New Laws Effective 2011

New Laws 2011 graphic

Hello and Happy New Year!  Several new laws affecting the real estate industry have become effective as of January 1, 2011.  Below is a short overview of a few new laws that may relate to your business:

 

Short Sale Deficiency Protection for Sellers:
Lenders who have agreed to a short sale will not have the ability to obtain a deficiency judgment against the seller after the short sale is completed.

 

Foreclosure Protection for Tenants:
Tenants remaining in a property after it has been foreclosed must be provided a notice of their statutory rights for one year, explained in a separate cover sheet or included in a 90-day termination notice.

 

Mortgage Loan Originator Requirements:

Those who act or advertise themselves as an MLO without a DRE MLO endorsement is guilty of a crime punishable by: a $20,000 fine, six months imprisonment, or both.

 

To read more complete descriptions and to view the other new laws going into effect, see below.

2011 New Real Estate Laws – Summary


Short Sale Deficiency Protection for Sellers
This new law applies to first mortgage loans secured by one to four residential units, and states that lenders who have agreed to a short sale will not have the ability to obtain a deficiency judgment against the seller after the short sale is completed.   This means the lender must accept the proceeds of the short sale as full payment and must dismiss the remaining balance due on the loan.

Foreclosure Protection for Tenants:
Senate Bill 1149 states that tenants that remain in a property after is has been foreclosed must be provided a notice of their statutory rights for one year, and must be explained in a separate cover sheet or included in a 90-day termination notice.  This law also prohibits a landlord from harming a tenant’s credit score by revealing unlawful detainer records, unless the landlord prevails in court.

Energy Efficiency Audit in Home Inspection Report
Effective January 1, 2011, a home inspection and inspection report may include a Home Energy Rating System (HERS) home energy efficiency audit if requested by a client.  The inspection may be performed by a home inspector who meets the HERS regulations requirements.  REALTORS are encouraged to provide the HERS booklet that explains the statewide HERS program to residential buyers.

Adverese Possession Claim Requires Timely Payments
For a claim of adverse possession, existing law requires proof that taxes have been paid on the property for a five-year period.  Effective January 1, 2011, Assembly Bill 1684 will further require that all state, county, or municipal taxes have been certifiably paid in a timely manner for the five-year period the property has been occupied and claimed.

MLO Requirements
Effective January 1, 2011, Senate Bill 1137 requires those who act as a mortgage loan originator (MLO) to hold a MLO license endorsement issued by the Department of Real Estate (DRE) in order to be employed or compensated by a real estate broker.  Those who act or advertise themselves as an MLO without a DRE MLO endorsement is guilty of a crime punishable by: a $20,000 fine, six months imprisonment, or both.  Corporations acting as an MLO without the endorsement by the DRE are punishable by a fine of $60,000.

Domestic Violence Protection for Tenants
Beginning January 1, 2011, a landlord cannot evict or fail to renew a lease for a tenant or members of the tenant’s household that have become victim to domestic violence, as stated in Senate Bill 782. For leases entered into after January 1, 2011, this law will also require landlords to change the locks on the victim’s unit within 24 hours of the tenant providing a police report or written proof from the court.

Real Estate Fraud Protection
There are three new laws, effective January 1, 2011, that protect consumers from real estate fraud.

  1. Assembly Bill 2325: Foreclosure consultants performing “forensic audits” will be included in the foreclosure consultant law, prohibiting advance fees for services.
  2. Assembly Bill 1373: Any mail solicitation that offers to provide a copy of an owner’s grant deed or title records for a fee must include a prominent disclosure statement explaining that the homeowner can obtain the records from the county recorder, and that the service is not associated with any government agency.
  3. Senate Bill 1035: The punishments for renting out a residential unit without the owner’s consent have been increased to one year imprisonment and a fine of up to $2,500.

Categories News and Events | Tags: | Posted on January 10, 2011

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