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New Laws for 2024

by | Jan 5, 2024 | Agent Liability, Broker Practice, Contracts and Forms, Department of Real Estate, Disclosures, Environmental Hazards, Ethics, Forms

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

(All New Laws Are Effective January 1, 2024 Unless Otherwise Noted)

 

  1. DISCLOSURES: Flippers must disclose recent repairs and renovations. (AB 968)

Effective for all transactions ratified on or after 07/01/24:

So called “Flippers” of residential 1 to 4 properties must disclose recent repairs and renovations to the property in addition to all other existing disclosures. (The term “Flipper” is not used in the statute.)

  1. Applies to transactions if:
  • Residential 1-4 units (TDS categories, exemptions and cancellation rights apply),
  • Seller accepts an offer within 18 months from the date that seller acquired title; and
  • Renovations or repairs were performed by a contractor who contracted with seller.
  1. Requires a seller to disclose to the buyer:
  • Any room additions, structural modifications, repairs, or other alterations.
  • A copy of any permits if obtained (or if the seller contracted with a third party and was not provided with a copy of any permits, the seller may inform the buyer that the permits may be obtained through the third party and provide their contact information).

NOTE: These disclosures may alternatively be disclosed as a list as given by the contractor to seller.

  1. Where the cost of labor and materials was $500 or greater, the seller will disclose the name of each contractor and the contact information of each contractor (as provided to the seller).

 

  1. DISCLOSURES: NHD Statement must specifically identify fire hazard severity zones (FHSZ) for defensible space and fire hardening disclosures (AB 1280):  All NHD Reports contain the one-page Natural Hazard Disclosure Statement (the NHDS), which is the one-page disclosure in an NHD Report that contains the 2 fire, 2 flood and 2 earthquake check boxes, and which now required to be completed with three new sub-categories.
  2. This law expands the disclosures required by the NHDS to show if the property is in High FHSZ as well as Very High FHSZ. (Prior to 2024, only the Very High FHSZ was shown in the NHDS)
  3. Three new sub-categories added to the NHDS: The NHDS has been expanded to include three specific sub-categories under the category of High FHSZ or Very High FHSZ which are whether the property is in a:
  • High FHSZ in a state responsibility area (SRA)
  • Very High FHSZ in a state responsibility area (SRA)
  • Very High FHSZ in a local responsibility area (LRA)
  1. Defensible Space and Fire Hardening Disclosures: When the property is located in any of three of these FHSZs, the NHD company will check the appropriate box, in which case the Fire Hardening and Defensible Space form (FHDS) must be completed per paragraph 1 of that form.
  2. This law will allow a seller to view the NHDS and easily make the determination whether the FHDS, or similar form, is required to be completed by seller.

 

  1. Listings Are Capped at 24 months (AB 1345): Under this law, exclusive listings on residential 1-4 properties can be longer than 24 months. The law also:
  • Makes void and unenforceable (a) any automatic renewal, and (b) the recordation of any exclusive residential listing regardless of duration or of the number of dwelling units.
  • Excludes from the 24-month prohibition any exclusive residential listing agreements entered into between a broker and an LLC, corporation, or partnership; but such listing agreements may not be recorded or automatically renewed.

 

  1. Online Notarization by California Notaries (SB 696): California notaries are not presently permitted to conduct notarization online. However, under SB 696, they will be authorized to do so. The technology required by SB 696 features various security and anti-fraud mechanisms with two forms of identity proofing and verification by a live commissioned notary.  Online notarizations conducted by out-of-state notaries, which are already recognized de facto, will be legal beginning in 2024, provided that the notarization is conducted in accordance with the law of the jurisdiction in which the notary is commissioned.
    Effective Date:  Upon Certification by the California Secretary of State.
  2. Small Claims Court Limits Increased (SB 71): Presently, the small claims court limit for a natural person is $10,000 (for the first two claims in one calendar year). Under the new law, the limit has been increased to $12,500. For a non-natural person (i.e. corporation), the limit is presently $5,000 (for the first two claims in one calendar year). This is now increased to $6,250 under the new law.
  3. ADUs may be sold separately from the primary unit as a condominium (AB 1033):  Presently, selling an ADU separately from the primary residence is prohibited (unless developed by a qualified nonprofit corporation). This law allows local agencies to adopt ordinances to allow the separate sale of ADUs and primary residences as condominiums.  There are requirements imposed by this law on the local agency’s approval of such an ordinance, such as:
  • The condominium plan must comply with the Davis-Sterling and the Subdivision Map Act.
  • If a property is within a homeowner’s association, that HOA must approve.
  • There is recorded evidence that each lienholder consents to the establishment of the condominiums prior to recording the condominium plan. A lienholder may refuse to give consent, or that a lienholder may consent provided its terms and conditions are satisfied.
  • The local agency must provide notice to applicants for ADUs of these requirements, including advising applicants contact agency to make sure that such a sale is permitted by that agency.
  • The local government must require the homeowner to notify providers of utilities, including water, sewer, gas, and electricity, of the condominium creation and separate conveyance.

NOTE:  This is a complex law and property owners should be advised to consult with a qualified California real estate attorney or other qualified professional before proceeding.

 

  1. Makes permanent the existing prohibition on local government’s ability to require owner-occupancy on a parcel containing an Accessory Dwelling Unit (ADU) (SB 976):  This law permanently prohibits local governments from requiring owner-occupancy of either unit. However, the locality may require that if the ADU is rented it must be rented for 30 days or longer.

 

  1. DISCLOSURES: Environmental hazard booklet updated (AB 255) Effective 1/01/24, but see below: Updates the state’s Homeowners Guide to Environmental Hazards booklet to add, as resources permit, three new chapters related to wildfires, climate change, and sea level rise to provide consumers with valuable information regarding these risks.  When will the update be completed? While the law itself is effective 1/1/24, because the booklet will be updated as existing resources permit, or as private resources are made available, no prescribed time is indicated in the law.

 

  1. The California Coastal Act (“CCA”) Amended to Allow Greater Necessary Improvements (AB 584): Previously the CCA exempted improvements of up to $25,000 if necessary to protect life and public property from imminent danger. This exemption limit is increased to $125,000 adjusted annually per the CPI. This law seeks to assist coastal landowners to protect their homes when experiencing rising repair and interest costs.

 

  1. Extends the FAIR Plan to commercial property (SB 505): This law requires the FAIR PLAN Association (FPA) to develop and implement a similar program for commercial policies. However, commercial FAIR PLAN insurance may not be available until the FPA develops the plan and policies.

 

  1. Commercial Financing Disclosures (SB 33): Commercial financing provider must disclose the cost of a commercial financing transaction as an annualized rate.

 

  1. Deed-Restricted Properties must be Sold to Owner-Occupants (AB 323): This law limits the ability of developers to sell deed-restricted units intended for owner-occupancy to purchasers that would rent the unit.

 

  1. Developments must be approved if consistent with general plan even if not consistent with local zoning ordinance (AB 821): Requires a local agency to approve developments that are consistent with its general plan even if not consistent with the applicable zoning ordinance, or to amend the zoning ordinance to make it consistent with the general plan within 180 days.

 

  1. Ministerial approval of 10 or fewer unit developments (SB 684): Requires a local government to ministerially approve, without discretionary review or a hearing, a parcel map or a tentative and final map for a housing development project on a lot zoned for multifamily where the proposed subdivision will result in 10 or fewer parcels and the housing development project on the lot proposed to be subdivided will contain 10 or fewer units. Limitations apply.

 

  1. Trespassing – “No Trespass” letters may be kept on file for up to one year (SB 602):

Under current law, property owners experiencing problems with trespassers can submit a no trespass letter (aka a “602 letter”) to local law enforcement, which is in effect for 30 days, giving law enforcement authority to remove trespassers from the property.  This law keeps the letters active for up to one year or for a time as determined by local ordinance.

 

RESOURCE:  For details on all New Laws for 2024, go to:

2024 New Laws (car.org)

 

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.