agreement with an owner to acquire a parcel of real estate. Upon opening escrow, the investor took possession of the property and began renovations but had not made a final determination whether the property would be developed as a single family residence (SFR) or multi-family housing units. Before escrow closed, title to the property was transferred to a substitute seller. The investor then made a demand on the substitute seller to deliver title as agreed by the previous owner. The substitute seller refused to deliver title unless the investor paid a higher purchase price. The investor refused. The investor sought to recover his lost profits for failing to receive title, claiming the substitute seller was liable for the investor’s money losses since the investor’s lost profits were directly related to the substitute seller’s breach of the purchase agreement. The substitute seller claimed he was not liable for the investor’s lost profits since the investor had not determined his final use for the property at the time he entered into the purchase agreement and thus his lost profits were speculative. A California court of appeals held a real estate investor is unable to recover lost profits due to a (substitute) seller’s failure to deliver title as agreed since the investor did not establish his specific plans for the future use of the property at the time he entered into the purchase agreement, rendering his profit estimate conjectural and too speculative to be established. [Greenwich S.F., LLC v. Wong (2010) 190 CA4th 739]

Editor’s note — See first tuesday form 181 — Cancellation Agreement – Release and Waiver of Rights

Related topics:
buy-to-let investor,

See all new real estate laws passed in the 2011-2012 state and 2011 federal legislative sessions.

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November 2011 LWs

November 2011 LWs somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Nov 4, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Topics:

Electronic transmission regulations for the HOA meetings of a CID
Construction of active solar energy systems does not trigger reassessment
A property on which dog- or cockfights take place is a nuisance

Reported by Tara Tran

This legislation amends the Common Interest Development Open Meeting Act by establishing procedures of electronic transmission for the homeowners’ association (HOA) board meetings of a common interest development (CID).

Electronic transmission regulations for the HOA meetings of a CID

Civil Code §1363, 1363.05, 1365.2
Added by S.B. 563
Effective: January 1, 2012

The board members of a common interest development (CID)’s homeowners’ association (HOA) may not conduct a meeting via electronic transmission.

HOA members may consent to be notified of meetings held by board members in executive session via electronic transmission. The notice must indicate the time and place of the executive session.

Teleconferenced meetings must continue to protect the rights of all members and comply with the regulations provided by the CID Open Meeting Act.

Reported by Kelli Galippo

This code clarifies the exclusion of an active solar energy system from being considered new construction which triggers property reassessment.

Construction of active solar energy systems does not trigger reassessment

California Revenue & Taxation Code §73
Added by A.B. 15
Effective: June 28, 2011

Reported by Jeffery Marino

This law classifies any property used to conduct dog- or cockfighting as a nuisance and allows for the eviction of any tenant who conducts dog- or cockfights on the property.

A property on which dog- or cockfights take place is a nuisance

California Civil Code § 3482.8, California Code of Civil Procedure § 1161
Added and Amended by S.B. 426
Effective: January 1, 2012

Any property used for the purpose of dog- or cockfighting will be declared a public nuisance.

Any tenant who occupies a property, which he maintains as a public nuisance by conducting dog- or cockfights on the premises, may be evicted.

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homeowners association (hoa)

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OWS occupies foreclosures

OWS occupies foreclosures somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Dec 6, 2011 | Finance, Laws and Regulations, Real Estate | 6

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Where else should OWS occupy?

They should go home! (44%, 68 Votes)
The White House (42%, 64 Votes)
REOs (14%, 22 Votes)

Total Voters: 154

As winter rapidly closes in, participants in the Occupy Wall Street (OWS) movement have started looking for new digs. Rather than the icy and windswept public parks that were the home of the movement at its inception, OWSers now plan on occupying foreclosed homes.

By mid-December, the movement projects they will have occupied more than 30 homes nationwide that are either in danger of foreclosure or that have already been foreclosed on and now sit vacant. In addition to foreclosure squatting, representatives of the movement have also vowed to peaceably disrupt foreclosure auctions in order to forestall trustee’s sales and keep lenders from repossessing more homes.

first tuesday take: Occupying foreclosures may prove more difficult than occupying public forums such as Zuccotti Park. There is a rich history of code and case law on both a state and federal level that protects demonstrators occupying public space.

However, there is perhaps an even more imposing canon of property law that protects the owners of private property from trespassers. After the trustee’s sale, the bank usually owns the private property — and trust us, lenders know exactly how to have trespassers evicted quickly.

Although the Occupiers are taking on a significant challenge with this move, they are meeting Goliath at his front door and stand to make considerable headway on the new fair housing front if they are successful. It is a big “if,” but more power to them. Better than agents using them for a midday rendezvous. [For more information on Occupy Wall Street (OWS) and fair housing, see the November 2011 first tuesday article, A new age for fair housing.]

re: “Occupy movement’s next stop? Foreclosed homes.” from the Los Angeles Times

See all new real estate laws passed in the 2011-2012 state and 2011 federal legislative sessions.

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October 2011 LWs

October 2011 LWs somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Oct 7, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Topics:

Notice required to prohibit smoking in residential rentals
Public agency’s authority to finance and construct public sewer systems revised and defined
Electrical vehicle charging station installation and use in a CID defined

Reported by Mary Balash

This law establishes notice requirements for landlords prohibiting smoking on residential properties.

Notice required to prohibit smoking in residential rentals

California Civil Code 1947.5
Added by S.B. No. 332
Effective: January 1, 2012

Landlords may now prohibit smoking in both the internal and external areas of residential rental properties.

To prohibit smoking under rental or lease agreements entered into on or after January 1, 2012, landlords are required to include a provision in the lease agreement specifying the areas on the property where smoking is prohibited.

To prohibit smoking under existing rental or lease agreements (entered into before January 1, 2012), the landlord must notify tenants by delivering a written 30-day notice of change of terms.

The smoking prohibition does not affect any other terms or conditions of a tenant’s rental or lease agreement.

Related forms: first tuesday Form 550 – Residential Lease Agreement; first tuesday Form 551 – Residential Rental Agreement (Month to Month); first tuesday Form 570 – Notice of Change in Rental Terms

Reported by Tara Tran

This legislation amends the payment period and interest rate on a public agency’s financing for the construction or improvement of public sewer systems and specifies the purposes for which the public agency may exercise its authority over public sewer systems.

Public agency’s authority to finance and construct public sewer systems revised and defined

California Health & Safety Code §5464, 5465
Amended by A.B. 741
Effective: January 1, 2012

The period which a public agency is given to pay for the costs to construct or improve public sewer systems has been extended from 15 years to 30 years. The interest rate charged to a public agency on the unpaid balance of those costs has been increased from 6% to 12%.

The public agency has the authority to finance and order the construction or improvement of public sewer systems regardless of whether discharge or contamination has occurred. The agency may exercise this authority only for the following purposes:

to connect a property which has an onsite septic system to the public sewer system (costs cover but are not limited to pipes, pumps, other equipment, septic system abandonment and associated sewage treatment); or
to replace or repair existing sewer system laterals which connect the pipes to the public sewer system (cost of replacement or repair will be the same as the cost to connect a pipe to the public sewer system).

The following definitions apply in this section:

“Assessment district” is an improvement district or area served by the public sewer system;
“Government board” and “governing body” is the governing body of the public agency; and
“Ordinance” is a resolution.

Editor’s note – The public agency is defined as an entity, which includes counties, cities and counties, cities, sanitary districts, county sanitation districts, county service areas, sewer maintenance districts and other public corporations and districts authorized to acquire, construct, maintain and operate sanitary sewers and sewerage systems. [Calif. Health & Safety Code §5470]

Reported by Tara Tran

Electrical vehicle charging station installation and use in a CID defined

California Civil Code §1353.9
Added by S.B. 209
Effective: January 1, 2012

The following provisions apply if the station is in a common area or an exclusive use common area:

1. A homeowner must obtain the CID’s approval to install a station and the CID must approve the installation if the homeowner agrees in writing to:

comply with the CID’s architectural standards for station installation;
employ a licensed contractor for the installation;
within 14 days of approval, provide an insurance certificate which insures the CID under the homeowner’s insurance policy; and
pay for the station’s electricity costs.

2. The homeowner and each successive homeowner of the station’s parking stall is responsible for:

costs for damage to the station or areas common or adjacent which result from work done on the station;
costs for work done on the station until it is removed from the common area;
costs for electricity; and
disclosure to prospective buyers of the station’s existence and the responsibilities associated with the station.

An HOA which violates this new law will be liable for actual money losses and pay a civil penalty of no more than $1,000.

Related forms: first tuesday Form: 304 Condition of Property – Transfer Disclosure Statement (TDS)

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landlord, tenant

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PMI Group seized by AZ Department of Insurance, files for bankruptcy

PMI Group seized by AZ Department of Insurance, files for bankruptcy somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Nov 28, 2011 | Laws and Regulations, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

Updated on November 28, 2011

PMI Group, the nation’s third largest private mortgage insurer, filed for Chapter 11 bankruptcy on November 23, 2011, listing $736 million in debt. In October 2011 the company was seized by the Arizona Department of Insurance which now has full possession, management and control of the company.

PMI Group warned policyholders in August 2011 that it was $320.3 million below the minimum capital required by state law. PMI Group was instructed by the Arizona Department of Insurance in October 2011 to:

halt sales of new policies;
stop making interest payments on $285 million in surplus notes; and
submit a plan outlining how it will meet its obligations to existing policyholders.

first tuesday take: Steve Smith, president and CEO of PMI Group, made astute observations in 2005 about a perfect storm of “…new loan products, stretched borrowers, less equity, geographical concentrations: Each of these developments in isolation might not be sufficient to cause concern…These developments, however, have not occurred in isolation.”

Ironically, it seems the company did not follow its own CEO’s good instincts.

It is not in style to suggest the government should have pulled an AIG and bailed out PMI Group. However, if we are ever going to eliminate Fannie Mae and Freddie Mac and privatize the mortgage industry that is precisely what should have happened. [For more information regarding Fannie Mae and Freddie Mac, see the March 2011 first tuesday article, Some dread the demise of Fannie and Freddie.]

Clearly, the government does not support the restructuring of the private mortgage insurance (PMI) industry. More important than GM or Chrysler, PMI Group directly competes with the government. Thus, their downfall only serves to bolster our dependence on Freddie and Fannie. [For more information regarding mortgage insurance, see the September 2011 first tuesday article, Potential future increases for PMI and guarantee fees and the October 2011 first tuesday article, FHA, PMI or neither?]

Re: “PMI Group Unit Seized by Arizona Regulator, to Pay Out 50%” from Mercury News

“The PMI Group: Main AZ subsidiary low on capital, could shut down” from the Phoenix Business Journal

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bankruptcy, fannie mae, freddie mac, private mortgage insurance

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Parcel’s water allocation for agricultural use proper basis for subdivision’s impact on water usage

Parcel’s water allocation for agricultural use proper basis for subdivision’s impact on water usage somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Apr 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A developer sought approval from a local government agency to develop a parcel of land previously used for agricultural purposes for residential use. The agency conducted the mandatory environmental impact report (EIR) on the parcel to determine the development’s potential impact on the region’s water supply. The agency issued the developer a building permit based on the EIR, claiming the development would not have a significant negative impact on the region’s water supply since the development would use less water than the agency originally allocated to the parcel when it was used for agricultural purposes. A citizen’s group sought to stop the development of the parcel, claiming the agency improperly issued the developer a building permit since the EIR’s analysis of the development’s impact on the region’s water supply was based on the amount of water allotted to the parcel when it was used for agricultural purposes and not on the amount of water actually being used by the parcel at the time — an amount less than what the development would use. A California court of appeals held the agency properly issued the developer a building permit to develop a parcel of land for residential use since the agency’s EIR showed the development would not use more water than the agency originally allotted to the parcel of land. [Cherry Valley Pass Acres and Neighbors v. City of Beaumont (2010) 190 CA4th 316]

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Pending an award in arbitration, owner’s property is attached as security

Pending an award in arbitration, owner’s property is attached as security somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Jul 29, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A real estate investor entered into a real estate partnership agreement with an income property owner to invest money in a project. Under the agreement, the owner was to make annual payments to return the investor’s money. An arbitration provision in the agreement required disputes to be submitted to arbitration. The owner breached the agreement by failing to pay as agreed, and the investor learned of the owner’s financial hardship. The investor’s claims were submitted to arbitration. Prior to the arbitrator issuing an award, the investor sought a court-ordered attachment of the owner’s properties, claiming any money the arbitrator awarded to the investor would be uncollectable without an attachment of the owner’s current assets since the owner’s financial hardship suggested the owner was insolvent. The owner claimed the investor did not have the right to an attachment of his assets since the investor did not prove the owner was insolvent. A California court of appeals held an investor in a real estate partnership due money from a partner who owns property but appears to be insolvent is entitled to attach that property while arbitration proceedings are pending and prior to the issuance of an award since any money award the arbitrator may issue the investor would otherwise be uncollectable. [California Retail Portfolio Fund GMBH & Co. KG v. Hopkins Real Estate Group (2011) 193 CA4th 849]

Editor’s note – This case corners a weakness of the arbitration process. Due to the owner’s insolvency, the owner was judgment proof in the event of a money award. Arbitration forced the investor into litigation to have a court preserve assets to recover on getting a money award in arbitration. [For more information on the arbitration process see the March 2011 first tuesday article, Bargaining for justice: arbitration and the loss of judicial review.]

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arbitration,

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Public agency’s authority to finance and construct public sewer systems revised and defined

Public agency’s authority to finance and construct public sewer systems revised and defined somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Oct 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

California Health & Safety Code §5464, 5465
Amended by A.B. 741
Effective: January 1, 2012

to connect a property which has an onsite septic system to the public sewer system (costs cover but are not limited to pipes, pumps, other equipment, septic system abandonment and associated sewage treatment); or
to replace or repair existing sewer system laterals which connect the pipes to the public sewer system (cost of replacement or repair will be the same as the cost to connect a pipe to the public sewer system).

The following definitions apply in this section:

“Assessment district” is an improvement district or area served by the public sewer system;
“Government board” and “governing body” is the governing body of the public agency; and
“Ordinance” is a resolution.

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construction, new laws 2011

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Small claims court ceiling on money claims increased to $10,000

Small claims court ceiling on money claims increased to $10,000 somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Aug 29, 2011 | Laws and Regulations, New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law increases the amount of the monetary demand which is under the jurisdiction of a small claims court.

Code of Civil Procedures § 116.221 & 116.224
Added by S.B. 221
Effective: January 1, 2012 until January 1, 2015

The amount a small claims court now has jurisdiction over has changed from $7,500 or less to $10,000 or less for an action brought on by a natural person.

Editor’s note – In the event a tenant fails to make payment of monetary amounts due under provisions in a rental or lease agreement, a landlord has the option to enforce the payment by filing action against the tenant in a small claims court. [See Chapter 22 “Other amounts due under three-day notices” in the first tuesday book, Landlords, Tenants and Property Management.]

However, the revised $10,000 ceiling amount for a small claims court applies only to natural persons. It does not apply to fictitious persons, e.g. landlords and brokers who are operating in the name of an entity such as a limited liability company (LLC), a limited partnership (LP) or a corporation. Persons operating rentals in the name of an entity are limited to a $5,000 award in their small claims court action. [A special thank you to first tuesday reader Thomas Kerr for pointing out this necessary clarification.]

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Sunset provision for common interest development (CID) manager regulations is extended

Sunset provision for common interest development (CID) manager regulations is extended somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Feb 9, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

The information reported here extends the deadline for the amendment or repeal of the rules governing the required qualifications for certified CID managers.

Business and Professions Code § 11506

Amended by S.B. 294

Effective: January 1, 2011

The qualifications for becoming a certified common interest development (CID) manager, such as the completion of continuing education to qualify an individual to oversee and manage the operations of a CID, were previously slated for automatic repeal on January 1, 2012. [For more information on the requirements for CID managers, see the March 2008 first tuesday Legislative Watch.]

This bill extends the repeal of CID manager qualifications until January 1, 2015.

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common interest development (cid)

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Surviving wife owes deceased spouse’s ex-wife support, limited to the value of joint tenancy property

Surviving wife owes deceased spouse’s ex-wife support, limited to the value of joint tenancy property somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Mar 2, 2011 | Laws and Regulations, Real Estate, Recent Case Decisions | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

A husband and wife divorced and entered into a marital settlement agreement (MSA) requiring the husband to pay the wife spousal support until her death or remarriage. The husband waived the automatic termination of spousal support upon his death. The husband remarried and transferred title of his separately-owned real estate to himself and his new wife as joint tenants. After the husband died, his new wife terminated the spousal support the husband paid to his ex-wife under the MSA. The ex-wife sought to impose liability on the new wife for the spousal support payments under the MSA, limited to the value of the separately-owned property the husband conveyed to himself and his new wife as joint tenants. The ex-wife claimed the new wife, as the owner by survivorship, breached the terms of the MSA by terminating spousal support payments since the new wife was responsible for the deceased husband’s obligation to his ex-wife. The new wife claimed she properly terminated spousal support since she held title to her deceased husband’s property free of creditor’s claims as the surviving joint tenant. A California court of appeals held a surviving wife is obligated to pay spousal support to a deceased husband’s ex-wife under the terms of a marital settlement agreement (MSA), limited to the value of the property held in joint tenancy by the deceased husband and his surviving spouse, since the surviving spouse is responsible for the deceased husband’s MSA debts owed to his ex-wife up to the value of all property he passes to his surviving spouse. [Kircher v. Kircher (2010) 189 CA4th 1105]

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TDS to disclose existence of water-conserving plumbing

TDS to disclose existence of water-conserving plumbing somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Sep 1, 2011 | New Laws, Real Estate, Your Practice | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law requires sellers of one-to-four unit residences (SFRs) to also disclose information about the property’s water-conserving plumbing fixtures in the Transfer Disclosure Statement (TDS).

Civil Code § 1102.6
Amended by S.B. 837
Effective: January 1, 2012

The real estate transfer disclosure statements (TDS) for one-to-four unit single family residences (SFRs) marketed for sale must now disclose whether the property is equipped with water-conserving plumbing fixtures.

In addition, SFRs built on or before January 1, 1994 must be equipped with water-conserving plumbing fixtures after January 1, 2017.

Also, SFRs built on or before January 1, 1994 must be equipped with water-conserving plumbing fixtures in order to obtain final approval from the local building department for alternations or improvements made on the property on and after January 1, 2014.

Editor’s note – Prospective buyers may confirm the completion of the required retrofitting for the property’s plumbing fixtures with the local agency in authority. [See first tuesday Form 304]

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Tenant subjected to domestic violence, sexual assault or stalking has 180 days to serve notice to vacate

Tenant subjected to domestic violence, sexual assault or stalking has 180 days to serve notice to vacate somebody Fri, 09/22/2023 - 10:19 pm

Posted by ft Editorial Staff | Sep 1, 2011 | New Laws, Property Management, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law extends the time a tenant who is a victim of domestic violence has to hand the landlord a notice to vacate.

Civil Code § 1946.7
Amended by A.B.588
Effective: January 1, 2012

A tenant or household member who is a victim of domestic violence, sexual assault or stalking now has 180 days from the date listed on a police report confirming the incident to hand the landlord a notice to vacate.

Editor’s note – The tenant or household member in this situation may terminate his tenancy and vacate (provided he hands the landlord a notice to vacate within the 180-day time period) even if the tenant has not completed the full term of the rental or lease agreement. [See first tuesday Form 572.]

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The enforcement of mechanic’s liens containing erroneous information

The enforcement of mechanic’s liens containing erroneous information somebody Fri, 09/22/2023 - 10:19 pm

Posted by Jeffery Marino | Sep 1, 2011 | New Laws, Real Estate | 0

Reprinted from firsttuesday Journal — P.O. Box 5707, Riverside, CA 92517

This law specifies the improper information which invalidates a mechanic’s lien and revises the law for the enforcement of mechanic’s liens.

California Civil Code § 8422
Added by S.B. 190
Effective: July, 1 2012

A mechanic’s lien is invalid if:

the lien was created with the intent to defraud; or
an innocent third party takes possession of the property and is not made aware of the lien due to the lien being deceptively deficient.

All rights under a mechanic’s lien will be forfeited if the claimant willfully includes in a mechanic’s lien any labor, services, equipment or materials not provided for the property described.

Editor’s note — Although there is a technical difference between the invalidation and forfeiture of a mechanic’s lien, there is no practical distinction.

The conditions for invalidation and forfeiture described above can only be determined after the lien has been litigated. Since the statute of limitations for recording a mechanic’s lien is quite time-restrictive, any willful inclusion of erroneous information in a mechanic’s lien, once judicially determined, will effectively forfeit the lien.

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lien, new laws 2011