What do you call 1,000 lawyers chained together at the bottom of the ocean? It’s a bad joke, so if you don’t know the punch line I’ll spare you—at least that much. While the idea of lawyers and lawmakers too often conjures negative feelings in people, it appears that during the past year or two many of them have been battling for the little guy—namely the consumer. William Shakespeare’s famous quote about killing all the lawyers, this year it seems, is off the mark. To be fair, it was a rabble-rousing character named Dick, not the Bard himself, who so scornfully besmirched lawyers in perpetuity.
Several laws came into effect in and around the New Year, many of which seemed to be aimed at consumer protection. Among the new additions to the “did you know” files for 2010: If you use an unlicensed contractor in California you are eligible to restitution for services rendered; mortgage fraud is now a felony (shouldn’t it have been all along?); it is now illegal to charge advance fees for a loan modification. There are also some new homeowners association laws, so if they apply to you, I encourage you to do some research on those, as there are too many for me to name here.
Many laws new to this year were created to address the numerous issues that arose during the market turbulence of the last couple of years, according to a Long Beach real estate attorney and former Long Beach City College professor.
“This year there were so many new laws that try to protect the consumer,” says Cheryl Lackman Feinberg (pictured at right), who heads a legal practice by her own name in Long Beach. And Feinberg, who has been practicing real estate law in Long Beach for more than 23 years—add another seven years if you count her time assisting her father, a well known real estate attorney who helped craft countless state laws relating to the industry—believes the turbulent market caused many of these laws to be enacted.
One new law that seems to be getting a lot of attention requires agents to include their real estate license ID numbers on business cards, on stationary, on websites they own, control or maintain, on all promotional materials, e-mails, etc. “Anything that is designed to solicit a professional relationship,” Feinberg says of the legal requirement. “One of the first things I do (when dealing with someone new) is run a real estate agent’s name on the Department of Real Estate’s Web site, but that’s no good if you get 20 or 30 entries on a common name. This helps the consumer find out if an agent’s license is expired, or to check on any potential disciplinary action.”
Did you know it is a misdemeanor for a person to engage in a business or act in the capacity of a contractor without having a license? Well it is, and the penalties for doing so have been increased (a fine of up to $5,000 and jail time). Penalties were increased for second and third convictions too.
Another law changes the foreclosure requirements for notice of default or a notice of short sale. The law, effective through Jan. 1, 2013, prohibits lenders from filing for 30 days on loans made from Jan. 1, 2003 to Dec. 31, 2007 on owner-occupied residential real property. And it increases from 14 to 20 days the amount of time before the sale can take place after the notice is given.
Now banks and lenders can’t ignore you… as much. A law in effect until Jan. 1, 2014 changes in the time limit for short payoff requests, giving recipients 21 days from receipt of a short pay off request. Banks or lenders don’t have to agree to the request, but they do have to respond in a somewhat timely manner.
“The laws have changed so much in the last two years,” Feinberg says. “I think that there were so many people who were no longer able to pay their loans that the lenders were inundated, and many of the loans should have never been given in the first place in my opinion. There were a lot of good people, hardworking people, who were affected detrimentally by the housing situation. Then there were others who should have never purchased those homes in the first place.”
The homestead exemption has been increased again. It’s now $75,000 for a single person, $100,000 for head of household and $175,000 for people 65 or older or who are disabled or age 55 or older with a limited income. The way it works, in case you are interested, is say that you are head of household and own a home worth $250,000 and you have a loan of $100,000 (that leaves $150,000 of equity if you aren’t keeping up with the math). Now say you are sued and don’t have medical insurance and have medical bills of $100,000 and “they” want to come after you to collect and “they” decide to go after your house, you are essentially protected. “The beauty of a homestead is they cannot foreclose and kick you out of that house,” Feinberg says. The “they” in question can foreclose, and sell the house, but all other loans and bills have to be paid off first and the “they” in question must still be able to take their entire of their chunk of flesh. The prior homestead amounts were $50,000, $75,000 and $150,000 respectively. If you need, or want, a more thorough explanation, call your local Realtor.
Not to be left out, there’s some green, or environmentally friendly, legislation new out this year. There is now a requirement for residential and commercial properties built before Jan. 1, 1994 requiring the replacement of noncompliant plumbing fixtures with water conserving fixtures when any new plumbing work is done.
Additionally, as of Jan. 1, 2014 all building alterations to residential and commercial real property must be done using water conserving plumbing. And by Jan. 1, 2019 all noncompliant plumbing fixtures in all property must be replaced with water conserving plumbing fixtures.
In the landlord-tenant realm, a new law creates a new 90-day requirement for rental termination after foreclosure by the foreclosing lender or a purchase at a foreclosure or a trustee sale for tenants on a month-to-month tenancy. If there’s a lease, it must be honored, unless the property is sold to a buyer who intends to occupy the property. “This law was, again, in response to the massive number of foreclosures,” Feinberg says.
A much needed mortgage law, in many people’s opinion, went into effect in October and stays in effect to 2013, prohibiting advanced fees in connection with loan modifications. Basically it prohibits any person who is negotiating or attempting to negotiate a “loan mod” on residential property of one to four units from charging a fee of any form before the loan is modified. “So many people were looking for a loan mod, and there were so many companies out there charging fees and not arranging the modification,” Feinberg says. “This law is designed to stop that form happening. People were not only losing their homes but they were losing money that they had paid to try to save their homes.”
Then of course there was the extension and expansion of the homebuyer tax credit. “We’re still seeing a lot of activity in single-family residences from that tax credit,” Feinberg says. “And we’re seeing a lot of the activity in the under $500,000 range. It’s a wonderful incentive.”
And for the record, Feinberg emphasizes, “The majority of the laws new for 2010 are really trying to protect the consumer.” Now I call that a good start. No joke.