Every year, there are new laws/rules plus other changes that realtors need to know. Yesterday was the annual review by Gov Hutchinson, the assistant general counsel for the California Association of Realtors.

Gov has been with C.A.R. since 1985 and manages C.A.R.’s Member Legal Services Program in Los Angeles. Gov advises REALTORS® through the “Hotline” on all aspects of real estate law and he trains and supervises other “Hotline” attorneys.  Gov received his Bachelor’s Degree in History from Princeton University and his Juris Doctorate from the University of Pennsylvania.

Because he runs the Hotline, he hears all the feedback about the current forms and issues and he is the best equipped to deal with them!

He is a fantastic speaker and we enjoy going every year to learn and laugh with Gov! One agent stomped out when Gov wouldn’t agree with him about listing agents offering a specific compensation to the buyer-agents on the phone. I agree with Gov – a verbal offer over the phone isn’t binding, so why bother?

The highlights:

On Tuesday, Gavin Newsom signed an executive order mandating that homes in the fire zone could not be sold for less than they were worth on January 6th. The idea sounds preposterous, but the scammers are already out making lowball offers so I guess something has to be done:

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As of August 17, 2024, the NAR Settlement required realtors to complete a buyer-broker agreement with their buyer clients prior to viewing residential properties in person. The State of California supplemented the practice with their own law that began on January 1st, and the Department of Real Estate will issue their own mandate shortly. Between the two, they will require that every licensee (realtor or not) has a written buyer-broker agreement before showing any type of property, not just residential.

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The initial exclusive buyer-broker agreement could be cancelled with 30 days notice. The latest version allows for 30 days or less, as negotiated in paragraph 2F. Buyers may feel more comfortable signing an agreement that can be cancelled on short notice, and if you are going to cancel, you might as well get it over with. Choosing 1, 3, 5, or 10 days may now be more appropriate here:

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This new form change is welcome. Whenever a buyer or seller wanted to agree to a deal but the offer or counter-offer had expired, we would have to author another addendum to extend – leaving the door open for possible shenanigans.

Now the verbiage is included – as long as the other party signs the paragraph 6, then we have a deal. The delay is still possible, but at least we don’t have to agree on who will be writing the addendum and exactly what it needs to say to make everyone happy:

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Tenant rights are already long and lengthy but every year the rentals category gets at least twice as many changes as sales side:

A. There is a new form for landlords to report the tenant’s payment history to the credit bureaus. But it’s only required if the landlord owns two or more rental properties. They are able to charge the tenant $10 per month for this service.

B. If a landlord is going to keep more than $125 of the tenant’s deposit, they need before and after photos.

C. Any clause that states the tenants are responsible for professional carpet cleaning at move-out is unenforceable. Carpet cleaning is only required if it is ‘reasonably necessary’.

D. The seller is responsible for maintenance when renting back after the close of escrow.

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Rent Gouging is illegal in areas that have been declared to be in a state of emergency. Rents can’t be jacked more than 10% of what are currently or what they were over the last 12 months. If the property is new to the rental market, the rent can’t be more than 160% of the HUD standard in the area. Even when there are multiple tenants bidding up the rent, it can’t go higher than +10%.

What areas are in a state of emergency? ALL of California has been in a state of emergency……due to the Bird Flu. The notice expires on Friday so wait until Saturday to gouge tenants around here.

The Tenant Protection Act of 2019 limits the annual maximum increase in rents to 10% or CPI + 5%. This year in San Diego County, the CPI + 5% = 8.8%.

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That’s about all for now!

BTW, I ran into another long-time agent in the parking lot. When I told him that I’m getting a call a day from potential sellers, he said he’s taken TEN listings in the last seven days.

We agreed – in our decades of being in this business, we’ve never seen it like this! The fires may be providing a bit of a respite, but a flood of listings is coming.