The legal landscape constantly changes, whether that’s through legislation, regulations, or court decisions. Here are five new California laws that may impact how you make decisions and possibly whether you make money or not. We can keep you updated on legal developments so you can make informed decisions that will protect your interests.
AWB Law’s mission is to provide you with timely, high-quality legal services. Anthony Burton is an experienced real estate negotiator and litigator. He has a unique perspective on how real estate matters can turn into battles that require a court to sort them out. If you have questions or concerns about these new laws or how they might impact you, call him today at (949) 244-4207.
These new laws were discussed in the San Diego Union-Tribune.
Limits on Homeowner Association Regulation of Rentals
Homeowner associations (HOAs) must allow at least 25 percent of their properties to be rented by owners. In the past, an HOAs could prevent them from doing this. A quarter of the properties is the floor, not the ceiling, for renting homes, townhouses, or condos. The law also prevents HOAs from having rules an owner must live in the unit for more than a year before it can be rented. HOAs can still prevent short-term property rentals. The goal is to get more rentals onto the market in the hopes the increase in supply will stabilize or reduce housing costs.
Disclosure of Fire Risk
For homes built before 2010, when more strict building standards were put in place, a new law requires sellers to disclose if it’s in a high-risk fire area. The disclosure must also list things which may ignite in a wildfire (roofing, non-fire-resistant vents, landscaping). The state’s Director of Forestry and Fire Protection designates parts of the state that are very high fire hazard severity zones.
The law results in another disclosure to be signed at a closing. It will also give the new owner advice on how to prepare for a fire (or “fire harden” the property) and reduce the risk the home will be destroyed.
Right of First Refusal After Foreclosure
During the Great Recession, investors snapped up many foreclosed properties, leaving families scrambling for new homes and outbidding local businesses and families. During the pandemic, lawmakers were concerned history might repeat itself. A new law may allow a renter living in a foreclosed home to have a chance to buy the house after someone else was the winning bidder at an auction.
If a potential buyer is successful at an auction, but doesn’t plan on living in it, a renter has a chance to to buy it if they can match the winning bid (in cash or a mortgage) in 45 days. If that happens, the renter can buy the property, and the winning bidder loses out.
If the renter doesn’t participate, anyone wanting to live in the property as their primary residence can bid on it if their offer is more than what the winning bidder is willing to pay. A nonprofit that plans to use the home as subsidized housing could do the same.
These provisions may sound good for those who want to discourage investors from buying up homes, but there are practical problems. Many renters don’t have the cash to buy a home in California’s heated real estate market or afford the mortgage payments and all the other costs of home ownership. If someone else wants to live in the property, or a nonprofit wants to buy it, they could just outbid the other parties during the auction and skip the process in this new law.
Increased Homestead Exemption
This new law is featured in an earlier blog.
Proposition 19 – Lower Property Taxes for Disabled and Older Californians
This law permits homeowners 55 years old and older, those with severe disabilities, and people who lost their homes in a natural disaster to sell their house, buy another, and use their (presumably lower) property tax from their old home to lower their taxes on the new one.
Usually after a home sale property values are reassessed and tax bills increase. This law allows for a lower, blended tax rate when they buy a new home. With the new law, someone who qualifies can move three times within California and still get the benefit.
After selling your home, and moving into a more expensive one, the taxable value of the two properties are blended. This should result in a lower tax bill than if the law wasn’t in place. If your home is assessed at $250,000 but sells for $2 million and you buy a new home for $3 million, its new assessed value would be $1.25 million (the original $250,000 assessed value of your old home, plus the $1 million difference between the sales prices).
This measure aims to encourage home sales by older Californians so their homes can be added to the supply of homes for sale. But if they buy another house after the sale, there’s no boost to the number of homes on the market. If nothing else, those who benefit from the law will pay less in taxes.
We’re Here to Help
If you need help in a real estate or property matter or have questions about these new laws and how they may impact you, we can help. Call Anthony Burton at (949) 244-4207 or fill out our online contact form today. We can talk about your situation, how the law may apply, and what you should do next.
