Legal Update


  • January 12th, 2012
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The California legislature enacted the following new laws for 2012 that are relevant to real estate.



 Sellers Disclosure of Water-Conserving Plumbing Fixtures:  The Transfer Disclosure Statement (TDS) now provides a checkbox in Section IIA for a seller to disclose whether the property has water-conserving plumbing fixtures.  By January 1, 2017, a single-family residence built on or before January 1, 1994 must be equipped with water-conserving plumbing fixtures.  If a single-family home is altered or improved after January 1, 2014, the water-conserving plumbing fixtures are required for final building permit approval. (Civil Code Section 1102.6) (effective January 1, 2012).

NHD Disclosure for Mining Operations: A company preparing a Natural Hazard Disclosure (NHD) Statement for a prospective buyer, must now disclose whether the property is located within one mile of a mining operation, according to map coordinate data from the Office of Mine Reclamation.  If a property is within one mile, the NHD company must give a specified notice that such mining operations may cause inconveniences.  (Civil Code Section 1103.4) (effective January 1, 2012).



 Revising the Notice of Trustee Sale: Effective April 1, 2012, a notice of trustee’s sale for the non-judicial foreclosure of one-to-four residential units must contain specified notices to the owner on how to seek postponement of the trustee’s sale, and advising potential bidders on the risks involved in bidding at trustee auctions.  Additionally, a lender or authorized agent must make a good faith effort to provide up-to-date information about sale dates and postponements to persons who want this information.  The lender must also provide updated information through the Internet, a telephone recording, or any other means that allows free access at any time.  (Civil Code Section 2924(f)) (effective April 1, 2012)


Homeowners Association (HOAs)

HOA Disclosures: Upon request for applicable transactions, an HOA must provide a specified cover sheet itemizing: (1) the HOA sales disclosures required by law; (2) the HOA disclosures provided by the HOA; and (3) the estimated fee for providing the required HOA disclosures distinguished from other fees, fines, or assessments.  C.A.R.’s standard form Homeowner Association Information Request (revised 11/11) complies with this requirement.  The fee for providing the required HOA disclosures must be reasonable based upon the HOA’s actual cost for procuring, preparing, reproducing, and delivering the HOA documents.  If such fee is paid, the HOA cannot withhold the required HOA disclosures for any reason.  If an HOA maintains the HOA documents electronically, they must be made electronically available to a requesting party at no additional fee.  This law also requires an HOA to, upon a buyer’s request, provide 12 months of approved minutes of the association’s board of directors meetings (excluding executive sessions).  (Civil Code Section 1368(b)) (effective January 1, 2012).


Restricting HOA Board procedures, executive sessions, emergency meetings, discussions, and decisionsNotice of an executive session meeting of an HOA board of directors (other than emergencies) must be given to unit owners at least 2 days before the meeting.  The board of directors cannot take action on any item of business outside of a meeting, except for actions that have been validly delegated to managing agents, officers, or any other persons.  A board meeting may be conducted be teleconference as specified, but the notice of a teleconference meeting must identify at least one physical location where members can attend, and at least one director must attend the meeting at that location.  A board meeting cannot be conducted by email, except for an emergency in the manner specified.  Agendas for executive session meetings are no longer excluded from the records that HOA must make available for inspection.  (Civil Code Sections 1363, et seq.) (effective January 1, 2012).


Owner’s Right to Rent Condominiums: An owner in a common interest development is exempt from any prohibition in a governing document against renting or leasing the unit, unless that prohibition was in effect before the owner acquired title to his or her unit.  When renting out a unit, the owner must give the HOA verification of the owner’s acquisition date, and name and contact information of the prospective tenant.  An owner’s right to rent under this law does not terminate for certain transfers of title, including, but not limited to, probate, spousal, parent-to-child, adding a joint tenant, and other transfers exempt from property tax reassessment.  For sales transactions, the required HOA disclosures must include a statement describing any prohibition in the governing documents against renting or leasing.  This law does not apply to rental prohibitions in effect before 2012.  (Civil Code Section 1360.2) (effective January 1, 2012).


Installing Electric Vehicle Charging StationsAn HOA must allow the installation or use of electric vehicle charging stations, but may impose reasonable restrictions.  An HOA cannot willfully avoid or delay an application to approve an electric vehicle charging station, which may be deemed approved if not denied within 60 days.  If a unit owner seeks to install a charging station in a common area or exclusive use common area, that owner and each successive owner of the parking stall on or near the charging station will be responsible for certain costs and for disclosing to prospective buyers the existence of the electric vehicle charging station and related responsibilities.  An HOA that willfully violates this law shall be liable for actual damages, plus a $1,000 civil penalty.  (Civil Code Section 1353.9)  (effective January 1, 2012).


Landlord- Tenant

Tenants’ Right to Display Political Signs:  A residential landlord must generally allow a tenant to display political signs related to elections, legislative votes, initiatives, and other political matters as specified. The landlord can make reasonable restrictions as to location, size, and duration of display.  In a single-family dwelling, a tenant’s political signs can be displayed from the yard, window, door, balcony, or outside wall of the leased premises. In a multi-family dwelling, a tenant’s political signs can be posted in the window or door of the leased premises. A landlord can restrict the size of a political sign to 6 square feet. A landlord can also prohibit a tenant from displaying political signs that violate local, state, or federal law, or a lawful provision in an HOA’s governing documents. A tenant must remove political signs in compliance with time limits set by local ordinance, or absent such time limits, the landlord can reasonably restrict the posting of a sign to 90 days before an election, and require removal within 15 days thereafter.  (Civil Code Section 1940.4) (effective January 1, 2012).


Tenants Recycling RightsA multifamily residential dwelling of 5 or more units (or a multifamily residential dwelling or business that generates more than 4 cubic yards per week of commercial solid waste as defined) must arrange for recycling services in an effort to help reduce solid waste. The required recycling services must be consistent with state or local laws to the extent that these services are offered and reasonably available from a local service provider.  A multifamily residential owner may require tenants to source separate their recyclable materials to aid in compliance with this law. (Public Resources Code Section 40004) (effective July 1, 2012.)


Tenants Smoking BanA residential landlord can prohibit the smoking of cigarettes and other tobacco products anywhere on the premises, including any interior or exterior area on the property.  For new tenants in 2012, the areas where smoking is prohibited must be stated in the lease or rental agreement.  For preexisting tenants before 2012, a new smoking ban is a change in the terms of tenancy that requires adequate written notice, depending on whether the tenancy is a month-to-month or fixed term agreement.  (Civil Code Section 1947.5) (effective January 1, 2012).


Right to Terminate Tenancy for Victims of Domestic ViolenceThe law allowing a tenant who is the victim of domestic violence to terminate a tenancy as specified has been revised to require that the notice must generally be given within 180 days of a temporary restraining order, police report, or as provided.  (Civil Code Section 1946.7) (effective January 1, 2012).



 Value Increase for Probate Exemptions.  The total value of a decedent’s estate that can be transferred using simplified petition procedures, rather than a formal probate administration, has been increased from $100,000 to $150,000.  The total value of all real property in a decedent’s estate that can be transferred by an affidavit procedure, instead of a formal probate administration or the petition procedures, has been increased from $20,000 to $50,000.  (Cal. Probate Code §§ 7620, 13200, and 13600) (effective January 1, 2012).


Property Taxes

 Deferral for Seniors and the Disabled:  Counties can elect to participate in a County Deferred Property Tax Program that allows senior and disabled citizens to defer payment of property taxes owed.  If the claimant who applies is eligible, and the county’s Property Tax Deferral Fund has adequate funds, the county treasurer or tax collector may defer property taxes for a claimant’s residential dwelling for that fiscal year.  The amount of deferred tax plus interest shall be secured by a judgment lien as specified.  (Government Code Sections 20800 et seq.) (effective January 1, 2012).

Real Estate Licensees

Property ValuationA real estate licensee cannot knowingly or intentionally misrepresent the value of real property.  Furthermore, a licensee who offers or provides an opinion of value for residential property that is used as the basis for originating a mortgage loan cannot have any direct or indirect interest in the property or transaction.  A licensee or other interested party is prohibited from using coercion, extortion, bribery, intimidation, compensation, or instruction to improperly influence a person preparing an appraisal or valuation for a real estate transaction. (Business and Professions Code Section 10177.3) (effective January 1, 2012).


Brokers Designating Managers: Effective July 1, 2012, an employing broker may appoint a licensee as a manager to supervise the licensed activities, clerical staff, and day-to-day operations of a branch office or division.  An appointed manager who fails to properly supervise licensed activities will be subject to disciplinary action by the California Department of Real Estate (DRE).  Appointing a manager, however, does not limit the employing broker’s supervisory responsibilities.  The appointment of a manager must be in a written agreement in which the manager accepts the delegated responsibility.  The employing broker must notify the DRE when a manager has been appointed or terminated.  A licensee cannot be an appointed manager if the licensee holds a restricted license, is or has been subject to a debarment order, or is a salesperson with less than two years of full-time real estate experience within the last five years.  (Business and Professions Code Section 10164) (effective July 1, 2012.)


Licensee’s Duty to Report Discipline to DRE:  The DRE will have greater disciplinary authority to achieve its highest priority of protecting the public.  A licensee will be required to report to the DRE within 30 days of any of the following: (1) disciplinary action taken by another licensing entity in California or another state, or by a federal governmental agency; (2) an indictment or information charging a felony against the licensee; or (3) a conviction of a felony or misdemeanor, including a plea of guilty or no contest.  A failure to comply with this reporting requirement will be cause for discipline.  (Business and Professions Code Section 10186.2) (effective January 1, 2012).


DRE Disciplinary Authority over Licensees.   The DRE’s broader disciplinary authority will also include, among other things, the following:

  • Entering into a pre-prosecution settlement with a licensee or applicant, instead of pursuing an accusation or statement of issue, but the settlement will be considered discipline,
  • Including payment of reasonable investigation and prosecution costs in a disciplinary order.   A licensee’s failure to pay can result in non-renewal of license,
  • Requiring that a restricted licensee pays the costs of monitoring the licensee and monetary restitution to any person who sustained damages caused by the licensee’s misconduct.  Failure to pay can result in non-renewal of license,
  • Automatically suspending the license of anyone incarcerated after a felony conviction
  • Conclusively presuming without a hearing that a licensee’s conviction for murder, rape, lewd and lascivious acts, or a violation of dangerous drugs or controlled substances law, is substantially related to the qualifications, functions, or duties of a licensee,
  • Making public information confirming the fact of certain investigations or proceedings regarding a licensee, and
  • Applying for a court order to enforce a subpoena that a licensee has refused to obey.

(Business and Professions Code Sections 10079 – 10186) (effective January 1, 2012).

DRE Citations and Fines: The DRE can issue a citation and fine up to $2,500 if, upon investigation, it has cause to believe that a licensee has violated the DRE rules, or if an unlicensed person has engaged in licensed activities.  The person cited can request a hearing within 30 days from receipt of the citation.  The citation and fine will be in lieu of DRE disciplinary action for the offense cited, and the citation will not be reported as discipline.  However, failure to comply with the terms of the citation or pay the fine within a reasonable time specified by the DRE shall result in disciplinary action and non-renewal of license.  This law also gives the DRE the authority to make public information confirming the fact of certain investigations or proceedings regarding a licensee, and to apply for a court order to enforce a subpoena if a licensee has refused to obey.  (Business and Professions Code Section 10080.9) (effective January 1, 2012).


DRE License Suspension for Tax Delinquency: Both the State Board of Equalization and the Franchise Tax Board must periodically make public a list of the 500 persons in California with the largest tax delinquencies in excess of $100,000.  The lists must include, among other things, each taxpayer’s occupational or professional license numbers.  The DRE and other state governmental licensing entities (with certain exceptions) must suspend and refuse to issue or renew an occupational or professional license for anyone on either tax delinquency list.  (Business and Professions Code Section 494.5) (effective January 1, 2012).



 Parent’s Workplace Establishes Residency for School Attendance:   A school district may deem that a pupil has complied with the residency requirements for school attendance in the district if at least one parent or the legal guardian of the pupil is physically employed within the boundaries of that district at least 10 hours per school week.  This provision, which was originally scheduled to expire on July 1, 2012, has been extended to July 1, 2017.  (Education Code Section 48204)  (effective January 1, 2012).

 Small Claims Court

Increasing Small Claims to $10,000:  The small claims court jurisdiction will generally increase from $7,500 to $10,000 for an action brought by a natural person.  For a claim of bodily injury from a car accident, the increase to $10,000 will not occur until 2015.  The dollar limit in small claims court for an action brought by a corporation or other entity will remain at $5,000.   (Code of Civil Procedure Section 116.221) (effective January 1, 2012).

Mark L. Strombotne, Esq.

Real Estate Transactions and Litigation

 Strombotne Law Firm

16450 Los Gatos Blvd., Suite #110

Los Gatos, CA  95032

phone:  408-971-9540


You should consult legal counsel to evaluate this legal precedent in the context of your specific facts.  The distribution of Legal Update does not by itself create an attorney-client relationship with the reader.