Dear CAR Member,
Happy New Year!
A new year, and with it, brings new beginnings and new opportunities. 2020 was challenging in many aspects, but it gave me more opportunities to be a problem solver and connect with members – both which I plan to continue throughout my presidency this year.
As we turn the pages from a year filled with obstacles no one could foresee, let’s not forget the victories we achieved in the face of adversity as we fast forward to a new year filled with promise. I’m looking forward to meeting the challenges that invariably present themselves as the new year gets underway, and I hope your year is filled with good health and many more victories.
One victory we achieved just before the year ended was the passage of Prop. 19 at the ballot box, which allows homeowners who are 55 and older, people with severe disabilities, wildfire or natural disaster victims to transfer their current property tax base to a replacement home anywhere in California. Beginning Feb. 16, 2021, it also changes the rules on exemptions from reassessment for intergenerational transfers by limiting the exemption to the transfer of a primary residence to a child (or grandchild) only when the property continues to be used as a family home by the child (or grandchild), and even then, if the divergence between the taxable value and the actual value is too great, a partial increase in the new taxable value will be imposed. As is the case under current law, under Prop. 19, a grandparent- to-grandchild transfer receives the exemption only if the parents are deceased. Your clients are likely to have many questions regarding the implementation of the new law, so C.A.R.’s Legal Team has prepared extensive FAQs to address some of those questions related to intergenerational transfers. Read more about Prop. 19 below.
Our monthly Boost Your Biz newsletter is returning next week on Tuesday, Jan. 26. The “back-from-our-2020-hiatus” module is not exactly what you expect it to be. It is so much more than a newsletter. We’re bringing back this monthly member benefit because it provides you with actionable tips from industry pro’s on marketing, tech skills and new routes to more leads – ideas that can help you meet our new business reality. Real estate is constantly evolving, and we want to provide you with the how-to’s on utilizing the most advanced business strategies. Mark your calendars to check your inbox on the last Tuesday of each month.
Finally, a new year always brings new laws that may affect REALTORS®. Here are a few of the top new laws:
Proposition 19 (Statewide Tax Basis Portability)
With the passage of Proposition 19, a homeowner who is 55 years of age or older, severely disabled or whose home has been substantially damaged by wildfire or natural disaster may transfer the taxable value of their primary residence to:
• A replacement primary residence
• Anywhere in the state
• Regardless of the value of the replacement primary residence (with adjustments if “greater” in value)
• Within two years of the sale
• Up to three times (but without limitation for those whose houses were destroyed by fire)
Proposition 19 will supersede the old rules which limited this exemption to the sale and purchase of a principal residence within the same county (Proposition 60) or between certain counties (Proposition 90) — but only if the replacement property was of “equal or lesser value” and only one time. Prop 19 tax portability clearly applies to any sale or purchase on or after April 1, 2021. However, if an agent has a client who wishes to obtain the tax benefits of Proposition 19 for a transaction that closes prior to April 1, 2021, whether it is buying or selling a property, the client should be encouraged to seek the advice of a qualified California real estate attorney or tax advisor. View C.A.R. Legal FAQs on Tax Portability here.
AB 38 (Home Hardening Disclosure)
This law requires delivery of a statutory disclosure for homes in designated high fire areas built before 2010. In it, the seller will disclose specified home hardening retrofits that the property lacks. The disclosure will apply to any property in which the Transfer Disclosure Statement must be delivered, and the standard TDS exemptions and cancellation rights apply.
This law is not actually a new law for 2021. In fact, it was passed the year before last. However, it applies to transactions starting January 1 of this year. C.A.R.’s new form “Home Fire Hardening Disclosure and Advisory” (HHDA) may be used to comply with this disclosure.
AB 3182 (The Right to Rent out Your Unit in a Common Interest Development)
This new law requires common interest developments (CIDs) to allow at least 25 percent of owners to rent or lease out their units starting January 1, 2021, regardless of whether the HOA has formally amended their governing documents. If the owner actually occupies their own unit then renting out a space within the unit, an ADU or junior ADU must be permitted. No matter what, the existing rights that owners currently enjoy to rent out their units cannot be changed.
SB 1079 (Tenant, Prospective Owner and Non-Profit Right of First Refusal to Purchase Residential Property after Foreclosure)
This law grants tenants, prospective owner-occupants, nonprofit affordable housing providers, and other entities a 45-day window to purchase residential property through foreclosure if they can match (in the case of tenants) or exceed (in the case of other purchasers) the last and highest bid made on residential one to four single-family homes at the foreclosure auction. To ensure that residential properties are available to potential consumer purchasers, this law prohibits a trustee at a foreclosure sale from bundling the sale one to four single-family homes. Each one must be sold as a single sale.
AB 3088 (Temporary Statewide Rent Moratorium)
The “COVID-19 Tenant Protection Act of 2020” creates a statewide rent moratorium effective from March 1, 2020 through January 31, 202, for when a tenant cannot meet the rent due to a COVID related financial hardship. By the time this magazine is published, this law may have already been extended beyond the January 31st deadline. Under this law, rent owed during this period may be collected at the owner’s option through small claims court beginning March 1, 2020, for any amount, but cannot be collected in connection with an action for possession. Not only is a rent moratorium put in place but the just cause eviction rules under the statewide just cause eviction laws are extended temporarily to all properties even if previously exempt from the just cause eviction rules. However, a homeowner of a single-family home can still evict a tenant for no cause if the owner is in contract to sell to a buyer who will take occupancy.
See a complete list of new laws affecting REALTORS®.
Sincerely,
Dave Walsh
C.A.R. President