This bill, taking effect on January 1, 2022, provides that local agencies may adopt an ordinance to allow up to 10 dwelling units on certain parcels. The bill is an attempt to alleviate the current shortage of housing in California.
Our legislators were busy as bees last year, enacting 50 new laws affecting your real estate practice. As a real estate advisor, you need to be able to explain how these new laws may affect your clients. Bookmark this post and refer back to it often. I have provided links to summaries and texts of each of the new laws to answer all your questions.
This is the second of two posts covering the new laws for 2020.
LANDLORD/TENANT: DISCRIMINATION ON THE BASIS OF SOURCE OF INCOME SB 329
“Discrimination” on the basis of “source of income” has been expanded to include a refusal to rent to a tenant based on the tenant’s receipt of federal, state or local housing subsidies including “Section 8. Effective 1-1-20
LANDLORD/TENANT: RELIGIOUS ITEMS MAY BE DISPLAYED ON ENTRY DOORS SB 652
This law, with certain exceptions, prohibits a residential property owner and a common interest development from enforcing or adopting a restriction that prohibits the display of religious items on an entry door or entry door frame of a dwelling. Effective 1-1-20
LANDLORD/TENANT: TENANT ALLOWING OCCUPANCY OF PROPERTY TO PERSON AT RISK OF HOMELESSNESS
SB 1188 Creates a legal framework allowing a tenant, with the written approval of the owner/landlord, to take in a “person at risk of homelessness.” Effective 1-1-20
LANDLORD/TENANT: STATEWIDE RENT CAPS AND JUST CAUSE EVICTION
AB 1482 Imposes statewide rent caps of 5% plus inflation and just cause eviction requirements on rental properties. Various exemptions apply including single-family homes and condos (not owned by a corporation or REIT) and properties where a certificate of occupancy has been issued within the past 15 years. Effective 1-1-20
LANDLORD/TENANT: FAMILY DAYCARE HOMES
SB 234 Requires large family daycare homes with up to 14 children to be treated as a residential use for purposes of all local ordinances. Clarifies that apartments may be used as family daycare homes. Effective 1-1-20
LANDLORD/TENANT: RENT INCREASES ABOVE 10% REQUIRES 90-DAY NOTICE AB 1110
The notice period for increasing rent above 10% in any 12-month period is 90 days. Previously, it was 60 days. Effective 1-1-20
LANDLORD/TENANT: RECYCLING BINS AB 827
This new law requires a multi-family dwelling of five or more units, among other businesses, to provide customers with a recycling bin or container for a waste stream that is visible, easily accessible, adjacent to each bin or container for trash other than that recyclable waste stream (except in restrooms) and clearly marked with educational signage. Effective 1-1-20
LANDLORD/TENANT: EXTENDS INDEFINITELY A LAW PROVIDING VARIOUS PROTECTIONS TO TENANTS IN FORECLOSED PROPERTY INCLUDING 90-DAY NOTICE TO TERMINATE A MONTH TO MONTH TENANCY SB 18
This new law extends indefinitely the requirement that a landlord of a foreclosed property provides a month to month tenant with a 90-day notice of termination and that existing leases must generally be honored. Effective 1-1-20
INSURANCE: 75-DAY NOTICE OF NONRENEWAL
AB 1816 Requires insurers to provide at least a 75-day notice of nonrenewal of a homeowner’s policy (currently 45 days) and raises the limit on a homeowner insurance claim covered by the California Insurance Guarantee Association (CIGA) to $1 million. This law also allows the insurer to be proportionately relieved of their responsibility to participate in the Fair Access to Insurance Requirements (FAIR) plan. For policies that expire on or after 7-1-20
LEAD PAINT ABATEMENT IMMUNITY
AB 206 Grants immunity to landlords or agents who voluntarily abate lead paint hazards and provides that such efforts cannot be considered evidence of uninhabitability pursuant to certain lead paint abatement programs. Effective 1-1-20
LOANS: PROHIBITS CALIFORNIA FINANCING LAW LICENSEES FROM RECEIVING CERTAIN CHARGES ON A CONSUMER LOAN
AB 539 Prohibits California Financing Law (CFL) licensees from receiving charges on a consumer loan at a rate exceeding 36% per annum plus the Federal Funds Rate for loans with a principal amount from $2,500 to $10,000. Effective 1-1-20
REAL ESTATE LAW CLEANUP: TECHNICAL CHANGES THAT CONFIRM EXISTING LAW REGARDING DELIVERY OF THE TDS, NHD AND AD AB 892
This law clarifies and confirms existing law that delivery of the TDS and NHD is generally not required for leases of any duration, but the Agency Disclosure form is required for residential leases of more than one year.
Confirms that there is no cancellation right for a buyer based upon delivery of the visual inspection when purchasing from an unrepresented seller. Effective 1-1-20
RECORDING FEES: COUNTY MAY INCREASE FEE BY $1
AB 212 Counties are authorized to increase their recording fees by $1 to defray the cost of document storage. Effective 1-1-20
TAX: NO CONFORMITY WITH OPPORTUNITY ZONE TAX BENEFITS AB 91
California did not identify Opportunity Zones (OZ) to mirror federal law which would have resulted in greater incentivization of real property investments in these areas.
TAX: EXEMPTIONS FROM REASSESSMENT: NARROW EXCLUSION FOR CERTAIN PARENT-CHILD TRANSFERS OF PROPERTY THROUGH A CORPORATION
AB 872 Creates a property tax change in ownership exclusion in the case of a parent to child transfer of stock in a qualified corporation following the last surviving parent’s death limited in scope to the parents’ residence and the parcel of land upon which the home is located provided that among other things: 1) the residence has continuously served as the child’s home, and 2) the property’s assessed value does not exceed $1 million. Effective 10-9-19
UTILITIES: COSTS FOR EXTENSION OF WATER AND SEWER SERVICES SB 646
This law requires the estimated reasonable costs of labor and materials for installation of facilities associated with a water or sewer connection to bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the water connection or sewer connection. Effective 10-9-19
APPRAISAL REQUIREMENTS INCREASES FROM $250,000 TO $400,000 FOR CERTAIN HOME SALES
Certain home sales of $400,000 no longer require an appraisal as federal regulators increase the threshold at which residential home sales require an appraisal from $250,000 to $400,000. The rule will not apply to loans sold to or guaranteed to the VA, FHA, HUD, Fannie Mae or Freddie Mac. The final rule has yet to be published. Once published the rule will be effective
MOBILE HOMES: APPLICATION PROCESS; RIGHTS OF BUYER AND SELLER WHEN SELLING A MOBILE HOME THAT WILL REMAIN IN THE PARK; RIGHT OF FIRST REFUSAL AFTER DISASTER; AND RIGHT TO A COMPANION SB 274
Park Management must respond within 15 days to a seller and the prospective purchaser by providing application standards for the park where the mobile home being sold is located and a list of the necessary documentation. If a buyer is rejected for financial reasons, they have a right to supply additional financial information which the park must consider. A park that fails to comply is liable for damages to the seller.
Additionally, a homeowner has a first right of refusal when a park elects to rebuild after a disaster. A homeowner that lives alone has the right to designate one companion at a time to live with them free of charge, up to three a year. Effective 1-1-20
Our legislators were busy as bees last year, enacting 50 new laws affecting your real estate practice. As a real estate advisor, you need to be able to explain how these new laws may affect your clients. Bookmark this post and refer back to it often. I have provided links to summaries and texts of each of the new laws to answer all your questions.
This is the first of two posts covering the new laws for 2020.
APPRAISERS: APPRAISERS AND HOME INSPECTORS
AB 1018 Home inspectors are prohibited from giving an opinion of valuation on a property. Effective 1-1-20
ARBITRATION AGREEMENTS WITH CONSUMERS AND EMPLOYEES SB 707
This law provides that the drafting party of a consumer or employment-related arbitration agreement is in material breach of the arbitration agreement if the drafting party fails to pay, as required by existing law, specified costs and fees associated with the arbitration proceeding. Effective 1-1-20
CONSUMER PRIVACY: CHANGES TO THE CONSUMER PRIVACY PROTECTION ACT AND OTHER PRIVACY LAWS
DISCLOSURE: DISCLOSURE AND POINT-OF-SALE COMPLIANCE RE WILDFIRE DEFENSIBLE SPACE AND VEGETATION MANAGEMENT LAWS, AND HOME HARDENING
AB 38 Requires delivery of a statutory disclosure re home hardening for homes in designated high fire areas built before 2010, and that seller list specified retrofits. Effective dates of the disclosure requirements will be 1-1-20; 1-1-21; 7-1-21; and 7-1-25; depending on the disclosure
EMPLOYMENT: ARBITRATION AGREEMENTS AS CONDITION OF EMPLOYMENT PROHIBITED
AB 51 Prohibits employers from requiring employees or applicants for employment to waive a right, forum, or procedure for a violation of the Fair Employment and Housing Act or the Labor Code as a condition of employment or an employment-related benefit. It also prohibits employers from threatening, retaliating discriminating against, or terminating employees or applicants because they refused to waive any such right, forum, or procedure. Existing contracts for employment entered into, modified or extended on or after January 1, 2020, are exempt.
EMPLOYMENT: INDEPENDENT CONTRACTOR STATUS OF AGENTS RECONFIRMED AB 5
The right of real estate agents to be treated as independent contractors has been explicitly reconfirmed. Effective 1-1-20
EMPLOYMENT: SEXUAL HARASSMENT TRAINING SB 778
The sexual harassment training deadline required for employers with five or more “employees” has been postponed. Deadline extended until 1-1-21 – Effective 8-30-19
FIRE MITIGATION: BEST PRACTICES FOR DEVELOPING RESILIENCE AGAINST WILDFIRES BY HOME HARDENING DEFENSIVE SPACES AND OTHER MEASURES SB 190
Defines the specific requirement to develop best models for defensible space and additional standards for home hardening and construction materials to increase the resilience of communities. Effective 1-1-20
FIRE INSURANCE: FOR TOTAL LOSS, INSURED IS ENTITLED TO REPLACEMENT COST LESS DEPRECIATION AB 188
This law provides that the measure of cash recovery, less depreciation, for a structure or its contents, lost under an “open” policy is the cost to repair, replace, or rebuild the structure or contents. Effective 1-1-20
HOUSING: ALLOWS FOR CONSTRUCTION AND RENTAL OF ACCESSORY DWELLING UNITS IN HOA’S AB 670
Any provision in a CC&R that prohibits or unreasonably restricts the construction, use or rental of an accessory dwelling unit or junior accessory dwelling unit on a lot zoned for single-family residential use is void and unenforceable. Effective 1-1-20
HOUSING: STREAMLINES HOUSING PERMITTING AND APPROVAL PROCESS SB 330
Establishes the Housing Crisis Act of 2019, which will accelerate housing production in California by streamlining permitting and approval processes, ensuring no net loss in zoning capacity (“Down zoning”) and limiting fees after projects are approved.
HOUSING: TRANSPORTATION – MAJOR STOPS AB 1560
This law redefines “major transit stop” under CEQA to include “bus rapid transit”. Effective 1-1-20
HOUSING: DECLARATION OF STATE OF EMERGENCY: BUILDING STANDARDS FOR SOLAR AB 178
This exemption will allow low-income homeowners to rebuild their homes with the requirement that was in effect at the time their home was originally constructed. Effective 1-1-20
HOUSING: CEQA: COMMUNITY PLANS AB 1515
This law seeks to bring greater certainty to developers by allowing updates to community plans without the threat of noncompliance based on the environmental impact report and will help with housing production. Effective 1-1-20
HOUSING: STREAMLINED APPROVAL PROCESS AND REMOVES BARRIERS TO CONSTRUCTION FOR ACCESSORY DWELLING UNITS
This group of three laws removes impediments to ADU construction by restricting local jurisdictions’ permitting criteria.
LANDLORD/TENANT: $20 MILLION BUDGETED TOWARD LEGAL SERVICES FOR EVICTION DEFENSE AB 74
The budget provides $20 million for legal services for renters facing eviction. Effective 1-1-20
LANDLORD/TENANT: ELLIS ACT AB 1399
Makes changes to the Ellis Act to 1) clarify that owners may not pay prior tenants liquidated damages in lieu of offering them the opportunity to re-rent their former unit; and, 2) clarify that the date on which the accommodations are deemed to have been withdrawn from the rental market is the date on which the final tenancy among all tenants is terminated. Effective 1-1-20
LANDLORD/TENANT: REDUCED SECURITY DEPOSIT FOR SERVICE MEMBERS SB 644
A landlord may only collect one month security for an unfurnished unit, or two months for furnished units, from a service member who resides on the property. Effective 1-1-20
LANDLORD/TENANT: DISCRIMINATION ON THE BASIS OF MILITARY OR VETERAN STATUS SB 222
Discrimination in housing on the basis of veteran or military status is now unlawful under the Fair Employment and Housing Act.
A 1031 Exchange offers real estate investors one of the last great investment opportunities to build wealth and save taxes. By completing an exchange, the investor (Exchanger) can dispose of investment property, defer the capital gain tax that would ordinarily be paid, and leverage all of his equity into the replacement property.
Investors can accomplish virtually any investment objective with exchanges including greater leverage, diversification, freedom from joint ownership, improved cash flow, geographic relocation and property consolidation.
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IRS Code sec. 1.1031, as amended “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment purposes if such property is exchanged solely for property of a like-kind which is to be held for either productive use in trade or business or for investment purposes.” |
In order to defer the capital gains tax, these basic requirements must be met:
A typical tax deferred exchange is very similar to a taxable transaction except that
ADVERTISING “Hosting Platforms” (such as Airbnb) Must Provide Warning. SB 761 requires a “hosting platform” to warn a tenant that subletting the tenant’s residence may violate his/her lease and could result in eviction.
AUCTIONS Credit Bid Exception Eliminated. SB 474 eliminates the exception for credit bids on behalf of the lien holder from the “no-shill” bidding law. C.A.R. sponsored legislation.
BROKER AND AGENT PRACTICE Team Names. Revision to SB 146. Clarified issues as follows:
BROKER AND AGENT PRACTICE Threshold Brokers. SB 647 makes various changes to the rules governing threshold brokers including:
BROKER AND AGENT PRACTICE Trust Fund Withdrawals. AB 607 permits a deductible of up to 5% on required fidelity bond coverage for an unlicensed employee who is authorized to withdraw funds from a trust fund account. The employing broker must additionally maintain evidence of “financial responsibility” by either a separate fidelity bond or a cash deposit adequate to cover the amount of the deductible.
COMMON INTEREST DEVELOPMENTS Clotheslines or Drying Racks. AB 1448 permits owners in a homeowners association (HOA) to use clotheslines and drying racks. (A separate provision of this law applies to tenants.
See landlord/tenant section below.)
COMMON INTEREST DEVELOPMENTS FHA or VA Approval. AB 596 requires a homeowners association to disclose in the annual budget report whether it is an approved condominium project under Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) guidelines.
COMMON INTEREST DEVELOPMENTS Water Use. AB 349 makes void and unenforceable CID prohibitions against the use of artificial grass.
CONSUMER PROTECTION Information Security Procedures. AB 1541 adds health insurance information to a list of personal information for which businesses must maintain reasonable security procedures when the information is not encrypted or redacted.
CONSUMER PROTECTION Information Security Breach Notification. SB 570 requires that notification for a computer security breach be titled “Notice of Data Breach.” It prescribes a model form for a business to disclose a breach of computer security where unencrypted personal information was compromised.
DISCLOSURES Repeals Energy Use Disclosures for Commercial Property. This law repeals the requirement of the Energy Use Disclosure for nonresidential buildings.
DISCRIMINATION Construction Related Accessibility Lawsuits. AB 152 requires an attorney who is sending a demand letter or complaint alleging a construction-related accessibility claim to provide additional information along with a new judicial counsel answer form. This additional information and legal resources are to be provided to small business owners who may not realize how to minimize their liability for Americans with Disabilities Act violations or respond to a lawsuit filed against them.
DISCRIMINATION Protections against Discrimination Based upon Citizenship, Primary Language or Immigration Status. SB 600 extends the protections of the Unruh Civil Rights Act against discrimination based upon citizenship, primary language, or immigration status. However such protections do not require the provision of services or documents in a language other than English unless required by law.
EMPLOYMENT Discrimination Based upon Disability and Religious Belief. AB 987 prohibits an employer from retaliating against a person for having requested a reasonable accommodation based on his or her disability or religious beliefs.
EMPLOYMENT Discrimination Based upon Gender, Equal Pay for Substantially Similar Work. SB 358 bars employers from paying employees less than other employees of the opposite sex for substantially similar work regardless of their job titles or the location where they work.
EMPLOYMENT Paid Sick Leave Clean-Up Legislation. AB 304 clarifies various issues pertaining to the “Healthy Families Act of 2014.”
EMPLOYMENT Use of Paid Sick Leave. SB 579 broadens the rights of an employee to use paid sick leave by substituting in the coverage described in the Healthy Workplaces, Healthy Families Act of 2014.
ESCROWS Bonding and Business Location Rules for Underwritten Title Companies. AB 704 adopts escrow rules governing underwritten title companies (UTCs) more consistent with rules that currently govern independent escrow companies.
FINANCING Homebuyer’s Down payment Assistance Program. AB 1516 aligns state law with federal law by allowing a Home Purchase Assistance (HPA) down payment assistance loan to be recorded in a junior lien position, and updates the HPA statute to ensure it meets all of the qualifications of federal laws and regulations, thereby allowing it to be used with a Federal Housing Authority-insured loan product.
INSURANCE Earthquake Premiums. SB 335 requires any additional premium charged because of a failure to comply with building requirements to be prorated and refunded back to the owner once the dwelling is brought into compliance with those requirements.
LANDLORD/TENANT Clotheslines or Drying Racks. AB 1448 requires a landlord to permit a tenant to utilize a clothesline or drying rack approved by the landlord in the tenant’s private area. (A separate provision of this law applies to common interest developments. See previous section.)
LANDLORD/TENANT Insurer may not discriminate on basis on the renter’s source of income or receipt of public assistance. AB 447 generally prohibits discrimination based upon renters’ level or source of income, or receipt of “Section 8” vouchers or state or federal public rent subsidies in the application for or issuance of insurance policies covering real property and mobile homes used for residential purposes.
LANDLORD/TENANT Mold, Habitability Standards. SB 655 maintains a landlord is not obligated to repair dilapidations relating to mold 1) until he or she has notice of it or 2) if the tenant fails to keep the property clean and sanitary and thereby substantially contributes to the existence of the mold.
For a building, or portion thereof, to be declared a substandard building by virtue of mold it must be visible mold growth, as determined by a health officer or a code enforcement officer, which endangers the health of the occupants. If the presence of mold is minor and found on surfaces that can accumulate moisture as part of their proper and intended use, a substandard condition would not be deemed to exist.
LANDLORD/TENANT Notice of Pesticide Use. SB 328 states without a licensed pest control operator, a Landlord or the Landlord’s agent must post a statutory notice of pesticide use.
LANDLORD/TENANT Price Gouging During a Declared State of Emergency. Based upon existing law price gouging by businesses during a declared state of emergency is illegal within specified counties and applies to hotels, motels, and “housing,” which is defined as any rental housing leased on a month-to-month bases. Such a state of emergency for wildfires was declared in September, 2015 for various counties.
LANDLORD/TENANT Victim’s Right to Terminate Tenancy. AB 418 extends current law indefinitely to allow a tenant to terminate a tenancy if he or she is a victim of domestic violence or sexual assault. Reduces termination notice period from 30 to 14 days.
LICENSING Continuing Education. AB 345 requires a broker, as part of the broker’s 45 hours of continuing education, to successfully complete a 3-hour course in the management of offices and supervision of licensed activities when renewing his or her license for the first time. C.A.R. sponsored legislation
LICENSING Personal Information. SB 560 1) requires a licensing board, including the Bureau of Real Estate, to provide personal information regarding licensees upon request to the Employment Development Department (EDD), which administers the unemployment compensation program.
2) Additionally, this law authorizes the enforcement division of the Contractors’ State License Board (CSLB) to enforce the workers compensation laws against unlicensed contractors.
MARIJUANA REGULATION Structure to License, Tax and Regulate. AB 266 / SB 643 / AB 243. The Medical Marijuana Regulation and Safety Act (MMRSA) comprises three separate bills which together create the structure to license, tax and regulate medical marijuana, along with mechanisms to fund its implementation.
MOBILE HOMES Criteria for Park Approval of Purchaser; For Sale Signs. SB 419 requires mobile home park management to provide in writing, after a written request from the seller or buyer in writing of the information management will require and the standards that will be utilized in determining if the prospective homeowner will be acceptable as a homeowner in the park. It allows management to withhold approval based upon fraud, deceit, or concealment of material facts by the prospective purchaser. It allows management to require use of a “Step-in L-frame” sign. Otherwise the display of L-frame, A-frame, H-frame or yard arm type signs is permitted.
MOBILE HOMES Disposal of Abandoned Mobile Homes. AB 999 allows park management to dispose of a mobile home after obtaining a judicial declaration of abandonment when it is no longer habitable and without having to pay outstanding taxes or vehicle licensing fees. This law also permits disposing of a mobile home when enforcing a warehousemen’s lien against a mobile home when it is no longer habitable and without having to pay outstanding taxes or vehicle licensing fees. In both cases the management is authorized to dispose of the mobile home rather than sell it.
MOBILE HOMES Restraining Orders in Limited Civil Cases. SB 244 extends existing law indefinitely to allow use of limited civil cases by the management of a mobile home park for obtaining an injunction such as a temporary or “permanent” restraining order when someone breaks the park rules, rather than having to file an “unlimited” civil case or even an unlawful detainer.
PROBATE AVOIDANCE Transfer on Death Deed with Named Beneficiary. AB 139 creates the revocable transfer on death (TOD) deed which allows a homeowner to transfer to a named beneficiary 1-4 residential real property upon the owner’s death without a probate proceeding.
TAX Exemption from Additional Recording Fee. AB 661 clarifies an exemption from a $10 additional recording fee that counties may impose. The fee is used to help investigate and prosecute real estate fraud crimes.
TAX Fire Prevention Fee. AB 301 allows a seller of real property and a buyer to negotiate and apportion the payment of the fire prevention fee as a term of sale.
TAX Private Transfer Fees. AB 807 expands the current Private Transfer Fee (PFT) recordation requirement to include PFT’s whose payment does not occur upon a change of ownership or that are not based on sales price. C.A.R. sponsored legislation.
UTILITIES Liens on Real Property Imposed by Municipal Utility Districts. SB 188 extends existing law that allows a Municipal Utility District (MUD) to place liens on a property for unpaid water or sewer utility services provided to a tenant. However, a MUD cannot collect delinquent charges or penalties from a property owner accrued by a residential tenant in a nonmaster-metered building. This law does not apply to delinquent charges for electrical service.
WATER USE Artificial Lawns AB 1164 prohibits cities and counties from enacting or enforcing any ordinance or regulation that prohibits the installation of drought tolerant landscaping, synthetic grass or artificial turf on residential property.
WATER USE Lawn Appearance. AB 2100 prohibits a city or county from imposing a fine for a failure to water a lawn or having a brown lawn during a declared drought emergency.
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