NEW LAWS FOR 2008 AFFECTING REALTORS®

Published: October 19, 2007

With the conclusion of the first half of the 2007-08 legislative session, new laws have been enacted that may affect California's REALTORS®. The following is a summary of significant new laws that may impact real estate practitioners. To view the full text of a legislative bill, go to <a title="outbind://16-000000009CDDEF1B7B0DB14796CE0295DC171082C49B3600/www.leginfo.ca.gov" href="http://blog.srcar.org/www.leginfo.ca.gov">www.leginfo.ca.gov</a>.<br /><br /><strong>New Disclosure for Private Transfer Fees:</strong> Effective January 1, 2008, a seller who must provide a Transfer Disclosure Statement must also provide, at the same time, a disclosure statement of private transfer fees if applicable. A transfer fee is defined as any fee that must be paid upon transfer of real property as imposed by deed, CC&amp;Rs, or other documents, with certain exceptions (such as, but not limited to, transfer fees imposed by probate, trust, court order, or a governmental agency). The new disclosure statement must contain, among other things, a notice that payment is required, the amount of the fee, and the entity to which payment must be made. To comply with this new requirement, C.A.R. will release a new standard-form Notice of Transfer Fees (NTF) in November 2007. (Source: Assembly Bill 980.)<br /><br /><strong>Recording Private Transfer Fees:</strong> Also effective January 1, 2008, any person or entity imposing a private transfer fee must, as a condition of payment of the fee, record the instrument creating the transfer fee and a separate notice of &quot;Payment of Transfer Fee Required.&quot; These two documents must be recorded concurrently in the county recorder's office for which a property is located. The notice of &quot;Payment of Transfer Fee Required&quot; must include the following information:<br />  – Names of the current property owners;<br />  – Assessor's parcel number and legal description;<br />  – Amount of the fee (or percentage of sales price);<br />  – Actual dollar-cost examples of the fee for residential property priced at $250,000, $500,000, and $750,000;<br />  – When the fee expires if applicable;<br />  – Purpose of the funds;<br />  – Name of entity to be paid and that entity's contact information for sending the funds; and<br />  – Signature of that entity's authorized representative.<br />The title of the notice of &quot;Payment of Transfer Fee Required&quot; must be in at least 14-point bold type. For transfer fees imposed before January 1, 2008, the receiver of the fee must, as a condition of payment of any fee after December 31, 2008, record a notice of &quot;Payment of Transfer Fee Required&quot; by December 31, 2008 (or record a substantial equivalent as specified). (Source: Assembly Bill 980.)<br /><br /><strong>Real Estate Appraisers:</strong> Starting October 5, 2007, a licensed appraiser's compensation cannot be dependent upon, or affected by, the value conclusion generated by an appraisal for a real property purchase, sale, transfer, financing, or development. Also starting October 5, 2007, anyone with an interest in a real estate transaction is prohibited from improperly influencing, or attempting to improperly influence, through coercion, extortion, or bribery, the appraisal process for a mortgage loan. An interested party may, however, ask the appraiser to do any of the following:<br />  – Consider additional, appropriate property information;<br />  – Provide substantiation or explanation for the appraiser's value conclusion; or<br />  – Correct errors in the appraisal report.<br />(Source: Senate Bill 223.)<br /><br /><strong>Escrow Cancellation and Postponement Fees:</strong> Beginning January 1, 2008, an escrow company licensed by the California Department of Corporations (DOC) may charge a fee for cancellation or postponement resulting from the acts or omissions of the parties to an escrow transaction. The fee must be in not less than 8-point bold type on the front page of the escrow instructions signed by the principals. A postponement fee can only be charged for a postponement of at least two months after the most recent closing date in the agreed-upon written instructions. This legislative bill also requires an escrow company licensed by the DOC, and any of its directors, stockholders, trustees, officers, agents, or employees, to comply with the federal Real Estate Settlement Procedures Act (RESPA). (Source: Assembly Bill 804.)<br /><br /><strong>Mortgage Lenders and Brokers Regulated:</strong> Commencing January 1, 2008, anyone who makes eight or more loans to the public in a calendar year using that person's own funds must be licensed as a real estate broker. This law applies to loans secured by one-to-four residential units, including condominiums, whether such loans are held or resold. Excluded from the law, however, are loans negotiated through a real estate broker who meets the criteria of Article 7 of the real estate law (Cal. Bus. &amp; Prof. Code section 10232). This legislative bill also requires the Department of Real Estate (DRE) and other agencies to take steps to ensure that licensed mortgage lenders and brokers are aware of certain guidelines on subprime and other nontraditional mortgage product risks. (Source: Senate Bill 385.)<br /><br /><strong>Anti-Discrimination of Tenants' Immigration Status:</strong> Beginning January 1, 2008, a landlord or landlord's agent cannot inquire into the immigration or citizenship status of an existing or prospective tenant or occupant. A landlord may, however, request information or documentation necessary to determine or verify the financial qualifications of a prospective tenant, or to identify a prospective tenant or occupant. This law also prohibits any city or county from requiring a landlord or landlord's agent of residential rental property to inquire into, or take any action based upon, the immigration or citizenship status of an existing or prospective tenant or occupant. (Source: Assembly Bill 976.)<br /><br /><strong>Notice of Agenda for HOA Meeting:</strong> Under existing provisions of the Common Interest Development Open Meeting Act, a homeowner's association (HOA) must not only allow members to attend HOA meetings as specified, but also provide members with at least 4 days notice of the time and place of a meeting. Effective January 1, 2008, such notice must contain the agenda for the upcoming meeting. At the meeting, the board of directors cannot discuss or take action on any item not on the agenda. Exceptions apply as specified for brief statements, exigent circumstances, and continuances from last month's meeting. This law does not prohibit a resident, who is not a member of the board, from speaking at a meeting about issues not on the agenda. (Source: Senate Bill 528.)<br /><br /><strong>Certified Common Interest Development Managers:</strong> Existing law regulating certified common interest development managers was originally scheduled to expire on January 1, 2008, but has now been extended until January 1, 2012. Under this law, holding oneself out as a &quot;certified common interest development manager&quot; (or using a similar term) is an unfair business practice unless that person has satisfied certain requirements. These requirements include 30-hours of coursework in common interest development management, and either passing an aptitude exam or being certified by a professional association for common interest development managers. This law also requires common interest development managers to disclose certain information to the board of directors on an annual basis, such as, but not limited to, whether the manager is certified, is bonded for the current year's operating and reserve funds, and has a real estate license. (Source: Assembly Bill 691.)<br /><br /><strong>Manufactured Homes and Mobilehomes Distinguished:</strong> This new law provides a bright-line distinction between &quot;manufactured homes&quot; and &quot;mobilehomes&quot; to clarify the confusion surrounding these two terms. Starting January 1, 2008, both a manufactured home and mobilehome are generally defined as transportable structures of certain specifications, with or without foundations, but a manufactured home is constructed on or after June 15, 1976, whereas a mobilehome is constructed before June 15, 1976. (Source: Senate Bill 538.)<br /><br /><strong>Notice of Removal of Mobilehome from Park Upon Sale:</strong> Under existing law, when certain old or rundown mobilehomes are sold, the management of the mobilehome park may require the removal of such mobilehomes to upgrade the quality of the park. Beginning January 1, 2008, removal of such mobilehomes is prohibited, unless the park management provides the homeowner with a notice specifying the condition permitting removal. (Source: Assembly Bill 446.)<br /><br /><strong>License Number on Business Cards:</strong> Not going into effect this year is Senate Bill 226 which would have, among other things, authorized the DRE to require that real estate agents display their license numbers on business cards and other consumer first-contact materials. Governor Arnold Schwarzenegger stated he supported this aspect of Senate Bill 226, but vetoed the legislative bill on other grounds.


Last modified: October 19, 2007 at 7:39 am | Originally published: October 19, 2007 at 7:39 am
Printed: September 29, 2020