For a total list of all the real-estate laws digested by first tuesday for the 2008 legislative session, click here.

Reported by Bradley Markano:

Easements for solar and biogas projects are exempt from legislative restrictions on granting of subdivision maps

Government Code §66412
Amended by A.B. 1510
Effective: January 1, 2009

The Subdivision Map Act mandates a procedure for local agencies to approve or deny the final or parcel maps for subdivisions and common interest developments.

Whenever a local ordinance requires improvements for a division of land which is not a subdivision of five or more lots, the local agency may implement regulations which define rights-of-way and easements for the parcels being created.

A subdivider is not required to fill a local agency’s easement requirements until a permit has been issued by the local agency or a deadline set by prior agreement with the local agency.

If no prior agreement exists, the agency may require that the land or easement be granted after approval of the parcel map, as a prerequisite for a development permit, if the local agency finds that the improvement is necessary for public health and safety or the orderly development of the surrounding area.

As prerequisites for the approval of a subdivision map, a local agency may require:

  • payment of a fee;
  • the dedication of an easement; or
  • the construction of an improvement.

However, the agency may not require completion of these demands until the parcel’s contract terminates or is canceled.

If subject to review or discretionary action by a local advisory agency or legislative body, these regulations upon common interest subdivision developments do not apply to:

  • leasing or granting an easement to property as a part of the financing, construction, sale, or lease of a solar energy generator; or
  • leasing or granting an easement to property in connection with a biogas project that reduces overall emissions of greenhouse gases from agricultural operations on the land where it is located. This project must use agricultural waste or byproducts from the land as part of its operation to qualify for the exemption.

Insurance Code §12404
Amended by S.B. 133
Effective: January 1, 2009

Inducements paid by title insurers for referrals are prohibited

The deposit or maintenance of a “compensating balance” with a lender by a title insurance company (or an escrow company controlled by a title insurance company) for the purpose of influencing the lender to encourage clients to use the title or escrow business offered by the depositor of the compensating balance is now prohibited.

Advertising or paying for advertising by title insurers in any publication is considered an inducement for the placement or referral of title insurance business and is prohibited.

Expenditures by title insurers and controlled escrow companies are allowed for the following:

  • promotional items with a permanently affixed company logo of the underwritten title company, title insurer, or controlled escrow company with a value of less than $10 apiece, excluding:
    • gift certificates;
    • gift cards; or,
    • anything that can be exchanged for a specific monetary value; and
  • furnishing education, or educational materials, exclusively related to title insurance which do not convey DRE approval for continuing education credits toward license renewal.

Insurance Code §12418
Added by S.B. 133
Effective: January 1, 2009

Licensing requirement for title marketing representatives

All title marketing representatives employed by title insurers must now obtain a valid “certificate of registration” as a title marketing representative from the insurance commissioner.

Individuals whose primary duties directly involve the creation, production, or issuance of a title policy, or the performance of escrow services are excluded from licensing.

Insurance Code §12418.1
Added by S.B. 133
Effective: January 1, 2009

The title marketing registration certificate application

A certificate of registration as a title marketing representative is issued on application to the insurance commissioner.

An application for a certificate of registration must contain a statement, signed by the applicant’s employer, certifying that the applicant will be trained as a title marketing representative within 60 days of either the hiring date or the date of the application.

All applications to renew a certificate must be accompanied by a filing fee, not to exceed $200.

An applicant submitting an application for a certificate of registration is permitted to solicit, sell, or market title insurance in the interim period between submission of the application and the application’s approval, subject to the compliance requirements of an individual with an approved certificate.

When a title company terminates a title marketing representative’s employment, or hires a title marketing representative, the company must notify the insurance department within 30 days.

Insurance Code §12418.2
Added by S.B. 133
Effective: January 1, 2009

Rules for interim period in applications for title marketing registration certificates

Applicants registered as title marketing representatives are not required to pass a qualifying exam or complete any prelicensing or continuing education requirements except the mandatory training as a title marketing representative by the applicant’s title company.

Insurance Code §12418.3
Added by S.B. 133
Effective: January 1, 2009

Deadlines for renewal of a title marketing certificate

A title marketing certificate expires three years after the date it is issued.

Insurance Code §12418.4
Added by S.B. 133
Effective: January 1, 2009

Denying or revoking a title marketing certificate of registration

The insurance commissioner may deny an application if it is in the public interest to do so, or if the applicant:

  • is not qualified to perform the duties of a licensee;
  • does not intend to actively carry out the transactions with the public which would be permitted by the certificate;
  • has a bad business reputation;
  • lacks integrity;
  • has been refused a professional, occupational, or vocational license or had a license suspended or revoked by any licensing authority for reasons that should preclude the granting of a certificate;
  • seeks the certificate in order to avoid state insurance laws;
  • has willingly made a misstatement in a certificate application or in a document filed with the application, or has made a lied in testimony given under oath before a representative of the insurance commission;
  • has previously engaged in a fraudulent practice or act or has conducted any business dishonestly;
  • has shown incompetence or untrustworthiness in the conduct of business;
  • has exposed the public or his clients to the danger of loss by committing a wrongful act;
  • has been convicted of a felony, misdemeanor, or a public offense involving fraud or dishonesty;
  • has aided or abetted any person in an act that would constitute grounds for suspension of a certificate;
  • has permitted any of his employees behave in a manner that would justify suspension of a certificate;
  • has violated any provision of law relating to conduct of business which could only be done under the authority granted by a certificate; or
  • has submitted to the commissioner a false or fraudulent certificate.

The insurance department may revoke, suspend, restrict, or decline to issue a certificate of registration if the applicant or title marketing representative has:

  • paid, furnished, provided, or offered assistance with the business expenses of any person, including:
    • rent;
    • employee salaries;
    • furniture;
    • copiers;
    • facsimile machines;
    • automobiles;
    • telephone services or equipment; or
    • computers;
  • provided any benefits to any individual in exchange for favorable treatment, including:
    • cash;
    • below market rate loans;
    • automobile charges; or
    • merchandise or merchandise credits;
  • advanced or paid money into an escrow in order to facilitate the closing of the escrow, unless the money is the greater of:
    • the proceeds of a loan made in the ordinary course of business;
    • an advance of less than 2% of the sales price of the real property being sold or exchanged through the escrow;
    • the amount of any loan secured by real property involved in the escrow
    • the extension of credit; or
    • an advance for the costs, fees, and expenses of the escrow or of the title insurance issued connection with it;
  • disbursed escrow funds held by a title insurer, underwritten title company, or controlled escrow company before the conditions of the escrow have been met; or
  • furnished any part of the time or productive effort of any employee of the title insurer, underwritten title company, or controlled escrow company for any service unrelated to the title business.

Reported by Anthony Renaud:

Residential mortgage loan foreclosure procedures

Civil Code § 2923.5
Added by S.B. 1137
Effective: July 8, 2008 through January 1, 2013

Prior to recording a notice of default (NOD) on a loan recorded between January 1, 2003 and December 31, 2007 and secured by any type of residential real estate used as the owner-occupant’s principal residence, the lender is required to contact the borrower/owner in person or by telephone to commence the running of a period of at least 30 days before recording an NOD. Throughout attempts to contact the owner-occupant, the lender must:

  • assess borrower’s financial situation;
  • explore options for borrowers to avoid foreclosure;
  • advise borrowers of their right to an additional meeting within 14 days to discuss their financial options;
  • provide borrowers with the toll-free Department of Housing and Urban Development (HUD) phone number to find a HUD-certified housing counseling agency; and
  • in the event personal or phone contact cannot be made, the lender must exercise due diligence through further attempts to contact the borrower, including:
  • sending a letter via first-class mail to the borrower/owner containing HUD’s toll-free number used to find and contact a HUD-certified counseling agency;
  • after sending the letter, the lender may employ an automated dialing system to telephone the borrower on at least three different days and at different hours, provided a live representative is available if the borrower answers the call; and
  • make at least three attempts to reach the borrower by phone, unless the lender determines all the borrower’s telephone numbers on file have been disconnected.

Upon failing to make contact with the borrower via the above methods, the lender must send the borrower/owner a certified letter with return receipt requested containing a toll-free number with access to a live representative during business hours.

When contacting a borrower whose principal residence loan is in default:

  • a lender’s loss mitigation personnel may participate in any telephonic communication;
  • the borrower may select a HUD-certified agent to represent him during any meeting with a lender to discuss ways of avoiding foreclosure; and
  • any loan modification or plan to avoid foreclosure devised or offered by the lender is subject to the borrower’s approval.

The lender may record an NOD on a loan without complying with any of these 30-day pre-NOD requirements when the borrower/owner has:

  • surrendered the property to the lender either by letter confirming the surrender or by delivery of the keys to the lending institution;
  • contracted with a person who helps borrowers who have decided to leave their home to extend the foreclosure process and to avoid enforcement of the loan by the lender; or
  • filed a bankruptcy petition which is pending.

The NOD controlled by these rules must include a declaration stating:

  • the lender succeeded in contacting the borrower according to the above guidelines;
  • the lender was unable to contact the borrower, despite exhausting all due diligence efforts; or
  • the borrower has surrendered the property to the lending institution.

The notice of trustee’s sale (NOTS) for any NOD recorded on a principal residence loan prior to July 8, 2008, must contain a declaration that either:

  • states the borrower was contacted to assess his financial situation and to explore options to avoid foreclosure; or
  • lists the efforts made on behalf of the lending institution to contact the borrower in the event no contact was made.

To be due-diligent compliant, the lender must, prior to the 30-day pre-NOD recording, post a prominent link on the lender’s website containing information, including:

  • options available for borrowers who are unable to afford their mortgage payments and who wish to avoid foreclosure;
  • a list of financial documents borrowers need to have when discussing alternatives to foreclosure with the lender;
  • a toll-free telephone number for borrowers to discuss alternatives to foreclosure with their lender; and
  • the toll-free number made available by HUD for the borrower to find and contact a HUD-certified housing counseling agency.

Loan Servicing due diligence on behalf of pooled loans

Civil Code § 2923.6
Added by S.B. 1137
Effective: July 8, 2008 through January 1, 2013

To ensure a loan servicer acts in the best interest of a loan pool, any implementation of a loan modification or workout plan must ensure:

  • the loan is in default or default is reasonably foreseeable; and
  • a recovery amount equal to or greater than the amount anticipated to be recovered through foreclosure on a net present value basis is attainable.

Posting the property with a notice of sale and notice of right to 60-days notice to vacate

Civil Code § 2924.8
Added by S.B. 1137
Effective: July 8, 2008 through January 1, 2013

If the billing address for the borrower/owner of the property subject to the principal residence loan is different from the secured property’s address and the property is to be scheduled for a trustees foreclosure sale, then, concurrent with the posting of the notice of trustees sale (NOTS) on the property, there must also be posted on the property a notice, stating in English and five other mandated languages:

“Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or rental agreement or provide you with a 60-day eviction notice. However, other laws may prohibit an eviction in this circumstance or provide you with a longer notice before eviction. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights you may have.”

It is an infraction for anyone to tear down the notice of right to 60-days notice to vacate following the foreclosure sale within 72 hours of posting. Violators shall be subject to a fine of $100.

A copy of the above notice must also be mailed at the time of posting the property as a letter addressed to the “Resident of property subject to foreclosure sale.”

Editor’s Note—See first tuesday Form 471-1 (Notice of Sale)

Grantee taking title under a Trustee’s Deed has duty to maintain vacant property

Civil Code § 2929.3
Added by S.B. 1137
Effective: July 8, 2008 through January 1, 2013

A person who acquires title to property sold at a trustee’s sale as the grantee under the trustee’s deed is required to maintain the exterior of that property if it is vacant residential property. Failure to maintain property includes:

  • permitting excessive foliage growth that diminishes the value of surrounding properties;
  • failing to take action to prevent trespassers or squatters from remaining on the property;
  • failing to take action to prevent mosquito larvae from growing in standing water; or
  • allowing any other condition to persist that would create a public nuisance.

Failure to maintain vacant residential property acquired at foreclosure sale may result in a governmental entity imposing a fine of up to $1,000 per day for the violation. To establish a violation for failure to maintain, the governmental entity must ensure:

  • notice is given of the alleged violation;
  • conditions that gave rise to the violation are described;
  • notice is provided in writing of the entity’s intent to assess a civil fine if actions toward correcting the violation are not taken within 14 days or corrected within 30 days;
  • notice is mailed to the address listed on the deed or the return address listed on the deed or other instrument;
  • legal owner is given at least 30 days to remedy the violation before assessing a fine;
  • fine does not exceed $1,000 per day the property is in violation, beginning on the day following the expiration of the period to remedy the violation;
  • fines and penalties collected under this section are directed to local nuisance abatement programs;
  • fines are not to be imposed under both this section and local ordinance; and
  • these provisions do not preempt any local ordinance.

If any nuisance on the owner’s property is determined to be a threat to public health, a government entity may impose a civil fine on the owner of a vacant residential property with less than 30 days’ notice.

60-Day Notice to quit due to foreclosure

Civil Code § 1161b
Added by S.B. 1137
Effective: July 8, 2008 through January 1, 2013

A tenant or subtenant, but not the borrower/owner, in possession of a rental housing unit at the time the property is sold at a foreclosure sale must now be given 60 days’ written notice to quit before the tenant or subtenant may be removed from the property by an unlawful detainer action.

Editor’s Note—See first tuesday Form 573 (60-Day Notice to Quit Due to Foreclosure—To Holdover Residential Tenant)