New Laws Affect Real Estate Deals : Disclosure Legislation Expected to Involve Home Sellers and Buyers

The new year has brought with it a host of new laws affecting homeowners, would-be buyers, and real estate professionals from San Diego to the Oregon border.

Some of the laws affect only a fraction of California residents. But others, such as a measure calling for detailed disclosure of a property’s condition, will affect virtually everyone involved in California real estate.

No matter who you are, all these laws mean that you’ll be filling out a lot more forms when you eventually decide to buy or sell a house.

“It looks like we’re all in for some more paper work,” laments Stephen A. Groome, managing senior counsel of the California Assn. of Realtors. “I noticed that the summary of new laws we get each year looks a little thicker than usual this time around.”

Most of the new laws are aimed at helping consumers. But one measure, outlining what type of information must be disclosed to a prospective buyer, may actually be costing homeowners hundreds of dollars in unnecessary home-inspection fees (see accompanying story).

Fees for Schools

Perhaps the most controversial new law gives school districts the power to impose fees on developers to finance the construction of new educational facilities.

Opponents of the measure, including most developers, had said it would drive up the cost of housing and office space because the fees would be passed on to people who purchased the builders’ homes or rented space in their buildings. Some opponents also argued that the task of finding the funds to build new schools belongs to the state, not developers.

But supporters of the legislation successfully argued that the large number of people moving into new housing tracts creates a need for new schools, and that builders and the people who buy homes in the area should shoulder much of the cost of erecting those facilities.

The law, sponsored by Assemblyman Larry Stirling (R-San Diego), faces an uncertain future. A bill that would reduce the fees that the new law allows a district to impose already has been introduced in the state Legislature. Legal experts say developers may also challenge Stirling’s measure in court.

AIDS Disclosure

A controversy that cropped up in 1985 apparently has been settled by another new law that went on the books Jan. 1. The measure prohibits home buyers from suing real estate agents who don’t tell them that a previous occupant--including the seller--suffered from Acquired Immune Deficiency Syndrome, the deadly disease that has killed thousands of Americans.

Passage of the AIDS bill, authored by Sen. David Roberti (D-Los Angeles), and supported by the CAR, was welcomed by realtors throughout the state. Over the past few years, many agents had wrestled with the question of whether the state’s disclosure laws required them to tell a prospective buyer that a previous owner had AIDS.

If the agent refused to inform the buyer of the previous occupant’s condition, the buyer could sue the agent, claiming that the reputation of the house had been damaged and its value reduced. But if the realtor told the buyer about the previous occupant’s disease, the agent ran the risk that the seller might file an invasion-of-privacy suit.

The AIDS law is “good news for sellers, buyers, and especially real estate agents,” says CAR attorney Groome.

Law on Representation

Another law affecting consumers and realtors requires brokers or their sales agents to clearly spell out whom they represent--the buyer or the seller--and which duties the realtor is expected to perform. “The whole idea of this law is to avoid needless litigation,” says Gene Urbin, a lawyer who worked on the bill for Assemblyman Lloyd Connelly, (D-Sacramento).

Another new law establishes civil and criminal penalties for the fast-growing crime of “rent skimming.” Hundreds of unscrupulous buyers over the past few years have been purchasing property, collecting monthly rent checks from tenants, but then refusing to meet their monthly mortgage obligations.

The measure will likely save lenders millions of dollars and could reduce the number of tenants who are displaced when a property is put into foreclosure.

People who own their own mobile home but rent their lot will be happy to know that landlords must now give at least 10 days notice before their park is put up for sale. However, another piece of legislation that would have given park residents first right of refusal to buy their lots was defeated with the help of lobbyists representing park operators.

Housing for Elderly

There’s something in the new laws for elderly and handicapped Californians, too. This is legislation allowing the California Housing Authority to allocate $50 million in bonds for the construction or rehabilitation of housing for senior citizens and the handicapped.

The growing number of people who shop at home will get some help from another new law. Any telephone sales firm that doesn’t deliver its merchandise within 30 days now must give a refund to the buyer, provide an equivalent replacement or contact the consumer to explain the delay.

Another measure requires utilities that provide electricity or natural gas to attempt to contact their residential customers at least 24 hours before service is shut off. Still another law requires firms that repair appliances and home electronics to make written estimates for repairs or installations--much like auto mechanics have been required to do for several years.

Rights to Inventions

People who like to dabble on inventions at home will get to keep the rights to the machines and mouse traps they create under another new law--as long as they use their own time and money, and their inventions aren’t related to their employment. That’s good news for budding Steve Wozniaks or Steven Jobses, the two young men who slapped together a makeshift computer from spare parts in their Los Altos garage and went on to found Apple Computer Inc.

Of course, no legislative body ever left Sacramento without making at least one obscure new law, and the 1986 session proved no exception.

Lawmakers last year voted to abolish the Board of Dry Cleaning and Fabric Care, effective Jan. 1. The action gave the board the dubious distinction of being the first licensing body created by the Legislature to be eliminated by a succeeding Legislature.

What does the abolition of the Board of Dry Cleaning and Fabric Care have to do with California homes? Operators of dry-cleaning plants must now report to the Bureau of Home Furnishings.