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Chairman’s Message: Get Smart About the New Laws in 2018

Quincy Virgilio: MLSListings Inc 2015 Chairman

Quincy Virgilio
2017 Chairman, MLSListings

Each year, the federal government and the state of California put into effect legislation that may impact not only your clients but your business as well. It’s vitally important that every broker, broker associate, and agent becomes familiar with these new laws to protect themselves and their clients. As professionals, we have a fiduciary duty to be knowledgeable about these laws and the ways in which they can impact the transaction so that we can properly advise our clients. The following helps to break out some of these new regulations and provides a summary of each.

Laws Impacting Clients

  • HOAs and mandatory disclosure document costs. HOA managers must disclose to buyers that disclosures are the property of the HOA. The seller can give to the buyer, at no cost, current copies of any of the mandatory disclosures that the seller has. A seller can request the mandatory disclosure documents from the HOA but isn’t required to purchase all of them. Itemized cost for each separate disclosure must appear on the annual budget report.
  • HOAs and rooftop solar energy systems. An HOA may not establish a general policy prohibiting the installation or use of a rooftop solar energy system for household purposes on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. For requests for installation on a multifamily common area roof shared by more than one homeowner, the HOA must require the applicant to notify each owner of a unit in the building on which the installation will be located and each owner must maintain homeowner liability coverage.
  • Flood disclosures. When entering into a lease or rental agreement, the owner/landlord or agent must disclose in writing insurance issues, information about floods, and any actual knowledge of special flood zones or areas of potential flooding.
  • Bed bug disclosures. A landlord may not show or rent a vacant unit if the landlord knows it has a current bed bug infestation. However, there is no duty on the landlord to inspect a dwelling or the common areas of the premises for bed bugs if the landlord has no notice of a suspected or actual bed bug infestation. The tenant is responsible for reporting, in writing, a suspected bed bug infestation and the landlord is required to remedy the situation with pest control services. It is the responsibility of the landlord to provide copies of pest control reports to tenants whose units have been inspected and if infestation in a common area is confirmed.
  • Landlord and tenant immigration status. Landlords are prohibited from making any threats to disclose information relating to the immigration status with the intent of harassing, intimidating, retaliating, or influencing a tenant to vacate, unless it is required to comply with federal law. “Immigration or citizenship status” is defined as a perception that the person has a particular immigration status or citizenship status, or that the person is associated with a person who has, or is perceived to have, a particular immigration status or citizenship status.
  • Landlords and tenant marijuana use. Because marijuana is still illegal under federal law, a landlord can prohibit the use, cultivation or possession of medical marijuana in a rental unit, and does not have to accommodate a disability claim by a tenant under the American Disabilities Act or California Disability Law for use of marijuana for medical or other purposes. The landlord should state this in his or her lease agreement, covering both use (smoking) and cultivation (having a marijuana plant on premises).
  • Landlords of HCD housing and tenant pets. Any new housing development financed through certain Department of Housing and Community Development (HCD) on or after January 1, 2018, must allow a resident of the housing development to have one or more pets, such as a dog or cat, within the resident’s dwelling unit. Any animal kept for a commercial purpose is excluded.
  • Accessory Dwelling Unit changes. Several changes have been made to the 2016 ADU laws, including provisions for a local agency’s ADU ordinance shall include that the ADU may be rented separate from the primary residence, but may not be sold or otherwise conveyed from the primary residence. Further, parking requirements for ADUs may not exceed one parking space per unit or per bedroom, whichever is less. The changes remove the option for local agencies to prohibit off-street parking in setback areas or through tandem parking where that parking is not allowed anywhere else in the jurisdiction. Tandem parking is defined as two or more automobiles that are parked on a driveway or in any other location on a lot, lined up behind one another. Lastly, the law provides that no setback shall be required for an existing garage that is converted to a portion of an ADU.
  • Incentives for wood burning stoves. As part of the Woodsmoke Reduction Program administered by the State Air Resources Board, those who voluntarily replace their older wood-burning stoves with cleaner and more efficient alternatives, are entitled to receive money incentives. The program is designed to achieve short- and long-term climate benefits and localized public health benefits. The incentive funds come from the Greenhouse Gas Reduction Fund.

Laws Impacting Real Estate Professionals

  • License number disclosure in advertising. All agents and brokers are required to include their real estate license number and the responsible broker under whom they do business on all advertising, including their “for sale” and “open house” yard signs and directional signs. It is not necessary to include the responsible broker’s license number.
  • BRE vs. DRE vs. CalBRE designation. The Department of Real Estate (DRE) is being restored to its status as a department, as opposed to its current status as a Bureau of Real Estate (BRE) under the Department of Consumer Affairs. This move is designed to create greater efficiencies and cost savings. For designation on printed materials, such as business cards, the real estate professional is not required to make the change at this time and may, in fact, use “DRE,” “BRE” or “CalBRE.” The important requirement is that one of these designations appears in front of the professional’s license number.
  • Broker Associates. Like their sales agent peers, broker associates must now adhere to the same advertising and responsible broker identity laws that require identification of the responsible broker under whom they conduct the majority of their business and this information must be included and searchable on the CalBRE website. The responsible broker is required to submit a form identifying all broker associates working for them to the BRE by January 1, 2018. This form must be signed by both the broker and broker associate, and submitted in hard copy format. Online submission is not available.

This is only a snapshot and not a comprehensive list of changes. I encourage all of you to research the laws that take effect in 2018. Helpful resources include the California Association of REALTORS® and your local and state representatives.

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