BY: SYLVIA J. SIMMONS, ATTORNEY AT LAW
CASEY MCINTOSH, PARALEGAL
This month’s Courtside Newsletter will discuss the recent settlement of the California and Massachusetts class action lawsuits against Uber Technologies, Inc. and how it potentially impacts the classification of workers as either employees or independent contractors.
As an article in the San Francisco Magazine states, “the crux of [the lawsuit] was whether the sharing economy habit of using contractors rather than fully vested employees violates basic labor laws.” The Uber cases have been closely watched as potentially setting a precedent that could affect this “sharing economy” or “gig economy.” In this rapidly growing business model, companies do not hire employees to perform certain key tasks. Instead, the company facilitates interactions between independent contractors and customers through electronic communications (e.g. smart phone applications). On one hand, the independent contractors enjoy flexibility and unlimited income potential by setting their own hours and working for more than one company. However, on the other hand, they are not due any benefits such as overtime or health insurance, guaranteed hours or a minimum wage, and are often faced with the question of who to turn to when their rights are potentially violated.
Terms of the Uber Settlement
The uncertainties of the appeal, as well as the impending trial before a jury in San Francisco where Uber is very popular, encouraged the plaintiff’s attorney to negotiate a settlement and the defendant’s attorney to accept some terms favorable to the drivers. The current question will be whether the Uber company policy changes will satisfy Judge Chen, who in denying Uber’s motion for summary judgment last year, took apart Uber’s claim that it is a technology company simply facilitating smart phone app interactions between riders and independent contractor drivers.
Under the terms of the settlement:
- Drivers are not reclassified to be employees.
- The main case in California and a smaller case in Massachusetts were conditionally settled for $100 million (which includes a contingent $16 million based on Uber’s initial public offering).
- Drivers who drove at least 25,000 miles and opted out of the arbitration agreement will receive $8,000 or more.
- Drivers who worked part-time will receive about $200.
- No settlement figure has been identified for drivers who drove less than 25,000 miles.
- The parties’ lawyers will get $21 million.
- Uber will not provide drivers with benefits under state and federal labor laws.
- Drivers will not be reimbursed for gas.
- Uber will clearly inform riders that tips are not included in Uber’s fares.
- Uber will provide drivers with small signs to post in their vehicles to encourage tips.
- Uber will make significant policy changes, including:
- Uber will not be allowed to delist a driver without longer notice, sufficient cause, and transparency, including an appeals process.
- Uber will institute an “appeals panel” comprised of drivers who believe they were unjustly dismissed.
- Uber will help create and then recognize a Drivers Association to communicate concerns to management, and Uber will meet with the drivers’ councils quarterly.
Approval of Settlement is Required
The Uber settlement (154 pages) is not final until it is accepted by U.S. District Judge Edward M. Chen in San Francisco, and the judge is not required to approve the settlement just because the lawyers are satisfied with it. A hearing on preliminary approval was scheduled for June 2nd, but is currently pending. Judge Chen has ruled favorably for the plaintiffs throughout the litigation. He certified a 15,000-driver class in August and another 160,000-driver class in December by invalidating Uber’s employee arbitration agreements. The ruling on the arbitration agreement was appealed and is set for hearing in June.
Government Agencies and Organizations Not Bound by Settlement
Government agencies and organizations are not bound by the pending Uber lawsuit settlement.
IRS: The Internal Revenue Service could audit Uber and decide the drivers are employees. In the case, Uber would be responsible for all employment taxes that were not withheld from wages, with penalties and interests.
NLRB: The National Labor Relations Board is reported to already be investigating Uber. One commentator wrote that the Uber settlement may help support the classification of the drivers as employees, because Uber alone controls the listing and delisting of drivers, how they are evaluated, and how they are compensated, and the right to set their own hours is compatible with employee status.
Teamsters: The Teamsters are reported to be interested in organizing Uber drivers and may file charges claiming that Uber’s assistance to the new drivers’ councils violated federal labor law, giving the NLRB an opportunity to decide whether the drivers are employees. Employees have a legal right to form unions and negotiate wages, but an association of independent contractors does not enjoy those protections and might even be violating antitrust law.
Settlement Incentive: Administrative proceedings typically lack the incentive to settle, which is present in court proceedings because millions in legal fees must be paid when expensive law firms are involved.
Legal Issues Not Resolved by Uber Settlement
An increasing number of people work in the new flexible labor markets or “gig economy” and have issues similar to the Uber drivers. Those issues include, for example:
- Benefits (usually provided by employers)
- Tracking compensation (usually documented on paycheck stubs)
- Sharing in success of company (usually hard work results in raises, bonuses, promotions, and stock options)
- Communicating with the company (usually company policies and labor laws apply)
Regulating New Working Models
This case and others provide support to the argument that the law is not keeping up with the changes in the economy created by technology. Enforcing current law is like trying to put a square peg into either the round employee hole or the round independent contractor hole – it just doesn’t fit!
The underlying motivation for enforcing these labor laws is allegedly to protect the worker from being unfairly treated and to ensure that workers receive benefits (overtime pay and medical coverage, paid time off, protected leave, etc.). The trend is to impose this responsibility on the employer even when the employer does not exercise control over the worker’s actual work. However, in reality the enforcement of labor laws is also driven by the desire of the government (local, state and federal) to have control and protect its entitlement to funding – when workers are employees on payroll, taxes are withheld and paid to the government.
Impact on the Real Estate Broker-Agent Relationship
According to the National Association of REALTORS® (“NAR”), “the hallmark characteristic of an independent contractor relationship is one where the worker is generally free of control.” However, there seems to be a trend away from the old classification tests (employee or independent contractor) and toward expanding responsibility beyond the employer that controls the work.
No court has yet decided whether Uber drivers are employees or independent contractors – that question will continue to be debated and litigated, or possibly be the subject of rulings by the National Labor Relations Board or the California Labor Commissioner, or state or federal legislation. The Courts in the Uber cases have suggested that the legislature intervene to “enact rules particular to the new so-called ‘sharing economy’” and to create “a new category of worker altogether, requiring a different set of protections.”
Under the “follow the money” model, it seems likely that we will continue to see a chipping away of the protections from liability provided to real estate brokers based on the classification of licensed agents as independent contractors. Many issues remain to be resolved!
BY: KELLY A. NEAVEL, ATTORNEY AT LAW
CASEY MCINTOSH, PARALEGAL
The California Association of REALTORS® (C.A.R.) will release two (2) new and nine (9) revised forms during the week of June 27, 2016. In this month’s Courtside Newsletter, we will explore the new forms, their significance, and the revisions to existing forms.
1. Seller Agricultural Land Supplementary Questionnaire (SALSQ) This new form serves to supplement the Seller Property Questionnaire with a focus on agricultural land. Section II explains in no uncertain terms that the contents of the form consist of representations made by the Broker: “Unless otherwise specified in writing, Broker and any real estate licensee or other person working with or through Broker have not verified information provided by Seller. A real estate broker is qualified to advise on real estate transactions. If Seller or Buyer desire legal advice, they should consult an attorney.”
The form also allows for “Seller Awareness” (Section V), allotting “Explanation” spaces after each section. The seller is also encouraged to attach any documentation regarding the disclosures, “regardless of when such documentation was originated” (Section VI). The form includes disclosures regarding the following and has a space for buyer acknowledgment at the end:
- “Geological Condition and Environmental Hazards;”
- “Governmental” disclosures,
- “Water-Related Issues;”
- “Utilities and Services;”
- “Landscaping, Agriculture, Structures or Other Improvements;”
- “Title, Ownership, and Other Legal Claims;” and
- “Disaster Relief, Insurance or Civil Settlement.”
2. Wire Fraud Advisory (WFA) After seeing an increase in wire transfer fraud targeting the real estate industry, C.A.R. has included a Wire Fraud Advisory form in its repertoire of forms to provide buyers and sellers. Per C.A.R., the WFA is “an advisory…regarding the need to exercise extreme caution when using wire transfers of funds and also some practical suggestions for safeguarding their transactions and private information.” Among the precautions suggested is the advice to:
- Obtain the phone numbers of the escrow company and bank officers early on in the transaction;
- Always call the escrow company or bank to confirm escrow instructions; and,
- Never rely on a telephone number provided in the wiring instructions.
C.A.R. recommends making the WFA a part of the listing package provided to buyers and sellers. This sort of fraud can allow criminals access to buyer’s and seller’s email accounts, personal information, and bank routing numbers, enabling them to redirect funds into the criminals’ accounts. It should not be taken lightly.
3. Agricultural Addendum (AGAD) Paragraph 1E of the Agricultural Addendum has been updated to reference the Seller Agricultural Land Supplementary Questionnaire (SALSQ). The form now indicates that the seller will complete and provide the buyer with Form SALSQ “in addition to any Seller property questionnaire that may be required by the [Purchase] Agreement.” This revised language removes any reference to the Vacant Land Questionnaire to avoid duplication. Paragraph 2 of the form has also been updated to encourage the buyer to “investigate” matters that may affect the buyer’s decision to purchase property, such as zoning and land use (Paragraph 2B), environmental hazards (Paragraph 2D), neighborhood, area and property conditions (Paragraph 2H), or owner associations in Common Interest Subdivisions (Paragraph 2I).
4. Contingency for Sale of Buyer’s Property (COP) Paragraphs 7A and 7B of the COP have been added regarding Time Periods and Buyers Deposits, respectively. Specifically, Paragraph 7A “Time Periods” states:
Time periods in the Agreement for inspections, contingencies, covenants, and other obligations shall begin as specified in the Agreement, or □ on the Day After Buyer Delivers to Seller any of the following: (i) Escrow Evidence for Buyer’s Property, or (ii) Buyer’s election in writing, signed by Buyer, to begin time periods, or (iii) Buyer’s removal of this contingency for the sale of Buyer’s Property.
Paragraph 7B “Buyer’s Deposit” includes similar language, stating:
Buyer’s deposit shall be delivered to escrow within the lime specified in the Agreement or □ within 3 business Days After Buyer Delivers to Seller any of the following: (i) Escrow Evidence for Buyer’s Property, or (ii) Buyer’s election in writing, signed by Buyer, to begin time periods, or (iii) Buyer’s removal of this contingency for the sale of Buyer’s Property.
Language has also been added regarding the seller’s right to cancel (Paragraph 5) after giving the buyer a Notice to Buyer to Perform. Lastly, below the signatures, a section entitled “Notice to Remove Contingencies” has been added, allowing the seller to give the buyer notice that contingencies are being removed and the actions specified in Paragraph 8A (“Immediate Right to Notify Buyer to Remove Sale of Properly Contingency”) are being taken.
5. Lease/Rental Mold and Ventilation Addendum (LRM) The signature lines have been changed to include two for tenants and two for landlords.
6. Representative Capacity Signature Disclosure (For Buyer Representatives (RCSD-B)
7. Representative Capacity Signature Disclosure (For Seller Representatives (RCSD-S)
Per C.A.R., the Representative Capacity Signature Disclosures for both buyer and seller have been reformatted to “make the form easier to understand where the entity names should be inserted, where signatures should occur, and who or what should be identified for each.” Language has been added to indicate that the purpose of the form is “to identify who the principal is in the transaction and who has authority to sign documents on behalf of the principal.” If the buyer is a trust, the trustee and co-trustees will be identified as the buyer, and the full name of the trust will be included on the form. If the signatory is a power of attorney, the principal will be listed as the buyer. It is important to remind clients that this form does not create a Power of Attorney. A Power of Attorney must have been created prior to signing the form.
8. Seller’s Purchase of Replacement Property (SPRP) This form has been updated so that the default time for buyer’s performance of covenants, contingencies and other obligations is delayed until after the seller removes the contingencies. Paragraph 2B has also been added regarding “Buyer’s Deposit,” indicating that “Buyer’s deposit shall be delivered to escrow within 3 business Days After Seller delivers to Buyer a written notice removing the Finding replacement Property Contingency as specified in paragraph 1 A or □ as specified in the [Purchase] Agreement.” The form also reflects the potential for two contingencies: “One for seller entering into contract to acquire another property and another for seller closing escrow on another property.”
9. Contingency Removal (CR) Section II of the Contingency Removal has been updated to reflect the above-referenced changes in the Seller’s Purchase of Replacement Property (SPRP), specifically the two potential contingencies.
10. Notice to Seller to Perform (NSP) The format of this form has been changed to identify the two potential contingencies of finding a replacement property and closing escrow on a replacement property. Doing so allows the form to stay consistent with the changes in the Seller’s Purchase of Replacement Property (SPRP).
11. Text Overflow Addendum (TOA) The TOA has been updated to clarify the property and the form that it is referring to. For example, it now says, “The foregoing terms and conditions are hereby incorporated in and made a part of the paragraph(s) referred to in the document to which this TOA is attached.”
Thank you to everyone that participated in this year’s election for the 2017 SRCAR® Board of Directors. We are pleased to announce this year’s election winners are:
Several weeks ago, our Team attended the California Association of REALTORS® (C.A.R.) Spring Business Meetings in Sacramento. This month’s Courtside Newsletter will discuss some of the news and information picked up in the Member Legal Services portion of those meetings.
C.A.R. has revised several Legal Q&As, available for review on their website, including:
- “Team Names” (revised 2/16/2016) – Discusses the definition and use of team names as per the California Bureau of Real Estate (CalBRE) and Business & Professions Code requirements.
- “Advertising Your Services: Required Name and License Information” (revised 2/29/2016) – Regarding the California laws and regulations, and the C.A.R. Code of Ethics sections that govern how a REALTOR® may advertise his professional services.
- “Revocable Transfer on Death Deed & Reprint of the Statutory FAQs” (revised 1/22/2016) – Enacted on January 1st, Assembly Bill 139 allows for the creation of a revocable transfer on death (TOD) deed to allow a homeowner to pass property to a beneficiary without a probate, trust, or joint tenancy. C.A.R.’s Q&A explains the purpose and requirements of the TOD deed.
- “Liquidated Damages and Deposit Disputes” (revised 4/7/2016) – Discusses the liquidated damages clause standard in C.A.R. purchase agreements and the effects of the clause when a buyer breaches the purchase agreement.
- “Use of An ‘As Is’ Clause” (revised 3/18/2016) – Clarifies the “as is” clause in C.A.R. purchase agreements and outlines its limitations and significance.
- “Counter Offer Forms (C.A.R. Forms SCO, BCO and SMCO)” (revised 3/15/2016) – Outlines the more important aspects of the C.A.R. counter offer forms, also known as the Seller Counter Offer (SCO), Buyer Counter Offer (BCO) and the Seller Multiple Counter Offer (SMCO). Specifically, it clarifies what must be done in a situation with multiple counter offers and/or back-and-forth between buyer and seller, and when a binding agreement is created.
- “Contingencies and Contingency Removal” (revised 3/14/2016) – Discusses the more common contingencies found in real estate sales transactions, their appearance in the C.A.R. form Residential Purchase Contract (RPA-CA), and how to remove contingencies under the C.A.R. contracts.
New Legal Developments
- Impact of TRID on Disclosure of Commissions: The buyer should know how much their real estate agent is going to receive in commissions 7-10 days before the transaction closes. Further, there is now a mandatory field to disclose the commissions of both sides.
- Fast-Tracked Real Estate License Application for Military Veterans: As a result of Senate Bill 122, effective July 1, 2016, the California Bureau of Real Estate (CalBRE) will expedite licensure process for an applicant who has served as an active duty member of the Armed Forces of the United States and was honorably discharged.
- Rights of Pregnant Employees: Effective April 1, 2016, California employers must provide employees with a new poster describing the rights and obligations of pregnant employees. Pregnant employees must be provided with pregnancy disability leave (PDL) of up to four months and employers must return them to the same job, or a comparable job in certain circumstances, when they are no longer disabled by pregnancy. The poster also offers further clarification of PDL, including the fact that it is not for an automatic period of time and that it is ultimately determined by a health care provider.
- A copy of the poster must be provided to the employee when the employer finds out the employee is pregnant.
o Additional rights and requirements are applicable under the California Family Rights Act and/or the federal Family and Medical Leave Act.
- If more than 10% of the employees speak a different language, the employer must have policy translated into every language that is spoken by at least 10% of the workforce.
- A copy of the poster must be provided to the employee when the employer finds out the employee is pregnant.
Property Management Hot Issues – Presented by Sanjay Wagle, Legislative Advocate
- Support Animals: Current law requires landlords to allow service animals on their property, so that handicapped individuals may be afforded the equal opportunity to use and enjoy a dwelling. A “service animal” is defined in the Americans with Disabilities Act as “a dog that has been individually trained to do work or perform tasks for an individual with a disability.” Recently, controversy has arisen regarding a landlord’s allowance of support animals on a property. Support animals are any animal that provides emotional support, therapy, comfort, or companionship. Since they have not been trained to perform a specific job or task, they are not considered service animals.
As a result of the ongoing argument over the necessity of support animals, Assembly Bill 2760 has been introduced to “provide that a tenant or prospective tenant shall not be prohibited from possessing a support animal on the rented premises or associated common areas if the tenant or prospective tenant satisfies specified conditions.” Amongst those conditions would be:
- notification to the landlord;
- the animal must be housebroken;
- the animal does not disturb the quiet enjoyment of other tenants, or pose a threat to them;
- the animal does not jeopardize the availability or price of insurance.
- Furthermore, the Bill would finally define “support animal” as “a support dog, companion animal, emotional support animal, or assistive animal that is prescribed by a California licensed physician or licensed mental health professional in order to treat a mental or emotional illness or mental or emotional disability. A support animal does not include a service animal.”
- Bed Bugs: Under the recently introduced Assembly Bill 551, California legislature attempts to evoke cooperation amongst landlords, tenants, and pest control operators to address the unique challenge of controlling bed bug infestations. Specifically,
- Beginning July 1, 2016, landlords will be required to provide written notice to prospective tenants regarding “Information about Bed Bugs.”
- The notice, outlined in Civil Code Section 1954.12, will also be provided to existing tenants by January 1, 2017.
- Landlords cannot rent or lease, or offer to rent or lease, any dwelling they know or should know has bed bugs.
- Such a dwelling is considered untenantable.
- Tenants cannot bring furnishing onto the property that they know, or reasonably should know, has bed bugs.
- Tenants must inform the landlord within seven (7) calendar days of finding or suspecting bed bugs.
- Within five (5) days of being informed, the landlord must retain the services of a pest control operator.
- If there are bed bugs, the landlord must inform other tenants of units identified for treatment, in writing, within two (2) business days. If common areas are infested, all other tenants will be notified.
- If an infestation is confirm, the landlord must prepare and implement a bed bug treatment program within 10 calendar days after the infestation confirmation.
- Tenants will be provided with a cover sheet from the landlord disclosing the date/time of the treatment, length of time of the treatment, and what the tenant must do to prepare, as outlined on a checklist.
- Entry into units must comply with Civil Code § 1954.
- Within 30 calendar days after an infestation, landlords will create a written bed bug management plan for the property, which will be made available for tenants.
- Beginning July 1, 2016, landlords will be required to provide written notice to prospective tenants regarding “Information about Bed Bugs.”
- Fair Housing Act – Criminal Records and Tenant Selection: On April 4th, the Department of Housing and Urban Development (HUD) issued the “Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records.” This paper brings to light how a landlord may be violation the Fair Housing Act (FHA) by implementing a blanket ban on potential renters with arrest records. The FHA prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status or national origin. While having a criminal record is not a protected characteristic under the FHA, a blanket ban on potential renters with arrest records could have a disparate impact on racial groups. Per the Guidance, “African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population…” and “criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers.” According to HUD Secretary Julián Castro, “Many people who are coming back to neighborhoods are only looking for a fair chance to be productive members, but blanket policies like this unfairly deny them that chance.”
HUD’s guidance comes after last year’s Supreme Court decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., et al., in which it was determined that disparate impact is cognizable under the FHA. The guidance urges landlords and property managers to reevaluate their rental practices to ensure that they are acting within the law. Blanket bans and requirements that cause disparate impact are illegal. When screening applicants with arrest records, housing providers must take into consideration “the nature, severity, and recency of criminal conduct” and ultimately prove that any policy is “necessary to serve a ‘substantial, legitimate, nondiscriminatory interest.’” In other words, not all past criminal conduct is a risk to resident safety, and landlords need to distinguish what and who could be a risk on an applicant-by-applicant basis.
BY: KELLY A. NEAVEL, ATTORNEY AT LAW
CASEY MCINTOSH, PARALEGAL
Our January Courtside Newsletter covered many of the new laws that would affect real estate practitioners in the coming year. However, there were a few more that we felt deserved coverage, as outlined below.
Team Names – Senate Bill 146
With “Team Names” becoming a more complicated feature in the past few years, the California Legislature agreed revisions to the way fictitious business names (FBNs) were being used in real estate were not only appropriate but also an urgent necessity. Senate Bill 146 was backed by both CalBRE and the California Association of REALTORS® (C.A.R) and became effective immediately upon being signed into law on July 16, 2015.
Per SB 146, the California State Legislature clarified that true Team Names are not FBNs for purposes of submitting a certified copy of the fictitious business name statement along with an application to the California Bureau of Real Estate (CalBRE). Codified in Business & Professions Code § 10159.7, “Team name” means: “a professional identity or brand name used by a salesperson, and one or more other real estate licensees, for the provision of real estate licensed services… A team name does not constitute a fictitious business name…if all of the following apply:
a) The name is used by two or more real estate licensees who work together to provide licensed real estate services, or who represent themselves to the public as being a part of a team, group, or association to provide those services.
b) The name includes the surname of at least one of the licensee members of the team, group, or association in conjunction with the term ‘associates,’ ‘group,’ or ‘team.’
c) The name does not include any term or terms, such as ‘real estate broker,’ ‘real estate brokerage,’ ‘broker,’ or ‘brokerage’ or any other term that would lead a member of the public to believe that the team is offering real estate brokerage services, [or] that imply or suggest the existence of a real estate entity independent of a responsible broker.”
It is important to remember that Senate Bill 146 also addresses the advertising and solicitation materials used by the salesperson in marketing with a FBN or a Team Name. When using a FBN, all marketing materials “including business cards, print or electronic media and ‘for sale’ signage, shall include the responsible broker’s identity in a manner equally as prominent as the fictitious business name,” as well as the name and license number of the salesperson who is using the fictitious business name. Furthermore, advertising and solicitation materials cannot contain terms that imply the existence of an entity that is independent of the responsible broker. When using a Team Name, all marketing materials “including business cards, print or electronic media and ‘for sale’ signage, shall include the Team Name, the name and license number of at least one of the licensed members of the team, as well as the responsible broker’s identity.
Trust Fund Withdrawals – Assembly Bill 607
Existing law requires real estate brokers to deposit funds accepted in connection with a transaction to place those funds into a neutral escrow depository, the hands of the broker’s principal, or a trust fund account maintained by the broker. An unlicensed employee of the broker can make a withdrawal from the trust fund, if authorized in writing. More specifically, this unlicensed person must have fidelity bond coverage equal to the maximum amount of the trust funds to which the unlicensed employee has access. Codified in Business & Professions Code § 10145, this bond may have a deductible of up to 5% of the coverage amount, if the employing broker has evidence of financial responsibility. Evidence of financial responsibility includes:
a) Separate fidelity bond coverage adequate to cover the amount of the deductible;
b) A case deposit held in a separate bank account adequate to cover the amount of the deductible and held solely for that purpose; and,
c) “And other evidence of financial responsibility approved by the commissioner.”
This legislation was backed by C.A.R. when REALTORS® reported that bond companies will not sell bond coverage exceeding $100,000 unless the bond contains a deductible, usually of 1-5%. The new law is effective as of January 1, 2016.
Discrimination – Senate Bill 600
Under the Unruh Civil Rights Act, all persons are entitled to full and equal accommodations, advantages, facilities, privileges, or services in all business establishments, including both private and public entities, regardless of their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation. Senate Bill 600, codified in Civil Code § 51, extends these protections to persons regardless of citizenship, primary language and immigration status. However, these protections do not require the provision of services or documents in a language other than English, beyond that which is required by law. This is important for real estate licensees to note, as they are considered “business establishments” under the Unruh Civil Rights Act. Per C.A.R., “the Unruh Act will generally apply to an owner of property offering commercial or residential units for rent, and to the sale of real property where the owner is in the business of selling properties.” This law became effective January 1, 2016.
As always, we encourage you to seek qualified legal counsel should you have any questions or concerns regarding these new laws.
As discussed at the MLS Meeting on Tuesday, February 9, 2016 here are the updated C.A.R. forms for your review:
For additional details, please visit http://www.car.org/legal/standard-forms/new-forms-and-revisions/
BY: JOHN V. GIARDINELLI, ATTORNEY AT LAW
CASEY MCINTOSH, PARALEGAL
California’s Legislature once again boasted of a busy year in 2015, preparing and passing numerous new laws. Many of these laws may have an effect on the practice of real estate. Brokers and agents would do well to keep abreast of them.
Continuing Education Requirements for Brokers – Assembly Bill 345
In mid-July, Governor Brown signed Assembly Bill 345 into law, thus enacting a new requirement for real estate brokers’ continuing education. Current law requires a real estate broker to renew his or her license every four years. Pursuant to Business & Professions Code § 10170.5, within that 4-year period, the broker must complete 45 clock hours of education, now including a 3-hour course in the management of offices and supervision of licensed activities.
The California Association of REALTORS® backed this bill, stating, “Since the California Bureau of Real Estate can hold a manager accountable for failure to supervise, C.A.R. believes it important that a real estate broker understand how to properly manage real estate offices, salespersons, and broker associates, in order to minimize risk for all parties involved.” The new requirement went into effect January 1, 2016. For more information on continuing education requirements, please see our September 2015 Courtside Newsletter, which can be found on our website: www.glawgroupapc.com.
Personal Information – Senate Bill 560
Business & Professions Code § 30 has been amended to include the language that no later than January 1, 2016, the Bureau of Real Estate (CalBRE) will require from licensees either an individual tax payer identification number (TIN) or social security number (SSN), if the licensee is an individual. Upon request from the Franchise Tax Board or Employment Development Department, CalBRE will provide the licensee’s information, including the TIN or SSN.
Additional Recording Fees – Assembly Bill 661
Pursuant to current law, a $10 fee is paid at the time of recording of every real estate instrument, paper, or notice required or permitted by law to be recorded within that county. The fee goes toward the Real Estate Fraud Prosecution Trust Fund, which supports local law enforcement activities to fight real estate fraud crimes. AB 661 was drafted to clarify some ambiguities in the language of exemption from the fee. Codified in Government Code § 27388, the fee does not apply to any real estate instrument, paper, or notice that is:
- Accompanied by a declaration stating that the transfer is subject to a documentary transfer tax;
- Recorded concurrently with a transfer subject to a documentary transfer tax; or,
- Presented for recording within the same business day as, and is related to the recording of, a transfer subject to a documentary transfer tax.
This law is effective as of January 1, 2016.
Fire Prevention Fee –Assembly Bill 301
The State Board of Forestry and Fire Protection has adopted an emergency regulation under Public Resources Code § 4212 to levy an annual fire prevention fee upon each “habitable structure” within a state responsibility area. The owner of the structure as of July 1st of the year the fee is due is responsible for payment of the fee. AB 301 allows the owner of the structure the ability to negotiate payment of the fee as part of the terms of the sale of the structure. However, in addition to this language, Public Resources Code § 4213.1(a)(2) contains the caveat that the liability for payment of the fee still rests upon the owner of the structure as of July 1st. This law went into effect January 1, 2016.
Private Transfer Fees – Assembly Bill 807
Current law defines a “transfer fee” as “any fee payment requirement imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid as a result of transfer of the real property.” It is, effectively, a private tax to be paid upon the sale of a property. Assembly Bill 807, sponsored by the California Association of REALTORS®, “expands Private Transfer Fee (PFT) recordation requirements to include PTFs whose payment does not occur upon a change in ownership or that are not based on sales price.” Furthermore, the disclosure of the PFTs must be in a single document and not incorporated by reference to other documents.
Lawn Appearance – Assembly Bill 1
Many issues and concerns have arisen regarding the appearance of lawns and the limitation for watering said lawns during California’s drought crisis. In an effort at clarity, AB 1 was passed and codified into Government Code § 8627.7, stating that during a state of emergency based on drought conditions, “a city, county, or city and county shall not impose a fine under any ordinance for a failure to water a lawn or for having a brown lawn.” This law went into effect January 1, 2016.
Recycled Water – Assembly Bill 786
As a result of the ongoing state of emergency regarding the drought, the legislature has been concerned with preserving potable water and limiting its use to water outdoor landscaping. To that effect, Civil Code § 4735 includes language stating that an association cannot impose a fine or assessment against a homeowner for reducing or eliminating watering his landscaping or lawns. However, AB 786 has amended CC§4735 to allow an assessment or fine to be imposed against “an owner of a separate interest that…receives recycled water…and fails to use that recycled water for landscaping irrigation.” Due to the emergent nature of the drought, this law went into immediate effect upon being passed by the legislature (October 11, 2015).
Water-Efficient Landscaping – Assembly Bill 349
Passed in conjunction with AB 786 in response to the drought crisis, AB 349 further amends Civil Code § 4735. Governing documents or landscaping policies or guidelines are void and unenforceable if they prohibit the use of artificial turf or synthetic grass. Furthermore, owners of a separate interest who implement water-efficient landscaping measures in response to the state of emergency shall not be required to reverse or remove the water-efficient landscaping measure when the state of emergency is declared to be over. This law was also enacted immediately (September 4, 2015.)
Drought-Tolerant Landscaping – Assembly Bill 1164.
On April 1, 2015, Gov. Brown issued Executive order directing the State Water Resources Control Board to implement mandatory water reduction across the state of California. The goal is to reduce water usage by 25%, and with landscape irrigation representing 43% of urban water use, efforts have been made to replace existing landscaping with drought-tolerant landscaping, including artificial turf or synthetic grass. Whilst laws have been implemented stating a city and/or county may not prohibit the installation of drought-tolerant landscaping, synthetic grass, or artificial turf, AB 1164 has added caveats to that prohibition. Government Code § 53087.7(b) states that a city and/or county may impose reasonable restrictions on the type of drought-tolerant landscaping that may be installed on residential property, provided the restrictions do not:
- Substantially increase the cost of installation;
- Effectively prohibit installation; and/or,
- Significantly impede the installation, such as with the requirement that a yard must be covered with living plant material.
As with the other water-use bills discussed herein, this law went into effect immediately (October 9, 2015).
Clotheslines or Drying Racks – Assembly Bill 1448
Codified in Civil Code §§ 1940.20 and 4750.10, landlords may no longer restrict tenants from using a clothesline or drying rack. Furthermore, any governing document, such as those issued by homeowner associations, may not prohibit or unreasonably restrict the use of clotheslines or drying racks. As defined, a “clothesline” is a cord, rope, or wire from which laundered items may be hung to dry or air. A “drying rack” is considered to be an “apparatus” from which laundered items may be hung to dry or air. A balcony, railing, awning or other part of the structure or building is not considered a drying rack or clothesline. This new law became effective January 1, 2016.