A new year means new laws take effect. The following highlights some of more relevant and important laws affecting California real estate:
1. PROBATE AVOIDANCE – TRANSFER ON DEATH DEED WITH NAMED BENEFICIARY
Typically, to avoid probate courts to automatically transfer real property to a beneficiary upon death, you would need a trust or hold title to property in joint tenancy or community property with right of survivorship. Effective January 1, 2016, California law now has added another method of avoiding probate to automatically transfer real property to a beneficiary upon death.
A Transfer on Death (TOD) Deed, if properly signed, dated, and acknowledged before a notary public and recorded within 60-days after execution, can create a revocable transfer of real property on the death of its owner without a probate proceeding (the law also requires the deed to include a “Frequently Asked Questions” section to the deed). The TOD Deed has no effect until a person dies and can be revoked at anytime.
However, only certain real properties are included:
Residential one to four properties
Single tract agricultural land (40 acres or less) improved with a single-family residence.
Why is this important? Essentially the creation of TOD Deed can act similarly to a revocable / living trust, but much cheaper to create. Families without a lot of real property holdings that feel trusts are too expensive can use a TOD Deed to avoid probate. Because this is a new instrument to avoiding probate, it is important to consult an attorney for the specific requirements to creating a TOD Deed.
2. ADVERTISING – “HOSTING PLATFORMS” (Such as AirBnb) MUST PROVIDE WARNING
New California law now requires companies such as AirBnb to provide warnings to users that subletting the tenant’s residence may violate his/her lease and could result in eviction. This law was created in response to the rise of tenants using AirBnb to sublet their residence. Landlords and HOA have now begun to prohibit this type of subletting and use of AirBnb can permit a landlord to evict a tenant.
Because AirBnb has provided this warning, AirBnb is no longer liable for evictions that occur. Tenants now have the full responsibility to read through their lease agreement to make sure use of AirBnb does not violate the lease or HOA regulations.
3. LANDLORD/TENANT – MOLD AND HABITABILITY STANDARDS
Mold issues have been a very common problem with rental units. For 2016, California has clarified when a landlord is responsible for mold and what constitutes a property as “substandard” because of mold.
California law now states that a landlord is NOT obligated to repair dilapidations relating to mold 1) until he or she has notice of it or 2) if the tenant fails to keep the property clean and sanitary and thereby substantially contributes to the existence of the mold. This is important because it places more burden on the tenant to report mold issues. If the tenant fails to report mold (and subsequently has health issues related to the mold) the landlord is now not liable. Additionally, if the landlord can show that the tenant contributed to the mold problem by not keeping the property clean, the landlord is not responsible for the repairs.
Second, the new law also defines further what constitutes an uninhabitable property due to mold. Specifically, for a property to be uninhabitable, the mold must be visible and endangers the health of the occupants as determined by a health officer or a code enforcement officer. Additionally, if the presence of mold is minor and found on surfaces that can accumulate moisture as part of their proper and intended use, this is not considered uninhabitable condition.
Again, this places more burdens on the tenant because for a tenant to prove that the rental unit is uninhabitable, the tenant has to have a health officer or code enforcement officer confirm presence and danger of the mold.
4. LANDLORD / TENANT – NOTICE OF PESTICIDE USE
New law now requires landlords to provide tenants with notice of the use of pesticides at the rental unit if the landlord applies any pesticide without a licensed pest control operator. Additionally, the landlord has to also notify neighboring units of pesticide use.
It is common for landlords to go to the hardware store to buy common pesticide to spray the rental property if the tenant complains about pests. This typically saves money. However, new law now requires the landlord to provide notice to the tenant and neighboring units before using pesticide (if they do not use a licensed pest control operator). Essentially, this adds more burdens on the landlord. The law is trying to promote landlords to use licensed pest control operators to insure safe use of pesticides.
5. LANDLORD / TENANT – VICTIM’S RIGHT TO TERMINATE TENANCY
Boyfriend and girlfriend move in together and sign a lease. In the middle of the lease, girlfriend is a victim of domestic violence. Unfortunately, this is a common occurrence and California has extended the law allowing the girlfriend to terminate the lease. Prior law stated the victim had to give at least 30-day notice and attach a copy of the temporary restraining order or protective order to the notice. New law now states the victim only has to give 14-day notice and attach a copy of the temporary restraining order or protective order. Landlords should be mindful of this law when renting out to couples.
These are a few of the new laws for 2016 effecting real estate. Please consult an attorney for your specific situation to see if any of the new laws affect you.
Eric W. Ching is a real estate attorney with Ching & Associates, a real estate and business law firm in San Diego.