New Year, New Laws for Real Property Lawyers

The California legislature has enacted new laws that may affect your real property law practice. Here are some of the key statutory changes you need to know about.

  • Real estate “salespersons” to include independent contractors.
    Between 2012 and 2017, while California’s real estate market was recovering, the number of licensed real estate agents increased as the number of real estate brokers decreased slightly. More agents are working for fewer brokers. Under existing law, real estate agents (called “salespersons”) are generally described as being “employed” by the real estate broker for whom they work. Starting in 2019, a “salesperson” will be defined as one who is “retained” by a real estate broker, meaning a real estate licensee who is an independent contractor affiliated with, or an employee of, a broker. Salespersons will also be allowed to share compensation among themselves, as long as they are paid through the responsible broker. The new law makes numerous other changes to the relationships among real estate brokers and salespersons, and the parties involved in real estate sales transactions. See AB 2884 (Stats 2018, ch 285). For more on the regulation of real estate licensees, see CEB’s California Real Estate Brokers: Law and Litigation, chap 8.
  • Limits on PG&E liability for 2017 wildfires. PG&E’s equipment has been blamed for causing many of the devastating wildfires that destroyed thousands of Northern California homes and businesses in 2017. Estimates of PG&E’s property damage liability range up to $15 billion. To avoid forcing PG&E into bankruptcy, SB 901 was enacted to enable PG&E to pass on some of its liability costs to customers and to bolster the state’s forest management efforts. As Governor Brown said, “Wildfires in California aren’t going away, and we have to do everything possible to prevent them. This bill is complex and requires investment – but it’s absolutely necessary.” The extremely complex 112-page bill changes the calculation of how much utilities must pay for damage they cause and provides grants to landowners to reduce fire fuels by removing small and mid-sized trees. See Stats 2018, ch 626.
  • Looking on the bright side of environmental review. Before approving a proposed project, public agencies must study certain effects that the project might have on the environment. In the past, the focus of all CEQA review has been on the potential negative or adverse effects the project might have on the environment, as possible reasons for denying the project. But what if a project could have environmental benefits? A new law broadens CEQA review to include consideration of the positive side. Starting in 2019, lead agencies may consider (1) certain economic, legal, social, technological, or other benefits, including regionwide or statewide environmental benefits, of the project and (2) the negative effects of denying the project. See Pub Res C §20182.4 (added by Stats 2018, ch 193, effective January 1, 2019). For example, a project that increases density within an area could lead to an overall reduction in greenhouse gas emissions by reducing the amount of driving by those residents. Denying that project could have negative consequences for the area and the surrounding region. Agencies will now have to consider both negative and positive effects. For full details of the CEQA review process, turn to CEB’s Practice Under the California Environmental Quality Act.
  • Short-lived sunset for certain provisions in the Homeowner Bill of Rights. A decade ago, California enacted urgency legislation to protect homeowners facing a nonjudicial foreclosure (i.e., a trustee sale) on their residence. In later amendments, these laws came to be known collectively as the Homeowner Bill of Rights (HBOR). Some provisions were subject to automatic sunsetting on January 1, 2018. But many of the provisions that did sunset were re-enacted in 2018 under SB 818 (Stats 2018, ch 404). They include requirements for lenders under dual tracking and loss mitigation provisions, restoration of initial borrower remedies for material violations of HBOR, and notices to borrowers of their appeal rights on loan modification and other decisions. For further details on which repealed HBOR provisions were revived in 2018, see CEB’s California Mortgages, Deeds of Trust, and Foreclosure Litigation.

Get more of these key legislative updates in CEB’s free 2018 NewsFlash! Key Statutory Developments for Real Property Lawyers. To keep up with all developments in real property law, subscribe to CEB’s OnLAW® Real Property Law Library—a virtual encyclopedia of real property law, full of commentary, practice advice, and sample documents.

Check out all CEBblog™ posts on real property law.

© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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