EDCAR Immediate Past President
The El Dorado County Association of Realtors directors recently attended the quarterly California Association of Realtors’ spring meetings held at the Sacramento Convention Center. I always enjoy the process of working with directors from each association in Region 3 to bring forward issues and concerns from EDCAR to the state association level. Our Realtor association is relatively small in membership compared to some associations, so working together as a region gives EDCAR the megaphone to make its concerns heard.
On Wednesday morning we gathered at the Convention Center in general assembly, with nearly 2000 directors representing Realtor associations from 57 regions, statewide. Governor Brown and Sen. Bob Huff addressed the assembly to discuss key legislation affecting our industry. Afterward, we walked to the Capitol to meet with our elected officials and bring forward our issues and concerns, then urged them to vote for or against issues that affect private property rights.
The member director forum ended the day with an update on key industry issues and a preview of hot policy, legal and regulatory topics being considered by CAR directors during the business meetings.
The second and third days began early and continued throughout the days at a fast-paced schedule. Our directors split up to attend different forums and meetings of interest, each summarized and discussed at our nightly Region 3 caucus meetings.
A revised Residential Purchase Agreement in its third draft form was presented and discussed. It is ready for your consideration and input, so venture onto the CAR website and take a look at the RPA draft and voice your opinions. The final draft will be posted online for comments. In November, the new RPA form will be released. Please watch for education classes on the updated version. I believe we will have a more clearly defined purchase agreement to better serve our clients.
AB 2039 (Muratsuchi) — Auction Company Liability
CAR is sponsoring this bill (currently in the Assembly) to prevent real estate auction companies from shifting liability for their mistakes to sellers and listing agents when the lender sends short sale properties to auction to validate their value.
A new practice has arisen where some lenders require homes in a short sale transaction to be put up for auction typically run by a third-party auction company chosen by the lender. If the bids come in under the original offer, then the offer is accepted. If, however, a higher bid is submitted, then that bidder can purchase the home.
Currently, homeowners and Realtors are unfairly held responsible for the mistakes of others. In addition, homeowners have no leverage to negotiate. Auction companies should be liable for their own mistakes. The auction company is currently held harmless for mistakes it makes in the regular course of business.
SB 391 (DeSauinier) — Recording Tax
CAR opposes this bill, which will impose a $75 tax on the recording of all non-sale documents, including refinances, because it unfairly singles out one segment of society to pay for something that should be responsibility of all Californians. It creates a $75 per document recording tax to fund the affordable housing trust. The real issue is that this tax is imposed only on real estate document recordings. Affordable housing programs should be funded by the broadest base possible of California’s citizens.
SB 30 (Calderon) AB 42 (Perea) — Debt forgiveness Tax
On Dec. 31, 2012, Congress passed budget solutions to avoid the “fiscal cliff” which included an extension of the mortgage debt forgiveness tax protection’s sunset date to Jan. 1, 2014. CAR sponsored SB 30 and AB 42 to make conforming changes in California law retroactive to Jan. 1, 2013. In late 2013, however, CAR obtained opinion letters from the IRS and the FTB clarifying that under California law, debt forgiven in a short sale is not subject to income tax at the state or federal levels. With this clarification SB 30 and AB 42 are not longer necessary and CAR is no longer pursuing those measures.
Refer to the CAR website for a complete list of all of the bills that have been introduced to the California Assembly and Senate for approval.
Risk management is always one of the most interesting forums where we learn how we can better protect our clients. A flood insurance update was given regarding properties included in flood zones. We were instructed on pro-active measures to eliminate the additional and excessive costs of flood insurance for properties at time of transfer.
FEMA designates the flood zones areas. Flood insurance rates are based on how high houses are located above the flood zone. Homes that were built after 1982 had to be elevated, so the properties that are most affected are the properties built before 1982. If homeowners can obtain an elevation certificate for the property, the cost of flood insurance drops dramatically. Seek out and work with an insurance person who knows flood insurance. Find a surveyor who can provide the homeowner with a flood certificate, proving the elevation of the home is above the flood plain, thus reducing the flood insurance policies.
The Saturday morning general assembly summarized the week-long meetings and we voted to ratify the nominations for 2016 Regional chairpersons, discussed new business and anything else for the good of the order. One new item was Proposition 41 — the California Veterans Mortgage bond bill. After (what seemed like) hours of back and forth, positions for and against, we voted as a body to support this bill.
If approved by the voters, it will establish the Veterans Housing & Homeless Prevention Bond Act of 2014. It proposes to repurpose $600 million of the $900 million in general obligation bonds approved by voters in 2008 for the Cal Vet Home Loan Program. Proceeds from this measure will only be used for the acquisition, construction, rehabilitation, and preservation of affordable multifamily transition housing, or related facilities, for veterans and their families only. The funds will come from the sale of state general obligation bonds to investors. The sale will leave a bond authority balance of $535 million for the Cal Vet Home Loan Program ($300 million from Prop. 12 and a balance of $235 million remaining from 2000’s Prop. 32). If Prop 41 passes in June, there will be about $539 million in approved bond funds available for veterans’ home loans.
This will be my last year to represent our association at the state quarterly meetings. I have learned a great deal and love this process of democracy in action.