As an eventful 2024 winds down in the real estate industry, it is time to start looking forward to some of the changes happening in the law next year. As usual, the California Legislature was extremely busy and this article will analyze several important changes to California law occurring that will affect REALTORS®, agents, and brokers.
AB 2992
In response to the litigation and settlement reached in the Sitzer-Burnett case, the Legislature has passed AB 2992 which carries sweeping changes for the real estate industry. With an eye towards the concerns addressed in the Sitzer-Burnett litigation, the Legislature has passed AB 2992 codifying fundamental changes to the structure, organization, and documentation of the buyer and buyer-broker relationship. Given the important and expansive nature of AB 2992, we will be drafting a “Special Report” that will detail the new law and its impact on the industry. Be on the lookout for the AB 2992 Special Report in the next few weeks.
AB 2579 Balcony Inspections
When: Effective January 1, 2025.
Where: Health and Safety Code, section 17973.
There are some important changes to the news laws related to wooden balconies. As this Newsletter has discussed previously, existing law requires that buildings with 3 or more units that also have balconies, stairways, or other elevated structures (at least 6 feet off the ground) extending beyond the exterior walls of the building that are partially or wholly supported by wood-based products must be inspected by January 1, 2025, and then additional inspections completed at least every six (6) years thereafter. Under AB 2579, the inspection deadline is being pushed back from January 1, 2025, to January 1, 2026. Note: local ordinances or codes may supersede state law. Make sure to consult with a local licensed attorney regarding questions of compliance with local ordinances and rules.
An analogous law related to associations for condominiums requiring inspection of elevated wooden elements every nine (9) years with the first inspection to be completed by January 1, 2025, is not modified by AB 2579.
AB 2114 Common Interest Development Balcony Inspections
When: Effective as of July 15, 2024 (urgency statute).
Where: Civil Code, section 5551.
Under current law, HOA director boards of condominiums or other buildings containing three (3) or more multi-family housing units are required to perform an inspection of wooden elevated structures and/or balconies once every nine (9) years. Enacted originally in 2022, the deadline for the first inspection is quickly approaching on January 1, 2025. Under the original language of the law, only a licensed architect or structural engineer was permitted to perform the inspection, but, to help HOAs meet the approaching requirement, the legislature expanded the list of inspectors who could inspect the wooden elevated structures. As of July 15, 2024, licensed civil engineers can also perform the necessary inspection.
AB 2622 Contractor Licensing Law Ceiling Increase
When: September 14, 2024
Where: Business and Professions Code, sections 7027.2 and 7048.
Currently, under the Business and Professions Code, sections 7027.2 and 7048, contractors must be licensed to advertise or perform construction work in California unless the aggregate cost of the material, labors, and work on a specific project is $500 or less. Under AB 2622, this exemption limit will now be raised to $1000. Important qualification: where the project under $1000 is only a part of a larger project or operation, the licensing exemption does not apply. Further, contracts that are made for a value under $1000 for the purpose of evading the licensing law will not be exempt.
SB 382 Gas Appliance Disclosure and Electrical Inspection Notice
When: On or after January 1, 2026.
Where: Civil Code, sections 1102.6i and j.
SB 382 applies to the Transfer Disclosure Statement made pursuant to the sale of residential 1 to4-unit properties (including mobile homes). Specifically, sellers or seller’s agents who are aware of any state or local requirements related to replacing gas-powered appliances that are being transferred with the subject property must disclose this to the buyer. Further, the new law will also require statutory notice be given to the buyer to obtain an electrical inspection for the subject property. The statutory notice reads as follows:
In a purchase of real property, it may be advisable to obtain an inspection by a qualified professional of the electrical system(s) of any buildings, including, but not limited to, the main service panel, the subpanel(s), and wiring. Substandard, recalled, or faulty wiring may cause a fire risk and may make it difficult to obtain property insurance. Limited electrical capacity may make it difficult to support future electrical additions to the building(s) such as solar generation, electric space heating, electric water heating, or electric vehicle charging equipment. (Civ. Code, § 1102.6i(a).)
Under SB 382, the statutory notice is not necessary for a building where the certificate of occupancy was issued within three (3) years. (Civ. Code, § 1102.6(i)(b).)
Further, disclosures under SB 382 are subject to the same exemptions, application, and statutory rights defined under Civil Code, section 1102 et seq.
SB 1366 Disclosure Domestic Water Tank Assistance
When: January 1, 2025.
Where: Civil Code, section 1102.156.
This bill is going to apply to households that received grant relief under the State Water Resources Board (“SWRB”) grant program enacted in 2020 that provides relief grants for households where water-wells went dry due to drought, wildfire, or some other natural disaster. With the passage of SB 1366, sellers of real property who either received domestic storage tank assistance or is aware the subject real property received such assistance must deliver a disclosure statement to the buyers informing them of such.
SB 1366 will require the sellers to disclose whether “the property has a domestic water storage tank provided by a county, community water system, local public agency, or nonprofit organization, as specified, and that the domestic water storage tank might not convey with the real property.” (Civ. Code, § 1102.156(a) & (c).) Further, the new law will require disclosure that the tank was made available to households where the well went dry due to drought, wildfire, or other natural disaster. (Civ. Code, § 1102.156(b).) Additionally, AB 1366 advises the buyer to get an inspection of the water well and have the property professionally evaluated for the availability of water corresponding to the manner in which the buyer intends to use the property. (Civ. Code, § 1102.153(d).)
Similar to SB 382, SB 1366 is also subject to the same exemptions, applications, and termination rights established by the Civil Code, sections 1102 et seq.
SB 1137 Fair Housing Update
When: January 1, 2025
Where: Civil Code, section 51; Education Code, sections 200 and 210.2; and Government Code, sections 12920 and 12926.
SB 1137 makes changes to the state’s various laws governing anti-discrimination while remaining declarative of the state’s current civil rights protections. Specifically, SB 1137 amends existing civil rights protections by expanding the language of the bill to protect listed classes from discrimination based on a single characteristic or on any combination of various traits of protected characteristics. In the realm of real estate, this means that discrimination in the Fair Housing context can be based on a combination of different protected characteristics.
AB 1815
When: January 1, 2025
Where: Civil Code section 51; Education Code, section 212.1; and Government Code, section 12926.
With AB 1815, updates are being made to the Unruh Civil Rights Act by making the definition of the term “race” more expansive. Under AB 1815 the race also includes traits associated with race, such as hair texture and protected hair styles. This update is consistent with the other expansions occurring under SB 1137.
