Another year, another set of new or revised laws. There are hundreds of new or revised laws this year for California, several of which impact the real estate community. This is the second in our series of three articles highlighting what we consider to be the most significant such laws.
These new laws cover a wide range of topics of interest, including disclosure requirements, licensing matters, adjoining owners, landlord-tenant, subdivisions, land use, employment, and many more.
Part 2 of this series will cover laws impacting homeowners associations and title and escrow issues.
Condominium Manager Exempt from Contractor’s Licensing Law
Effective January 1, 2014, the law states that a common interest development manager performing management services is not required to have a contractor’s license. Conversely, the term “contractor” or “consultant” does not include a common interest development manager. A “common interest development manager” is generally defined as someone who, for compensation or in expectation of compensation, provides or contracts to provide management or financial services (or represents himself or herself as providing management or financial services) to a condominium complex or other common interest development.
Real estate agents who are property managers performing activities for which a real estate license is required are already exempt from the contractor’s licensing requirements under existing law (however, this exemption has limitations, which will be the subject of a future article). Senate Bill 822.
HOA Contract for Traffic and Parking Enforcement
As part of a pilot program, the Orange County Board of Supervisors or the city council of a city in Orange County is authorized to contract to provide supplemental law enforcement services to a homeowners’ association (HOA) as specified. The services to be provided will generally be to enforce, on an occasional or ongoing basis, provisions of the Vehicle Code on the HOA’s privately owned and maintained roads. Such services will generally be rendered by regularly appointed full-time peace officers. This law expires on January 1, 2017. Senate Bill 298 (codified as Cal. Gov’t Code § 53069.81) We assume that at that time, the legislature will consider whether to expand the program state-wide.
Enactment of Commercial and Industrial Common Interest Development Act
The Commercial and Industrial Common Interest Development Act has been enacted, starting January 1, 2014, to provide for the creation and regulation of commercial and industrial common interest developments. Until now, commercial and industrial common interest developments (CIDs) have been governed by the Davis-Stirling Common Interest Development Act, just like residential condominiums and planned developments. Many provisions of the new law are patterned after provisions in the Davis-Stirling Common Interest Development Act for residential properties, including association governance, operating rules, and property use and maintenance. However, various provisions of the Davis-Stirling Act are not part of the Commercial and Industrial Common Interest Development Act, including, among other things, sales disclosure requirements, board and member meetings, accounting, and dispute resolution. Senate Bill 752.
Revised Billing Statement for HOA Documents and Other Changes
Commencing on January 1, 2014, existing law requiring a homeowners’ association (HOA) to use a statutory form for billing charges for HOA sales disclosures has been revised. The new law requires the form to be in at least 10-point type and include an itemization for “Rental Restrictions, if any.” Furthermore, existing law stating that, when an inconsistency exists, governing documents prevail over articles of incorporation, which in turn prevail over bylaws, and in turn prevail over operating rules, has been revised to apply when a conflict, not inconsistency, exists. Additionally, existing law requiring delivery of documents to an HOA by email, fax, other electronic means, or personal delivery if the HOA consents to any of those methods, has been extended to allow delivery by first-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service center, regardless of HOA consent. Senate Bill 745.
TITLE & ESCROW ISSUES
30 Day Notice of Tax Sale to Tax Assessor
Existing law requiring a tax collector conducting a sale to notify the tax assessor about the sale and provide other information within 10 days after the sale has been extended to 30 days after the sale. As background, if an owner defaults on the payment of property taxes, existing law authorizes a county tax collector to sell residential property 5 years after default or sell commercial property 3 years after default (Cal. Rev. & Tax. Code § 3691). Senate Bill 825 (codified as Cal. Rev. & Tax. Code § 3716)
Title Companies Protected for Good Faith Filing of Notice of Default or Sale
Except when acting as a trustee, a title insurance company is not liable for violating certain laws prohibiting the filing of a notice of default or notice of sale if the title company, while acting in good faith and in the normal course of business, records or causes to be recorded a notice of default or notice of sale at the request of the trustee, substituted trustee, or beneficiary. This protection applies to the following laws: (1) prohibition against the filing of a notice of default until 30 days after the lender contacts a borrower to explore options of avoiding foreclosure; (2) prohibition against the filing of a notice of default or sale if a short sale is approved by all parties as specified; (3) prohibition against the filing of a notice of default or sale if the borrower has submitted a complete loan modification application as specified; and (4) injunctive relief for certain violations. Senate Bill 310.
Regulation of Escrow Agent Rating Services
A new law regulates escrow agent rating services in a similar manner as some of the requirements for consumer credit report agencies. An “escrow agent rating service” is a person or entity that prepares a report, for compensation or expectation of compensation, for use by a creditor in evaluating the capacity of an escrow agent to perform escrow services in connection with an extension of credit. Escrow agents protected by this law include broker-owned escrows, as well as escrow and title companies, among others. Under the new law, an escrow agent rating service must generally comply with the following requirements: (1) allow an escrow agent to visually inspect files maintained regarding that escrow; (2) disclose to an escrow agent the right to obtain a decoded written version of the file; (3) disclose the recipients of any report as specified; (4) provide a report only upon written instructions of the escrow agent; (5) exclude certain information, such as bankruptcies over 10 years old, judgments over 7 years old, and other information; (6) investigate and record disputed information as specified; (7) maintain procedures to ensure that public records likely to have an adverse effect are current and complete; (8) comply with certain procedures if engaged in reselling the report; and (9) establish procedures to safeguard personally identifiable information from theft or misuse. This law expires on January 1, 2017.
The last article in this series will highlight new law relating to employment issues, land use, and property taxes.
If you or a friend is seeking real estate legal counsel regarding a California based property, don’t hesitate to contact our law firm at (650) 327-2900 or to learn more about our firm and read attorney bios, visit us on the web at www.BrewerFirm.com.