21 Reasons for Title Insurance

Every transaction someone asks “Why do I have to buy Title Insurance?” Maybe you answered “Well, the lender requires it. It protects the lender.”

It may surprise you to learn there are myriad ways that title insurance protects buyers, sellers, and everyone else related to the transaction. To give you insight as to the many ways that title insurance benefits everyone, I am providing the following flyer. Feel free to copy this and give it to your buyers and sellers. It only adds to your credibility as a consumate transaction specialist.

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.

Common Types of LIENS and JUDGMENTS

There are a number of types of judgments and liens that can attach to your client and/or their property that affect title when they sell or refinance. Many of these will remain on title for anywhere from 7-20 years or more and must be satisfied accordingly. They may be required by their lender to pay off the lien or judgment in order to close their refinance, or if they’re selling their property, a portion of the proceeds may be used in order to satisfy the lien so they can pass on a clean title to the buyer.

Below are some of the most common types you may encounter on a preliminary title report that will notify you up front if there are any that will need to be addressed throughout the transaction process.


Federal Tax Liens   State Tax Liens   EDD Liens   County Tax Liens

  • All above-mentioned liens have a duration of 10 years from the date recorded unless they are released.
  • The lien can be continued for successive periods and its original priority is maintained by recording and re-filing notice before the original lien expires.
  • Like judgments, these liens are blanket liens and attach themselves to ALL property belonging to the delinquent taxpayer.
  • Escrow will order the demand and the title company will manage the payment in order for the lien holder to record the release.
  • Escrow must have an IRS Power of Attorney form to obtain a demand.
  • Title will not close without a demand on federal and state tax liens.




Mechanic’s Liens   Notice of Action  (Lis Pendens, Homeowner Association Liens, & Substandard/ Abatement Liens)

Mechanic’s liens are created when a contractor/subcontractor who has done work on a specific property was not paid when the work was completed. The duration of a mechanic’s lien is 90 days from the date recorded.

The contractor can foreclose on the property on which they recorded the mechanic’s lien but must commence the action within 90 days.

A lis pendens is a notice that a court action affecting the property has been filed. This document is also used to foreclose on a property under a mechanic’s lien. This item has an unlimited duration and must be released or withdrawn. · ·

Homeowner’s liens are recorded when a person is delinquent on their association dues. There is no fixed duration associated with this lien. Escrow must get demand.

Substandard liens are recorded by the city or county. They can be for weed abatement, hazardous substances, or substandard dwellings. This lien does not have a fixed duration. Escrow must order demand in order to find out if money is owed.



Money Judgments  Spousal and/or Child Support Judgments

  • A money judgment has a duration of 10 years from the date the judgment is filed.
  • A spousal/child support judgment duration will extend over 10 years. Spousal support judgments will be considered until released; child support liens will be considered up to 5 years after the child reaches the age of majority.
  • A money judgment can be extended for an additional10 years when a renewal of judgment is recorded within 10 years of the original date of entry of the judgment.
  • The only judgment that has a duration of 20 years is one in favor of the United States of America, a Federal Corporation.
  • Escrow orders the demand and full or partial satisfaction from the judgment creditor. The title company pays demands at the close of escrow.



Emi Statement1

New Real Estate Laws for 2018 – Part 3 of 3

Our legislators passed 41 bills affecting the real estate business last year. This is part 3 of our 3-part summary of those bills. For the full text of a law visit http://leginfo.ca.gov/ for California laws – or – http://www.gpo.gov/fdsys/ for federal laws. A legislative bill may be referenced in more than one section.

OC-Groundwater-BasinLAND USE Authorizes any local agency overlying a groundwater basin to decide to become a groundwater sustainability agency for that basin and specifically consider the interests of farmers, ranchers, and dairy professionals. Assembly Bill 321 codified as Water Code § 10723.2. Effective date January 1, 2018.

MANUFACTURED HOMES This law prohibits an owner from being liable for taxes and fees specified in the Manufactured Housing Act of 1980 that accrue after the compliance date if the owner properly endorses and delivers the certificate of title to the transferee and delivers or mails to the Department of Housing and Community Development the completed notice of sale or transfer form developed by the department. Senate Bill 542 codified as Health and Safety Code § 18107. Effective date is January 1, 2018.

Mobile HomeMANUFACTURED HOMES All state and local programs designed to facilitate home ownership must now include manufactured homes, to the extent feasible. Senate Bill 329 codified as Government Code 65852.35. Effective January 1, 2018.

MANUFACTURED HOMES The Mobilehome Residency Law governs residency in mobilehome parks and requires the management of a mobilehome park to disclose the name, business address, and business telephone number of the park owner upon a homeowner’s request. Assembly Bill 294 codified as Civil Code § 798.28. Effective date is January 1, 2018.

PACE LogoPACE LIENS CONSUMER PROTECTIONS A “solar energy system” disclosure document that provides a consumer with accurate, clear, and concise information regarding the installation of a solar energy system must be provided prior to completion of a sale. The Public Utilities Commission, on or before July 1, 2019, will develop standardized inputs and assumptions to be used in the calculation and presentation of electric utility bill savings to a consumer. Assembly Bill 1070 codified as Business and Professions Code §§ 7169 and 7170, and Public Utilities Code § 2854.6. Its requirements come into force at various times.

PACE LIENS CONSUMER PROTECTIONS Adopts various consumer protections and best practices recommended by the federal Department of Energy in regard to PACE lien financing and improvements by requiring, among other things, a program administrator, before a property owner executes an assessment contract, to make oral confirmation of various consumer rights. Senate Bill 242 codified as Streets and Highways Code § 5900 et. seq. Effective January 1, 2018.

HelicopterTAX The fire prevention fee is suspended beginning with the 2017-2018 fiscal year which runs from July 1, 2017, to June 30, 2018. The provision suspending the fee sunsets at the end of 2030. The fire prevention fee is charged on each habitable structure on a parcel within a state fire responsibility area. The fee was typically paid was approximately $117 and was owed by whoever the owner of the property was on July 1 regardless of subsequent transfer. The actual payment of the fee was typically in March, April or May of the following year. This fee is now suspended. Assembly Bill 398 codified as Health and Safety Code §§ 38501, 38562, 38594, 38505.5, 38590.1, 38591.1, 38591.2, 38591.3, 38592.5, and 38592.6; Public Resources Code 4213.05 and 4229; and Revenue and Taxation Code 6377.1. Effective July 1, 2017.

TAX AB 398 strengthens and extends the state’s cap-and-trade program, which would have expired without legislative action. The program, along with other state carbon reduction measures, is intended to ensure that California will meet its SB 32 target to reduce greenhouse gas emissions 40 percent below 1990 levels by 2030. Assembly Bill 398 codified as Health and Safety Code §§ 38501, 38562, 38594, 38505.5, 38590.1, 38591.1, 38591.2, 38591.3, 38592.5, and 38592.6; Public Resources Code 4213.05 and 4229; and Revenue and Taxation Code 6377.1. Effective July 26, 2017.

TAX This new law authorizes the board of supervisors of a county to provide that a tax on real or personal property is not a lien against the property assessed or the person being assessed if the amount of the tax assessed against that property or the person is less than an amount set by that ordinance or resolution, up to $200, excluding any interest, penalties, or other fees. Senate Bill 624 codified as Revenue and Taxation Code § 2191.10. Effective January 1, 2018.

TAX Allows stormwater management assessments by a simple majority as opposed to a 2/3 majority as required by Proposition 218. Senate Bill 231 codified as Government Code §§ 53750 and 53751. Effective January 1, 2018.

CDTFTAX Effective July 1, 2017, AB 102 transfers most of the State Board of Equalization’s (SBE) primary administrative, collection and regulatory duties, powers and responsibilities with respect to sales and use taxes and other taxes and fees to a newly formed department – the California Department of Tax and Fee Administration (DTFA). Assembly Bill 102 codified as Government Code §§ 12803.2, 15570 et seq., 15670 et seq., 15600, 15601 15605.5, 15618.5, 15623 and 15609.5; and Revenue and Taxation Code § 20. Effective  July 1, 2017.


TAX – RECORDING TAX REVENUES ALLOCATED TO HOUSING FUND A fee of $75 is imposed at the time of recording of every real estate instrument, paper or notice which is required or permitted to be recorded. The fee shall not exceed $225 per transaction. However, the fee does not burden purchase transactions or sales in general based on the two following exemptions. First, the fee is not imposed for any document recorded in connection with a transfer of real property that is a residential dwelling to an owner-occupant. Second, the fee is not imposed whenever a documentary transfer tax (DTT) must be paid which is whenever real property is sold for valuable consideration. The most common circumstances when the fee would be imposed would be on a refinance or reconveyance. Senate Bill 2 codified as Government Code § 27388.1 and Health and Safety Code § 50470 et. seq. Effective January 1, 2018.

Wood Burning StoveWOOD-BURNING STOVES New program to provide incentives for the voluntary replacement of older wood-burning stoves. Senate Bill 563 codified as Health and Safety Code § 39733. Effective January 1, 2018, but there is no deadline for when the program would actually be implemented.


New Real Estate Laws for 2018 – Part 2 of 3

Our legislators passed 41 bills affecting the real estate business last year. This is part 2 of our 3-part summary of those bills. For the full text of a law visit http://leginfo.ca.gov/ for California laws – or – http://www.gpo.gov/fdsys/ for federal laws. A legislative bill may be referenced in more than one section.

suburbs-zoomHOUSING Creates a streamlined, ministerial approval process for infill projects with two or more residential units in localities that have failed to meet their regional housing needs assessment numbers. SB 35 codified as §§ 65400 and 65582.1 of the Government Code. Effective January 1, 2018.

HOUSING The law enhances the authority of the Department of Housing and Community Development (HCD) to determine if a locality is in compliance with its general plans for housing development. Assembly Bill 72 codified as Government Code § 65585. Effective January 1, 2018.

HOUSING Allows a city or county to create a housing sustainability district to complete upfront zoning and environmental review in order to receive incentive payments for development projects that are consistent with the district’s ordinance. Assembly Bill 73 codified as Government Code §§ 65582.1 and 66200 et. seq., and Public Resources Code § 21155.10 et. seq. Effective January 1, 2018.

HOUSING Changes the standard for a locality to disapprove development from “substantial evidence” which is a relatively low threshold to a “preponderance of the evidence.” Assembly Bill 678 and Senate Bill 167 codified as Government Code § 65589.5. Effective January 1, 2018.

HOUSING Requires a more detailed and broader housing element planning process with an eye toward removing obstacles that may hinder a locality from meeting its general housing plan. Assembly Bill 879 codified as Government Code §§ 6500, 65583 and 65700, and Health and Safety Code § 50456. Effective January 1, 2018.

HOUSING This law authorizes a local government to establish a Workforce Housing Opportunity Zone (WHOZ) which includes an upfront environmental review (EIR) pursuant to the California Environmental Quality Act (CEQA). The importance of this is that CEQA has reportedly been used as a barrier to housing projects even after those housing projects have been subject to lengthy public discussion and scrutiny, and have been approved by local governments. Senate Bill 540 codified as Government Code § 65620 et. seq. Effective January 1, 2018.

HOUSING RECORDING TAX A fee of $75 is imposed at the time of recording of every real estate instrument, paper or notice which is required or permitted to be recorded. The fee shall not exceed $225 per transaction. However, the fee does not burden purchase transactions or sales in general based on the two following exemptions. First, the fee is not imposed for any document recorded in connection with a transfer of real property that is a residential dwelling to an owner-occupant. Second, the fee is not imposed whenever a documentary transfer tax (DTT) must be paid which is whenever real property is sold for valuable consideration. The most common circumstances when the fee would be imposed are refinances or reconveyances. The funds generated by this fee are dedicated as follows: 20% of all funds are specifically dedicated to affordable owner-occupied workforce housing. Overall, the allocation is 70% of revenues will go to local governments for housing and 30% is distributed by the Department of Housing and Community Development and the California Housing Finance Agency. Senate Bill 2 codified as Government Code § 27388.1 and Health and Safety Code § 50470 et. seq. Effective January 1, 2018.

HOUSING The housing bills discussed above are part of a package of 15 housing bills that were signed into law. These laws are intended to streamline new housing developments, enforce the Housing Accountability Act, and provide a permanent source of funding for affordable housing projects. This package of laws also included the following:

  • SB 3 (Beall) authorizes $4 billion in general obligation bonds for affordable housing programs and a veteran’s homeownership program. SB 3 must be approved by voters next November.
  • SB 166 (Skinner) ensures that cities maintain an ongoing supply of housing construction sites for residents of various income levels.
  • AB 571 (E. Garcia) makes it easier to develop farmworker housing by easing qualifications for the Farmworker Housing Tax Credit.
  • AB 1397 (Low) makes changes to the definition of land suitable for residential development to increase the number of sites where new multifamily housing can be built.
  • AB 1505 (Bloom/Bradford/Chiu/Gloria) authorizes cities and counties to adopt an inclusionary ordinance for residential rental units in order to create affordable housing.
  • AB 1515 (Daly) allows housing projects to be afforded the protections of the Housing Accountability Act if the project is consistent with local planning rules despite local opposition.
  • AB 1521 (Bloom/Chiu) gives experienced housing organizations a first right of refusal to purchase affordable housing developments in order to keep the units affordable.

granny-flatHOUSING ACCESSORY DWELLING UNITS This is a follow-up law to the 2016 law, AB 2299, which among other things created a single standard for the Accessory Dwelling Unit (ADU) permit review process regardless of whether a local government has adopted an ordinance or not. This new law made clarifying changes to better reflect the intent of AB 2299 including: ADUs may be rented out; parking requirements cannot exceed one parking space per unit or per bedroom whichever is less and; and that “tandem parking” means when two or more cars are lined up behind one another. Assembly Bill 494 and Senate Bill 229 codified as Government Code § 65852.2. Effective January 1, 2018.

HOUSING Prohibits a city, county, or city and county from limiting the number of efficiency units in certain locations near public transit or university campuses. Assembly Bill 352 codified as Health and Safety Code § 17958.1. Effective January 1, 2018.

HOUSING Allows for a city or county to create an affordable housing authority which encompasses the entire city or county. Assembly Bill 1598 codified as Government Code § 62250 et seq. Effective January 1, 2018.

LandlordTenantLaw-1LANDLORD/TENANT DISCLOSURE OF FLOOD HAZARD Requires landlord or agent to disclose in writing in every residential lease or rental agreement information regarding flood hazards including the landlord’s “actual knowledge.” Assembly Bill 646 codified as Government Code § 8589.45. Effective July 1, 2018

LANDLORD/TENANT IMMIGRATION STATUS Expands protections against discrimination based upon immigration status and makes illegal the disclosure of information related to that status in the context of residential housing Expands the definition of immigration or citizenship status in the context of residential rental housing to include perception of such status or association with a person so perceived.

Prohibits any threat to disclose information relating to immigration status with the intent of harassing, intimidating or retaliating, or influencing a tenant to vacate, unless it is required to comply with federal law. If not, then a landlord can be liable for statutory damages of between 6 and 12 times the monthly rent in addition to other damages and penalties. -A new affirmative defense is created in a UD action if the landlord acted to recover possession because of immigration status. Nonetheless, the landlord is still entitled to request information or documentation necessary to determine or verify the financial qualifications of a prospective tenant, or to determine or verify the identity of a prospective tenant or prospective occupant. Practice pointer: Assuming it is the landlord’s standard practice to verify financial qualifications or identity of a prospective tenant, the landlord should never approve a tenant to take occupancy before verifying their financial qualifications or identity as this could give risk to an affirmative defense in an UD action. Additionally, the landlord may disclose information when complying with any legal obligation under federal law, including, but not limited to, any legal obligation under any federal government program that provides for rent limitations or rental assistance to a qualified tenant, or a subpoena, warrant, or other order issued by a court. Assembly Bills 291 and 299 codified as Civil Code §§ 1940.05, 1940.2, 1940.3, 1940.35, 1942.5, 3339.10; Code of Civil Procedure § 1161.4; and Business and Professions Code § 6103.7. Effective January 1, 2018.

PetsLANDLORD/TENANT PETS For new housing developments financed through certain Department of Housing and Community Development (HCD) programs, residents must be allowed to have one or more pets such as a dog or cat. Assembly Bill 1137 codified as Health and Safety Code § 50466. Effective January 1, 2018.

Introducing the Life Estate

The phrase “life estate” often comes up in discussions of estate and Medicaid planning, but what exactly does it mean? A life estate is a form of joint ownership that allows one person to remain in a house until his or her death when it passes to the other owner. Life estates can be used to avoid probate and to give a house to children without giving up the ability to live in it.  They also can play an important role in Medicaid planning.

The Basics

In a life estate, two or more people each have an ownership interest in a property, but for different periods of time. The person holding the life estate — the life tenant — possesses the property during his or her life. The other owner — the remainderman — has a current ownership interest but cannot take possession until the death of the life estate holder. The life tenant has full control of the property during his or her lifetime and has the legal responsibility to maintain the property as well as the right to use it, rent it out, and make improvements to it.

What Happens at Death of the Life Tenant

When the life tenant dies, the house will not go through probate, since at the life tenant’s death the ownership will pass automatically to the holders of the remainder interest. Because the property is not included in the life tenant’s probate estate, it can avoid Medicaid estate recovery in states that have not expanded the definition of estate recovery to include non-probate assets. Even if the state does place a lien on the property to recoup Medicaid costs, the lien will be for the value of the life estate, not the full value of the property.

What about Taxes?

Although the property will not be included in the probate estate, it will be included in the taxable estate. Depending on the size of the estate and the state’s estate tax threshold, the property may be subject to estate taxation.

What Happens when the Property is Sold?

The life tenant cannot sell or mortgage the property without the agreement of the remaindermen. If the property is sold, the proceeds are divided up between the life tenant and the remaindermen. The shares are determined based on the life tenant’s age at the time — the older the life tenant, the smaller his or her share, and the larger the share of the remaindermen.

What if I Encounter a Listing with a Life Estate?

If you encounter a listing or sale involving a Life Estate, contact me to discuss your options so we can insure your property without any glitches.

The Medicaid Problem

Be aware that transferring your property and retaining a life estate can trigger a Medicaid ineligibility period if you apply for Medicaid within five years of the transfer. Purchasing a life estate should not result in a transfer penalty if you buy a life estate in someone else’s home, pay an appropriate amount for the property and live in the house for more than a year.

For example, an elderly man who can no longer live in his home might sell the home and use the proceeds to buy a home for himself and his son and daughter-in-law, with the father holding a life estate and the younger couple as the remaindermen. Alternatively, the father could purchase a life estate interest in the children’s existing home. Assuming the father lives in the home for more than a year and he paid a fair amount for the life estate, the purchase of the life estate should not be a disqualifying transfer for Medicaid.  Just be aware that there may be some local variations on how this is applied, so check with your attorney.

This post was originally published by elderlawanswers.com.

Mechanics’ Liens in California

The California Mechanics’ Lien law provides special protection to contractors, subcontractors, laborers, and suppliers who furnish labor or materials to repair, remodel or build your home.

If any of these people are not paid for the services or materials they have provided, your home may be subject to a mechanics’ lien and eventual sale in a legal proceeding to enforce the lien. This result can occur even where full payment for the work of improvement has been made by the homeowner.

In a Nutshell

The mechanics’ lien is a right that California gives to workers and suppliers to record a lien to ensure payment. This lien may be recorded where the property owner has paid the contractor in full and the contractor then fails to pay the subcontractors, suppliers, or laborers. Thus, in the worst case, a homeowner may actually end up paying twice for the same work.

Is That Fair?

Why, you may ask, can a homeowner be placed in the impossible situation of having to pay twice for the same work? The answer lies in the Constitution and laws of California. The overriding theory behind the mechanics’ lien law is that between two potentially blameless parties, the homeowner who has ordered the work and made full payment of the agreed amount and obtained the value of the work is in a better position to bear the loss than the laborer or supplier who has provided work or materials to the job site and has not been paid for his efforts by the contractor. It is the homeowner who bears the ultimate responsibility for making payment for services rendered.

How Can That Be Justified?

Worker1The theory is that the value of the property upon which the labor or materials have been bestowed has been increased by virtue of these efforts and the homeowner who has reaped this benefit is required in return to act as the ultimate guarantor of full payment to the persons responsible for this increase in value. In practice, a homeowner faced with a valid mechanics’ lien may be compelled to pay the lien claimant and then pursue conventional legal remedies against the contractor or subcontractor who initially failed to pay the lien claimant but who himself was paid by the homeowner. Another justification for this result relates to the relative financial strengths of the parties to a work of improvement. The law views the property owner as being in a better situation to absorb the financial setback occasioned by having to pay the amount of a valid mechanics’ lien, as opposed to a laborer or materialman who is viewed as being less able to absorb the financial burdens occasioned by not being paid for services or materials provided in connection with a work of improvement.

How Do I Protect Myself?

Contract PaidThe best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and/or require completion and payment bonding of the construction work. The issuance of checks payable jointly to the contractor, material-men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics’ lien releases can also be helpful.

Now, What Do I Do?

Even if a mechanics’ lien is recorded against your property you may be able to resolve the problem without further payment to the lien claimant. This possibility exists where the proper procedure for establishing the lien was not followed. While it is true that mechanics’ liens may be recorded by persons who have provided labor, services, or materials to a job site, each is required to strictly adhere to a well-established procedure in order to create a valid mechanics’ lien.

Maybe All Is Not Lost

Needless to say, this is one area of the law that is very complex, thus it may be worthwhile to consult an attorney if you become aware that a mechanics’ lien has been recorded against your property. In the event you discover that a lien has been recorded but no effort has been made to enforce the lien, a title company may decide to ignore the lien. However, be prepared to be presented with a positive plan to eliminate the title problems created by this type of lien. This may be accomplished by means of a recorded mechanics’ lien release from the person who created the lien or other measures acceptable to the title company.

A Word to the Wise

Contr with subsAs in all areas of the real estate field, the best advice is to investigate the quality, integrity, and business reputation of the firm with which you are dealing. Once you are satisfied you are dealing with a reputable company and before you begin your construction project, discuss your concerns about possible mechanics’ lien problems and work out, in advance, a method of ensuring that they will not occur

Understanding Props 60 & 90 – Senior Citizen’s Replacement Dwelling Benefit

Propositions 60 and 90

These constitutional tax initiatives allow senior citizens to transfer the trended base value from their current home to a replacement property if certain requirements are met. This may result in substantial tax savings.

Who Qualifies?

If you or your spouse that resides with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property.

This is a one-time only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original
home and the new home must be your principal place of residence. A claim must be
filed within three years of purchasing or completing new construction of the replacement property. If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed.

Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again.

Eligibility Requirements:

  1. The replacement property must be your principal residence and must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
  2. The replacement property must be of equal or lesser “current market value” than the original property. The “equal or lesser” test is applied to the entire replacement residence, even if the owner of the original property acquires only a partial interest in the replacement residence. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 60 base-year transfer to a replacement residence of greater value than the more valuable of the two original residences.
  3. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
  4. Your original property must have been eligible for the Homeowners’ or Disabled Veterans’ Exemption.
  5. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.

Frequently asked questions

What is the difference between Proposition 60 and Proposition 90?

Proposition 60 relates to transfers within the same county (intra-county). Proposition 90 relates to transfers of base value from one county to another county in California (inter-county).

If I qualify for Proposition 60/90 benefits, do I still need to file for a Homeowner’s Exemption on the replacement property?

Yes. Homeowners’ Exemptions are not granted automatically.

What is the Proposition 60/90 filing deadline?

A claim must be filed within three years of purchasing or completing new construction of the replacement property.

If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed.

My original home is located outside Los Angeles County, but my replacement home is in Los Angeles County. Do I qualify for relief?


I plan to relocate from Los Angeles County to another county. Do I qualify for relief?

You may qualify for relief. Other counties in California have passed ordinances enabling Proposition 90. We recommend that you contact the county to which you wish to move regarding Proposition 90 eligibility.

Do all replacement homes qualify?

If you meet all other eligibility requirements, relief is granted for a single family residence, condominium, unit in planned development, cooperative housing, community apartment, manufactured home subject to local real property tax, and living unit within a larger structure consisting of both residential and non-residential accommodations.

If I make an improvement to my replacement home within two years of purchase, can I get additional tax relief for the new construction?

Yes, as long as the total amount of your purchase and the new construction does not exceed the market value of the original property at the time of the sale.

What does “equal or lesser value” of a replacement property mean?

The meaning of “equal or lesser value” depends on when you purchase the replacement property. In general, equal or lesser value means:

 100% or less of the market value of the original property if a replacement property was purchased or newly constructed before the sale of the original property, or

 105% or less of the market value of the original property if a replacement property was purchased or newly constructed within the first year after the sale of the original property, or

 • 110% or less of the market value of the original property if a replacement property was purchased or newly constructed within the second year after the sale of the original property.

When making the “equal or lesser value” test, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price.

The Assessor will determine the market value of each property. In some new developments, the indicated sale price does not include upgrades paid for outside of escrow. The Assessor must consider the value of these upgrades when determining the market value of the property. If the market value of your replacement dwelling exceeds the “equal or lesser value” test, no relief is available. It is “all or nothing” with no partial benefits granted.

Can I give my original home to my son or daughter and still get Proposition 60/90 benefits when I purchase a replacement property?

No. An original property must be sold and subject to reappraisal at full market value.

If an original property has multiple owners, can Proposition 60/90 tax relief be split?

No. The co-owners must determine between themselves which one will get the benefit. Only one original owner can claim Proposition 60/90 tax relief.

How does the “equal or lesser value” test apply if my original property is a multi-unit dwelling?

The “equal or lesser value” test applies to the original single unit that the homeowner calls their principal residence. The market value of the replacement property has to be of “equal or lesser value” to the market value of the original single unit. An example would be one unit of a duplex.