By Karen Larson
As a director for the El Dorado County Association of Realtors, I recently had the privilege of representing EDCAR Realtors at the California Association of Realtors quarterly meetings in Sacramento. The state directors assemble at the Convention Center to begin the four-day session where, as a 2,200-member body, we receive issue briefings on key legislations affecting our industry. We discuss the hot issues that directly involve real estate, then meet with our local Assembly and Senate legislators to ask them for their support, either for or against important bills, currently being debated in Sacramento. It is a full week of work and I think all who attended felt gratified that we truly experienced the grass-roots level of the democratic process in action.
Last week we convened early Wednesday morning discuss four bills currently in the Assembly and Senate. The first, AB 42 (Perea) and SB 30 (Calderon) — Short Sale Debt Forgiveness — will conform California law to federal law by making clear that debt forgiven in a short sale is not income. Short sales have become an increasingly important alternative to foreclosure for distressed homeowners. Federal and state law views the debt forgiven by a lender in a short sale as income. In recent years, CAR and the National Association of Realtors have secured short-term relief in state and federal law that keeps this “phantom” income from being taxed. In early January, President Obama signed into federal law an extension of the mortgage debt tax through Dec. 31, 2013. Because state legislation has not yet passed extending the sunset for state tax purposes, many short sale sellers are in limbo. Both bills have been placed on “Suspense files” in the Legislature, keeping them from being voted on and quickly approved. We asked our legislators to vote yes on both bills and urged that they be removed from the “Suspense file.”
AB 905 (Ting) — Private Transfer Tax — will allow current owners of a property to enter into a binding contract that forces ALL future owners of the property to pay a transfer tax of as high as 2 percent of the purchase price of the property. So, for example, the purchase of a five-unit apartment building (the bill exempts residential 1 to 4) costing $ 1 million would require payment of a $20,000 private transfer tax. The transfer tax can be collected indefinitely and there is nothing in the bill that provides any oversight as to how the fees will be used. There is no connection between the fee and the actual cost of the improvement. There is no oversight on the entities receiving the funds, no “cap” on the collection or the duration of the fee. We asked our assembly members and senators to vote no on AB 905.
AB 1164 (Lowenthal) — Wage liens on Property — Under existing law, trades people and others who have conducted work to improve a property have the right to record a mechanics lien against the property for payment of that work. AB 1164 seeks to expand the mechanics lien concept so that an employee may record a lien against any property owned by the employer, even property that has no connection to the dispute. This is no standard lien either. This bill creates a super-lien for the first $50,000 of the claim. This super-lien would be paid before any other lien except tax and government liens, purchase money mortgages and mechanics liens. We asked our legislators to vote no on AB 1164.
In addition, we discussed “Pocket Listings” and listing clubs, two issues that may deny full exposure of listings in the market place. A new set of problems in this rising market.