New California Laws for 2020 – Part 2

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

MezuzahLANDLORD/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

Recycling bins

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 FeesRECORDING 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

SewerUTILITIES: 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

mobile homes

New California Laws for 2020 – Part 1

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.

Home InspectorAPPRAISERS: 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

  • Exempts from the CCPA information collected from employees and independent contractors for one year. AB 25
  • Broadens the public information exemption for personal information (PI). AB 874
  • Creates a new category and registration requirement for “data brokers.” AB 1202
  • SB 1355 excludes consumer information that is de-identified or aggregate consumer information from PI definition.
  • Rescinds requirement for a business that operates exclusively online and has a direct relationship with the consumer to provide multiple means for consumers to submit information requests. AB 1564
  • Expands the type of data subject to the Information Practices Act of 1977. AB 1130

WildFireDISCLOSURE: 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.

NAREMPLOYMENT: 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

ADUHOUSING: 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

SolarHOUSING: 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.

  • AB 68 makes major changes to facilitate the development of more ADUs and address barriers to building. It expands the categories of ADUs that cities must approve without applying any local development standards to include an 800 sq. ft. detached ADU. The bill also requires cities to allow “junior ADUs,” which in some instances can be developed in addition to a conventional ADU.
  • AB 881 removes impediments to ADU construction by restricting local jurisdictions’ permitting criteria, clarifying that ADUs must receive streamlined approval if constructed in existing spaces and eliminating minimum lot size requirements. It also prohibits jurisdictions from establishing a maximum square footage requirement for an ADU that is less than 850 sq. ft., or 1,000 sq. ft. if the ADU contains more than one bedroom. This will allow future ADUs in various cities to be a few hundred feet larger.
  • SB 13 eliminates local agencies’ ability to require owner-occupancy for five years and eliminates impact fees for ADUs under 750 sq. ft. For larger ADUs, it creates a tiered fee structure based on size. The Bill also addresses other barriers by shortening the application approval time frame, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing the state to ensure that localities are following ADU statutes. Effective 1-1-20

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

Service membersLANDLORD/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.

 

New California Real Estate Laws for 2019

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.

hoaHOA 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.

ev charging stationElectric 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.

soldier-salutes-flag-2100Military 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.

Proposition 5 – Property Tax Transfer Initiative

This Initiative would allow California’s senior citizens to sell their home and buy another, retaining some or all of their Proposition 13 property tax savings.

Why is This Needed?

Under Proposition 13, homeowners are protected from rapidly increasing property taxes. However, seniors, who are a big property tax increase if they sell their existing home and buy another one, discouraging them from ever moving. As a result of this “moving penalty,” almost three-quarters of homeowners 55 and older haven’t moved since 2000. This initiative will allow them to sell their home while keeping some property tax protections, and therefore create homeownership opportunities for young families.

How Do Property Tax Assessments Work Now?

real-estate-taxesThe amount any homeowner pays in property taxes is based on the assessed value of their home at the time of purchase. Generally, Proposition 13 limits property taxes to 1% of the assessed value at the time of purchase even if the value of the property subsequently increases.

Unfortunately, homeowners lose their Proposition 13 property tax savings when they move to another home. Under another law, Proposition 60, senior homeowners – defined as 55 years of age or older – are allowed to transfer their property tax bases to another home in the same county so long as the purchase price of the replacement home is equal to, or less than, the sale price of the original residence.

Under Proposition 60, a senior homeowner is limited to making only one such transfer over the course of his or her lifetime. And, if the spouse of a senior homeowner has already transferred a property tax base, that senior homeowner is disqualified from making another transfer of the tax base.

Proposition 90 is an extension of the original Proposition 60 program. Proposition 90 allows senior homeowners to transfer their property tax base to a home in a different county so long as that county accepts such transfers (at last count, only 11 counties in California are accepting transfers from other counties).

Propositions 60 and 90 are relatively limited. That’s where Proposition 5 comes in.

How Will the Initiative Work?

1985238-senior-woman-celebrating-in-chair-at-homeProp 5 would allow homeowners 55 years of age or older to transfer some of their Proposition 13 property tax bases to a home of any price, located anywhere in the state, any number of times.

What’s Next?

Prop 5 will now appear on the November 2018 ballot to decide it’s fate.

Where Can I Find More Information?

California Association of Realtors

916.492.5200

portability@car.org

https://ballotpedia.org/California_Proposition_5,_Property_Tax_Transfer_Initiative_(2018)

Emi Statement2a

 

How Long Should You Save Records?

Decluttering your home is great – but what about all those important papers you have stashed around the house? Which ones do you actually need to keep, when can you get rid of them, and where should you put them in the meantime?

This is actually more important than you may imagine as losing or even just misplacing them could cost you serious money.

Below is a list of suggested ways to store these documents and the recommended amount of time to keep them on hand.

Table

For a pdf version of this flyer, please email me at Emi4Title@gmail.com.

California’s New Revocable Transfer on Death Deed

There are several ways an owner of real property can direct the transfer of real property when they die. Up until recently, the most common way was through a trust, will or owning the property in joint tenancy with another person or persons. Effective January 1, 2016, there is now a new way California allows real property to be transferred upon a person’s death and avoid probate.

Governor Jerry Brown signed Assembly Bill 139, which established a procedure to transfer real property upon death through a revocable transfer on death deed. This revocable transfer on death deed is a new simple and inexpensive way to transfer real property to a beneficiary in California. The deed allows a person to leave their real property to a designated person or persons such as a family member, friend, life-long partner or other loved one, without having to set up a living trust.

Criteria for Transfer on Death Deed (TOD Deed)

The new TOD (transfer on death) deed allows an owner of residential real property to name one or more beneficiaries to receive the property when the owner dies, thus bypassing the need to probate the estate. There are some specific criteria, however, that a person should be aware of when considering recording a revocable transfer on death deed.

  • The real property must be a single family home or condominium unit, or a multiple residence of not more than 4 residential dwelling units, or be a single family residence on no more than 40 acres of agricultural land.
  • A revocable TOD deed must be signed and dated before a notary public to be effective and valid.
  • The transfer on death deed must be recorded within 60 days or less from the date it is signed.
  • The transfer on death deed can be revoked by the transferor at any time.

settlementRevoking a Transfer on Death Deed

There are three ways the transferor/owner can revoke a transfer on death deed.

  1. The owner can record a formal notice of revocation.
  2. A new transfer on death deed may be recorded.
  3. The real property can be transferred to someone else prior to the transferor’s death.

Although the transfer on death deed must be recorded within 60 days or less from the date it is signed and before the owner’s death, it is important to understand that the interest in the real estate only transfers when the owner dies. This means that the beneficiary identified on the TOD deed does not have any rights to the real property when the owner is alive. Furthermore, creditors of a named beneficiary cannot place any liens on the property. While the owner is living, the owner has the right to sell or encumber the property. The property is also subject to involuntary liens that may be recorded by creditors of the owner, which would transfer with the property to the beneficiary upon the owner’s death.

In theory, a person that owns real property in California could execute and record more than one revocable transfer on death deed. The new law provides that the deed with the most recent recording date will be the one in effect.

Downsides to a Transfer on Death Deed

If the person named in the deed as the transfer on death beneficiary dies before the real property owner does, the deed simply has no effect. This could result in the property having to be probated.

If the owner becomes incapacitated through stoke, dementia, or other event, there may be no one to revoke the deed, which may be necessary due to a change in family circumstances or the need to qualify the person for Medicaid assistance.

Two Last Things…

Title companies are not required to rely on TOD Deeds under the new law. Careful review of the legislation and consultation with an attorney are recommended before using a TOD Deed.

Fidelity National Title cannot offer advice on the use of the TOD Deed form. If you or your clients have any further questions, you should consult an attorney.

Now the Q & A…

COMMON QUESTIONS ABOUT THE USE OF THIS FORM

Q 1. What does the TOD deed do?

A When you die, the identified property will transfer to your named beneficiary without probate. The TOD deed has no effect until you die. You can revoke it at any time.

Q 2. Can I use this deed to transfer business property?

A This deed can only be used to transfer (1) a parcel of property that contains one to four residential dwelling units, (2) a condominium unit, or (3) a parcel of agricultural land of 40 acres or less, which contains a single-family residence.

Q 3. How do I use the TOD deed?

A Complete this form. Have it notarized. RECORD the form in the county where the property is located. The form MUST be recorded on or before 60 days after the date you sign it or the deed has no effect.

Q 4. Is the “Legal Description” of the property necessary?

A Yes.

Q 5. How do I find the “Legal Description” of the property?

A This information may be on the deed you received when you became an owner of the property. This information may also be available in the office of the county recorder for the county where the property is located. If you are not absolutely sure, consult an attorney.

Q 6. How do I “Record” the form?

ATake the completed and notarized form to the county recorder for the county in which the property is located. Follow the instructions given by the county recorder to make the form part of the official property records.

Q 7. What if I share ownership of the property?

A This form only transfers YOUR share of the property. If a co-owner also wants to name a TOD beneficiary, that co-owner must complete and RECORD a separate form.

Q 8. Can I revoke the TOD deed if I change my mind?

A Yes. You may revoke the TOD deed at any time. No one, including your beneficiary, can prevent you from revoking the deed.

Q 9. How do I revoked the TOD deed?

A There are three ways to revoke a recorded TOD deed: (1) Complete, have notarized, and RECORD a revocation form. (2) Create, have notarized, and RECORD a new TOD deed. (3) Sell or give away the property, or transfer it to a trust, before your death and RECORD the deed. A TOD deed can only affect property that you own when you die. A TOD deed cannot be revoked by will.

Q 10. Can I revoke a TOD deed by creating a new document that disposes of the property (for example, by creating a new TOD Deed or by assigning the property to a trust)?

A Yes, but only if the new document is RECORDED. To avoid any doubt, you may wish to RECORD a TOD deed revocation form before creating the new instrument. A TOD deed cannot be revoked by will, or by purporting to leave the subject property to anyone via will.

Q 11. If I sell or give away the property described in a TOD deed, what happens when I die?

A If the deed or other document used to transfer your property is RECORDED before your death, the TOD deed will have no effect. If the transfer document is not RECORDED before your death, the TOD deed will take effect.

Q 12. I am being pressured to complete this form. What should I do?

A Do NOT complete this form unless you freely choose to do so. If you are being pressured to dispose of your property in a way that you do not want, you may want to alert a family member, friend, the district attorney, or a senior service agency.

Q 13. Do I need to tell my beneficiary about the TOD deed?

ANo. But secrecy can cause later complications and might make it easier for others to commit fraud.

Q 14. What does my beneficiary need to do when I die?

A Your beneficiary must RECORD evidence of your death (Prob. Code § 210), and file a change in ownership notice (Rev. & Tax. Code § 480). If you received Medi-Cal benefits, your beneficiary must notify the State Department of Health Care Services of your death and provide a copy of your death certificate (Prob. Code § 215).

Q 15. What if I name more than one beneficiary?

A Your beneficiaries will become co-owners in equal shares as tenants in common. If you want a different result, you should not use this form.

Q 16. How do I name beneficiaries?

A You MUST name your beneficiaries individually, using each beneficiary’s FULL name. You MAY NOT use general terms to describe beneficiaries, such as “my children.” For each beneficiary that you name, you should briefly state that person’s relationship to you (for example, my spouse, my son, my daughter, my friend, etc.).

Q 17. What if a beneficiary dies before I do?

A If all beneficiaries die before you, the TOD deed has no effect. If a beneficiary dies before you, but other beneficiaries survive you, the share of the deceased beneficiary will be divided equally between the surviving beneficiaries. If that is not the result you want, you should not use the TOD deed.

Q 18. What is the effect of a TOD deed on property that I own as joint tenancy or community property with right of survivorship?

A If you are the first joint tenant or spouse to die, the deed is VOID and has no effect. The property transfers to your joint tenant or surviving spouse and not according to this deed. If you are the last joint tenant or spouse to die, the deed takes effect and controls the ownership of your property when you die. If you do not want these results, do not use this form. The deed does NOT transfer the share of a co-owner of the property. Any co-owner who wants to name a TOD beneficiary must complete and RECORD a SEPARATE deed.

Q 19. Can I add other conditions on the form?

A No. If you do, your beneficiary may need to go to court to clear title.

Q 20. Is property transferred by the TOD deed subject to my debts?

A Yes.

Q 21. Does the TOD deed help me to avoid gift and estate taxes?

ANo.

Q 22. How does the TOD deed affect property taxes?

A The TOD deed has no effect on your property taxes until your death. At that time, property tax law applies as it would to any other change of ownership.

Q 23. Does the TOD deed affect my eligibility for Medi-Cal?

A No.

Q 24. After my death, will my home be liable for reimbursement of the state for medical expenditures?

A Your home may be liable for reimbursement. If you have questions, you should consult an attorney.

 

Homestead Protection

If you are sued in court and lose, the person who sued you may try to force the sale of your home to collect their money. A homestead makes it harder for them to do this.

A homestead protects some of the equity in your home. If your home is worth more money than you owe on it, you have equity. For example, if your home is worth $350,000 and you owe $300,000, you have $50,000 in equity. A homestead can protect the $50,000.

There are two types of homesteads, automatic and declared.

What is an automatic homestead?

If you live in the home you own, you already have one. It protects some of your home equity until you sell your home. You do not have to sign or file anything to have an automatic homestead; however, if a creditor attempts to sell the home, the burden of proof is on the homeowner to prove to the court that an automatic homestead exemption exists.

What is a declared homestead?

A declared homestead is a legal form that you record with the Registrar-Recorder’s office. A declared homestead protects some of your equity for six months after you sell your home if the following three conditions are all true:

  1. You sell your home and buy another home within six months;
  2. The protected amount is used to buy another home;
  3. You record a homestead on the new home.

Only the home you live in qualifies for a homestead.

Who needs a declared homestead?

If you’ve been sued in court, lost, and have a large money judgment against you, a declared homestead can help.  If you sell your home, it protects some of the proceeds for six months. This gives you time to buy another home and record another declared homestead.

How much does a homestead protect?

Both automatic and declared homesteads protect the same amounts:

  • $75,000 for an individual;
  • $100,000 if the homeowner lives with at least one family member who has no interest in the house;
  • $175,000 if the homeowner is 65 years of age or older, or is physically or mentally disabled;
  • $175,000 if the homeowner is 55 years of age or older and single with an annual income of $15,000 or less;
  • $175,000 for a married couple with a combined annual income of $20,000 or less;

Note that these amounts are adjusted every three years by the California Judicial Council. They were last adjusted in April, 2013.

A homestead does not protect you against:

  • Foreclosure of your home by mortgage lender if you are behind on payments.
  • The enforcement of a mechanic’s lien;
  • A judgment for child or spousal support.

How do you file a declared homestead?

You can file a declared homestead by taking these steps:

  1. Buy a declared homestead form from an office-supply store, or download a form from the Registrar-Recorder’s website.
  2. Fill out the form.
  3. Sign the form and have it notarized.
  4. Record the notarized form.

Contact the Registrar-Recorder’s office where the property is located for fees and filing addresses. In Los Angeles County call (562) 462-2125.

Companies offering to help you file a declared homestead cannot charge more than $25; this includes notary and recording fees.

Needless to say…

The Homestead Law is technical in nature and complex in its application. A Declaration of Homestead which is not properly prepared may be invalid. This article is for general informational purposes only and should not be considered legal advice. We therefore suggest that you contact an attorney for any legal advice on your specific situation.

 

 

 

 

New California Laws for 2016

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:

  • Team Names are not fictitious names (DBAs) and need not be filed at a county recorder.
  • Only one member of the team need include their CalBRE license number and name in advertising materials.
  • Broker identity means the name that the broker generally uses.
  • The broker license number must appear in any team name (or agent-owned DBA) advertising.

BROKER AND AGENT PRACTICE  Threshold Brokers. SB 647 makes various changes to the rules governing threshold brokers including:

  • Adding a category of properties they are permitted to solicit.
  • Changing the timing of delivery of the investor questionnaire.
  • Exempting threshold brokers from having to update annual questionnaires.
  • Removing certain reporting requirements to the Department of Business Oversight for those relying on specified securities qualification exemptions.

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.Clothesline See landlord/tenant section below.)

 

FHA_homeownership_logoCOMMON 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.

lawsuitDISCRIMINATION  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.

home-insuranceINSURANCE   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.

pesticidesLANDLORD/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.

For Sale SignMOBILE 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 HomeMOBILE 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.

LandscapeWATER 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.

Michael Korte Laura WhitneyWATER 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.

What is a Lis Pendens?

Scales of justice, law books and gavel over dark backgroundA lis pendens literally means that litigation is pending. It tells the public that a lawsuit affecting the property is in progress and that any judgment awarded in that legal action will have priority as of the date of the lis pendens. Some lawyers file a lis pendens specifically to create a cloud on the title and to prevent a potential sale of the property from taking place.

How is the Lis Pendens established?

A lis pendens gives constructive notice of a pending lawsuit relating to real property or affecting the title or the right of possession of real property. The notice is recorded in the County Recorder’s Office in the county in which the property is located, at the time the complaint or cross complaint is filed, or at any time thereafter.

How does the Lis Pendens affect the property?

Once recorded the lis pendens imparts constructive notice not only of its contents (provided it meets statutory requirements), but also of facts concerning the action that could be discovered by reasonable inquiry. A lis pendens creates a cloud on title which could render the property unmarketable. Said lis pendens remains as long as the action is pending, unless it is voluntarily withdrawn or expunged (wiped out, erased) by motion to the court. Caution should still be used even if the lis pendens is removed since the potential for litigation still exists.

What are grounds for expungement?

Grounds for expungement include the following:

  1. The underlying action does not affect title to or the right to possession of the real property described in the notice, or
  2. The lawsuit was not commenced, or is not prosecuted for a proper purpose and in good faith.

The court may also order expungement, even if it concludes the real property claim is probably valid, if the court decides that adequate relief can be secured by posting a bond, an amount sufficient to indemnify the claimant against all resulting damages from removing the lis pendens.

Can the court ordered expungement be recorded immediately?

If a motion to expunge is granted, a certified copy of an order expunging the lis pendens may not be recorded until the period of time for filing a petition for review by the court of appeals has expired.