Watchout Landlords & Property Managers: Legal Updates for 2013

(Legal update information from Christopher Hanson, Real Estate Broker/Attorney, Hanson Law Firm, SAR Legal forum 1/9/2013)

New Real Estate Laws take effect January 1, 2013 and July 1, 2013

The Legislature has been active again in the real estate area, Several of these new laws will impact landlord-tenant matters, whether self-managed or professional property managers, We will look at them In the order in which they would be encountered in the normal landlord-tenant transaction.

Senate Bill 1191 provides that a landlord that has an outstanding Notice of Default (NOD) on the property must notify a prospective tenant of the NOD prior to entering into a lease for a property subject to the Notice. The required language of the disclosure notice to the tenant is spelled out in California Civil Code Section 2924.85(d). If the landlord fails to give the required notice in violation of this requirement the tenant may elect to terminate the lease and recover from the landlord all prepaid rent plus one month’s rent or twice the actual damages, whichever is greater. Or the tenant may elect to remain in the property and deduct one month’s rent from future rental obligations prior to the foreclosure sale. Property Managers (PM) are exempt unless the landlord has instructed them to provide notice to the tenant. If the landlord instructs the PM and the PM fails to deliver the notice the PM becomes liable for the above damages. This requirement becomes effective 1/1/2013 and shall remain In effect until 1/1/2018.

Assembly Bill 2610 modifies existing state law which was to expire 1/1/2013. Existing law requires a tenant of a property posted with a Notice of Sale (NOS) to be given a notice that the new owner after the foreclosure sale date may enter into a new lease or rental agreement or must be given a minimum 60 day notice to terminate. Effective 3/13/2013, the new owner is required to give a tenant in a foreclosed property a minimum 90 day notice after the sale to terminate. The effective date of the new law may need to be extended as it cannot be earlier than 60 days after the California Department of Consumer Affairs posts the notice requirements on their website. The 90 day notice requirement is consistent with the existing federal law which is scheduled to expire 12 /31/2014. This new law shall remain in effect until 12/31/2019.

Assembly Bill 2510 modifies existing law regarding notice to prior tenants about personal property left on the premises. Existing law specifies the notice provided allowed expedited disposal by providing a notice that in part provides “Because this property is believed to be worth less than $300 it may be kept, sold, or destroyed without further notice if you fail to reclaim it within the time indicated above.” The new law increases the value of the property subject to summary disposal to property worth less than $700. The new law allows the notice to also be delivered by email if the tenant has provided their email address. This new law becomes effective 1/1/2013.

More New Laws for 2013

Now we will look at the remaining new CA laws related to real estate.

Assembly Bill 1599 requires that, for any Notice of Default or Notice of Sale recorded after April 1, 2013 against a one-to-four unit residential property, the borrower must receive a separate notice attached to the NOD or NOS providing a summary of the provisions of the NOD or NOS. The summary must be in English and five additional languages. If the summary notice is not published by the Department of Corporations prior to January 1, 2013 then the effective date shall not be operative until 90 days after the form is released by DOC.

Senate Bill 978 establishes new requirements for brokers engaged in the sale of notes secured by real property effective January 1, 2013. These requirements include loan-to-value and appraisal requirements contained elsewhere In the law. They also require the four year retention of statements related to the purchaser’s qualifications of income or net worth. The broker must also make reasonable efforts to determine the note is a suitable investment for the purchaser.

Assembly Bill 2150 establishes new requirements for notices to be given to personal property mobile home owners effective January 1, 2013. The notice must advise of the mobile home owner’s right to a 90 day notice of rent increase, the right to just cause termination, the right to sell the home in place, the right not to sell to the park, the right not to pay any transfer or selling fee, the right to use a broker of the owner’s choosing and the right not to waive any rights on a rental or sales agreement.

Assembly Bill 2570 becomes effective January 1, 2013 and provides that a licensee registered with the Department of Consumer Affairs cannot include” or permit the inclusion of any provision in a civil settlement agreement that would prohibit a party from filing a complaint with the DCA or require the withdrawal of a complaint already filed. It would also prohibit a provision that would preclude the party from cooperating with DCA in any investigation. A licensee violating any of these provisions would be subject to disciplinary action. Real estate licensees shall be regulated by DCA as of July 1, 2013.

Assembly Bill 1838 requires that as of January 1, 2013 the cover sheet itemizing homeowner association documents must be in at least 10 point font. CAR form HOA complies with this requirement. This Bill also prohibits HOAs from charging a cancellation fee if the request for documents is cancelled in writing before the work is performed.

Senate Bill 1964 and Assembly Bill 2386 modifies the California Fair Employment and Housing Act effective January 1, 2013 to require employers to make reasonable accommodations for an employee’s religious grooming or dress. FEHA has also been expanded by declaration to require employers to make reasonable accommodations for breastfeeding.

Senate Bill 1394 modifies smoke detector requirements in buildings for human occupancy. An owner is responsible for maintaining and testing smoke detectors in multi-family units as of January 1, 2013 and in single family residences as of January 1, 2014. As of January 1, 2016 owners will be responsible for installing additional smoke detectors to bring them up to current building standards.

Assembly Bill 805 makes significant revisions to the Davis-Stirling Common Interest Development Act as of January 1, 2014. It is primarily a reorganization of the Act but does add a few new provisions. The most significant is probably the requirement that the HOA release a lien recorded in error within 21 days.

See all 2013 Real Estate Law (as of January 1, 2013) here.

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