CITY OF BERKELEY ADOPTS ORDINANCE ALLOWING ADUs TO BE SOLD AS CONDOMINIUMS 6.11

Last year, the California legislature passed Assembly Bill 1033, which allowed cities to pass ordinances permitting homeowners to sell accessory dwelling units (“ADUs”) in a similar manner to condominiums.  ADUs include granny flats, garage conversions, and other types of separate units, attached and unattached to single family homes, duplexes, or multiplexes. 

Recently, the City of Berkeley voted to opt into AB 1033.  While Berkeley has a number of details to finalize, such as utilities, it appears that over the next year ADUs may be separately sold in the City of Berkeley.  The purpose of this policy is to create more home ownership and allowing owners to build equity.

BLOG regarding Webinar 5.8

BRM hosted a client-exclusive risk management update webinar on May 6, 2024.  The webinar covered several important topics, including:  legal issues arising out of the current market; a war story; NAR litigation status report; disclosure issues; agent trouble areas; new statutes; new and revised forms; and DRE developments. That webinar has now been posted for use by BRM clients.

BLOG for CAR Presentation 5.1

Bill Jansen and Shannon Jones recently spoke at the California Association of Realtors Legal Affairs Forum.

On April 23, 2024, Shannon Jones provided a case update at CAR’s Legal Affairs Forum.  That presentation included a discussion of over 30 cases affecting real estate professionals decided by the California Appellate Courts between February and April 2024. 

Bill Jansen was joined by Vicki Nadorf (former partner of BRM) and David Hamerslough on a panel to discuss the NAR settlement and its implications on realtors. 

Both presentations were well received. 

On April 6, 2024, Shannon B. Jones presented a report before CAR’s Legal Defense Strategy Committee to discuss current updates and developments in claims handling affecting realtors.

Upcoming presentations for Bill and Shannon include a risk management seminar exclusively for BRM’s clients on May 6, 2024.  On June 3, 2024, they will discuss the upcoming CAR forms release and review that with their clients.

BLOG for May 6, 2024 WEBINAR

Broker Risk Management will be providing a risk management seminar for its clients on May 6, 2024.  Topics will include the following: war stories; disclosure issues; agent trouble areas; NAR settlement updates; and DRE updates. 

BLOG POST

BRM hosted a client-exclusive webinar on April 1, 2024, to discuss the NAR Settlement and what it means for Realtors. There was also an in-depth discussion about the buyer-broker agreement.  The event was well attended with over 1,000 participants.

SHANNON B. JONES SUCCESSFULLY DEFENDS $300,000

COMMISSION CASE 3.20

Recently, a claimant asserted a claim against one of Jones Law Group’s clients for a $300,000 commission.  In that case, the buyers wrote an offer using an agent.  The buyers subsequently used a second agent because the second agent agreed to reduce their commission, ousting the first agent.  The buyers subsequently returned to their original agent and closed the transaction.  The second agent filed an arbitration complaint seeking damages of $300,000.  A panel of arbitrators found in favor of the listing agent, JLG’s client, and denied the complainant any compensation. 

We are thrilled to share that Shannon B. Jones, partner of Broker Risk Management, has been awarded Super Lawyer for the 4th consecutive year!

LICENSED REAL ESTATE AGENT COMMISSION 1.16

Question:  Can a licensed real estate agent share a commission or pay a referral fee to an attorney?

Answer:  No, unless the attorney has a real estate broker’s license or a salesperson’s license and is affiliated with a broker.  A California appellate court has held that an attorney may not be paid a real estate commission unless the attorney has a real estate license.

FIRST COMMISION CASE FILED IN CALIFORNIA 1.10

On December 8, 2023, a California home seller who paid $50,000.00 in real estate commissions filed the first-class action lawsuit in the State of California alleging that the defendants violated anti-trust laws by conspiring to inflate real estate broker commissions. The complaint named as defendants the National Association of Realtors (NAR), the Bay Area Real Estate Information Services MLS (“BAREIS”), four other regional MLSs and three real estate brokerage companies.   BRM will be monitoring this lawsuit and providing updates.

12/4 Risk Management Webinar Recording 12.13

Broker Risk Management (“BRM”) provided a risk management seminar (webinar) for its clients on December 4, 2023.  The topics included legal issues driven by the current market, disclosures, agent trouble areas, new forms, new statutes and discussion of the NAR litigation.  That webinar has now been posted for exclusive use by BRM clients.

QUESTION AND ANSWER REGARDING LIS PENDENS 12.06

QUESTION:  The seller is refusing to sell the property to the buyer.  Can the buyer place a lis pendens on the property?

ANSWER:  To place a lis pendens on the property, the buyers would need to file a lawsuit as a notice of pendency of action (lis pendens) can only be recorded against a property with a lawsuit and appropriate causes of action. 

BRM Risk Management Webinar 11.30

BRM is offering a risk management webinar to its clients on December 4, 2023.  This webinar will provide the latest information regarding legal issues arising out of the current market, disclosure issues, agent trouble areas, new statutes, and a status report on the NAR litigation.

NAR Litigation Developments 11.20

BRM has been monitoring the NAR litigation and keeping its clients apprised of all developments relating to that litigation.  Last week, BRM prepared advisories for its clients to use with sellers and buyers to protect themselves from liability relating to the issues identified in that litigation. 

BRM Bay East Presentation 11.7

On Thursday, November 9, Shannon Jones and Bill Jansen will be attending the Bay East Association of Realtors presentation to review the NAR lawsuits, broker compensation, and other related topics.

Virtual Panel 11.6

On Wednesday, November 8, Shannon Jones and Bill Jansen will be discussing various risk management topics with Silicon Valley Association of Realtors (SILVAR).

BLOG 10.24

QUESTION:  Is an agent visual inspection required for vacant land?

ANSWER:  No.  Civil Code §2079 only requires a visual inspection of residential property, one to four units.  Therefore, an AVID is not required for vacant land.

BRM Webinar on legal challenges to broker compensation with June Barlow 10.20

Due to the number of inquiries BRM has received regarding the ongoing NAR and commission litigation, BRM is offering a webinar for its clients on Monday, November 6, 2023, regarding legal challenges to broker compensation with June Barlow, C.A.R. Senior VP and General Counsel.  Registration is open now.

October 2023 Newsletter

E&O Insurance Webinar now LIVE 10.4

BRM hosted a webinar for its clients with Brad Butlin of Austin & Austin on October 2, 2023.  The following topics were covered:  how an E&O Policy works;

what E&O issues affect agents – what agents need to know; what activities are typically covered and not covered; and common myths about E&O.

We would also like to provide you with Brad Butlin’s contact information for any further questions you may have: brad@a-ains.com.

If you missed it, we have posted it to our Website, viewable to BRM clients.

BRM Webinar on errors and omissions insurance with Brad Butlin 9.29

BRM is offering a webinar on October 2, 2023, on errors and omissions (E&O) insurance for its clients  – everything an agent needs to know.  Brad Butlin of Austin & Austin is BRM’s guest.  E&O insurance is critical for protection against potential liabilities, making it indispensable for professionals across various industries. 

AI WEBINAR NOW LIVE 9.15

BRM hosted a webinar for its clients with Chief Technology and Innovation Officer California Association of REALTORS®, Josh Sharfman this past Monday, September 11. The following topics were covered:  What is “Generative AI” and why all the controversy?  How can I use AI in my real estate practice?  Practical examples and solutions for real estate professionals to start using AI.  Who owns the copyright on AI generated text or images? What must be disclosed about AI generated images?  Can Generative AI output create fair housing violations?

If you missed it, we have posted it to our Website, viewable to BRM clients.

BLOG REGARDING SETTING UP A COMPANY AND RECEIVING COMMISIONS 8.30

Question:  I am a licensed real estate agent and want to set up a corporation to receive my commissions.  Is this legal?  If so, what type of corporation do I set up?  May I set up a limited liability company?

Answer:  According to the California Department of Real Estate, it is legal for a real estate licensee to set up a corporation to receive commissions.  However, a limited liability company cannot be used for this purpose.  Professional service companies, such as corporations for real estate services must be an S or C corp.  It is recommended that you consult with your accountant before choosing whether to make a sub-S or C election.

“AI Webinar with Josh Sharfman” 8.22

BRM is providing a Risk Management Webinar for its clients with Chief Technology and Innovation Officer California Association of REALTORS®, Josh Sharfman on September 11, 2023, covering the following topics:  What is “Generative AI” and why all the controversy?  How can I use AI in my real estate practice?  Practical examples and solutions for real estate professionals to start using AI.  Who owns the copyright on AI generated text or images?  What must be disclosed about AI generated images?  Can Generative AI output create fair housing violations?  The webinar is open to clients of BRM and will be posted on BRM’s website for clients after.

DEPARTMENT OF REAL ESTATE ISSUES WARNING REGARDING LISTING VACANT LAND WITHOUT VERIFYING THE SELLER’S IDENTITY 8.1

The California Department of Real Estate (“DRE”) recently published an alert warning real estate agents about a new scam regarding the sale of real property where the identity of the seller has not been verified.  In these circumstances, “fraudsters” will identify vacant land or a second home or rental property, which generally does not have a loan secured against it, and contact a real estate agent to list that property.  The fraudster does not own the property and once sold will abscond with the sales proceeds.  The real seller will likely be placed in a position of litigating the seller’s title with the new buyer.  It is likely that the agents and title company will also be involved in that litigation.

A link to the DRE’s alert is as follows:https://dre.ca.gov/files/pdf/adv/Advisory_2023_07_13_VacantLandPropertyScams.pdf.

Broker Risk Management (“BRM”) has sent a tip to its clients regarding this issue and recommendations for taking additional precautions. 

July 2023 Newsletter

QUESTION AND ANSWER REGARDING VERIFICATION OF FINAL CONDITION 7.13

Question:  I am the listing agent and the buyer undertook a final verification of condition and prepared a Verification of Property Condition (VP) and asked for repairs.  Is the seller obligated to make repairs?

Answer:  CAR’s Residential Purchase Agreement (“RPA”) provides that the property will be sold in the same condition it was in when the RPA was signed.  If the additional repairs remedy a change in condition from the date the RPA was signed, the seller needs to address the issue.  If the request for repairs is new and all contingencies have been removed, the seller does not have to undertake the repairs.

ANNOUCEMENT 7.10

Broker Risk Management (“BRM”) has partnered with Austin & Austin and Palomar Specialty Insurance Company, an A- admitted insurer, to provide errors and omissions insurance to BRM clients at less cost with additional benefits.

Under this program, any client of BRM who is a client at the time the policy is initiated and at the time of any claim, will receive a reduction in the retention (deductible) of up to $10,000.  Palomar has identified the significant value that BRM provides to its clients in risk reduction, including training and availability to assist with legal issues.  As a result, Palomar seeks to work with and insure BRM’s clients.

For more information, please contact us or Brad Butlin, Austin & Austin, directly at (925) 412-3861 or Brad@a-ains.com, who can provide quotes for your insurance needs. 

State Farm to stop accepting homeowners insurance applications in California 6.19

In a surprising development, insurance giant State Farm recently announced its decision to stop accepting new homeowners insurance applications in California. This move has raised concerns among homeowners and industry experts alike.  State Farm has indicated that it will honor all existing policies.  However, whether State Farm will renew existing policies remains unclear. 

State Farm’s decision to halt new homeowners’ insurance applications in California stems from a combination of factors.  State Farm has cited to increasing risks associated with wildfires in the state, which have resulted in significant financial losses for insurers. Additionally, regulatory challenges and the unpredictability of natural disasters have added to the complexity of providing coverage in California.  As a result, State Farm has deemed it necessary to reevaluate its approach in order to mitigate potential future losses.

State Farm’s decision will likely cause a further constriction of an already tight California insurance market.  Buyers need to address the insurability of property as part of their due diligence process when purchasing a property.

Source: https://www.cnbc.com/2023/05/27/state-farm-to-stop-accepting-homeowners-insurance-applications-in-california.html

Artificial Intelligence Use 6.12

Last week, a New York attorney was severely reprimanded by a judge for drafting a legal brief using Chat GBT.  The AI tool added cases and citations to the brief that were made up and did not exist.  The attorney did not bother to double check the cites, but opposing counsel did.  Opposing counsel notified the court leading the judge to harshly chastise the attorney.  The judge is currently evaluating whether to sanction the attorney with monetary fines.

This event emphasizes the importance of monitoring any written documents, including marketing materials, using AI.  Chat GBT is subject to error, so ensure you double check any documents prepare using that tool or any other AI tool.

Risk Management Webinar 5.30

BRM is providing a risk management seminar on May 31, 2023, covering the following topics:  impact of market changes on legal issues; war story; current disclosure issues; current agent trouble areas; CAR new and revised forms; and DRE updates.  The webinar is open to clients of BRM and will be posted on BRM’s website for clients after.

DRE IS FOCUSING ON UNAPPROVED DBA’s AND TEAM NAMES 5.22

Alert – The California Department of Real Estate (“DRE”) is focusing on agents and brokers using unapproved DBAs and, particularly, team names. 

Please double-check all of your advertising, websites, and signature blocks to ensure any DBAs have been approved by the DRE for your broker to use, and that all team names comply with all team name advertising requirements.  These violations are leading to fines and investigations into brokers’ practices and allegations that a broker failed to properly supervise. 

Team names and DBAs must be treated separately since DBAs require a DBA license approved for the broker to use. Team names require no registration at all.  Team names and “salesperson-owned” DBAs have similar advertising requirements, while “broker-owned” DBAs have different advertising rules.

L.A.’s Luxury Market Freezes, Putting Measure ULA Funds in Limbo 5.8.23

The luxury real estate market in Los Angeles has been a hot topic for some time, but recent developments have cast a shadow over its future. The Los Angeles Times reported on May 5th, 2023, that the city’s luxury market has come to a standstill, leaving the future of Measure ULA funds in limbo.

Measure ULA is a program that provides funding to support affordable housing initiatives in Los Angeles. The program is financed by a tax on high-end real estate transactions, which has generated millions of dollars over the years. However, with the luxury market currently in a state of flux, the program’s future is now uncertain.

According to the article, the luxury market has been hit hard by a combination of factors, including a slowdown in foreign investment and increasing interest rates. The result is a market that is frozen, with high-end properties sitting on the market for months without any buyers.

This news is particularly concerning for Measure ULA, as the program relies on revenue generated by high-end real estate transactions. With the luxury market currently in a slump, it is unclear where the necessary funds will come from to support affordable housing initiatives in Los Angeles.

The implications of this situation are far-reaching. Affordable housing is a pressing issue in Los Angeles, with many residents struggling to find safe, affordable housing in the city. Measure ULA was seen as a way to address this issue, but its success is now in jeopardy due to the current state of the luxury real estate market.

It remains to be seen what steps will be taken to address this situation. One possibility is to explore alternative sources of funding for Measure ULA. Another option is to wait and see if the luxury market bounces back, providing the revenue necessary to support the program.

In any case, this news serves as a stark reminder of the interconnectedness of the real estate market and its impact on wider issues such as affordable housing. It also highlights the need for innovative solutions and creative thinking in addressing the challenges facing the housing market in Los Angeles and other cities across the country.

In conclusion, the current state of the luxury real estate market in Los Angeles is a cause for concern, particularly for programs such as Measure ULA that rely on revenue generated by high-end real estate transactions. It is a situation that requires careful consideration and action, with the aim of finding solutions that can support affordable housing initiatives in the city.

Article Source: https://www.latimes.com/california/story/2023-05-05/l-a-s-luxury-market-freezes-putting-measure-ula-funds-in-limbo#:~:text=L.A.’s%20luxury%20real%20estate,ULA%20transfer%20tax%20so%20far.&text=In%20the%20days%20before%20Los,luxury%20market%20moved%20at%20hyperspeed.

DRE DEVELOPMENTS 5.1.23

The California Department of Real Estate (“DRE”), in the last several years, has focused on ensuring that fictitious names are properly approved by local counties and the DRE.  When an agent or team has used an unapproved DBA, the DRE will send a notice in the form of a letter or email.  In our experience, the agent or team promptly responds and corrects the issue.

Be aware that the DRE is authorized to issue a cite and fine of up to a maximum of $2500 per violation.

It has recently come to our attention that the DRE is now issuing cites and fines in the amount of $250 per violation.  In some instances, the DRE is fining the agent, broker, and brokerage each $250 for a total of $750 per violation. 

We understand that the DRE’s Cite and Fine Department is behind and is currently issuing cites and fines for DBA violations which occurred in 2021.  Therefore, anyone who received a notice should be aware that fines may be coming from the DRE.

April 2023 Newsletter