2018 Real Estate Legal Update with Gov HutchinsonJanuary 9, 2018 5:22 pm
On January 4, 2018, C.A.R. Assistant General Counsel Gov Hutchinson spoke at the Long Beach Broker Preview, highlighting current issues affecting realtors throughout California. The following is an outline of his talk and meeting.
Gov Hutchinson began by discussing new regulations on marketing. These specify that if a realtor reaches out to potential customers through printed, or online advertising, marketing, or direct customer contact, they must include the broker’s name, the agent’s name, and the agent’s license number within that contact. Social media, web sites, and even hand-written notes on company stationery are included in this requirement. Open house and directional signs are exempt if they are not branded. Additionally, these three pieces of information must not be the smallest font on the marketing material. Mr. Hutchinson expressed that the wording of the law is quite general, and he expects there to be some confusion among realtors for a while. He concluded, however, that as the year goes on the BRE will most likely clarify and provide more specifics and for the time being there is no reason for panic and alarm.
Mr. Hutchinson also talked about changes to the required disclosures and forms rental property owners must provide to tenants. There is now a required bedbug form, which simply notifies both landlord and tenant if bed bugs have previously been found inside the unit or in any of the tenant’s belongings. Secondly, a new water meter form, for owners of 2-plex or larger properties with individual unit water meters, outlines the responsibilities for both landlord and tenant in regards to the unit’s water meter. And lastly, there is now a required disclosure form notifying renters if their rented property falls within a FEMA National Flood Hazard zone. This information is available in a property’s NHD report. If a landlords can’t find their property’s NHD report, they can order a new, up-to-date report with us for properties of 4 units or less at www.pdqdisclosure.com
Of great concern to all present in the audience was the new 2018 Federal Tax Reform legislation, which negatively affects the tax advantages of buying a home. Interest deduction is no longer available on mortgages of up to $1 million; the new limit is $750,000 with 1st and 2nd homes qualifying, but only a total of $750,000 combined qualifies. Equity lines of credit don’t qualify for interest deduction unless they are used to improve the property. State and local tax deductions are capped at $10,000, including property tax. These changes might make selling a house more difficult for realtors, but fortunately there is a silver lining. Realtors will qualify for a 20% automatic deduction on income of up to $175K in addition to any other deductions for which they are qualified. Taxes are an extremely complicated matter and vary from case to case so it is always imperative to talk to a tax expert or CPA.
Mr. Hutchinson spoke about the efforts C.A.R is making to help realtors during a transaction with the introduction of 3 new forms. The team agreement form helps create team standards by clarifying roles and member compensation, and formalizing many aspects of team agreements. The property image agreement form is intended to aid realtors and photographers by clarifying who owns the property pictures. The amendment form (AEA form) gives buyers and sellers the ability to make changes to the contract after escrow is opened.
Lastly, the discussion turned to Propositions 60 and 90. C.A.R. organizers have been building efforts to pass these propositions. These would allow home sellers over 55 to transfer their previous home’s property tax rate to their new home, as long as the new home price is less or equivalent to that of the previous home. These propositions are meant to incentivize older home owners to sell their homes by allowing them to retain their tax advantages.
By Felix Figueroa
AB-646 Rental property: disclosures: flood hazard areas: areas of potential flooding:
SB-7 Housing: water meters: multiunit structures:
AB-551 Rental property: bed bugs:
Complete 2018 real estate laws: