New laws on the horizon
With the start of the new year we usually find ourselves faced with several if not hundreds of new state and federal laws. As 2015 draws near we will be confronted with new laws affecting our use of plastic bags and the increase of our gas tax from sixty-eight cents per gallon we currently pay to eighty-three cents or even up to a dollar forty-four per gallon.
Real estate is not exempt from the onslaught of new laws. Several new laws include additional disclosure requirements in a transaction, exemptions to property taxes potentially giving us savings each year and a few new laws affecting real estate brokers. I have highlighted below four new laws affecting commercial property owners.
Agency disclosure expanded to commercial real estate
An agency relationship is the representation by a broker of a seller or buyer in a transaction. A broker would represent the seller as the listing broker, the buyer or a dual agency where a broker represents both parties. Currently all residential real estate transactions require a written disclosure stating who is representing whom. With the new law this disclosure is now required on all commercial transactions as well.
Document bundling prohibited in the sale of common interest developments
In a transaction involving residential or commercial real estate of a common interest development, it is common for the association to bundle the legally mandated disclosures along with other documents for the buyer for a fee.
The mandated disclosures include the CC&Rs, bylaws, operating rules, rental restrictions, budget reports, regular and special assessments, etc. The new law requires these mandated disclosures be itemized and individually billed separately from other fees.
Additionally, the seller is required to provide the buyer all mandated disclosures in his possession free of charge. The association will not be allowed to then charge the buyer for the same disclosures already provided.
The new purchase agreement forms from the California Association of Realtors will require the seller to pay for the mandated disclosures while the fee of other disclosures and documents provided by an association will be negotiable.
Sales price can no longer be kept secret
Currently a seller or buyer could demand from the county that the document transfer tax be stated separately from the recorded document. This would enable a seller or buyer to keep the sales price private. For example, if the document transfer tax was $825 you could simply divide this amount by 0.0011 to arrive at a purchase price of $750,000 (the document transfer tax is a dollar ten per $1,000 of the purchase price). The new law requires every document submitted at recording to show the amount of the tax due.
Extension of solar tax exemption on property taxes
This law will extend the property tax exclusion for construction or addition of a solar energy system until 2025. What this means is if you install a $100,000 solar system on your property your taxes will not increase based on the added value to the property.