Home Buyers and Sellers Need to Protect Themselves from Wire Fraud

Home Buyers and Sellers Need to Protect Themselves from Wire Fraud in real estate transactions.

Wire FraudThe legal staff at the California Association of REALTORS® (CAR) has provided a clear advisory (Wire Fraud Advisory, WFA form), which deals with the challenge presented by fraudulent hackers who like to get involved in real estate transactions.

The challenge: Fraudulent hackers like to get involved it legitimate real estate transactions.  They can sometimes gain access to the network of participants in a real estate transaction, which might be through an email account of the parties, escrow, other affiliated services such as title or home warranty.

Example:  Hackers send a fraudulent email and pose as one of the relevant parties (agent, escrow, title, etc) and issue false instructions as to where money is to be wired.  

The new CAR Wire Fraud advisory (WFA form) is one page and should make it easier to bring attention for the parties.  Here are the 5 specific recommendations of CAR form: 

  1. Obtain the phone number of the Escrow Officer at the beginning of the transaction.  
  2. DO NOT EVER WIRE FUNDS PRIOR TO CALLING YOUR ESCROW OFFICER TO CONFIRM WIRE INSTRUCTIONS. ONLY USE A PHONE NUMBER YOU WERE PROVIDED PREVIOUSLY. Do not use any different phone number included in the emailed wire transfer instructions.
  3. Orally confirm the wire transfer instruction is legitimate and confirm the bank routing number, account numbers and other codes before taking steps to transfer funds.
  4. Avoid sending personal information in emails or texts. Provide such information in person or over the telephone directly to the Escrow Officer.
  5. Take steps to secure the system you are using with your email account. These steps include creating strong passwords, using secure WiFi, and not using free services.

real estate transactionsThis advice is basic and should lead to improved security and positive results for those involved California in real estate transactions.

First advice is the best:  Obtain the phone number of the escrow officer at the beginning of the transaction – and then not to switch to another after possible fraudulent hacker persuasion.

Real estate agents should use the Wire Fraud Advisory (WFA form) early in their transactions, which should provide best information and make it clear for buyers and sellers.

It’s also important that California that real estate brokers make sure that the escrow providers they recommend for their clients have a private and secure system (such as platform for encrypting of messages and data) for communicating about procedure for wiring of funds.  

By Harrison K. Long, real estate attorney at Orange County CA – Member of CA State Bar Association #69137.  Real estate broker – CALBRE #01410855.  Source of information is the California Association of Realtors and CA legislative and laws information.  This is for information only and is not the providing of legal services.

real-estate-attorneyFor further information and/or professional legal services consultation, contact Harrison by text at 949-701-2515 – or by email at ExploreProperties@gmail.com.  Thank you.

“Home Buyers and Sellers Need to Protect Themselves from Wire Fraud”

Posted in California laws, California real estate, California real estate laws, Real estate guide, Real estate laws, Real estate representation, Real estate transactions, Residential purchase agreement, Security | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment

New CA Law Requires Hosting Platform for Tourist or Transient Housing Marketplace

New CA real estate law requires a “hosting platform” to warn a tenant that subletting the tenant’s residence may violate his/her lease and could result in eviction.

Legislative Information header image: click to go to the home page

A “hosting platform” is a marketplace that is created to facilitate the rental of a residential unit offered for tourist or transient use for compensation to the offeror of that unit, and the operator of the hosting platform derives revenues, including booking fees or advertising revenues, from providing or maintaining that marketplace.

Airbnb is an example of such a platform.

This law requires a “hosting platform” to provide notice to an occupant listing a residence for short-term rental that states: “If you are a tenant who is listing a room, home, condominium, or apartment, please refer to your rental contract or lease, or contact your landlord, prior to listing the property to determine whether your lease or contract contains restrictions that would limit your ability to list your room, home, condominium, or apartment. Listing your room, home, condominium, or apartment may be a violation of your lease or contract, and could result in legal action against you by your landlord, including possible eviction.”

The notice must be in a particular font size and be provided immediately before the occupant lists each real property on the hosting platform’s Internet Web site in a manner that requires the occupant to interact with the hosting platform’s Internet Web site to affirmatively acknowledge he or she has read the notice.

CA Senate Bill 761. Codified as Business and Professions Code §§22590, 22592 and 22594. Effective date is January 1, 2016.

By Harrison K. Long, real estate attorney at Orange County CA.  Member of CA State Bar Association #69137.  Real estate broker – CALBRE #01410855.  Source of information is California Association of Realtors and CA legislative and laws information.  For further information and consultation, contact us at 949-701-2515.

“New CA Law Requires Hosting Platform for Tourist or Transient Housing Marketplace”

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Property Title Issues Are Important for CA Real Estate Investors

title insuranceProperty title challenges are important for CA real estate investors to consider:

  • Possible errors in public records
  • Unknown liens
  • Illegal deeds
  • Deeds of trust and chain of title
  • Missing heirs
  • Quitclaim deeds vs. grant deeds
  • Possible forgeries
  • Undiscovered encumbrances
  • Easements
  • Boundary line and survey disputes
  • Undiscovered wills
  • False impersonation of prior owner

If you are a California real estate investor, you should learn and understand your rights and responsibilities with legal issues – and your opportunity for success.

  • Avoid title problems
  • Purchase and sale agreements and transactions
  • Foreclosures
  • Deeds of lieu of foreclosure
  • Deed of trust sales
  • Best categories of residential property for investors
  • Landlord/tenant relationships
  • Investor and landlord disclosures
  • Leasing of homes and property
  • Relationships with tenants
  • Unlawful detainer actions
  • Cash for keys agreements
  • CA real estate laws
  • Landlord liability for pets and animals
  • Fair housing laws
  • Investor risk prevention and management
  • Land Use
  • Private property rights
  • Property co-ownership issues
  • Covenants running with the land
  • Litigation and dispute resolution

My legal service experience at Orange County CA includes representation of clients for many years with completion of more than 300 civil cases through jury and court trials and arbitration hearings.

  • Attorney member of the CA State Bar Association #69137
  • CA licensed real estate broker – CALBRE #01410855
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New CA Law Establishes Method for “Transfer on Death Deed”

California real estate law

New CA Law Establishes Method for “Transfer on Death Deed” – to Convey title to Real Property upon Death.

AB 139 was signed into law by the CA governor recently and allows an interest in certain real property to be transferred on death by recording a revocable “Transfer on Death” deed.
This would allow for planned transfer of ownership of that property interest to take place upon the death of the owner. 

People who are interested to use such and estate planning method in CA should work with an experienced attorney and/or estate planning professional before using such a deed.

Click here to see article by Bob Hunt about this new law and TRANSFER ON DEATH DEED

Orange County CA real estate investors need to know about legal issues for their buying, selling and leasing situations.  My legal service experience at Orange County CA includes:

  • Representation of clients for many years with completion of more than 300 civil cases through jury and court trials and arbitration hearings.
  • Attorney member of the CA State Bar Association #69137
  • CA licensed real estate broker – CALBRE #01410855
  • Now serving as risk management issues chairperson for “Transaction and Regulatory committee” at the California Association of Realtors.
  • Helping real estate investors with legal aspects of business and real estate situations

By Harrison K. Long.  This is for information only and is not the providing of legal services.  You should work with an attorney and estate planning professional before using such a Transfer on Death Deed.

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Real Estate Investors Want to Know What’s the Best Investment Category

Real Estate InvestingWhy SINGLE FAMILY HOMES are the best investment type of residential property for investors.

1. Expenses – single family homes usually have lower expenses per unit than multifamily.
2. Vacancy – tenants usually stay longer in single family homes than they do in multifamily, and single family homes also rent more quickly.
3. Tenant interaction – In a single family home, you usually don’t have to worry about tenants getting along.
4. Pride of ownership – Tenants often love that they have a home and will care for it.
5. Sale of the property – Single family home appeals to larger number of of buyers, including investors, and you can usually sell quicker for a solid price.

California real estate lawCONTACT ME ABOUT REAL ESTATE INVESTING AND LEGAL ISSUES:

  • Residential property investing
  • Landlord and tenant relationships
  • Tenant obligations
  • Home and Property Leasing contracts
  • Landlord disclosure obligations
  • Security deposits
  • Unlawful detainer actions
  • CA real estate laws
  • Fair housing laws
  • Purchase and sale transactions
  • Property management issues

money on house

  • As an experienced real estate and business attorney, I have represented clients for many years and completed more than 300 civil cases through trials and arbitrations.
  • Attorney member of the CA State Bar Association #69137
  • CA licensed real estate broker – CALBRE #01410855
  • Risk management issues chairperson, Transaction and Regulatory Committee, California Association of Realtors 2015.

By Harrison K. Long – Source of some information is article at BiggerPockets.com.  This is for information only and is not the providing of legal services.

Contact me for information and representation about your legal risks and opportunities as real estate investors and residential landlords.

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Reverse Mortgages Are Tricky and Become Due When Borrower Dies

reverse mortgageAfter a borrower on a reverse mortgage dies, the heirs need to act quickly to prevent foreclosure.  To keep the home, survivors must pay off the loan.

As seniors turn to reverse mortgages, their children need to know about what will happen to that debt when the parents die.

Nearly all reverse mortgages are home equity conversion mortgagesm – HECMs – that are insured by the Federal Housing Administration.

The adult children should know about HECMs technically become due and payable when the borrower dies.  However, a borrower’s heirs probably will not be able to refinance or sell the home on the day of death to satisfy the debt.

What usually happens is that the loan servicer sends a letter intended to inform the heirs of the rules and determine their intentions for the loan and property.

If the servicer does not get a letter of occupancy back, or if property taxes or insurance aren’t paid, the servicer will start contacting an alternate, searching other records or sending someone out to inspect the property and see if someone is living in the home.

The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage.  But if they want to keep the home, they’ll have to pay off the loan.

When heirs sell, they can usually manage the sale and keep any capital gain after the loan and closing costs have been paid.

If the borrower was married, the surviving spouse might be able to remain in the home even if he or she wasn’t a co-borrower.  A borrower needs to be careful when removing a younger spouse from their home’s title to secure a larger reverse mortgage.  That would leave the younger spouse vulnerable to eviction and foreclosure after the borrower’s death.

The rules that affect reverse mortgages and surviving non-borrower spouses are complicated.  Surviving spouses and heirs should consult with a real estate attorney to determine rights and options if the spouse wants to continue occupying the home.

The loan servicer usually will order an appraisal to determine how much the home is worth.  If the loan balance is higher than market value, the heirs can pay off an HECM at 95 percent of that value.

Another option for heirs is to sign a deed-in-lieu of foreclosure, giving the house to the lender, to resolve the situation more quickly.

If the heirs don’t act, the lender can foreclose.  Heirs should be able to get an extension of time if a reasonable effort is being made to refinance or sell the home.  The lender and HUD will usually agree to allow more time.  If the servicer does not hear from the family, they will start foreclosure proceedings.

By Harrison K. Long – real estate attorney – Professional real estate representative, Realtor and real estate broker.  CAL BRE #01410855 – attorney member of the California State Bar Association #69137.  949-701-2515 (cell or text).  HKLong@cox.net.   Source of some information is an article at Bankrate.com.

This is for information only about “Reverse Mortgages are Tricky” and is not the providing of legal services.  If you have questions about this and your situation, you should contact an experienced real estate attorney.

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CA Property Tax Reassessment Can Be Avoided When Transferring Between Parent and Child

property tax

CA Property Tax Reassessment can be avoided when transferring property and title between parent and child.

There are ways of avoiding CA property tax reassessments that every homeowner should know about and consider.

California property taxesThe property tax rate imposed on California homeowners is equal to 1% to 1.25% of the property’s assessed value at the time of purchase.  The assessed value is equal to the current market value of the property as of the date there is a change in ownership, plus a yearly increase in value based on inflation.

Proposition 13 mandates that the yearly increase does not exceed 2% of the prior year’s assessed value.

However, that assessed value may also increase upon completion of new construction and that is why building permits trigger the tax assessor’s interest.

The key to avoiding property tax increases is to avoid a change in ownership and assessment.

If you must transfer ownership or sell the property, make sure your transfer or sale qualifies for one of the exclusions from reassessment.

If you are inheriting a home from your parent, you want to make sure you take full advantage of certain exclusions to retain your parent’s low property tax basis.

California Proposition 58 – Transfer between Parent and Child

It is common that a deceased parent might have bought a home 30 years ago for $100,000 then, 30 years later, when the parent dies the child receives a $1,000,000 home.

Does the child pay the property tax based on the original $100,000 assessment or on the current value of $1,000,000?

Proposition 58 allows the child to retain the old property tax basis of $100,000!  This is of real importance and represents thousands of dollars in savings in property taxes each year.

These are the important requirements of Proposition 58:

The person doing the transfer, who can only be the parent or the child, must own the home.  Either the parent owns the home and is giving it to the child or the child owns the home and is giving it to the parent.

Proposition 58 only applies to a transfer between parent and child.  The person receiving the home must be the parent or the child.  Under Proposition 58, a “child” may be a son, daughter, son-in-law, daughter-in-law, stepchild, or child adopted before the age of 18.

The exclusion is not automatic, and the claimant must complete a “Claim for Reassessment Exclusion for Transfer between Parent to Child” form within 3 years of the transfer.  There is no dollar limitation on the original owner’s principal residence.  The parent’s home could be worth 5 million dollars at the date of transfer, but if the parent bought the home for $100,000 then the child’s property tax basis will be $100,000.

There is a $1 million base-year cumulative value limit on the transfer of non-principal residences.  Multiple non-principal properties may be transferred without property tax reassessment only up to this limit.

By Harrison K. Long, Professional real estate representative, Realtor and real estate broker.  CALBRE 01410855.  Also an attorney member of the California State Bar Assiociaion, member 69137.  949-701-2515 (cell or text).  HKLong@cox.net.  

This is for information only about “Avoid CA Property Tax Reassessment When Transferring Between Parent and Child” and is not the providing of legal services.  If you have questions about this and your situation, you should contact an experienced real estate attorney.

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CA Court of Appeal Held Listing Agent on a Home Sale Owed Fiduciary Duties to the Buyer

California real estate lawA California Court of Appeal held in Horiike v. Coldwell Banker, et. al., the California Court of Appeal (2nd appellate district, division 5) that the Agent on a Home Sale Owed Fiduciary Duties to the Buyer.

Question is whether a listing agent who is associated with the same brokerage as the buyer’s agent (dual agency in California) on a purchase and sale transaction has the same fiduciary duties to the buyer as he/she does to the seller.

CA laws and Real EstateThis established new court-made law that where a listing agent and a buyer’s agent are both licensed with the same broker (in this case dual agents with Coldwell Banker Residential Brokerage), they each owe the same fiduciary duties to both parties to the real estate purchase and sale transaction.

The owners of a luxury residence in Malibu in 2006 hired a listing agent to sell their home, and he was licensed under Coldwell Banker Residential Brokerage Company. This agent listed the property on the MLS as “approximately 15,000 square feet of living areas” and prepared a flyer accordingly. A buyer (Mr. Horiike) with his own buyer’s agent (from a different Coldwell Banker office) presented an offer and asked the listing agent for verification of size square footage. The listing agent provided a letter from the architect stating that the living area was approximately 15,000 square feet.

Mr. Horiike (the buyer) did not have the property measured for size and bought the property. It was later determined that the square footage size of the home was significantly less than 15,000 square feet. He filed a lawsuit against the listing agent and Coldwell Banker (but not against his own buyer’s agent) and alleged misrepresentation and breach of fiduciary duty. The trial court granted the motion by defendants for non-suit and held that the listing agent did not represent the buyer and owed no fiduciary duty to the buyer.

The Court of Appeal reversed and said that “a broker’s fiduciary duty to his client requires the highest good faith and undivided service and loyalty” and that the dual agency relationship had been created where the listing agent and buyer’s agent were licensed under the same broker (Coldwell Banker Residential Brokerage) representing the buyer and seller, and that each salesperson owed fiduciary duties not only his or her own client, but also owes those same duties to the other agent’s client.  This court of appeal decision has been appealed to the CA Supreme Court (case #S218734) and is now pending.

By Harrison K. Long – attorney, CAL State Bar Association member #69137 – 949-701-2515 cell/text.  California real estate broker – CAL BRE #01410855.

“CA Court of Appeal Held that Listing Agent on a Home Sale Owed Fiduciary Duties to the Buyer”

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CA Homeowners Should Be Careful With Solar Panel Lease Decisions

Solar panel leasingWhy it’s important that homeowners in CA be careful with solar panel lease situations and know the facts before making decisions – (Part One)

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Estate Planning Needed to Prepare for When a Co-Borrower on Title Dies

Whether you own your home with a spouse, significant other, family member, a friend or by yourself, you need to arrange for financial cushion to replace the loss of income when a co-borrower on the loan passes away.

What happens to the mortgage if a borrower on real estate title dies?  Do you have to get a new loan? Does the lender call the loan through a due-on-sale clause?

Law at the 1982 Garn-St. Germain Act has nine exemptions preventing a lender from calling a mortgage due on properties with four units or less.

You can take over the existing loan if you meet one of the exemptions.  Once you do take over the loan you should figure out if it’s a good loan that is a “keeper” or if you can refinance under a better rate and terms.

What about property taxes?  Does the property get reassessed for a higher property tax basis?  California law has the following rules:

1. The property will not be reassessed if it passes to the surviving spouse pursuant to a will or trust, whether the spouse is a joint tenant or has community property rights of survivorship.

2. Your property taxes on your primary residence, plus $1 million of assessed value of other properties, will pass to your children without reassessment.

3. Property passing to anyone other than a spouse or child, through joint tenancy, a will or a trust, will trigger a property tax reassessment.

4. Tenants-in-common interest will get reassessed unless it passes to the spouse or a child (provided the portion passing to the child does not exceed the $1 million assessed value limitation).

And how will your heirs be able to avoid probate court, fees and income taxes on the estate?

People who own property with another person should work with an experienced estate planning attorney or income tax professional to devise an estate plan and review and update that on an annual basis.

By Harrison K. Long – Realtor and professional real estate representative, broker associate, Evergreen Realty HomeSmart at Orange County CA – 949-854-7747 (direct) or 949-701-2515 (cell or text) – CAL BRE 01410855.  Also an attorney member of the CA State Bar Association #69137.  This is for information only and is not the providing of legal services.  

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