1997 Real Estate Law Changes

This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.

Happy New Year. What's new in California real estate laws?

In our system (descended from the British), the legislature passes laws (statutes), and the Courts explain what the statutes mean ("common law"). For example, one of the first 10 statutes was: Thou shalt not kill. Since then the Courts explained that it is OK to:

• kill in self-defense;
• in some States it is OK to kill your spouse if you catch her in bed with a neighbor;
• but it is not OK to kill your spouse if you caught her last month in bed with a neighbor.

Also, see New California Cases

A problem in recent years with a tight residential rental market has been greedy landlords demanding a credit check fee before accepting a rental application; they accept many fees, pick one tenant, and keep all of the fees. NO MORE!

Now, the maximum fee is $30, its use must be itemized, the balance returned, and the tenant has a right to obtain a copy of the credit report. [AB 2263]

Another new law affecting landlords is the requirement that a prospective tenant tell the landlord in advance, in writing, that she intends to operate a licensed day care facility on the landlord's premises. [SB 1695]

[Landlords had complained that tenants were running these businesses without the landlord's knowledge, subjecting the landlord to potential liability for injuries far beyond that contemplated with a simple residential apartment rental.]

If a tenant moves out and subleases the property, the Landlord may increase the rent, despite rent control.

Selling or using illegal drugs now is grounds for an eviction.

Municipal Utilities may no longer file tax liens for unpaid bills!!!

New home inspection rules apply to this previously unregulated area. Last year, any person could claim to be a home inspector; there were no state laws affecting the industry. Now, a home inspector is defined, as is a home inspection. [SB 258]

Previously, there was concern that inspectors were biased, since they often volunteered to do the repair work for which they discovered a need. Now, a home inspector cannot do the repairs for a 12 month period after the inspection. Theoretically, this will make the inspector less biased in his inspection opinion.

Previously, home inspectors often tried to limit their liability (in the fine print in the contract) for mistakes to the amount of the fee.

Jane hired an inspector for $250 to examine her prospective home purchase. He gave her a written report that the house is good shape, but he missed the bad foundation, which is discovered 3 months later, and will cost $35,000 to fix. Jane sues. The inspector says, "Read the contract. Even if I was 100% wrong and at fault, the most I owe you is a refund of my fee: $250. You signed the contract agreeing to these terms. Here's the $250. Tough luck."

Jane:

1. gives up because it's there, in black and white; or
2. hires a lawyer, sues and wins.

The Statute of Limitations against a home inspector is now 4 years.

Contractors doing home improvements or pool construction must have written change orders with the price listed.

A Contractor whose license has been suspended or revoked more than once in the last 8 years must disclose such discipline.

Swimming pool safety disclosure is required, beginning in July. Is the pool fenced, and what other safety features does it have? [AB 3305]

Window and door bars and grates keep out crooks, but can also trap a resident who cannot escape a fire. Some have quick release features allowing escape. 1997: Disclosure (not cure) is required if bedroom windows do not allow quick escape. [Building Codes may prohibit bars and grates without quick escape devices.]

Of course, the Federal rules on Lead Paint Disclosure now apply in full force.

Condominium Boards must allow members to speak (not just attend) any meeting, except Board executive sessions.

Volunteer Condominium Boards Members have no liability to investigate for hidden defects, nor a decision to sue the builder for defects.

PREPAYMENT PENALTIES: Mortgage equity lines (4 units or less) may be pre-paid without penalty in the event of a bona fide sale. [20% may be paid without penalty in any year; after 5 years, no penalty may be imposed.

Not much new legislation for 1997. For a review of real estate Court cases for 1996, see Cases.

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