Swimming Pools Have New CA Safety and Drowning Prevention Requirements

Private swimming pool

California law now in effect as of January 1, 2018, for new swimming pools has safety elements and drowning prevention requirements.

New pools must be constructed with at least two of seven drowning prevention safety features (as opposed to the current one) for a private single-family home.

The exemption for localities that have their own pool ordinances is eliminated. In regard to home inspectors, it requires them to include within their inspection a noninvasive physical examination of the pool or spa for the purpose of identifying which of the seven drowning prevention safety features the pool or spa has. This information must then be included in the home inspection report.

This law does not create any new disclosure obligation on the part of agents. Under the existing Swimming Pool Safety Act, upon the issuance of a building permit for construction of a new swimming pool or spa, or the remodeling of an existing pool or spa, at a private, single-family home, the pool or spa is required to be equipped with at least one of seven drowning prevention safety features.

This new law requires, when a building permit is issued, that the pool or spa be equipped with at least two of seven specified drowning prevention safety features. It also deletes the exemption for political subdivisions that adopt ordinances for swimming pools.

The seven drowning prevention safety features are:

(1) An enclosure that meets the requirements of Section 115923 and isolates the swimming pool or spa from the private single-family home.

(2) Removable mesh fencing that meets American Society for Testing and Materials (ASTM) Specifications F2286 standards in conjunction with a gate that is self-closing and self-latching and can accommodate a key lockable device.

(3) An approved safety pool cover, as defined in subdivision (d) of Section 115921.

(4) Exit alarms on the private single-family home’s doors that provide direct access to the swimming pool or spa. The exit alarm may cause either an alarm noise or a verbal warning, such as a repeating notification that “the door to the pool is open.”

(5) A self-closing, self-latching device with a release mechanism placed no lower than 54 inches above the floor on the private single-family home’s doors providing direct access to the swimming pool or spa.

(6) An alarm that, when placed in a swimming pool or spa, will sound upon detection of accidental or unauthorized entrance into the water. The alarm shall meet and be independently certified to the ASTM Standard F2208 “Standard Safety Specification for Residential Pool Alarms,” which includes surface motion, pressure, sonar, laser, and infrared type alarms. A swimming protection alarm feature designed for individual use, including an alarm attached to a child that sounds when the child exceeds a certain distance or becomes submerged in water, is not a qualifying drowning prevention safety feature.

(7) Other means of protection, if the degree of protection afforded is equal to or greater than that afforded by any of the features set forth above and has been independently verified by an approved testing laboratory as meeting standards for those features established by the ASTM or the American Society of Mechanical Engineers (ASME).

This new law, as part of the definition of home inspection for the transfer of real property, specifies that an appropriate inspection of real property with a swimming pool or spa would include noninvasive physical examination of the pool or spa and dwelling for the purpose of identifying which, if any, of the seven drowning prevention safety features the pool or spa is equipped. The information is required to be included in the home inspection report.

Senate Bill 442 codified as Business and Professions Code § 7195 and Health and Safety Code §§ 115922 and 115925. Effective January 1, 2018.

Home Inspectors Swimming Pool Safety Home inspection must include non-invasive physical examination of pool.  However, this requirement does not create any new disclosure obligation on the part of real estate agents.

This article is presented by Harrison K. Long, CA real estate broker, CALBRE 01410855, Realtor and broker associate, HomeSmart Evergreen Realty, Irvine and Orange County CA.  Also an attorney member of the CA State Bar Association #69137.

Disclaimer:  This is for information only and is not the providing of legal services.  If you have a real estate legal situation involving  your home and property, you should contact an experienced real estate attorney.

“Swimming Pools Have New CA Safety and Drowning Prevention Requirements”

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Section 1031 Like-Kind Exchanges of Real Estate with Income Tax Benefits Protected by U.S. Tax Cuts and Jobs Act of 2017

Real estate investors might want to unload one property and replace it with another, but selling such an appreciated property can result in gain and a tax hit.

1031 of the Internal Revenue Code still allows an investor to postpone a tax bill by arranging for a deferred like-kind exchange.  Such maneuvers have helped real-estate investors get and stay rich.

Like-kind real estate exchange basics

An investor can arrange for tax-free real property swaps as long as the relinquished property (the property you unload in the swap) and the replacement property (the property you receive in the swap) are of like-kind.

To avoid any current taxable gain, however, you also must avoid receiving any “boot” – which is cash and property that’s dissimilar to the relinquished property. When mortgaged properties are involved, boot also includes the excess of the mortgage on the relinquished property (the debt you get rid of) over the mortgage on the replacement property (the debt you assume).

If you receive any “boot”, you are taxed currently on gain equal to the lesser of: (1) the value of the boot or (2) your overall gain on the transaction based on fair market values. So if you receive only a small amount of boot, your swap will still be mostly tax-free (as opposed to completely tax-free). On the other hand, if you receive lots of boot, you could have a big taxable gain.

The easiest way to avoid receiving any boot is to swap a less-valuable property for a more-valuable property. That way, you’ll be paying “boot” rather than receiving it. Paying boot won’t trigger a taxable gain on your side of the deal.

The untaxed gain in a like-kind swap can get rolled over into the replacement property, which remains untaxed until sale of the replacement property in a taxable transaction.

What is “like-kind” real property?

When it comes to real estate, the IRS has a definition of “like-kind property” – and an investor can swap improved real estate for unimproved real estate, a strip center for an apartment building, a boat marina for a golf course, and so forth. However, you can’t swap real property for personal property without triggering taxable gain. For example, you can’t swap a building for an airplane. Finally, you can’t swap property held for personal use, such as your home or boat. Nor can you swap inventory, partnership interests, or investment securities. The vast majority of tax-free like-kind exchanges involve investment real estate.

The IRS previously clarified that even undivided fractional ownership interests in real estate (like tenant-in-common ownership interests) can potentially qualify for like-kind swaps.  So if the investor needs not to receive an entire commercial building as the replacement property in order to complete your tax-free exchange.  The real estate investor can instead receive an undivided fractional ownership interest in the property. (Source: IRS Revenue Procedure 2002-22).

Deferred like-kind real estate exchanges

It is difficult for the investor who wants to make a like-kind swap to locate another party who owns suitable replacement property and who also wants to make a like-kind swap rather than a cash sale.  Such deferred exchanges can also qualify for tax-free like-kind real estate exchange treatment.

Under the deferred exchange rules, the real estase investor is not required to make a direct and immediate swap of one property for another.  Instead, the investor can in effect sell the relinquished property for cash, park the sales proceeds with an intermediary who effectively functions as your agent, locate a suitable replacement property later, and then arrange for a tax-free like-kind exchange by having the intermediary buy the property on behalf of the investor.

Here’s how a typical real estate deferred swap works.

One:  The investor transfers the relinquished property (the property you want to swap) to a qualified exchange intermediary (whose role is to facilitate a like-kind exchange for a fee which is usually based on a sliding scale according to the value of the deal).

Two:  The intermediary arranges for a cash sale of your relinquished property. The intermediary then holds the resulting cash sales proceeds on your behalf.

Three:  The intermediary then uses the cash to buy suitable replacement property which you’ve identified and approved in advance.

Four:  Finally, the intermediary transfers the replacement property to you to complete the like-kind exchange.

From the real estate investor perspective, this series of transactions counts as a tax-free like-kind swap.  The investor winds up with like-kind replacement property without ever having actually seen the cash that greased the skids for the underlying transactions.

What if the real estate investor still owns the replacement property at time of death?

Under our current federal income tax rules, any taxable gain would be completely washed away thanks to another favorable provision that steps up the tax basis of a deceased person’s property to its date-of-death value.  So taxable gains can be postponed indefinitely with like-kind swaps and then erased if you die while still owning the property. Real estate fortunes have been made in this fashion without sharing with Uncle Sam.

Like-kind 1031 exchange swaps of real estate property can get complicated, and potential tax advantages are big.

Such like-kind exchanges of real estate property under Section 1031 have been protected by the Tax Cuts and Jobs Act of 2017.

Two Important Requirements

In order for your deferred exchange to qualify for tax-free swap treatment, you must meet two important requirements.

First:  You must unambiguously identify the replacement property before the end of a 45-day identification period. The period commences when you transfer the relinquished property. You can satisfy the identification requirement by specifying the replacement property in a written and signed document given to the intermediary. In fact, that document can list up to three different properties that you would accept as suitable replacement property.
Second:  You must receive the replacement property before the end of the exchange period, which can be no more than 180 days. Like the identification period, the exchange period also commences when you transfer the relinquished property. The exchange period ends on the earlier of: (1) 180 days after the transfer or (2) the due date (including extensions) of your federal income tax return for the year that includes the transfer date. When your tax return due date would cut the exchange period to less than 180 days, you can simply extend your return. That restores the full 180-day period.

The major change to Section 1031 by the 2017 Tax Cuts and Jobs Act is the complete repeal of personal property exchanges.

The Income Tax Code section now refers exclusively to real estate assets, and has been retitled, “Exchange of real property held for productive use or investment.”  Real estate exchanges are subject to the same rules and regulations as under previous law. The 45 day identification and 180 day exchange periods remain unchanged, as does the role of the Qualified Intermediary.  All real estate in the United States, improved or unimproved, also remains like-kind to all other domestic real estate.  Foreign real estate continues to be not like-kind to real estate in the U.S.

Personal property assets that can no longer be exchanged include intangibles, such as broadband spectrums, fast-food restaurant franchise licenses and patents; aircraft, vehicles, machinery and equipment, railcars, boats, livestock, artwork and collectibles.  Transition rules permit a personal property exchange to be completed in 2018 if either the relinquished property was sold or the replacement property was acquired by the taxpayer during 2017.

Source of some information for this post is an article at MarketWatch.com.  This is the providing information only and is not the providing of legal services or income tax services.  If you are a real estate investor and need more information about 1031 like-kind exchanges of real estate, you should consult with an experienced real estate broker, certified public accountant or real estate attorney in your area.

“Section 1031 Like-Kind Exchanges of real estate property with Income Tax Benefits Protected by U.S. Tax Cuts and Jobs Act of 2017”

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Be Careful Of Your Neighbor’s Roots

Be Careful Of Your Neighbor’s Roots

By Bob Hunt, July 10, 2017

Suppose that the roots from your neighbor’s tree have completely ignored property lines and are now well into your backyard and have begun to start cracking your patio. Do you have an absolute right to cut them back to the property line in order to maintain your own property? Not in California.

For guidance, we look to the 1994 case of Booska v. Patel (California First District Court of Appeal, May 20, 1994). In that situation, Steven Booska owned property adjacent to property owned by Ramanbhai Patel. Booska’s land contained a thirty-to forty-year-old Monterey pine tree. The roots of the tree extended well into Patel’s yard.

In May of 1991, Patel hired a contractor “to excavate along the length of his yard and sever the roots of the tree down to a level of approximately three feet.” According to Booska’s complaint, “Patel’s actions were negligently performed, with the result that the tree became unsafe, a nuisance, unable to support life, and was removed at Booska’s expense.” The complaint alleged causes of action for negligence, destruction of timber, and nuisance.

Patel moved for summary judgment — essentially dismissal — “arguing that he had an ‘absolute right’ to sever the roots on his property without regard to any injuries inflicted on Booska’s land.”

The trial court stated that a previous case,Bonde v. Bishop, “provided for an absolute right to sever any roots that enter an adjoining landowner’s property”, and granted the motion for summary judgment. Booska appealed.

The appellate court said that the question framed by the pleadings and declarations “is the single legal issue of whether an adjoining landowner may sever roots from a neighbor’s tree that have encroached on his property even if the action is done negligently or maliciously and even if no damage was caused by the tree.”

The Appellate Court then reasoned as follows: “Patel bases his argument on the common law principle codified in Civil Code section 829 which states that ‘the owner of land has the right to the surface and to everything permanently situated beneath or above it.'” However, the Court said, “Patel apparently does not feel bound by the maxim codified in [Civil Code] section 3514 which states: ‘One must so use his own rights as not to infringe upon the rights of another.”

The Appellate Court wrote that, “The possessor’s [of land] right is therefore bounded by principles of reasonableness, so as to cause no unreasonable risks of harm to others in the vicinity.” “The proper test to be applied to the liability of the possessor of land … is whether in the management of his property he has acted as a reasonable [person] in view of the probability of injury to others…” “Thus, whatever rights Patel has in the management of his own land, those rights are tempered by his duty to act reasonably.”

The Appellate court summed up its discussion by citing a passage from the previously-mentioned Bonde decision: “Apparently this is one of those rows between neighbors in which the defendants are standing on what they erroneously believe to be their strict legal rights to the exclusion of any consideration of the fair, decent, neighborly and legal thing to do.”

The summary judgment was reversed and the case remanded for trial.

This article by Bob Hunt is shared here with his permission.  Bob is a talented guy, a real estate broker at San Clemente, CA, a director of the California Association of Realtors®, and is the author of “Real Estate the Ethical Way.”

This information is presented by Harrison K. Long, CA real estate broker CALBRE 01410855, Orange County CA. Attorney member of the CA State Bar Association #69137.

Disclaimer:  This is for information only and is not the providing of legal services.  If you have a real estate legal situation involving tree roots and your home and property, you should contact an experienced real estate attorney.

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Can Emails Create a Binding Real Estate Contract?

Question:  Can emails create a binding and legal real estate purchase and sale agreement?

That’s a unusual issue and was addressed recently when a court of appeal in New York, which held that emails between a buyer and seller might constitute a formal binding contract.

In that case (Stonehill Capital Management v. Bank of the West 28 NY3D 439, 2016) the court of appeal upheld a contract entered into by parties when the seller “agreed” to accepted the option bidders bid in an email that set forth all the material terms of the deal, including the sales price, specific loan to be sold, timing of the closing and manner of payment and wire transfer information.  In that email, the seller had stated that its acceptance “was subject to mutual execution of an acceptable [loan sale agreement],” which was never executed.

Nevertheless, the New York appellate court found that by establishing these elements, the requirement of “Statute of Frauds” was met.

Currently, there are no cases in California where a court has issued a similar decision on the issue.  However, this could happen if a California court of appeal finds so in a similar situation.

Sellers and buyers of real estate are cautioned that when emailing terms of a proposed contract, they do not establish their agreement to those terms.

It’s also important that real estate brokers and agents may not (unless they have specific authority to do so from their seller and buyer clients) enter into contracts on behalf of their principals (their clients).  That would be beyond the scope of the agency relationship.

Article by Harrison K. Long, real estate attorney at Orange County CA.  Member of the CA State Bar Association #69137.  A member and chairperson this year at Legal Affairs Forum for the California Association of Realtors.  Also a California licensed real estate broker #01410855.

Source of information for this article is Shannon Jones, expert California real estate attorney associated with CRELA, California real estate legal alliance.  This article is the providing of real estate information only and is not the providing of legal services.  If you encounter such an issue, you should consult with an experienced real estate attorney.

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When Real Estate Commission is Earned – California Law

Real estate law in other states of the U.S. have held that a real estate commission had been earned if a buyer was procured who made an offer that matched the price and terms specified in the listing agreement, or on other price and terms the seller might find acceptable.

According to those laws, a completed transaction was not a required condition for a real estate commission to be earned by the agent.

The California Appellate Court ruling in 2012 (RealPro, Inc. v. Smith Residual Company, Fourth Appellate District Court) changed that in CA.  In the RealPro case, the buyer had made a full-price, per the listing, $17 million offer on terms that the seller found acceptable. However, the seller then increased the listing price to $19.5 million. The buyer declined the price increase.  But after that the buyer’s broker, as a third-party beneficiary, sued for his commission.

The trial court in RealPro focused on that part of the listing that set forth price and terms, which said “$17,000,000 cash or such other price and terms acceptable to Sellers…” The court of appeal said that it would be a mistake to say that the listing was for $17 million. Rather, it “was for $17 million cash or such other price, plus terms acceptable to Sellers.”

The Appellate Court in RealPro further said, “we, like the trial court, conclude that the $17 million price was merely an invitation to submit offers.  Although RealPro submitted an offer to purchase the Property, such offer never materialized into a sale that would trigger RealPro’s right to a commission.”

That court of appeal in RealPro essentially said that it is a sale — not just an acceptable offer — that triggers a real estate commission.

The California Association of Realtors (CAR) was concerned about that new law and changed its Residential Listing Agreement (RLA) the next year to clarify.  That listing agreement form now reads in essence that a real estate commission is due if anyone procures a ready, willing, and able buyer(s) whose offer to purchase the Property on any price and terms is accepted by Seller, provided the Buyer completes the transaction or is prevented from doing so by the Seller.

There has been a recent court of appeal decision in CGI v. City of San Francisco and Ellis Parking with a new twist.  However, that decision has not been published and cannot be cited as authority.

By Harrison K. Long, real estate broker and Realtor® associated with HomeSmart Evergreen Realty, CALBRE #01410855.  Also an attorney member of the California State Bar Association #69137.

Source of information for is article by Bob Hunt, real estate broker and Realtor® who serves as a director of the California Association of Realtors® – who is also the author of his book “Real Estate the Ethical Way”. 

This article is for information only and is not the providing of legal services.  If you have questions about your situation involving real estate commissions, you should contact an experienced real estate attorney.

“When real estate commission is earned”

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Arbitration Clause Removed From California Listing Agreement

Arbitration Clause Removed From California Listing Agreement

[This article was written and published by Bob Hunt on May 22, 2017, and he authorized me to use and share it].

A few weeks from now the California Association of REALTORS® (CAR) will release the semi-annual update to its library of Standard Forms. CAR currently publishes more than 200 standard forms (e.g. purchase contracts, listing agreements, and disclosures). Not only is it virtually inevitable that changes and modifications will continually be needed, but also new laws and court decisions provide the need for yet more new forms.

Among those to be released this spring are nine different listing agreements (e.g. residential, commercial, vacant land) all of which have been changed in the same way. In each, an optional arbitration agreement between the seller and listing office has been removed and replaced by “language advising of the need to use separate arbitration agreement if both parties consent.”

Why would CAR remove the optional arbitration agreement? The official explanation is this: “The arbitration clause was removed from the listing agreements because some attorneys for sellers were using it to draw listing agents into contract disputes between buyers and sellers.”

To understand this explanation fully, we need to realize an important difference between the optional arbitration agreements in the CAR listing agreements and the ones in the CAR purchase contracts. The difference is this: the arbitration agreements in the purchase contracts are between the principals — buyer(s) and seller(s) — whereas the agreement in the listing agreement is between the agent and the principal — the listing office and the seller.

If both principals (buyer and seller) have signed the optional arbitration agreement in the purchase contract, then, if a dispute arises between them and should mediation fail, they will be required to submit to arbitration. Going to court is not an option. Not being a party to the contract, neither broker would be required to join that arbitration proceeding; though either could if they so choose.

One can see, then, why an attorney might want to use the listing arbitration agreement “to draw listing agents into contract disputes between buyers and sellers.”

There is, however, another reason that many listing brokers will be pleased to see the optional arbitration agreement removed from the listing agreement.

When arbitration agreements were first introduced into the various CAR contracts, many — probably most — California brokers welcomed that as one of the greatest cultural improvements since the catcher’s mitt, or sliced bread. They welcomed the notion of having disputes settled outside of the judicial process with all of its time-consuming frustrations and expenses.

But, over the years, brokers came to discover how badly they can fare in arbitration which can often be, well, arbitrary. Arbitrators do not have to follow the law. They can choose an outcome that they may perceive to be fair, even if it is not the one the law would provide. Many brokers have reached the conclusion that they are more likely to obtain a just decision in a court of law rather than in an arbitration. Moreover, an arbitrator’s decision is not subject to appeal, except in extreme cases of bias.

In short, over the years, many brokers have come to the conclusion that, should they become involved in a dispute with a principal, they are far more likely to get a fair shake in court than at the hands of an arbitrator.

But, some might ask, why remove the arbitration clause from the listing agreement? After all, it’s optional. Yes, it is optional; but, remember, the overwhelming majority of listing agreements are negotiated between sellers and individual agents who are representatives of the broker. Few agents have the faintest idea where their broker stands on arbitration (and shame on the broker for that). Fewer still, even if they did know the broker doesn’t want to commit to arbitration, would be comfortable telling their client that the broker doesn’t want to sign the arbitration clause. Better to take it out, and leave that conversation for another day. Or no day at all.

[Bob Hunt is a smart guy, good writer and a friend.  He’s a real estate broker and Realtor® who serves as a director of the California Association of Realtors®. Bob is also the author of his valuable book “Real Estate the Ethical Way”.] 

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PACE Financing of Home Improvements Can Be Dangerous for Homeowners

California real estate law

PACE financing – “Property Assessed Clean Energy (PACE) programs” – is one  way to finance energy-efficient home improvements.

However, such PACE financing can be dangerous for homeowners who should be very careful before making those decisions.

PACE financing in California attaches to the property in the form of a “property tax”.  Because this kind of financing involves a property tax, the companies administering the program need a city’s or a county’s tax-levying authority to market it to residents.

So PACE financing is available only where the city council or the county board of supervisors has granted this authority.

What problems are associated with PACE financing in California?

  • Predatory Lending: Qualification is based on home equity rather than on the borrower’s ability to repay, which violates the U.S. Department of the Treasury’s prohibition against predatory lending practices.
  • Structured as a Property Tax Assessment: Because the amount borrowed is structured as a property tax assessment, it attaches to the property itself rather than to the owner, which negatively affects the owner’s ability either to sell the property or to refinance it and restricts a potential buyer’s ability to qualify for a mortgage on the property.
  • “Super-Priority” Lien: The amount borrowed is structured as a “super-priority” lien on the property, which means that, in the event of default, the PACE loan takes repayment priority over even the first mortgage. This arrangement violates the conditions spelled out in most mortgage agreements, negatively affects the owner’s ability either to sell the property or to refinance it, and restricts a buyer’s ability to qualify for a new mortgage on the property.
  • No Proof of Benefit or Value: Because the energy-efficient home improvements financed with PACE programs are often sold without either a home energy audit or a third-party certification of their operational effectiveness, the homeowner has no basis for performing a cost-benefit analysis or for assessing the true value of the improvements.
  • No Utility Cost Offset: The homeowner is told that he or she will save enough on utility bills to cover the cost of the energy-efficient upgrades, but this utility cost offset seldom materializes. More often, the hapless homeowner ends up deep in the red.
  • Price Inflation: PACE contractors inflate their prices for energy-efficient renovations, often charging far more than fair market value.
  • No Financial Oversight: Most of the contractors pitching PACE financing options have no financial expertise, and their offers and promises are not currently being scrutinized by any financial institution or government agency.
  • High Interest Rates: The interest charged for PACE financing can be as much as twice the amount charged for a home equity loan or on loans obtained via other financing alternatives.
  • Inadequate Disclosure: Often the total cost (with applicable fees and interest), the yearly payment amount, the actual payoff schedule, and the anticipated payoff date are not properly disclosed up front.
  • Large Payoff Penalties: The penalties for early payoff are large and may include extended interest payments.
  • Harsh Late-Payment Penalties: Late payment or failure to pay is penalized in the same way as failure to pay property taxes and could result in foreclosure.
  • Automatic Default: A homeowner whose mortgage agreement specifically prohibits any other loan or lien from taking priority over the first mortgage–and most do–will be automatically in default. Thus, the lending institution holding the first mortgage can require accelerated payment or initiate foreclosure.

You as a CA homeowner should be aware of these problems and weaknesses of PACE financing of home improvements.  If you are having problems with legal issues regarding PACE financing of your home improvements, you should contact a real estate attorney in your community or geographic area.

By Harrison K. Long – real estate attorney and member of CA State Bar Association #69137.  Real estate broker – CALBRE #01410855.  Source of information is the California Association of REALTORs® and the Orange County REALTORs®.  This is for information only and is not the providing of legal services.

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

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PACE Liens Financial Disclosure and 3-Day Rescission Right – New CA Law Effective Jan. 1, 2017

CA laws and Real EstatePACE Liens Financial Disclosure and 3-Day Rescission Right – New CA Law Effective Jan. 1, 2017

  • A property owner may not participate in a PACE lien program without delivery of a detailed financial disclosure document received before contractual consummation.
  • The disclosure document must contain a variety of notices and warnings including a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation. The property owner also retains a 3-day rescission right detailed in a statutory form.
  • Statements as to increased value of the property cannot be made unless based on a valuation as specified.
  • Existing law requires home loans to be accompanied by the Truth in lending RESPA Integrated Disclosure (TRID), which is intended to allow an “apples to apples” comparison shopping of various loan products.
  • PACE transactions are technically not loans and are not required to be accompanied by a TRID disclosure.
  • Current law gives delinquent PACE assessments “super-priority” status, as part of the tax bill, over other recorded obligations; lenders require these “super liens” to be paid off before any new financing can be obtained.
  • Requires a TRID-like disclosure be provided to a property owner participating in a PACE program, a 3 day right of rescission, and a notice that the property owner may not be able to refinance or sell without paying off the PACE obligation.
  • Prohibits making monetary or percentage representations of increased value to a property owner regarding the effect the financed improvements will have on the market value of the property unless the estimate of market value is based upon either “an automated valuation model,” a broker price opinion or an appraisal by a licensed appraiser.

AB 2693 codified as Government Code § 53328.1 and Streets and Highways Code §§5898.15, 5898.16 and 5898.17.

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 or cell at 949-701-2515 – or by email at ExploreProperties@gmail.com.  

“PACE Liens Financial Disclosure and 3-Day Rescission Right – New CA Law Effective Jan. 1, 2017”

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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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