Our legislators passed a raft of laws affecting the real estate industry last year. Following is a summary of the most significant changes affecting you. For the full text of a California law visit http://leginfo.ca.gov/ – or – http://www.gpo.gov/fdsys/ for federal laws. A legislative bill may be referenced in more than one section.
Building Permits Expiration Period Extended (AB 2913) – Effective 1/1/19 A building permit remains valid despite changes in the building code as long as work is commenced within 12 months after issuance.
Sexual Harassment Liability Expanded for Real Estate Agents (SB 224) – Effective 1/1/19 Even if a business, service, or professional “relationship” does not presently exist, a real estate agent (and “investor” among other persons) may be liable for sexual harassment when he or she holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party. This law eliminates the element that the plaintiff prove there is an inability by the plaintiff to easily terminate the relationship.
HOA Board Financial Review Requirement and Anti-Fraud Precautions (AB 2912) – Effective 1/1/19 The bill requires a managing agent of a common interest development who accepts or receives funds belonging to the association to, upon written request by the board, deposit those funds into an interest-bearing account in a bank, savings association, or credit union in this state, provided certain requirements are met. This bill would prohibit transfers greater than $10,000 or 5% of an association’s total combined reserve and operating account deposits, whichever is lower, without prior written approval from the board. This bill would further require the HOA board to review its financials on a monthly basis.
Revocable Transfer on Death Deeds (AB 1739) – Retroactively to 1/1/2016 The Revocable Transfer on Death Deed would no longer require the statutory FAQ to be recorded as part of the deed.
Home Inspections Requirement – Irrigation System (AB 2371) – Effective 1/1/19 Authorizes a home inspection report on an in-ground landscape irrigation system to include information regarding the operation and observation of the irrigation system.
Applicant for Real Estate License Not Required to Disclose Citizenship or Immigration Status (SB 695) – Effective 1/1/19 Prohibits the DRE from requiring a real estate license applicant to disclose either citizenship status or immigration status for purposes of licensure, or from denying licensure to an otherwise qualified and eligible individual based solely on his or her citizenship status or immigration status.
Criminal Conviction (AB 2138) – Effective 7/1/2020 This law institutes a seven year look back period for a board, including the DRE, to consider a criminal conviction in denying a license, and only if the crime is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made. However, there are exceptions such as convictions for serious crimes and sex offenders, and a specific exception for the DRE, among other boards, in regard to financially related crimes. In any case, a board may not deny a license to a rehabilitated applicant or one whose criminal record has been expunged.
Private Transfer Fee Prohibited (AB 3041) – Effective 1/1/19 This bill prohibits various private transfer fee by developers imposing new property covenants, conditions, or restrictions that force subsequent owners to pay specially designated fees every time the property is transferred, unless the fee provides a “direct benefit” to the property. This bill would provide that any transfer fee created in violation of this prohibition is void against public policy.
3 Days’ Notice Excludes Holidays and Weekends – Effective 9/1/19 In counting a three days’ notice to pay rent or quit or a three days’ notice to perform covenant or quit, or in responding to a complaint for unlawful detainer, Saturdays, Sundays and judicial holidays are excluded.
Electric Vehicle Charging Stations (AB 1796) – Effective 1/1/19 Eliminates the rent control exemption for the requirement that a landlord permit installation of an Electric Vehicle Charging Station.
Commercial Property Abandonment (AB 2847) – Effective 1/1/19 Allows a commercial landlord to serve Notice of Belief of Abandonment after the rent is unpaid for three days (at a minimum, depending on the number of days the lease requires before a landlord may declare a default), and allows delivery of that notice by overnight courier. This notice will expire after 15 days regardless of the form of delivery.
Commercial Property Disposal of Tenant’s Personal Property (AB 2173) – Effective 1/1/19 Increases the calculation of the total resale value of the personal property from $750 (or $1 per square foot, whichever is lesser) to either $2,500 or an amount equal to one month’s rent for the premises the tenant occupied, whichever is greater.
Inspection of Decks, Balconies, Stairways and Walkways (SB 721) – Effective 1/1/19 This law requires that buildings with 3 or more multi-family dwelling units with decks, balconies, stairways, and walkways must be inspected by a properly licensed person by 2025, and a subsequent inspection must be done every 6 years. The owner would have to make repairs if the inspector found that the decks or balconies were in need of repair.
Requires Landlord to Accept Rent from Third Parties (AB 2219) – Effective 1/1/19 Requires landlord to accept rent tendered by a third party. But no right of tenancy is created by acceptance, nor is a landlord required to accept housing assistance programs such as section 8. To ensure that no right of tenancy is created, the landlord may condition acceptance of rent from a third party on a signed acknowledgment to that effect.
Law Enforcement and Emergency Assistance (AB 2413) – Effective 1/1/19 Expands protections for victims of domestic violence and other types of abuse to not face eviction or other penalties on the basis of having summoned law enforcement or 9-1-1 emergency assistance on their own behalf, or on behalf of another, to respond to incidents of violence or abuse.
Price Gouging and Eviction During a Declared Emergency (AB 1919) – Effective 1/1/19Retains the 10% maximum rental price increase during a declared state of emergencies, and additionally:
- Expands the scope of criminal price gouging by including rental housing that was not on the market at the time of the proclamation or declaration of emergency.
- Clarifies that the cap on rent increases will remain in effect during an extension of a declared emergency.
- Makes it illegal to evict a tenant without cause during a state of emergency except for specified reasons if the property is then offered at a higher rent.
- Allows a greater than 10% rental price increase if directly attributable to additional costs for repairs or additions beyond normal maintenance that were amortized over the rental term.
Military Services Member Protections (AB 3212) – Effective 1/1/19 Existing law allows a service member to terminate a lease of premises occupied when that person entered a period of military service or receives deployment or change of status orders. This law additionally requires “any person,” such as a landlord, who receives a good faith request from a service member and who believes the request is incomplete, not legally sufficient or that the service member is not entitled to the relief requested, to, within 30 days of the request, provide the service member with a written response acknowledging the request and setting forth the objections. If the person fails to make such a response the person waives any objection to the request, and the service member shall be entitled to the relief requested.
Pest Reports – Certification and Warranty (SB 1481) – Effective 1/1/19 This law requires a specified certification when the property is free of evidence of active infestation and requires all certifications to be included on the complete, limited, supplemental, or reinspection reports. Additionally, where a consumer has directly contracted for the fumigation, this law requires a Branch 1 registered company to also provide the certification of completion.