Happy 2015 Year!
Several new laws affecting the real estate industry have become effective as of January 1, 2015. Below is a short overview of a few new laws that may relate to your business:
REOs cannot dictate title and escrow company. This law is known as "The Buyer's Choice Act," and is now made permanent.
The Buyer's Choice Act presently prohibits a lender that gained title through foreclosure from requiring upon resale, directly or indirectly, as a condition of selling the property, that the buyer purchase title insurance or escrow services from a particular title insurer or escrow agent. This law applies to residential real property of four dwelling units or fewer. A seller who violates these provisions is liable to the buyer for an amount equal to three times all the charges made for the title insurance or escrow services.
This existing law was due to sunset in 2015. Now however, the law will continue indefinitely.Senate Bill 1051 codified as Civil Code §1103.23. Effective January 1, 2015.
Documentary Transfer Tax --- Purchase price cannot be kept secret.
This law repeals the right of a principal to demand that the transfer tax be shown on a separate piece of paper. Previously, a seller or buyer of real property could demand from the county that the documentary transfer tax (the DTT) be stated apart from the recorded document. This enabled some principals to effectively keep the purchase price secret, since the amount of the transfer tax can be reliably used to deduce the purchase price. (Although the information could be obtained through a California Public Records Act request.) Now every document subject to the DTT when it is submitted for recordation must show on its face the amount of the tax due. These rules have little impact on listings input into an MLS since MLS Model Rules require the reporting of the selling price within two days after the final closing.
Assembly Bill 1888. Codified as Revenue and Tax Code §§11932 and 11933. Effective January 1, 2015.
Notary verifies only the identity of the individual signing the document and not the document's truthfulness, accuracy, or validity.
Existing law requires a notary to execute a certificate of acknowledgment or proof of execution on specified forms. This law changes the specified forms to include a notice that the notary verifies only the identity of the individual who signed the document and not the truthfulness, accuracy, or validity of the document.
Senate Bill 1050 codified as Civil Code §1189 and Government Code §8202. Effective January 1, 2015.
Document bundling is prohibited. It is the responsibility for the seller to pay HOA document fees.
CAR sponsored legislation: This law prohibits the practice of "document bundling" in the sale of units in a common interest development. ("Document bundling" means requiring the purchase of a package of documents together with the legally mandated disclosures). Current law requires delivery of various common interest disclosure documents ("mandated CID disclosures").
These disclosures include the CC&Rs, Bylaws, Operating Rules, rental and age restrictions, budget reports, regular and special assessments, etc... Under the new law the fees for these mandated CID disclosures must be individually itemized for each document. Additionally, the fees for all mandated CID disclosures must be separately stated and separately billed from all other fees, fines, or assessments. Only mandated disclosures may appear on the statutory form.
This law will also require a seller to provide a prospective purchaser with all mandated CID documents that the seller possesses --- free of charge. It is the responsibility of the seller to pay the association, person, or entity that provides the mandated CID disclosures.
As a result of this law, C.A.R. will modify its standard purchase agreements to require that the seller alone will pay for the mandated CID disclosures, but the cost for other contractual disclosures will remain negotiable. Additionally, form HOA will be modified to reflect the required changes by dividing it into three forms: one for the request to the HOA, form HOA 1; one for mandated CID disclosures, HOA 2 (per the revised statutory form); and one for additional contractual disclosures as required under the C.A.R. standard purchase agreements, HOA 3.
Assembly Bill 2430 codified as Civil Code §§4528 and 4530. Effective January 1, 2015.
Disclosure Regarding Real Estate Agency Relationships (C.A.R. form AD) must be delivered on commercial transactions.
Presently, the Disclosure Regarding Real Estate Agency Relationships form (C.A.R.'s AD form) is required for real property transactions involving residential one to four dwelling units, leases of greater than one year and manufactured homes (if negotiated by an agent). Existing law also requires the listing or selling agent to disclose to the buyer and seller whether he or she is acting as the buyer's agent exclusively, the seller's agent exclusively, or as a dual agent representing both the buyer and the seller. This disclosure is typically made through the confirmation of agency relationships on the first page of CAR purchase agreements.
Under the law, the AD form and confirmation will be required for any commercial, vacant land or industrial property; or any residential 1-- 4 property. Senate Bill 1171 codified as Civil Code §2079.13. Effective January 1, 2015.