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Summary of new California Real Estate Laws for 2012

Construction & Contractor Disputes and Real Estate Law

The new year brings with it new laws and some of these may affect you and/or your clients. The following are effective January 1, 2012.


Transfer Disclosure Statement (TDS) Disclosure of Water-Conserving Plumbing Fixtures A seller must now disclose whether the property has water-conserving plumbing fixtures such as low-flow toilets, shower heads, and faucets. (Existing law already requires that by January 1, 2017 a single family residence built on or before January 1, 1994 must be equipped with water-conserving plumbing fixtures.) If, however, a single-family residence is re-modeled on or after January 1, 2014, the water-conserving plumbing fixtures will be a condition of final permit approval. (California Civil Code § 1102.6)

The change is minimal in that it is merely an extra box to check on the TDS form. However, for sales of homes after 2017 with much deferred maintenance that would normally be marketed and sold as “fixer-uppers” or “tear-downs,” the seller requirements would be more burdensome.

HOA Disclosures: Right to Rent Condo
Buying into a townhouse or condominium? Now, a unit owner in a common interest development is exempt from any prohibition in a governing document (ie CC&Rs) against renting or leasing the unit, unless that prohibition was in effect before the owner bought the unit. An owner’s right to rent under this law survives certain transfers of title such as probate, spousal transfer, parent-to-child transfers, adding a joint tenant, and other transfers exempt from property tax reassessments. (Transfers that do not typically qualify for an exemption from property tax reassessments are sibling transfers and grandparent to grandchild transfers.)

For a purchase or sales transaction, an HOA must disclose any prohibition in the governing documents against renting or lease. For rental transactions, a unit owner must give the HOA verification of the owner’s purchase date, and the name and contact information of the prospective tenant. This law is not retroactive and does not apply to rental prohibitions in effect before 2012. (Cal. Civil Code § 1360.2)


For Appraisers, Lenders & Appraisal Management Companies – Proper Valuation of Property It is already federal law that appraisers can have civil and criminal liability for misrepresenting property values as part of a federally related loan transaction (FIRREA). Now, it will be statutory that a DRE licensee cannot knowingly or intentionally misrepresent the value of real property. A licensee who provides an opinion of value for residential property that is used as the basis for originating a mortgage loan cannot have any direct or indirect interest in the property or transaction as defined under Regulation Z (at 12 C.F.R. § 226.42(d)). A licensee or other interested party is prohibited from using coercion, extortion, bribery, intimidation, compensation, or instruction to improperly influence a person preparing an appraisal or valuation for a real estate transaction. (codified as Cal. B&P Code § 10177.3). This last provision is really to address appraisal management companies. This statute is a little duplicative in that there were already remedies under the law for aggrieved lenders (fraud, breach of fiduciary duty, intentional misrepresentation, duress) but obviously in the current economic climate, legislators felt the need for a belt and suspenders approach. (Cal. B&P Code § 10177.3)


And later in the year, effective April 1, 2012:
For Loan Servicers and Lenders – Disclosing Foreclosure Postponements A notice of trustee’s sale for a non-judicial foreclosure of one-to-four residential units must contain specified notices to the owner on how to seek postponement of the trustee’s sale, and to potential bidders on the risks involved in bidding at trustee auctions. A lender or authorized agent must make a good faith effort to provide up-to-date information about sales dates and postponements to persons who want this information. A lender must also provide updated information through the Internet, a telephone recording, or any other means that allows free access at any time. (codified as Cal. Civil Code § 2924f).

Stay tuned on our blog for more real estate and lending law updates as new legislation continues to go into effect this year, such as the new escrow regulations effective July 1, 2012.

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