• New Laws in California for Property Management

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      The end of the year will soon be upon us, and with the beginning of 2013 will come a number of new laws which affect property owners here in California. While the effect of the new laws vary from trivial to significant, it is important for property owners and managers to take some time to understand these new laws…because as the Romans said ignorantia legis non excusat (i.e. “ignorance of the law excuses no one”)

      There are no less than 80 new and/or changed laws which are relevant to real estate professionals, and a number of these specifically relate to property management.

      While some of these changed laws are significant and address important issues which have been the subject of much public debate, other new laws seek to remedy problems which I was not aware existed.

      Thou Shall Not Require the “Declawing and Devocalizing” Of Animals

      Despite all of the difficult issues currently affecting our state, our California State Legislature took the time to “find and declare” that:

      (a) The permanence of declawing and devocalizing contrasts with the temporary nature of the occupancy of real property owned by another, which generally lasts only for a fixed term and may be terminated upon notice by one of the parties.

      (b) Therefore, it is the intent of the Legislature to restrict the ability of a person or corporation to impose conditions on occupancy of property that are based on declawing or devocalizing an animal that is allowed on the premises.

      In their infinite wisdom, the Legislature then went on to craft a new law (Civil Code Section 1942.7) which prohibits, among other things, the owner or manager of real property who allows an animal on the premises, from advertising the property in a manner designed to discourage the application of an occupant because an applicant’s animal has not been declawed or devocalized.

      While the need for this new law may be debatable, starting January 1, 2013 it will be the law of the land.

      Thou Shall No Longer Have To Auction Off Your Tenants Old Couch

      Moving on to a changed law which benefits property owner and managers, the total resale value of personal property left behind by a tenant after termination of a tenancy that a landlord must sell at a public auction, rather than merely retain for his or her own use or dispose of in any manner, has been increased from $300 to $700, if certain procedures are followed. The procedures which must be followed by the landlord remain largely unchanged, except that the new law prohibits a landlord from assessing any storage cost if the tenant reclaims personal property within 2 days of vacating the premises. In addition, the statutory notices of Right to Reclaim Abandoned Property can now be sent to the tenant by email if the former tenant provided the landlord with the tenant’s email address. The law also requires that the notices of termination of tenancy and pre-move out inspection contain specified language that former tenants may reclaim, subject to certain conditions, abandoned personal property left on the premises.

      Thou Shall Not Evict a Tenant After a Foreclosure Sale

      Civ. Proc. § 1161b will take effect January 1, 2013 and will give residential tenants additional rights if the house they occupy is foreclosed upon. Until this new law takes effect, California law requires 60 days notice to a tenant after foreclosure.

      Since May 20, 2009 California law has had little significance with regard to tenants in foreclosed homes, because on that date the federal ‘Protecting Tenants at Foreclosure Act of 2009’ went into effect. The Protecting Tenants at Foreclosure Act of 2009 stated that, with regard to any “federally related mortgage loan” (which is almost every mortgage loan in existence), “any immediate successor in interest” in such a foreclosed property, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements. Under this law, the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date of such notice. Most significantly, the Protecting Tenants at Foreclosure Act of 2009 also requires that Tenants must be permitted to stay in the residence until the end of their leases, with two exceptions:

      (1) When the property is sold after foreclosure to a purchaser who will occupy the property as a primary residence or,

      (2) When there is no lease or the lease is terminable at will under state law.

      The new California law is an expansion of tenant rights, although given that the new law makes California’s requirements very similar to those of the existing federal law, the effect on property owners will be relatively minimal. The new California law will require a tenant or subtenant in possession of a rental housing unit under a month-to-month lease at the time that property is sold in foreclosure to be provided 90 days’ written notice to quit before the tenant or subtenant may be removed from the property. The new law will also provide tenants or subtenants holding possession of a rental housing unit under a fixed-term residential lease entered into before transfer of title at the foreclosure sale the right to possession until the end of the lease term, except in specified circumstances. These “special circumstances”, which allow a fixed term lease to be terminated upon 90 days’ written notice to quit, are:

      (1) The purchaser or successor in interest will occupy the housing unit as a primary residence.

      (2) The lessee is the mortgagor or the child, spouse, or parent of the mortgagor.

      (3) The lease was not the result of an arms’ length transaction.

      (4) The lease requires the receipt of rent that is substantially less than fair market rent for the property, except when rent is reduced or subsidized due to a federal, state, or local subsidy or law.

      While the federal law was set to expire on December 31, 2014, the California law will not expire until December 13, 2019.

      In Conclusion

      These are just a few of the new laws which affect real estate owner and managers. At Haedrich & Co., Inc. we take pride in staying abreast of the most recent legal, technological and economic developments in the area of commercial real estate and property management. This results in our being able to provide superior service to our clients. If you have any questions on these new laws may affect you, or if you have any other property management issues you would like to discuss, please feel free to give me a call.

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