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Last week Gov. Jerry Brown signed AB 771 into law, a bill that prevents home buyers in a common interest development (CID), such as a condominium or townhome, from being charged excess document fees.
Homeowner associations (HOAs) are required to provide specific documents to prospective purchasers of homes in a CID — a form of real estate ownership in which each homeowner has an exclusive interest in a unit and a shared interest in the common area property. In addition to the standard residential property disclosures, purchasers of a unit within a CID must receive basic information about the structure, operation and management of the HOA that operates the CID.
Current law requires that this information come from the HOA and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents. HOAs generally have provided the documents for approximately $75 to $250. Increasingly, HOAs have been delegating document preparations to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1,000, for other documents which were “bundled” with the required documents.
Assembly Bill 771 (Betsy Butler, D-Torrance) addresses this situation by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. The seller of a CID must complete this form and transmit it to the prospective purchaser along with the required documents. This will eliminate any uncertainty for the prospective purchaser as to exactly which documents are being provided and the precise fees being charged for those documents.
Time is running out on important housing-related issues before Congress. We need REALTORS® to contact their elected representatives in Washington, D.C., today.
Here is what REALTORS® can do:
Reauthorize National Flood Insurance Program (NFIP) to ensure access for millions of Americans to affordable flood insurance which is not available in the private insurance market. The House has passed its bill. Now we need you to urge the Senate to act.
Without reauthorization, the National Flood Insurance Program (NFIP) will expire on September 30, 2011. Today, 5.6 million property owners rely on the program in 21,000 communities where flood insurance is required for federally related mortgages. Both consumers and your fellow REALTORS® are counting on your to help get this bill passed.
Tell Congress to Reauthorize the National Flood Insurance Program
Make permanent the current loan limits for FHA, Freddie Mac and Fannie Mae to ensure the affordability of mortgage credit for hundreds of thousands of responsible and credit-worthy American families.
The cost of a mortgage could rise significantly if loan limits are reduced. If this happens, many of your clients run the risk of being priced out of the American Dream of home ownership. This could hold back the housing recovery. The new loan limits show that more than 669 counties in 42 states and the territories would be negatively impacted by the loan limit change.
Take Action to Ensure Your Clients Have Access to Affordable Mortgages
The business of real estate puts REALTORS® in potentially hazardous situations because a significant part of their work involves meeting with strangers. Every year, real estate agents around the country are threatened, robbed, physically or sexually assaulted while fulfilling the everyday requirements of their jobs. Some even lose their lives.
According to the Bureau of Labor and Statistics, the real estate, rental and leasing occupation has seen an average of 75 deaths a year from 2003 to 2009. There don’t appear to be solid statistics on the number of agents who were victims of specific crimes like sexual assault, non-fatal shootings, beatings, stabbings, robbery and carjacking. The latest highly publicized tragic incidents happened in February 2011. According to news reports, a real estate agent in Ottumwa, Iowa, was assaulted and tied up when she arrived at a home for a scheduled showing appointment. Her attackers then robbed the home. Two months later, in West Des Moines, a 27-year-old agent was fatally shot while working at a model home.
REALTORS® can make adjustments to the way they do business and avoid violent crimes by practicing these general REALTOR® Safety Tips from the National Association of REALTORS® and other sources, so you can avoid being a victim:
- Always meet a client for the first time in the office. Introduce him or her to coworkers and make it clear that they know you are taking him out of the office. Try to take separate cars but if that is not possible you will have slightly more control if you drive. Also, do not meet a client at the property, particularly if he is calling on a yard sign. He will already have had a chance to note if the property is vacant. Don’t identify a property as vacant to a caller, on an ad or sign.
- Get a license plate number and leave it at the front desk. Just explain that it is office policy; a customer who means no harm won’t mind. Leave an itinerary for your house tour with someone in your office.
- Agents are vulnerable when they are walking back to and from their car before or after an open house. Park where you cannot get blocked in. Take a few minutes to make sure you have a clear line of sight to your vehicle. Can you see the front door? Are there trees or shrubbery within 10 feet that can serve as a hiding place? When getting out of the car, keep looking around. When you get to the front door, turn around and walk back — are there places where someone could surprise you?
- The No. 1 place where agents are attacked during an open house is the front door, partly because lockboxes take time to open. If you are alone, turn your back against a wall to avoid being attacked from behind. If you can, work in teams. Sign up your affiliates, such as a home inspector or title officer, to sit the open house with you.
- Never go into certain rooms. When showing visitors around, never go into rooms with no escape routes. These include walk-in closets, bathrooms and laundry rooms, among others. Instead, direct visitors to those rooms.
- Establish your escape routes. Walk around the house and notice how to get in and out of rooms. If there is a fence in the backyard with a gate, unlock the gate for easy exit. As another escape route, open the garage door but lock the door leading to the inside from the garage. Direct clients to the front door with signs.
- Set up for safety. Hang decorative bells behind every outside door that you have unlocked. These will alert you whenever someone enters the house. Carry only what you need — purses go in the trunk of your car before you leave your house, not when you arrive at the open house. Do not bring your laptop to an open house. Not only can it be easily stolen, but signing on to someone’s unsecured wireless network can open you up to identity theft.
- Always carry a cell phone where it is easily accessible (not in the purse you left in the car). Make sure emergency numbers are programmed into the speed dial.
- When showing property to strangers, follow rather than lead them through the house. Don’t let them get between you and the door. Never, ever turn your back on a prospect. If a man says, “Ladies first,” to a female agent, the agent should say something like, “You are such a gentleman, thank you. But I really want you to see this home, and if I can direct you where to go, I think you’ll gain a further appreciation for this home.”
- Go with your gut. If something doesn’t feel right, if anything raises the hair on the back of your neck, escape the situation immediately. Until you really know a customer, remain vigilant regardless of the gender, appearance, dress, or charm.
For more safety tips, visit NAR’s REALTOR® Safety Web site at www.REALTOR.org/Safety.
- Left to right: Panelists Tim Anderson, Phyllis Carmichael, Ethel Green, Gary Herbert, Jim Nappo, and Los Altos/Mountain View District Chair Denise Welsh (standing), who served as moderator.
Veteran REALTORS® with experience ranging from 26 to 36 years shared their perceptions on how much the real estate business has changed over the years at last week’s Los Altos/Mountain District tour meeting. Forming the panel were Tim Anderson (Alain Pinel Realtors), Jim Nappo (Alain Pinel Realtors), Ethel Green (Intero Real Estate), Phyllis Carmichael (Coldwell Banker) and Gary Herbert (Coldwell Banker).
The panelists said technology has been the big business changer, especially in the last 10 years. Technology has contributed to the ease of doing business and quicker response time. Tools available to help REALTORS® provide better service to clients include emails, websites and virtual tours, and smartphones with the ability to send real time data to their clients.
At the same time technology has also brought new demands on REALTORS®. Buyers are now more educated than they used to be and majority do research on the Internet first before finding a home and an agent. As a result, agents show buyers fewer homes, but they are also expected to be very well-versed about the market.
The business has also become more complicated with pages of documents to wade through. Carmichael can still remember when a sale merely required a one-page document, an agreement among the agents, buyer and seller, with no lawyers involved. “We hand delivered everything and spent much time on the road, driving from Blossom Valley all the way to San Carlos, just to deliver the one-page document,” she added.
The panelists said they also feel real estate has become less of a relationship business. “A lot has been lost because people don’t talk to each other anymore. They get emails and this can be a positive as well as a negative,” said Nappo.
What hasn’t changed is they continue to take education courses, network with one another, and still see value in open houses and keeping in touch with their clients. While cell phones and computers have become valuable tools, Herbert and the others insist the best way to help people understand the market is to “pick up the phone and call them, talk to them face to face.”
How different is the local market today? “It’s fascinating. Everywhere, it’s a tailspin, but demand continues to be overwhelming here and for good reasons – the schools and jobs,” commented Anderson.
Green was just as upbeat and said, “We are fortunate because there is no more land here. If you are here for a long time, you will get equity in your house because there is just no more land in this area.”
The Carbon Monoxide Poisoning Prevention Act of 2010 became effective on July 1 and requires every existing single-family residence having a fossil fuel burning heater or appliance, fireplace, or an attached garage to install or plug in a carbon monoxide device. Other existing dwelling units will need to have the devices installed by January 1, 2013.
A carbon monoxide detector is a relatively inexpensive device, similar to a smoke detector that signals detection of carbon monoxide in the air. It can be battery powered or a plug-in device with battery backup. The following FAQs on what homeowners should know about the new carbon monoxide law are provided by the Silicon Valley Association of REALTORS® from information from the California Association of REALTORS®, in accordance with the California Health and Safety Code.
How many devices and where do I place them in the home?
It is recommended that for minimum security, a CO alarm should be centrally located outside of each separate sleeping area in the immediate vicinity of the bedrooms, at least six inches from all exterior walls and at least three feet from supply or return vents.
For new one-to-two family dwellings and townhouses not more than three stories and where work requiring a permit for alterations, repairs or additions exceeding $1,000 in existing dwellings units, a CO detector must be installed outside of each separate sleeping area in the immediate vicinity of the bedroom(s) and on every level, including basements within which fuel-fired appliances are installed and in dwelling units that have attached garages.
Are there any penalties for noncompliance with this law?
A violation is an infraction punishable by a maximum fine of $200 for each offense. However, a property owner must receive a 30-day notice to correct first. If an owner who receives such a notice fails to correct the problem within the 30-day period, then the owner may be assessed the fine.
Can a buyer rescind the sale if the dwelling doesn’t have the necessary carbon monoxide detectors?
While the Real Estate Transfer Disclosure Statement (TDS) has been amended to incorporate the seller’s certification that, by close of escrow, the seller will be in compliance with existing requirements for CO detector, smoke detector and water heater bracing, the TDS specifically states installation of a CO detector, among other appliances and devices, is not a precondition of sale or transfer of the dwelling.
Does a seller have any special carbon monoxide disclosure obligations?
Disclosure obligations are satisfied when providing a buyer with the TDS. If the seller is exempt from giving a TDS, the law doesn’t require any specific disclosures regarding CO detector devices.
Do landlords have any special obligations regarding carbon monoxide detectors?
All landlords of dwelling units must install carbon monoxide detectors. The CO device must be operable at the time that a tenant takes possession. However, the tenant has the responsibility of notifying the owner or owner’s agent if the tenant becomes aware of an inoperable or deficient CO device. The landlord is not in violation of the law for a deficient or inoperable CO device if he or she has not received notice of the problem from the tenant.
If the California Building Standards Commission adopts or updates building standards relating to carbon monoxide devices in the future, is the owner required to install the newer device?
Yes, when the owner makes an application for a permit for alterations, repairs, or additions to that dwelling unit with the cost exceeding $1,000.
A new California law now ensures that any lender who agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans, regardless of whether the lender is a senior or junior lien holder. The new measure, signed by California Governor Jerry Brown on July 15, goes into effect immediately.
Last October, California passed a law requiring primary mortgage lenders to accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but the rule did not apply to junior or second lien holders. The new law extends the requirement to junior or secondary lenders and ensures that once a lender has agreed to accept a short sale payment on a residential property (one to four units), all lien holders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.
The new law is considered a victory for homeowners, according to the California Association of Realtors, which sponsored the bill, SB 458, authored by Senate Majority leader Ellen Corbett (D-San Leandro). “The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce.
The new law does not apply if the short sale seller is a corporation, an LLC, or a limited partnership. It also prohibits a lender from requiring any “additional compensation” other than the proceeds of the sale in exchange for the lender’s approval.
REALTORS® hope the new law will improve the short sale process for distressed sellers. “This provision also attempts to address instances when lenders have demanded additional compensation as a condition of their approval. It is now illegal for a lender to require such payments,” said Gene Lentz, president of the Silicon Valley Association of REALTORS®.
The new law still preserves fraud and waste as exceptions to its protections, such as a lender seeking damages for a borrower’s fraud or waste. The law applies to any short sale transaction which closes on or after July 15, 2011. It does not apply to short sale transactions that closed prior to that date.
The Silicon Valley Association of REALTORS® advises short sale sellers to still consult with appropriate professionals to evaluate all issues that may impact their decision to pursue a short sale process, including adverse impact on credit and tax consequences.”
This is a call for all REALTORS® to respond to the Loan Limits Call for Action. It seems the National Association of REALTORS® may have an opportunity to get an amendment to a bill that’s being debated on the Senate floor as early as Monday.
FHA and Conforming loan limits will drop DRAMATICALLY on September 30th. Bank of America has already lowered its loan limits for new loans, and others will follow suit. Early next week, the U.S. Senate will consider amending the Military Construction Appropriations bill to maintain the current loan limits for at least another year. The National Association of REALTORS® and the California Association of REALTORS® support this effort.
Please respond to this Call for Action NOW to urge California Senators Dianne Feinstein and Barbara Boxer to work to maintain the current loan limits through this amendment or some other means.
For several months the National Association of REALTORS® has been working with the Federal Trade Commission (FTC) to minimize the potential impact on real estate professionals who assist financially distressed clients obtain short sales. On July 7, NAR President Ron Phipps met with FTC Commissioner Jon Leibowitz to further highlight the importance of this issue to REALTORS®. In a statement issued today, the FTC announced it will not enforce provisions of the Mortgage Assistance Relief Services (MARS) Rule against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers. This is a substantial victory for REALTORS®.
The statement says as a result of the stay on enforcement, these real estate professionals will not have to make several disclosures required by the Rule that, in the context of assisting with short sales, could be misleading or confuse consumers. As more and more American homeowners seek short sales, it is especially important that the Rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions.
The MARS Rule was issued pursuant to authority granted by Congress in 2009. The issuance of the Rule followed numerous FTC and state enforcement actions against companies that claimed to be able to obtain from consumers’ mortgage lenders or servicers a loan modification or other relief to avoid foreclosure. The Rule covers companies or individuals, among others, who assist consumers in obtaining approval of a short sale from their lender or servicer.
A short sale occurs when a home is sold for an amount less than the balance owed on the mortgage loan, and the lender or servicer agrees to accept the proceeds of the sale instead of pursuing foreclosure. Short sales can benefit consumers by allowing them to escape from a mortgage that they cannot afford, while avoiding foreclosure. Many real estate professionals assist distressed homeowners by providing both traditional services associated with selling their homes (e.g., listing the property) and working to seek lender or servicer approval of a short sale.
The MARS Rule requires companies offering mortgage assistance relief services to disclose certain information to consumers about the services they provide, bans collection of advance fees, and prohibits false or misleading claims. After the Rule went into effect, a number of real estate professionals who help consumers with short sales raised concerns about complying with the Rule. These professionals pointed out that some of the required disclosures could confuse consumers or could be inaccurate in this context.
At this time, the Commission has announced that it will not enforce most of the provisions of the MARS Rule against real estate professionals who are engaged in obtaining short sales for consumers. The stay applies only to real estate professionals who: 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing the practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule’s ban on misrepresentations.
The Commission stated that the stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications. In addition, the FTC will continue to enforce the Rule and Section 5 of the FTC Act, which prohibits unfair and deceptive practices, against all other providers of mortgage assistance relief services.
The Commission vote approving the MARS Rule enforcement policy was 5-0. It can be found on the FTC’s website and as a link to this press release. More information about the Rule can be found here, and information about consumers’ mortgage rights can be found here.
For additional information on the MARS Rule you can visit http://www.realtor.org/topics/mars
Late last month, California Insurance Commissioner Dave Jones, joined by Amy Bach, executive director of United Policyholders, announced a series of new homeowner regulations aimed at enhancing the standards and training for estimating the replacement value on homeowners insurance in the event of a disaster. These new regulations also represent a concerted effort to significantly curb the common problem of underinsurance that many homeowners face.
The new regulations include provisions for laying out requirements applicable to replacement value and replacement cost estimates to create a more consistent, comprehensive and accurate replacement cost calculation; setting forth training standards for agents and brokers who sell homeowners insurance; creating standards for real estate appraisers who estimate replacement cost for insurance purposes; requiring the application of certain standards when estimating replacement and construction costs; and establishing record keeping requirements.
The regulation addresses how insurance companies communicate with their customers when they are making a sale, ensuring they give them complete and accurate information and not mislead them. According to Commissioner Jones and complaints filed with the Department, when policies are sold to customers there has been confusion about what a “replacement cost” estimate actually covers. This regulation clears up that confusion. Insurance companies are not required to provide an estimate, but if they do, it must be complete and include certain components.
SILVAR is happy to announce great news and another free benefit for members. Instanet has officially released tablet support. PRDS subscribers are now able to log in to create transactions, forms and edit forms just like you currently do using your desktop or laptop. You can access PRDS Forms on Instanet on popular Apple, Windows and Android-based tablet devices such as the iPad/iPad2, Xoom, Galaxy, Playbook and others at no additional charge.
Instanet’s approach has been to make its site “tablet friendly,” rather than require users to learn an entirely new interface and download an app for a certain device. The goal is to provide as many features as possible on as many devices as possible.
As a current PRDS/Instanet user, all you need to do is log into your existing Instanet account through your tablet browser and you will automatically be accessing the new version. There is no new software to install or apps to download.
Most system functions will already work on the tablet. As Instanet makes more features “tablet ready,” it will give SILVAR updates for users. Instanet will also post a system message for users logging in on tablets, so they are aware of the updates.
PRDS and Instanet Solutions are pleased to bring this mobile technology to SILVAR members.
Silicon Valley Association of REALTORS® says ... 