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The following is a partial list of real estate related statutes which became effective on January 1, 2007, unless otherwise noted.

Change in use of eminent domain property subject to vote

Added by SB 1650:
Code of Civil Procedure §1245.245

For the governing body of a public entity to authorize a changed use of seized property or reauthorize the existing use of seized property, they must adopt a resolution by:

  • a vote of at least 2/3 of all members of the governing body of the public entity; or
  • a greater vote as required by statute, charter, or ordinance.

Any property seized by a public entity under an eminent domain resolution of necessity must be used for the purpose stated in the resolution within 10 years of adopting the resolution, or the public entity must:

  • adopt a resolution authorizing a different use of the seized property;
  • adopt a resolution reauthorizing the existing use of the seized property; or
  • sell the property.

A government agency’s resolution to either authorize a changed use for the seized property or reauthorize the existing use of the seized property must contain:

  • a general statement of the proposed new public use or reauthorized public use, including a reference to the statute authorizing the eminent domain seizure for that use;
  • a description of the location and extent of use, with sufficient detail for identification;
  • a declaration that the governing body has determined the proposed use is required by public interest;
  • a declaration that the proposed use is planned and located to be most compatible with public good and little private injury; and
  • a declaration that the property described is necessary for the proposed use.

Notice of a resolution to change use or reauthorize the existing use on a seized property must be sent to every person who holds an interest in the seized property.

If the property is not used in the manner stated in the resolution within 10 years of its adoption and neither the resolution to change nor reauthorize use is adopted, the public entity must make a diligent effort to find and offer the right of first refusal to purchase the property to the person from whom the property was seized.

Under the right of first refusal, the property must be offered to the person from whom it was acquired at the present market value as determined by independent appraisers, unless it was a single family residence at the time of the public entity’s acquisition. If so, the following applies:

  • the offer price may not be greater than the price paid by the public entity for the acquisition, adjusted for inflation;
  • the offer price may not exceed fair market value; and

  • the person from whom the property was acquired must certify they are of low or moderate income, subject to verification by the public entity.

If the single family residence is offered at a price less than fair market value, the public entity will impose the following restrictions:

  • the property must remain owner-occupied by the person from whom the property was acquired for five years; or
  • the property must remain available to the low income households for at least 45 years for home ownership units and 55 years for rental units.

The Department of Housing and Community Development will provide to the public entity recommendations for the prices, terms, and conditions. The public entity must do all of the following to show a diligent effort has been made:

  • mail the notice of the proposed sale by certified mail, return receipt requested, to the last known address of the person from whom the property was acquired;
  • mail the notice of the proposed sale by certified mail, return receipt requested, to any person with the same name at any other address on record;
  • publish the notice of the proposed sale in at least one newspaper of general circulation within the city or county where the property is located;
  • post the notice of the proposed sale in at least three public places within the city or county where the property is located; and
  • post the notice of the proposed sale on the property to be sold.

If the public entity cannot find the person from whom the property was acquired, or that person does not choose to purchase the property, the public entity must sell the property. The public entity must pay the person from whom the property was acquired any financial gain between the original acquisition price, adjusted for inflation, and the final sales price.

Upon the completion of the acquisition of a property or the adoption of a resolution of necessity, the public entity must give written notice of the rights of refusal and financial gains to the person from whom the property was originally acquired.

Goodwill established prior to leaseback agreement

Added by SB 1650:
Code of Civil Procedure §1263.510

If a public entity and the owner of a property enter into a leaseback agreement, the following applies:

  • additional goodwill will not accrue during the lease; and
  • goodwill is to be established and paid at the time of acquisition or after notice is given that the property may be taken by eminent domain.

Leaseback offer required in eminent domain action

Added by SB 1650:
Code of Civil Procedure §1263.615

On any property acquired through eminent domain, a public entity must offer a one-year leaseback agreement to the owner of the seized property subject to the property owner’s payment of fair market rents, unless the public entity states in writing that any of the following will begin within two years of acquisition:

  • the development of the property;
  • the redevelopment of the property; or
  • use of the property for its stated public use.

No leaseback offer is required if the public entity states in writing that a leaseback would create or continue a public nuisance. The following conditions apply to all leasebacks:

  • the lessee is responsible for any waste, nuisance, or liability on the property arising from the property’s continued use;
  • the lessor can require a security deposit to cover any potential liability arising from the leaseback;
  • the lessor is indemnified from legal liability and attorney’s fees of any lawsuit arising from the operation of the lessee’s business or use of the property;
  • the lessee must carry adequate insurance to cover potential liabilities arising from the use of the property, and name the lessor as an insured party;
  • additional goodwill does not accrue during the lease; the lessee shall be subject to unlawful detainer proceedings and holdover damages if he holds over after the lease expires; and
  • the leaseback does not affect the amount of compensation payable for the seized property.

At least 60 days prior to the lease termination date, the public entity must either:

  • offer to renew a leaseback agreement for a one-year term, subject to compliance with other requirements and rent adjustments; or
  • send a written statement notifying the owner that the development, redevelopment, or use of the property is scheduled to begin within two years of the termination of the lease.

Failure to offer a renewal or give the required notice shall extend the lease term by 60-day increments until an offer is made or notice is given. If a notice of termination is given after the lease termination date, the lessee shall have no less than 60 days to vacate the property.

At least 30 days prior to the lease termination date or the notice of termination, the lessee must either accept or reject a lease renewal offer. Failure to accept the renewal offer in a timely manner constitutes a rejection of the offer.

Servicing broker for an institutional investor may use interest-bearing account benefits

Added by AB 2602:
Financial Code §854.2

A real estate broker collecting payments or providing services for an institutional investor—such as a bank, credit union, trust company, or commercial finance lender—in connection with a loan secured by any property except one-to-four unit residential property may, if agreed to in writing by the broker and the institutional investor, use the benefits accruing from funds the broker receives and places in an interest-bearing account with a financial institution, such as a bank or credit union which safeguards money or securities.

Translation of contract in language negotiated

Amended by SB 1609:
Civil Code §1632

A reverse mortgage agreement negotiated primarily in Spanish, Chinese, Tagolog, Vietnamese, or Korean must provide, prior to execution, a written translation of the entire agreement in the language the reverse mortgage was negotiated.

Counseling for reverse mortgage borrower

Amended by SB 1609:
Civil Code §1923.2

A lender qualifying a reverse mortgage loan borrower is prohibited from:

  • requiring the borrower to purchase an annuity;
  • offering the borrower an annuity before the close of the reverse mortgage or prior to expiration of the borrower’s right of rescission; or
  • referring the borrower to anyone to purchase an annuity before the close of the reverse mortgage or prior to the expiration of the borrower’s right of rescission.

Prior to accepting an application for a reverse mortgage, the lender must refer and provide the borrower with a list of five United States Department of Housing and Urban Development (HUD) approved agencies for reverse mortgage counseling. At least two of the agencies listed have the capacity to counsel by phone.

A lender must receive, by hand or by fax, certification from the borrower or his agent that he has completed a HUD approved reverse mortgage counseling session before the lender may accept the reverse mortgage application and assess fees. The certification must be signed by the borrower and counselor of the agency, and must list the counselor’s name, address, telephone number, and the date of the counseling. The lender must keep the certification in their retrievable records for the term of the reverse mortgage.

Required counseling notice

Amended by SB 1609:
Civil Code §1923.5

Before a lender may accept a reverse mortgage loan application, the borrower must receive notice of the required reverse mortgage counseling. The notice must include, in 16-point font or larger, the following:

“IMPORTANT NOTICE TO REVERSE MORTGAGE LOAN APPLICANT

A REVERSE MORTGAGE IS A COMPLEX FINANCIAL TRANSACTION THAT PROVIDES A MEANS OF USING THE EQUITY YOU HAVE BUILT UP IN YOUR HOME, OR THE VALUE OF YOUR HOME, AS A SOURCE OF ADDITIONAL INCOME. IF YOU DECIDE TO OBTAIN A REVERSE MORTGAGE LOAN, YOU WILL SIGN BINDING LEGAL DOCUMENTS THAT WILL HAVE IMPORTANT LEGAL AND FINANCIAL IMPLICATIONS FOR YOU AND YOUR ESTATE. IT IS THEREFORE IMPORTANT TO UNDERSTAND THE TERMS OF THE REVERSE MORTGAGE AND ITS EFFECT. BEFORE ENTERING INTO THIS TRANSACTION, YOU ARE REQUIRED TO CONSULT WITH AN INDEPENDENT LOAN COUNSELOR. A LIST OF APPROVED COUSELORS WILL BE PROVIDED TO YOU BY THE LENDER. YOU MAY ALSO WANT TO DISCUSS YOUR DECISION WITH FAMILY MEMBERS OR OTHERS ON WHOM YOU RELY FOR FINANCIAL ADVICE.”

Two previously required portions of the notice have been deleted, including:

  • “THE REVERSE MORTGAGE WHICH YOU ARE CONSIDERING:
    • DOES
    • DOES NOT

REQUIRE THAT YOU PURCHASE AN ANNUITY IN CONNECTION WITH THE REVERSE MORTGAGE TRANSACTION”; and

  • “AS IS TRUE BEFORE ENTERING INTO ANY COMPLEX FINANCIAL ARRANGMENT, IT IS WISE TO SEEK THE COUSELING AND ADVICE OF APPROPRIATE PROFESSIONALS SUCH AS ATTORNEYS, FINANCIAL ADVISORS, AND ACCOUNTANTS. COUNSELORS TRAINED ON REVERSE MORTGAGES MAY ALSO BE AVAILABLE.”

The first portion has been deleted since lenders can no longer require, recommend or offer a borrower the purchase of an annuity in connection with a reverse mortgage loan. The second portion has been deleted since a lender must now require a prospective borrower to receive reverse mortgage loan counseling before the lender accepts a borrower’s application.

Government sells surplus property to low-income families

Amended by SB 710:
Government Code §54236

In response to the state’s shortage of low-income residential housing, the government offers surplus, single-family residential property at affordable prices to low or moderate-income families. A person or family qualifies as a person or family of low or moderate income if their income does not exceed 120% of the area’s median income and the person or family has not owned an interest in real estate during the last three years.

Amended by SB 710:
Government Code §54237

The amendment adds a fourth level of priority for the state’s sale of surplus property. A state agency disposing of surplus, single-family residential property may sell the property to its current occupants if they have not held an ownership interest in any real estate property during the last three years, unless they were the previous owners of the property.

Home loans and automated valuation report fees for DOC licensees

Added by AB 2416:
Financial Code §22317.2

A computerized property valuation system used by mortgage lender licensees of the Department of Corporations (DOC) to derive a real estate’s value for a consumer loan for which they charge an automated valuation fee is called an automated valuation model.

A DOC licensee may charge a borrower a fee for an automated valuation report prepared by a third party on a property, in lieu of an appraisal, not to exceed the amount paid by the licensee to the third party. The borrower may not be charged fees for both an automated valuation report and an appraisal for the property, unless the borrower has obtained a new or additional loan after a year has elapsed since the prior delivery of an automated valuation report or an appraisal. If the borrower has obtained a new loan on the same property within one year of the delivery of a prior automated valuation report, an appraisal fee minus the amount paid by the borrower for the automated valuation report may be charged for an appraisal.

The DOC licensee must notify the borrower of his right to receive a copy of the automated valuation report if the borrower paid for the report. The notice must:

  • be a retainable document, printed in at least 10-point boldface type, given within 15 days after the DOC licensee receives the application;
  • state that the borrower’s request for a copy must include the borrower’s mailing address and be received in writing by the DOC licensee within 90 days after the lender notifies the borrower it has taken action; and
  • include the following statement: “An automated valuation model is not an appraisal. It is a computerized property valuation system that is used to derive a real property value.”

The DOC licensee must deliver a copy of the automated valuation report to the borrower within 15 days after the DOC licensee receives either a written request or the automated valuation report, whichever occurs later.

Income requirements property tax postponement

Amended by AB 2719:
Revenue and Taxation Code §20585

Senior citizens and disabled persons may file a claim with the State Controller, using a form provided by the Controller, postponing payment of ad valorem property taxes, special assessments, and other fees and charges due on their principal residence, including condos and mobilehomes, if the person’s household income is within the following parameters:

1. For persons who filed and qualified for postponement in 1983 and each following year through 2007, household income may not exceed:

a. $34,000 for those years; and

b. $35,500 for the year 2008.

2. For persons who have not previously qualified for postponement, the household income may not exceed:

a. $24,000 for years up to and including 2006;

b. $31,500 for 2007; and

c. $35,500 for 2008.

3. For all persons after 2008, the household income may not exceed $39,000 in 2009. Beginning with 2010, the $39,000 amount for 2009 will be adjusted for inflation by the California Department of Industrial Relations.