Those of you who are followers of my blog know that I post Items from time to time about current California legislation relating to real property issues. While the last several months witnessed several impactful high-profile legislative proposals and enacted statutes that garnered a great deal of attention, the most recent session of the California legislature that ended last fall also produced several new laws and modifications to existing law that, while perhaps not getting as much attention, will also have an effect on matters involving California real estate. I have highlighted a few of them below:
AB-217 Commercial real property: termination of tenancy: disposition of personal property
Over the years, California landlord-tenant law has evolved to treat commercial rentals differently from residential tenancies in many ways, in recognition of their practical differences. This new law continues this trend by modifying the threshold amount at which abandoned property in a commercial premises must be sold at public auction with notice to the tenant. Landlord groups AIR-CRE and the California Business Properties Association co-sponsored this legislation, which increased the threshold amount from the lesser of $750 or $1 per square foot of space to the greater of $2,500 or one (1) month’s rent, making it less cumbersome for commercial landlords to clear out property left behind by commercial tenants.
AB-1799 Insurance: policy documents
In the aftermath of the catastrophic 2017 California wildfire season, confusion among insureds about the coverage of their insurance policies and insufficient coverage to rebuild or replace their property arose as serious concerns. At that time, California law required an insurer in the event of a covered fire loss to provide to its insured a copy of the insurance policy without charge within thirty (30) calendar days of receiving the insured’s request, subject to extension by the insurance commissioner. While some insureds leveled charges at their insurers for being unresponsive, little could apparently be done due to a lack of specificity in the law. The amended statute now requires the insurer to provide the insured with a copy of the full policy, including all endorsements and the declaration page, and sets forth additional standards for the provision of electronic copies in connection with a state of emergency.
AB-2229 Residential property insurance: disclosures
Also in response to the 2017 wildfires, AB 2229 augments Section 10102 of the Insurance Code, which requires insurers to provide the named insured on a residential property insurance policy a copy of the California Residential Property Insurance Disclosure (which describes certain types of insurance coverage, such as actual cash value coverage and guaranteed replacement cost coverage). As amended, the statute requires that any California Residential Property Insurance Disclosure provided on and after January 1, 2020, include any fire safety-related discounts offered by the insurer. Under the amended statute, insurers must also consider features of the property that contribute to increased or decreased fire risk; insurers will also be required to inform the policyholder how those factors affect the cost of their insurance policy.
SB-1173 Common interest developments: annual notices: time-share plan interests
California law governing common interest developments, including mixed-use timeshare projects, imposes notice requirements on both associations and owners. Under the Vacation Ownership and Time-share Act of 2004, timeshare associations must maintain a list of names and addresses of timeshare owners and update this list every 6 months. As amended by SB 1173, Civil Code Section 4041 now provides that an association in such a mixed-use project is deemed compliant with California law if it obtains a copy of that list from the timeshare association at least once a year and enters that information into its records; the timeshare association must also provide this list to the association at least annually for this purpose. In essence, this new law exempts timeshare owners in mixed-use projects from California’s common interest development notice requirements.
SB-1139 Real property liens: equity lines of credit: suspend and close
The California Land Title Association sponsored AB 1770 in 2014, which established standard procedures for closing home equity lines of credit (“HELOCs”) at least thirty (30) days before a change in ownership, in order to help prevent the original borrowers from fraudulently or otherwise improperly drawing on, increasing or incurring new HELOC debt after they have sold the property. These requirements were scheduled to sunset on July 1, 2019, but have now been extended indefinitely by SB 1139.
