New real estate laws coming in 2015

Quite a few new real estate laws are becoming active in 2015.  No particular order of importance.  Some don't pertain to the Bay Area, but are interesting test laws to to combat fraud and squatters. 

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 document. 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.

AB 1888 (codified as Revenue and Tax Code §§11932 and 11933) (effective January 1, 2015).

Property tax exclusion for construction or addition of active solar energy system is extended
This law extends a solar tax exemption for new active solar energy systems until 2025. An existing law, set to expire in 2017, bars property tax increases based upon the construction or addition of a solar system. (Without this exemption, such an improvement would add value to the property and thus result in an increase in the property taxes assessed.)

SB 871 (codified as Revenue and Tax Code §73) (effective June 20, 2014).

Document bundling is prohibited by HOAs as part of required common interest development disclosures. Seller to pay HOA fees
This C.A.R. sponsored 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. Once a written request for the mandated CID disclosures is made, the HOA must estimate the cost of the mandated CID disclosures prior to processing the request. Where there is no hard copy delivery of documents, the HOA may not charge an additional fee for electronic delivery in lieu of the hard copy. The statutory form has been modified to reflect these changes.
This law would also require a seller to provide a prospective purchaser with all mandated CID documents that the seller possesses -- free of charge. If a seller confirms in writing that the document is a current document then the HOA may not bill for it.  The association may collect a reasonable fee based upon the association’s actual cost for the procurement, preparation, reproduction, and delivery of the documents – but only from the seller. 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, C.A.R. form HOA will be modified to reflect the required changes by dividing it into three forms: one to request from the HOA the common interest disclosures; one for mandated CID disclosures (per the revised statutory form); and one for additional contractual disclosures as required under the C.A.R. standard purchase agreements.

AB 2430 (codified as Civil Code §§4528 and 4530) (effective January 1, 2015).

Exclusions from taxation of mortgage debt forgiveness – state law conformed to federal through the end of 2013
This measure extends California’s exclusions of taxation of mortgage debt forgiveness for qualified principal residence indebtedness but only through the end of 2013 in partial conformity with the federal Mortgage Forgiveness Debt Relief Act of 2007 (which sunset at the end of 2013 as well). Qualified principal residence indebtedness is limited to $800,000 ($400,000 for taxpayers filing separately). Forgiven debt will not be treated as cancellation of debt income, but will instead be capital gains. Taxpayers may exclude from capital gains up to $500,000 ($250,000 for taxpayers filing separate) of qualified mortgage debt forgiven. 

AB 1393 (codified as Revenue and Taxation Code §17144.5) (effective on July 21, 2014).


No Shill Bidding - Auction companies must disclose bids placed on seller's behalf and neither lender nor auction company working for a lender may require indemnification by the homeowner or listing agent as a condition of lender approval of sale
This law, on and after July 1, 2015, with respect to an auction that includes the sale of real property, prohibits a person from causing or allowing any person to bid at a sale for the sole purpose of increasing the bid on any real property being sold by the auctioneer. The law, however, does allow an auctioneer or another person to place a bid on the seller’s behalf during an auction of real property if notice, as specified, is given that liberty for that bidding is reserved. The law also requires in this regard that the person placing that bid contemporaneously disclose to all auction participants that the particular bid has been placed on behalf of the seller.
The law exempts a credit bid made by a creditor with a security interest in the property that is the subject of auction when the credit bid can result in the transfer of title to property to the creditor.
Finally, this law prohibits a lender or an auction company that is retained to control aspects of a residential real property transaction from requiring, as a condition of receiving a lender’s approval of the transaction, a homeowner or listing agent to defend or indemnify the lender or auction company from any liability alleged to result from the actions of the lender or auction company and declares a clause, provision, covenant, or agreement in violation of this prohibition to be against public policy, void, and unenforceable.

Assembly Bill 2039 (codified as Civil Code §§ 2079.23 and 1812.610) (effective July 1, 2015).

Owners in three California cities can register vacant real property to protect against squatters
This law allows an owner of residential property in the Cities of Palmdale and Lancaster in the County of Los Angeles or the City of Ukiah in the County of Mendocino, or an agent of the property owner, to register vacant real property with the local law enforcement agency and to execute, under penalty of perjury, a Declaration of Ownership of Residential Real Property.
Further, an owner or an agent of the property owner, can file the Declaration of Ownership of Residential Real Property with the local law enforcement agency of the jurisdiction in which the property is located. The property owner must post the filed declaration on the property listed in the declaration. The law requires the local law enforcement agency with which the property is registered to respond as soon as practicable after being notified that an unauthorized person has been found on the property and to take specified action, including requiring a person who is found on the property to produce written authorization to be on the property or other evidence demonstrating the person’s right to possession, and to notify any person who does not produce that authorization or other evidence that the owner or owner’s agent may seek to obtain a court order and that the person will be subject to arrest for trespass if he or she is subsequently found on the property in violation of that order.
The property owner, or an agent of the property owner, can file an action for a temporary restraining order and injunctive relief against a person who is found on the property not less than 48 hours after that person has been so notified. However, a property owner, or an agent of the property owner, who files a declaration that includes false information regarding the right to possess the property is liable to any person who, as a result of the declaration, vacates the property, for damages, as specified. 
The provisions of this law apply only to 1 to 4-unit residences in the Cities of Palmdale and Lancaster in the County of Los Angeles and the City of Ukiah in the County of Mendocino. This bill would provide that its provisions would be operative until January 1, 2018.

Assembly Bill 1513 (codified as Code of Civil Procedure §§ 527.11 and 527.12).

Judgment Debtor retains equitable right to redeem real property after execution sale even beyond 90 day statutory period 
In 1982 the legislature codified the Enforcement of Judgments Law which provides that a sale of real property pursuant to execution sale regarding enforcement of judgments is absolute and may not be set aside. As a procedural safeguard, that same law states that if the sale was improper because of irregularities in the proceedings, because the property sold was not subject to execution among other reasons, the judgment debtor may commence an action within 90 days after the date of sale to set aside the sale if the purchaser at the sale is the judgment creditor.
However, the Enforcement of Judgments Law was not originally intended to affect the equitable right of redemption. This is the right that a judgment debtor has to redeem property from a sale where there may be a grossly inadequate price, or where the purchaser is guilty of unfairness or has taken undue advantage, or in other circumstances which could merit an equitable right to redeem beyond the 90 day period. This law declares that these provisions of existing law do not affect, limit, or eliminate a judgment debtor’s equitable right of redemption.

Assembly Bill 2317 (codified as Code of Civil Procedure §701.680) (effective January 1, 2015).

Security Deposits  - Landlords and tenants may agree to use electronic communications regarding the security deposit generally. Delivery of the itemization of deposit still requires “personal receipt” or by mail.
This omnibus law, among other things, permits landlords and tenants to agree to the use of electronic communications for some notices and agreements pertaining to the establishment and handling of security deposits, including the Notice of Right to Inspection Prior to Termination of Tenancy (C.A.R. form NRI). Nonetheless, handling of the security deposit law itself, Civil Code § 1950.5, requires that the itemization of the security deposit and notice to the tenant of its disposition must still be made be either personal delivery or first class mail.  This law may potentially impact the use of electronic signatures for lease agreements. 

Assembly Bill 2747 (relevant section codified as Civil Code §1633.3) (effective January 1, 2015).

Seller/Borrower has right to request suspension of HELOC during escrow
Presently, if a borrower has a home equity line of credit (HELOC) secured by a lien on his or her house, the HELOC loan is supposed to be closed and not drawn on during the sale or refinancing of the house. If the lender fails to close the HELOC during escrow and money is drawn on, the underlying lien and loan may become the debt of the innocent buyer.
This law facilitates the seller’s/borrower’s request to suspend the HELOC by creating a form for the seller/borrower to sign in escrow, the ultimate purpose being to avoid the mistake of drawing upon a HELOC during the escrow or immediately following the sale of the house.

Assembly Bill 1770 codified as Civil Code §2943.1. Effective on July 1, 2015 to remain in effect only through July 1, 2019. 

HOAs and landlords must permit personal agriculture Existing law regulates the terms and conditions of residential tenancies, and prohibits a landlord from interfering with a tenant’s quiet enjoyment of the premises. This law requires a landlord to permit a tenant to participate in personal agriculture in portable containers approved by the landlord in the tenant’s private area if certain conditions are met.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments and authorizes the board of directors of the association that manages the development to adopt and amend the operating rules for the development. This law makes void any provision of a governing document of a common interest development that effectively prohibits or unreasonably restricts the use of a homeowner’s backyard for personal agriculture.

Assembly Bill 2561, (codified as Civil Code §§ 1940.10 and 4750 to the Civil Code) (effective January 1, 2015).

HOAs prohibited from fining members for reducing water use
This law prohibits a homeowner’s association from imposing a fine or assessment against a member who reduces or eliminates watering of vegetation or lawns during any period during which the Governor or local government has declared an emergency due to drought. In January of 2014 Governor Brown declared a State of Emergency to exist in California due to severe drought conditions.
Assembly Bill 2100 (codified as Civil Code §4735) (effective July 21, 2014).

Emergency regulation restricting use of water for outdoor landscapes adopted by State Water Resources Control Board
In January of 2014 Governor Brown declared a State of Emergency to exist in California due to severe drought conditions. Since then, other executive orders by the Governor cleared the way for the state water board’s adoption of emergency regulations to prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion of water, to promote water recycling or water conservation.
On July 15, the state water board adopted emergency regulations restricting water use for outdoor landscapes. The regulations prohibit using potable water outdoors, such as watering your lawn, in a manner that results in runoff water on sidewalks, driveways, roadways and your neighbor’s property; washing a car with a hose unless the hose is fitted with a shut-off nozzle; watering down your driveway and sidewalk; and using water in a decorative fountain unless it recirculates. Violation of the regulations is an infraction and may result in a fine of up to $500 for each day the violation occurs.
C.A.R.’s form “Statewide Buyer and Seller Advisory” (SBSA) (an optional disclosure form) advises potential buyers of the possibility of governmental limitations on the amount of water available to the property, restrictions on the use of water, and an increasingly graduated cost per unit of water use, including penalties for excess usage.  
Article 22.5 Drought Emergency Water Conservation §864 (effective July 15, 2014).

Los Angeles County - separate notification of notice of default or sale sent by county recorder as anti-fraud measure
This law is specific to Los Angeles County. It extends to 2020 a previous measure that directs the L.A. County recorder to notify by mail the owner of a property and the occupants or tenants of a notice of default or a notice of sale.  Notices of default and notices of sale are already required to be mailed to the property owner and posted under state law, so this additional notice may appear redundant. However, the intent of this law is to alert an owner to potential fraud, since someone recording fraudulent notices of default or sale would likely not mail out the state-law mandated notice of default or sale.

Senate Bill 827 (codified as Government Code §§27297.6 and 27387.1) (effective January 1, 2015).