Emily Maynard: This is Emily Maynard and I’m the project manager for the California Community Colleges Real Estate Education Center. I’m so glad that you’re all joining us for our first webinar. Ed Estes is presenting and he is a faculty member at Mt. Sac and he’s gonna Emily Maynard: Be sharing a little bit about legal updates, including the new standard purchase agreement that’s coming down the line. Emily Maynard: And if you have questions, you can open the question Q AMP. A or you can add some thoughts in the chat and we’ll do our best to sort of Emily Maynard: keep this moving as well as answer your question, but I’m going to turn it over to Ed and yeah you have anything that you need. I will do my best. If you can just put it in the Q AMP a section or in the chat. Ed Estes: All right, so Emily’s gonna pull up the first screen had a little technical difficulties on my end. Ed Estes: So she would be so kind as she can actually run the PowerPoint and I’m going to talk about the slides as they come through. Ed Estes: Well, right. Well, there we have my title page there. We have my name and my college. So what I’d like to do first are talking about some new cases that come down in the last year or so. Ed Estes: And I think you’ll find them in like been in a couple of them are actually kind of entertaining. Ed Estes: The first one there, the specter versus as a year is not very good on my case thing pronunciations. We had a situation here where Ed Estes: specter soon as a curious. I don’t recall how it was going. I think it was the defendant that wasn’t going very well in the litigation. Ed Estes: And after about two years, they decided they were going to go back to the contract. And lo and behold, in the contract. There was an arbitration clause. So, um, I think I just felt Miss misspelled arbitration there to Ed Estes: That on my part. But anyway, I’m Courtney held that after two years that dependence had back waive their arbitration rights. So that’s important to note that if you do have a contractual dispute. Ed Estes: And you have an arbitration clause that you want to enforce. You got to go with arbitration in the beginning. If you go into court and start litigation. Ed Estes: You probably will not be able to go back and arbitrary case next item or next case is the VC vs lamb. Ed Estes: In this situation, I believe this was a San Francisco case, the landlord decided to evict a tenant. Ed Estes: And put one of their family members in. Now we will be talking about the statewide rent control law in a little bit. And that also has a provision that a landlord may Ed Estes: Evict A Tenant without cause if they want to put in a family member. Well, in this case, it doesn’t appear that a family member actually moved in, when in fact they newspaper it up the windows. Ed Estes: There was a report that they had left the light on in the apartment, but it never went off and no one was ever seen entering or exiting the apartment and the court hell that this was not in fact a move in have a family member. Ed Estes: If you’re going to evict a tenant and move a family member in it has to be done. Good thing the next case Halle vs Alan Ed Estes: In this case, and I believe another San Francisco case a real estate agent went up to the tenant and asked the tenant. If a particular parking space belong to that tenant. Ed Estes: And the tenant was elderly and said something to the effect that no that was not her parking place when in fact that parking place had been assigned Ed Estes: To that particular apartment unit where upon the landlord then allocated that parking space to a different tenants and presumably charge that different tenants additional rent. Ed Estes: The court here just said here that no you can’t take a tenants response to a questionnaire and have that modify the terms of the lease or rental agreement. Ed Estes: The last case on this particular slide one of my favorite cases, this is the Gary Gill Martin versus OB Insurance Corporation Ed Estes: Gary Gail Martin was an independent real estate broker and he did not have errors and omissions insurance. Ed Estes: Well, she was involved in a real estate transaction and was actually a dual agent. So he represented both the buyer and seller and sell Ed Estes: Well, after close of escrow. I guess there were some problems, potentially some disclosure issues. So the buyer decided to sue every deal Martin, as well as the seller. Ed Estes: Well Gary Gail Martin, of course, didn’t have errors and omissions insurance so he figured that this would be a good time to get an Eno policy, which he did Ed Estes: Well, lo and behold, after he got the policy, the seller than countersued against Gary Gail Martin. Ed Estes: And Gary Gail Martin Dan offered or tendered up the defense of the second lawsuit by the seller to the insurance company. Ed Estes: And the insurance companies said no, this is all part of one action you did not have your Ian old policy in place when the buyer for soon so we’re not going to cover you with the Ed Estes: With a defense against the last word by the seller went up on appeal, and the Court of Appeals agreed. Ed Estes: So bottom line here and what we take from this is make sure you have no insurance, make sure its current don’t try to get you know insurance after a claim arises. All right, Emily. If we don’t have any questions. Why don’t we jump to the next slide. Ed Estes: All right, so the top case there that Chuck versus Dale said Ed Estes: Also found in many rent control ordinances, they exclude single family dwellings. Well, in this case the Chung versus Gail suitcase. There was a single family dwelling. However, I believe it had Ed Estes: Nine bedrooms, two bathrooms and four separate families living in the house and the owner of the property said, you know, this is a single family dwelling I’m exempt permit control. Ed Estes: And the court of appeals that no no you were to our IS YOU ARE A rooming house this is effectively an apartment and you are covered by rent control. Ed Estes: So if you do want to claim the exception or the exemption of a single family residence. Ed Estes: does need to be occupied by a single group or family and we’re not going to get into a discussion here, what constitutes a family, but Ed Estes: Definitely a living unit where they’re all together related in some fashion by either relationship marriage or blood Ed Estes: Our next case down is the ice in vs Canada. We’re in here on CC and RS prohibited new construction from blocking us, but it didn’t mention anything about a remodel Ed Estes: So the owner of this House decided to do some remodeling and they’re remodeling. In fact impinged on a view of a neighbor now. Ed Estes: We probably should do some clarification here. We’re not talking about a condominium complex or a Planned Unit Development. Ed Estes: These were single family detached houses, I believe, but they were within a homeowner’s association. Ed Estes: So as many of us know many new developments really done within a plan community and they will have CC and RS that cover. So, the Court ruled the CTR provision very strictly Ed Estes: It covers new construction, but does not cover a remodel last case here on this page is the fans versus walnut gardens apart condominium Association. Ed Estes: In this case, the homeowner had some leakage, either through a window or a rough not sure the case wasn’t sure what it was about. But there was a leak into the unit and the homeowner association was responsible, the property owner Ed Estes: Decided they were not getting the service that they wanted from the homeowner association. So they decided to sue. Ed Estes: And they wanted to sue under a tort action rather than a contract action. Now if you don’t teach the legal aspects of real estate. Maybe I could make a little digression here in a tort action you’re allowed to claim speculative damages. Ed Estes: Somebody is injured. They go into court under a tort action, they’re playing pain and suffering can’t really prove that they’re actually in pain. Ed Estes: But the jury can speculate that they are in fact in pain and can award damages. So that’s allowed in a court action not allowed in a contract act. Ed Estes: In a contract action, you actually have to show actual damages. That’s one of the reasons we have a liquidated damages clause in the Ed Estes: Real Estate purchase agreement is because in order for a seller to sue the buyer, they would have to show actual damages. In other words, they would have to show that there was another buyer out there. Ed Estes: That was not able to purchase the property because buyer one bought the property and then buyer one defaulted. Ed Estes: And buyer to was nowhere to be found. After that, very difficult to prove actual damages, but that is what you need to prove in a contract action. Ed Estes: In a toward action. You may only need to prove speculative damages well in the sands case, the court rule that if you’re going to sue an owner Association, you need to shoot through under contract law can’t sue under corporate Ed Estes: Emily, if we don’t have any questions now I’d like to go to the last page of cases. Ed Estes: The first case here that baby in versus renovate America a this kind of a concerning case because it ruled against DocuSign being an electronic signature. Ed Estes: Now, before I get too much into this. Let’s talk about what the case was about this was a case where a solar company. Ed Estes: Induced a homeowner to sign up for a solar system or solar panels on their roof, and in doing that contract they use DocuSign Ed Estes: So I think the court may have been a little prejudice here because of all the bad Ed Estes: publicity and press that are out there against these solar companies that induce homeowners to sign up for the solar systems and oftentimes these Ed Estes: Homeowners don’t exactly know what they’re signing into. But let’s just kind of put that on the side and let’s talk about the facts of the case. Ed Estes: In the backs in the case, the defendant the solar company renovate America did not adequately do their prove up to explain why a DocuSign signature is a valid signature. Ed Estes: So what we take from this case if somebody is sued over whether or not a DocuSign signature isn’t backing true electronic signature, you’re going to have to prove up Ed Estes: The mechanics of DocuSign, so my recommendation would be to contact DocuSign have them provide that information that you could then introduce into court. Ed Estes: Showing how DocuSign works. Now I think most of my audience here understand DocuSign, but just to refresh. Ed Estes: A real estate agent who’s going to use DocuSign sends an email over to their buyer or seller, there’s a link in that email that they can then click on Ed Estes: That go into Doc, you sign it put in a username, they put in a password. Now they have access into DocuSign Ed Estes: And it was only them armed with their username and their password that allows them to go in to the site. Ed Estes: And then initial design documents and they can then also customize what their initials going to look like what their signature is going to look like. Ed Estes: It’s important to know that their initials in DocuSign that their signature in DocuSign is not actually the electronic signature the electronic signature is Ed Estes: The username and the password that is controlled by that particular person and that is how their consent or their signature is authenticated. Ed Estes: What is the signature. How do we define a signature a signature has to have two qualities. First of all, it needs to be unique. In other words, nobody else can Ed Estes: Origin or essentially nobody else can forge it. Secondly, it needs to be attributed to that person. So, which is why most of us for our signature use our name because our name is attributed to us. Ed Estes: And because our signatures in my case, and so hilariously sloppy and messy and convoluted, no one else could possibly duplicate it so everybody knows it is my signature. Ed Estes: If I were to send one of you an email and at the bottom of my email I were to have my name college address Ed Estes: That would constitute electronic signature because it is coming from my IP address and it has my name. Ed Estes: Nobody else can replicate that unless they work to steal my login information or unless I was to share my login information which I would never do. Ed Estes: This is the one of the reasons that now San Antonio college and I suspected your colleges as well, you require your students to use their college email in all their communications with you. Ed Estes: Because that is how you verify it is actually them. You don’t want to use their Gmail or Hotmail address because Ed Estes: Other members of their family spouses may also use that email address and you don’t know who it is. So again, in this case the DocuSign Ed Estes: Case, you do need to prove up if you’re going to be using an electronic signature. I think I’ve beaten this dead horse to get enough, but we have questions on electronic signatures Emily will relay those to me. Let’s cover the last case first. The Ryan vs real estate at the civic Ed Estes: In this case, Mr Ryan was hosting an open house and the neighbor came over and told him that the neighbor was going to be doing some construction. Ed Estes: And building a wall or building along the property line and just one of the real estate agent to know about it. Well, the real estate agent fail to convey that information to the buyer. Ed Estes: And the buyer. I’m sorry that Ryan is the buyer, not the real estate. I apologize for that. And then Ed Estes: Ryan and then Sue’s and arguing that was never explained this by the real estate company or the real estate agent at real estate of the Pacific. Ed Estes: And the Court held that yes, if a neighbor tells a real estate agent, something about the property or the neighborhood. Ed Estes: And the real estate agent has an obligation to convey that to potential buyers. Now, this can be a little dicey because this information is arguably your state. Ed Estes: So my recommendation if real estate agent finds themselves in this situation, you would say something to the effect that Ed Estes: The neighbor across the street, identify the neighbor told me this. I’m not sure if this is true or not, but I thought I should share this information with you. Ed Estes: And you probably should document that as well. In the FBI DEA agents visual inspection disclosure Emily, do we have any questions so far. Emily Maynard: No. No questions. Emily Maynard: No questions at this time. Ed Estes: Well, that’s good. That means I’m doing my job or everybody has hung up or somebody is sleeping. Let’s go ahead and go to the next slide. Ed Estes: And we have some recently filed cases they’re actually joint cases they’re all dealing with the same issue and what they’re trying to do is require that the Multiple Listing Service. Ed Estes: Will publicly display the amount of commission. It’s going to be share to the cooperating agents in the public comments. Ed Estes: In the MLS so that when Zillow and the other third party site pick up information run the MLS the viewer the MLS can see how much Commission, the agent who will be representing them is receiving from agent who has taken the listing now. Um, I think the Ed Estes: reason behind this is we do have several real estate companies, I won’t mention them on the air here, but we do have several real estate companies who follow a business model where they reach out to potential buyers. Ed Estes: Let the potential buyers or suggest to the potential buyers that they go out and look at properties which this real estate company provides to them. Ed Estes: They actually visit the properties with the listing agents and then when they’re ready to purchase the property they go back to this broker, the broker actually writes the offer and then we’ll rebate. Ed Estes: A portion of the Commission, back to the buyer. So hypothetically, if there’s a 3% Commission being offered to the broker who is representing the buyer. Ed Estes: This particular company might rebate 2% back to the buyer between 1% to themselves or maybe repaid 1% and keeping 2% on. We don’t know where this is going on, but it could have the it could have a significant impact on how real estate is marketed Ed Estes: as we know it today, Emily. Let’s go on to the next slide. Ed Estes: And we now have a couple of new dare regulations. I think most of you are familiar with the first one, where the disclosure of the license identification number has to be on solicitation materials. Ed Estes: The Department of real estate has clarify this a little bit on it needs to be on all points of first contact or all points of contact for that matter, not just first contact, but all points of contact. Ed Estes: So that would be signs email letter flyers business cards website that mean anything a buyer, we could possibly see or a seller to possibly see Ed Estes: If you got your name. If you have to have your license number on it. One exception directional signs for open houses. Ed Estes: Do not have to have your license number on that. But the for sale sign or the open house sign on the property, you need to have your dare license number I might want to make a Ed Estes: Humorous point here on about a year ago I thought it might be cute to delete one of the zeros from my license number on will have one of those old license numbers where my license number begins with two zeros, not one zero. Ed Estes: And taking the position that a zero to the left of a number doesn’t have any value. So I could just delete it. Ed Estes: Somebody shared that with one of the deputy Commissioners at the Dr. Ray. Ed Estes: I actually got an lol email from the deputy commissioner, she did think it was pretty funny. But she said add please add the other zero to your license number. So for those of you old timers, like myself, who have Ed Estes: A license number that begins with two zeros or even one zero, you need to put the zeros on there so they know truly how old you really are. Ed Estes: The last regulation on this page. Ed Estes: 2915 this came about last year where if you have disciplinary action listed on a public site of the Department of real estate website, you may buy petition have that removed. Ed Estes: The conviction must be at least 10 years old. It is discretionary by the real estate, Commissioner. Ed Estes: He or she, as you know, we don’t have a real estate Commissioner right now or at least. Last time I checked, we didn’t have a real estate, Commissioner. Ed Estes: But we do have an acting real estate, Commissioner, and there is a non refundable fee of $1,275 so you pay that fee. Ed Estes: You have no assurance or guarantee that it will be granted. We don’t get that feedback if the Commissioner rules against you. Ed Estes: Again conviction has to be over 10 years old and more likely than not it needs to involve something that doesn’t directly reflect to moral turpitude. I actually have a former student or had a student who had his fails license revoked due to fraud and forgery. He had an interesting Ed Estes: Plan when his sales license got revoke he took his broker level classes at Mount sac and then decide to apply for his broker’s license. Ed Estes: And the Dr. He was not abused. They did not grab his broker’s license. And I think there is little or no chance that will ever have that discipline removed because as we all know, there’s probably nothing worse. Ed Estes: For a conviction against a real estate agent than fraud or forgery, that really speaks to the heart of a real estate licensees integrity. Ed Estes: You cannot have real estate licensees out there who commit fraud or investment or X meaning fraud or forgery. Emily put on any questions. Let’s go to the next slide. Ed Estes: So now we’re going to start the new laws and we’re going to kick it off with the new statewide rent control. So let me get through these two slides. Um, I, I just, I feel the questions coming out there unless you’re Ed Estes: Unless you’re more knowledgeable than I am. I’m still learning things about this, this new law 1482. First of all, there is a cap on how much you can increase your rent. Ed Estes: And that is 5% last local CPI, but it cannot increase more than 10% a year so 5% is the cat plus whatever local CPI Consumer Price Index cannot exceed more than 10% now if you choose to raise the rent this year. Let’s say 7% Ed Estes: And next January 2021 you decide to raise the rent. Again, they will count this year’s rent and next January’s rant. Ed Estes: And it cannot exceed 12% because it was, was it with an well month of each other. So we both have the calendar, kind of, but then we also have this 12 month cap. Ed Estes: Basically, the legislature does not want you raising the rent more frequently than every 12 months. So they got you on the calendar year. And they got you on the 12 months. So just an FYI on that. Ed Estes: Next evictions must be for just costs. In other words, if you’re going to evict a tenant, you have to have a reason for it, such as breach of beliefs criminal activity failure to pay rent. Ed Estes: Now this will kick in. Once the tenant has been a resident of the premises for 12 months. So essentially you have an 11 month Ed Estes: 29 or 30 day honeymoon to figure out whether the landlord rarely gets along with this tenant. So during that first 12 months of residency, the landlord can Evict A Tenant Ed Estes: For no reason whatsoever. Just simply give a 30 day notice and the tenant is gone. But after the tenant has been there for 12 months then the law takes into effect. The thinking here is, if this is a bad tenant. This gives the land more 11 and a half months or whatever to make that determination. Ed Estes: Could land or enact the policy that Ed Estes: They will evict all of their tenants or only make leases for an 11 and a half months I guess they could, but the thinking is after 11 months. Ed Estes: You’re going to know whether you got a good tenant or a poor tenant. And if you’ve got a good tenant, it really doesn’t make sense. Ed Estes: To get rid of them, and then go out into the rental pool and bring back a tenant that you don’t know you know the thinking is the devil, you know, is probably better than the devil, you don’t. So that’s the thinking, I think, or I believe regarding this Ed Estes: I’m going to get through this slide before I started taking questions. Now we’ve taken care of the at fault. Ed Estes: Let’s go down to the no fault, you need to have justification. If you want to get rid of a tenant. Ed Estes: Who hasn’t breached the lease. So this justification is a family member. Ed Estes: Significant remodeling withdrawing the rental rejoining the unit from the rental market or government order. So single family residency your have a family member moving in. Ed Estes: How close that family member has to be. We don’t know. Could it be your third cousin five times removed. I don’t know, certainly direct relationship, brother, sister, son, daughter grandson granddaughter grandparent, that probably that’s when we start going out to cousins and uncles, aunts. Ed Estes: We don’t know yet. We’re going to have to see what happens with the courts. Ed Estes: Significant remodeling, at the very least, you’re going to need a permit. Ed Estes: My feeling is the remodeling when it is being done would impact habitability. In other words, during the role modeling the premises really aren’t that for occupancy Ed Estes: You’re going to be shutting off utilities like power gas, electric electricity power electricity on sewer things of this nature. So the premises is not handle that would certainly qualify Ed Estes: Thrall from the rental market you are taking the property off the market, you are going to sell the property to a prospective homeowner government order condemnation. Ed Estes: Domain would certainly qualify. If you are taking Ed Estes: The tenant out be a no fault, you must provide relocation assistance Nat is the equivalent of one month’s rent. You can either for go the last month’s rent for if you’re going to pay the rent to cash to the tenant. It needs to be done 15 days prior to the expiration of the tenancy. Ed Estes: Alright. So, Emily. We do have some questions if it’s on this slide, I’m going to go ahead and take it over need to go through the exceptions with us, which is on the next slide. So there was a question I think that came in, could you either flashback off or share it with me. Emily Maynard: Sure. The question is, what about the 90 day notice if rent increases more than 10% that would seem to imply, we could increase greater than 10% so long as we give 90 day notice is that correct Ed Estes: Correct. That is my understanding. If you want to raise that rat more than Ed Estes: 10% of the 12 month period, you’ve got to give a 90 day notice Ed Estes: But that 90 day notice would have to be in my example in 2021 Ed Estes: So if you gave that 90 day notice in January. You couldn’t raise that rent until April, because you would have to go. Those 90 days so me we’re working on a 30 day month Ed Estes: Does that make sense. Hopefully out there essentially they’re trying to put a roadblock up here to keep you from raising that ran more than 10% in a 12 month period and the 90 day notes. Ed Estes: Are they have any other questions. Emily Maynard: No other questions for now. Ed Estes: Great. Let’s go to the next slide. And we’ll get into some of the exemptions. Okay, so the big exemption out there, single family home. Ed Estes: If the to our condo. If the tenant has received a notice of exemption and the owner is not a real estate investment trust or a corporation. So we all know what a single family dwelling is and we are renting the single family dwelling to a single family unit. So it is Ed Estes: spouses and children, it is parent and child. It is, but they are living in a cohesive unit. It’s not a rooming house as I earlier talked about Ed Estes: You also have to have provided with the landlord also has to have provided this notice of exemption. Ed Estes: And later in this slideshow I will show you an example of car. Notice of exemption. But you have to give that to the candidate. So the tenant understand that this particular property is not under the statewide rent control. Ed Estes: Violate the owner to not be a repeat or a corporation, it can be in a living trust. Ed Estes: It can be in a LLC, as long as none of the members of the LLC or a corporation. Right. So we got to make sure that clear. Ed Estes: Also properties built in the last 15 years are exempted. So this would be include apartment buildings. Ed Estes: This was put in to stop opposition from the construction industry. Now this is a rolling timeframe. So if I own a 15 year old apartment building today. Ed Estes: I’m not covered by the statewide rent control, however, NEXT YEAR MY APARTMENT BUILDING WILL BE 16 years old, so I will be covered. Ed Estes: last owner occupied duplexes The thinking here is, if you are living in one of the duplexes and you read out the other side. Ed Estes: And you and your neighbor or not kidding long you can kick them out. Okay, so it doesn’t apply there but this exemption is or duplexes Ed Estes: triplex or four Plex if you have a duplex and you add an additional dwelling unit and edu you turn yourself into a triplex and you’re not going to get this exemption in my opinion. Ed Estes: Alright, so now let’s go to 8585 it’s pretty straightforward for all of us. Ed Estes: 85, of course, is that independent contractor qualification. It is currently going to be challenged on the ballot box by Uber, because it’s gonna blow a hole in their Ed Estes: In their business plan. But the nice thing for real estate licensees it’s created an exemption for us. First, if you hold a real estate license. Ed Estes: Second, your compensation is based on commissions. And third, you have a written independent contractor agreement with your broker, then you are exempted. And you can remain an independent contractor. Ed Estes: But here’s where we’re going to see some problems on licensed assistance unlicensed assistance part of teams are part of successful agents. They need to get a real estate license if they’re going to be compensated by as independent contractors Ed Estes: Otherwise, they need to be treated as employees, which means they need to be salary. They need to have normal working hours and they can’t be compensated by a bonus system so Ed Estes: This is actually an opportunity for all of us who teach real estate. I am going out there on LinkedIn and other social media, letting teams know that, hey, if you’ve got an unlicensed assistant Ed Estes: And you’re treating them as an independent contractor as of last January 1 you’re in violation of law, you need to get them a real estate license you need to enroll enough that they need to take our three classes and get themselves licensed otherwise. Ed Estes: You’re going to be in trouble with the Department of Labor, Emily. We don’t have any questions. Let’s go ahead and go to the next slide. Ed Estes: All right, so, Senate Bill 778 require sexual harassment training two hours for all companies with five or more employees employee with the managers and W two employees. Ed Estes: Or 2021 this also will extend to abusive behavior. So you need to get sexual harassment training and training against abusive behavior to all of your W two employee does not extend to independent contract. Ed Estes: At 670 a homeowner associations can no longer unreasonably restrict accessory dwelling units. So again, this doesn’t necessarily pertain to condominiums, I wouldn’t think but for those Single Family Detached homes in an HOA Ed Estes: If they want to convert their garage into a dwelling unit. They may be very well able to do that. Of course, this creates a land use issue. Because where are they going to haul park their cars. Ed Estes: Presumably on the street that’s going to be another problem that cities in the states are going to have to deal with SB 652 Ed Estes: Landlords, and he cannot prohibit religious items on an entry door. Ed Estes: So, Ed Estes: I don’t think that’s too big of a problem with a two ways might be, they could be a problem with apartment buildings. So just a heads up for landlords Ed Estes: Resident wants to put religious across or a but as I move Medusa little scroll box that people, the Jewish faith often have on their door, they’re allowed to do that. Ed Estes: Senate bill. Let’s see 1343 you cannot refuse to read to or refuse to sell to the daycare provider. Ed Estes: So it sounds like daycare providers may now be entering into the area of a protected class more to be seeing what happens with the legislature at the next term before we go to the next slide, Emily. I think we have a question out there. Emily Maynard: Yes, the question is regarding sexual harassment training. If I have a team and train the paid staff over five, do I also have to train the agents who are paid by the broker of record. Ed Estes: You would not have to train the agents, no matter how they’re paid because they are not W two employees so independent contractors are not covered by 778 Ed Estes: Only salaried employees. So, W two employees. They are covered independent contractors Ed Estes: No matter how they get paid at this point, they are not covered by sexual harassment training. I think there’s still a philosophy out there that because independent contractors have a certain amount of freedom, um, Ed Estes: They’re not as vulnerable as, say, a W two employee. Ed Estes: Anything else, and what Emily Maynard: That looks like it did for now. Ed Estes: Okay, great. Let’s go to the next slide. Ed Estes: All right, so, Senate Bill 234 large family take her home. So this would be Ed Estes: Homes at taking in as many as 14 children. They are now treated as a resident to use. Therefore, Ed Estes: They are not considered to be a material fact for disclosure purposes, um, they are simply a residential use arm. Ed Estes: And as far as we’re concerned. It’s just another neighbor down the street. If, however, the daycare facility does Ed Estes: Have an adverse impact on the value of a property that you have listed for example traffic issues or no as well, that may be a material back Ed Estes: But nearly the existence of a daycare home with 14 children or less, that in itself does not warrant a disclosure. It’s just simply a residential years at 1018 Ed Estes: I went home inspectors go out to a property. They may make a comment as to whether or not the property is or is not worth what the property is being sold for Ed Estes: I can’t do that anymore. They cannot give opinions of value and appraisers when they go out and appraiser home, they are not to be making a home inspection. So buyer should not rely only rely on the appraiser as a home inspection. Now we know, particularly with FHA and VA, they will make Ed Estes: We want to call it recommendations or requirements coming from the lender. It’s certainly a requirement. I think from the, from the appraiser, it may be a recommendation. Ed Estes: But they certainly make points that certain things should be or need to be repair because of requirements of FHA and VA, um, that’s one category but Ed Estes: The bottom line. The statute. They don’t want people to view and a phrasal as a home inspection, Emily. I think I see a question, why don’t we take that question right now. Emily Maynard: Sure regarding appraisers don’t FHA and VA appraisers do some level of inspection. Ed Estes: Well, you could argue that an appraisal is an inspection of the house because they do go through the property, um, typically they don’t operate systems. They don’t test things Ed Estes: They typically don’t look at things like plumbing. Ed Estes: I had an appraisal done on our property wants and there had been a plumbing leak in the ceiling. Ed Estes: And there was actually a hole in the ceiling, because they were in the middle of repairing it and the appraiser and air even saw didn’t even look at the ceiling. Ed Estes: Gives you some comment on what you think of what I think of appraisers these days but yes appraisers do make comments. Ed Estes: But these are not to be viewed as Home Inspections. So I think what the legislature is trying to do is make a clarification appraisals, the appraisers need to focus on determining the value of the property and home inspectors are the focus on Ed Estes: Testing systems and coming up with a an opinion on what the condition of the property. Yes. Ed Estes: There’s always going to be an overlap here, but I think the legislature is trying to draw a line. Ed Estes: At 38 disclosure and point of sale compliance recording defensible states. So in those areas that are prone to fire. Ed Estes: So we’ve got the state responsibility areas and we have the wildland fire areas that are noted in the natural hazards disclosure or an HD report. Ed Estes: is anticipated that local governments will start identifying those properties going out and requiring property owners to create defensible space and require property owners to have fire retardant landscaping. Ed Estes: This is a Ed Estes: Item in motion. Right now you’re going to start reading more and more about it. The Los Angeles Times did have an article about it. About a week or so ago. So this is going to be coming out. So, we will see additional disclosures as local governments start Ed Estes: Making these again identifications presumably it’s going to show up in HD report, but I don’t know, again, it’s a work in progress. We’re going to see what happens. Just a heads up, it’s coming our way. Ed Estes: You’ll know more about it, probably six or 18 months from now, last item SP 18 on 90 day notice to give to a periodic tenant in the property has been foreclosed upon. So we all know that the tenants been in a property for less than Ed Estes: 30 days consuming less than a year. You need to give a 30 day notice if the tenants been in the property for over a year. You need to give a 60 day notice both on a periodic or month to month tenancy. Ed Estes: It. However, the periodic tenant is in the property. The property was foreclosed upon the Ed Estes: Beneficiaries who forecloses on the property. Take the property back, they must be a 90 day notice, Emily. If we don’t have any more questions. Let’s go to the next slide. Ed Estes: So Ada 27 if your residential or commercial property is generating more than four cubic yards of waste. Ed Estes: You need to have recycling bins for them. Not that they actually properly knew them, but you’re required to have them. Ed Estes: SB 329 a source of income. Now a protected class. And specifically, we’re talking about Section eight tenants. So landlord may not make a blanket refusal to read the section eight tenants. Ed Estes: Now there’s a landlord have to rent to a section 810. Well, it depends the landlords and certainly follow their qualification guidelines. Ed Estes: They can certainly look at the credit history of the tenant, they can certainly look at the past rental history of the tenant, they can certainly go on. References Ed Estes: If the landlord has an income requirement. Let’s say, hypothetically, three times or two and a half times monthly rent. Ed Estes: But Section eight is paying a third of the rent, then the landlord could only require two times monthly rent or something like that. So they would have to adjust their income qualifications, based on the percentages that Section eight is supplementing the rent, um, Ed Estes: I don’t know if a landlord could say I require this particular rental agreement and if you want to sign this particular rental agreement. Ed Estes: Under Section eight I will rent to you, knowing that Section eight will not do that because they have their own rental agreement. Ed Estes: I don’t know exactly how that’s gonna play out. I’m all we can say at this point landlords. Do not publish anything that says no section aches. Ed Estes: If somebody calls you and says, Do you take Section eight, you would have to say yes if they qualify. Please come in and fill out a rental application and let’s see where you are. Ed Estes: So that’s, that’s where we are on this on the statute, SB 222 military service members and veterans are now a protected class we have race, color, Ed Estes: familial status disability. We have citizenship, we have foreign language spoken. I could go on and on. Add to that. Ed Estes: Military service members and veterans. They are all now considered a protected class, you cannot discriminate them on a base that their military service and connected to that we have SP 644 security deposit for military service members both active reserves also National Guard. Ed Estes: Or unfurnished unit, it is no longer two months rent it is one month’s rent. Ed Estes: Or a furnished unit, it is no longer three months rent or the equivalent of three months rent it. And now the equivalent of two months. It’s been decreased by one month before we go to the next slide, Emily. I think we have a question out there. Emily Maynard: Yes, the question is, is it up to the service member to let the landlord know that they are reserves or just the landlord have a duty to ask up front. Ed Estes: I, you know, the statute is not clear on that. I would say that the service member would either have to tell or the landlord would have imputed knowledge by doing the credit check Ed Estes: So if they’re an active service member, you would see that on their employment, so that wouldn’t be a problem. The veteran on Ed Estes: If they’re wearing a baseball cap that says Vietnam veteran, I would think that would be a red flag on if they have a if they’re wearing military Ed Estes: Related clothing that might be a red flag that would warrant an inquiry, um, Ed Estes: But I don’t think you would ask, because again, when I deal with protected classes. I try to deal with them all the same. Ed Estes: You wouldn’t walk up to somebody and say, Hey, do you have a disability or hey, are you of color or hey do you only speak a foreign language. I think you would have to learn through the application process. Ed Estes: Or habit disclose to you, but I don’t think I would ask them, I’m just like, I would ask somebody if they have a disability. Ed Estes: And we have another question. Emily Maynard: Yes, another follow up question with that is, does this security deposit limit apply to existing tenants wouldn’t have wouldn’t require refunds up the difference for existing tenants. Ed Estes: My, my feeling here is, yes, it would be retroactive. So if you have a service member on my recommendation would be to refund it Ed Estes: So you don’t have an excess amount. However, if that service member has been in your unit for a few years. Your rents have probably gone up. Ed Estes: All landlords do things differently. But I know it is not unusual for a landlord if they have a good tenant to leave the security deposit in its original amount Ed Estes: So you would calculate the equivalent of one month’s rent or two months rent based on current rank. Ed Estes: So it’s quite possible that if you collected, let’s say, two months rent on an unfurnished apartment. Five years ago, you might not have to refund. Um, you might only have to refund a half a month’s rent or for a month rap because over the last five years, given what’s happened with Ed Estes: rants Ed Estes: You might be up to the pool that have one month’s rent. So you probably want to keep that in mind. But yes, if you have more than one month’s rent or two months rent based on furniture unfurnished My recommendation would be to rip on Ed Estes: Anything else anyone Ed Estes: Know, so we go to the next slide. So Civil Code 17 nine eight week 100 the California consumer privacy act so Ed Estes: As of January 1 till you make those Fargo routes Albertson all those people that collect your information because you want to get Ed Estes: Cheaper Twinkies, or you want to get us special something from your credit card company or whatever. Anyway, now under California law, they must allow you to opt out if you want to opt out, and you have the right to do so, um, Ed Estes: Does that apply to the Multiple Listing Service. That’s the concern that a lot of Realtors have right now and the feeling is it doesn’t at least Ed Estes: In most MLS is, I believe, Seattle has a private MLS so it might be for profit this statute only applies to profit entities. It doesn’t apply to nonprofit. Ed Estes: At the present time, of course, the problem is, even though the MLS is nonprofit entities that harvest that information like Zillow are for profit. Ed Estes: So does it extend there. And the bottom line is we don’t know so lane. It’s a car has created a new form, which I will get to later in the slide deck. Ed Estes: To deal with that. So there are some MLS concerns. So you do have a new disclosure form that we’ll talk about in a few more slides that deal with the California consumer privacy. Ed Estes: Prop 65 safe for drinking and water toxic enforcement. We’ve got some new rules that have been introduced us specifically for underground parking Ed Estes: Because cars and that exhaust. And that can be a carcinogen and smoking areas, a number of businesses. Ed Estes: Have designated smoking areas, a number of apartment owners don’t allow smoking in their apartments, but they do provide smoking areas. Ed Estes: In the common area expect to see signs identifying the prop 65 so when you go to the gas station. You see that prop 65 notice there next to the pump. Ed Estes: Expect to see more science landlord should probably be putting up those blocks 65 signs in there. This doesn’t need smoking areas if you have Ed Estes: underground parking or you’re managing a property with underground parking, you should probably look in to putting those prop 65 signs in your underground parking spots, Emily. If you don’t have any questions. Let’s move on. Ed Estes: So some other legal issues and concerns on model mo school model MLS rule 12 point 11 now depending on which MLS you belong to. I know a number of Ed Estes: licensees out there belong to see our MLS. It’s one of the largest if not the largest MLS in the in the state. You are not allowed to mine expired listings for prospecting purposes. You cannot go into the MLS look up expires and then use that information to contact expires. Ed Estes: Under the MLS rules. I know a lot of agents do it. And when I announced this to group up real estate license. These they say, well, how else am I supposed to do it. Ed Estes: And I respond, I don’t know, but you’re not supposed to get it from the MLS so just an FYI. Ed Estes: There is an MLS rule that prohibits it in the models and that is probably been adopted by most of your local MLS so I would refer to your local MLS Ed Estes: CRM. The last certain certainly has it. So if you belong to a different MLS you might want to look that up. Ed Estes: I’m photographic image license. So if you’re using a professional photographer for your listings, you should probably have some sort of a release and car does have a forum for that. Ed Estes: So that the photographer is not retain rights to that photo you want to own the rights to that photo you paid for that photographer to come out and paid for those photos. You want to own them so Ed Estes: Make sure you get that license and then virtual staging and enhance images. Ed Estes: There are concerns about their about misrepresenting the property either per sale or police. So all of you have seen this software where you can look at a photo in a Ed Estes: In a kitchen and you can change the color of the cabinet for the ceiling. The walls. Well, you can also make that brown lawn look green and you can put a pool in the backyard or a gazebo. Or you could do all kinds of things. Ed Estes: And that is misrepresenting the property. So again, be careful with virtual staging and enhance images. Ed Estes: Property that doesn’t have furniture and you use virtual staging and you put furniture in there, you pretty need to put a disclosure in there that the property is vacant. Ed Estes: The is virtual staging this furniture doesn’t exist. It’s just in there to give a perspective of what the room would look back Ed Estes: And kind of that perspective needs to be accurate. Don’t virtual stage with miniature furniture can make the room look bigger. And only if we have any questions. Let’s go to the next slide. Ed Estes: Okay, so we’ve got some new forms of a bullet list there for you. Let’s go to the next slide. And we’ll go through the forms one at a time. Ed Estes: Next slide. There we go. The purchase agreement probate agenda. So the purchase agreement, we used to have a probate purchase agreement. Ed Estes: Car has been away from that thinking is, we’re going to have one single family purchase agreement, I say single family purchase agreement. The RP a CA is for a single dwelling house or condo. Ed Estes: If you have multiple dwellings even a duplex you should be using the our IPA residential income purchase agreement. Ed Estes: If you read it, you’ll understand why it reads pretty much the same as the RTA CA, but it does call for things like security deposits a tenant installs tenant stackable certificates, things of that nature. But anyway, if you have a probate listing or a probate purchase. Ed Estes: You would then attach this to the purchase agreement to outline the purchase procedures, particularly things like the overbid process and the independent administration of the states at Emily. Let’s go to the next slide. Ed Estes: photo and video agreement and release. So this is kind of in tandem of what I was talking about earlier with the release from the photographer. Ed Estes: Let’s say you’re out there. You’re up photographer as out there and they are taking pictures of the property. Well, they happen to take a picture of the sellers dog. Ed Estes: And those the seller have any rights to royalties, because you took a picture of their dog. Ed Estes: Even if it was the back end. And you’re now publishing it out there and flyers and stuff. So it’s a good idea to have this signed by the sellers. Ed Estes: So that if you inadvertently get a picture of the dog, the child. The child artwork from their second grade class on the refrigerator. Ed Estes: They’re releasing that right to news so you can certainly use the photos in your marketing of the problem. Let’s go to the next slide and elite. We don’t have any questions. Ed Estes: So our wildfire disaster advisory, this has been with us for about a year, maybe a little bit longer than that. Ed Estes: If you have a property that has been identified in your HD as being a wildfire risk or state responsibility area. I would recommend to use this disclosure to the buyer. Also, if you’re in an area where you know that there is a fire risk. Ed Estes: I’m in Southern California on that San Antonio college is named after San Antonio mountain, which is also known as Mount Baldy so we do have the St. Gabriel Mountains behind us. Ed Estes: If I were taking a listing on a property that was up against the San Gabriel Mountains, or in a mountain area like big bear or Lake Tahoe. This would be a good form to include because you do have the risk of buyers there. Let’s go to the next slide, Emily. Ed Estes: The California consumer privacy act advisory or this the CPA. For those of you are old enough, it kind of reminds me of the initials of the old Soviet Union, right. Ed Estes: And this is the form that we would use to disclose to our sellers and buyers that information game from the property is coming into the MLS Ed Estes: And that that information is going to be distributed. So again, consumer privacy act disclosure form, probably a good idea to include this in Illinois Tech Lead should not apply this last slide. Ed Estes: On MLS. It is a good idea to have it, just in case they they change the law and we’re suddenly covered. We just don’t know. Let’s go to the next slide. Ed Estes: Here we have the rental cap and just cause eviction agenda. So as I mentioned earlier, as we were going through that state or law. Ed Estes: Regarding for statewide rental cap. This is the form that landlords need to give to their tenants of their single family dwellings condos houses so that they will then be exempted from the statewide rent control. Ed Estes: However, keep in mind that if you are in a jurisdiction, with its own rent control law that may apply Ed Estes: Also, if you are in an area that has its own let control law which ever rent control law is more strict or whichever provision of a rent control law is more strict that’s what you’re going to go under. So landlords get hit with the strict Islam. Ed Estes: And let’s go to the next slide. Ed Estes: feller, they can’t vacant land advisory SP LA. So, this essentially is clean to be viewed as a TTS for they come in. Ed Estes: So the transfer disclosure statement or PDF is a state mandated form, it’s required by statute, unless the sellers exact on a single family dwellings one to four units. There is no mandated form for vacant land, however. Ed Estes: There’s things that it probably would be a good idea of for sellers of vacant property to make a disclosure and this would be the appropriate way to make disclosures. If you are selling vacant. Now let’s go to the next slide, what Ed Estes: We’re done with PowerPoint, but let’s keep this slide up because I do want to make my contact information available to the viewers of this Ed Estes: I also want to caution everybody that even though I am a member of the bar. I’m not giving legal advice. This has just been illegal. Ed Estes: Sonia educational experience a couple of musings since we do have a couple more minutes on the on the new purchase agreement. Ed Estes: The new RPI ca is under contract right now they are on draft eight. It is accessible from the car website. Ed Estes: If you have difficulty accessing it from the car website and I know that. See our website is not the easiest website to navigate through Ed Estes: If you want to send me an email, I’ll be more than happy to send you the draft of what it’s looking like right now if you are familiar with the SU LM our Pa. Ed Estes: It is a single page form that in a grid fashion. Ed Estes: Provides the important points of the purchase arena. Essentially what car is doing is they are going to take this grid format which will include the timeframes and other Ed Estes: Boxes to be checked and put them on the first three pages. So the contract will introduce the name of the buyer. It will then give the agency disclosure and then you will go into a grid format for the next three pages. Ed Estes: And then then following 13 pages. Yes, the RPI is going to go to 16 pages at this point we’ll have that textual material of Lot all these boxes and timeframes relate to Ed Estes: The thinking I guess his Ed Estes: Agents are more concerned about the timeframes and which clause applies. Well, that will all be listed on the first three pages. Ed Estes: The actual content and meaning of the contract will be in the later 13 pages. Now the good news is probably 98% of the meaning of the contract. Ed Estes: has not changed, it will understand what the RTA does today. Then you’re going to understand what the RP is going to do in the new revision. Ed Estes: There is a couple of exceptions currently in the RBA if you have an all cash offer you have to show proof that you have the cash with the offer, unless you check the box, then you have three days. Ed Estes: In the current offer you have three days to show your pre qualification or pre approval. The buyer and that you have closing costs and down payment. Ed Estes: Unless you check the box and then you include it with the offer. In other words, the cash paragraph and the downpayment and qualification paragraph. Ed Estes: Or opposite, which makes no sense whatsoever. They are going to align those that information now needs to be provided with the offer, unless you check the box. Ed Estes: Then you have three days to provide that information. So that’s probably the most major change in the new agreement on again. It’s not significant. Ed Estes: Most agents don’t know it even exists in the first place, but it is going to 16 pages we should have the final version in late May or early June. Ed Estes: It will not be accessible on zip forms until Ed Estes: December between June and December car is couldn’t be providing classes. I will be providing classes for my local associations. Ed Estes: Those of you who like to teach at your local associations, you may want to be providing classes as well. Ed Estes: I find that providing classes is an excellent way to introduce myself and our real estate program to the real estate community because I find that many of my students have come in. Ed Estes: Because they have a friend or family member who’s in the real estate business, Emily. That’s about all I have. Are there any remaining questions out there.