Parent’s Workplace Establishes Residency for School Attendance

A school district may deem that a pupil has complied with the residency requirements for school attendance in the district if at least one parent or the legal guardian of the pupil is physically employed within the boundaries of that district at least 10 hours per school week. This provision, which was originally scheduled to expire on July 1, 2012, has been extended to July 1, 2017.
Senate Bill 381 (codified as Cal. Ed Code § 48204) (effective January 1, 2012).

http://www.cde.ca.gov/re/lr/sa/

Be Cautious When Hiring Short Sale Negotiators and Delegating Potential Agency Duties to Others

Dear Agents:

I have heard and spoken to many agents who have understandably complained about this hectic real estate marketplace, and the increased workload and responsibilities to close the same or less amount of deals for less money.

We all know the arduous process of completing a short sale transaction and many agents take the route of hiring 3^rd Party Negotiators to process and negotiate their short sales. From a business model perspective, this can make complete sense for many individuals who want more time available to prospect and to do what they are paid to do, which is to market and sell homes.

Our law firm currently teams with many agents in the Santa Clarita Valley to negotiate and process Short Sales on behalf of their Sellers, and we absolutely know the time and administrative detail the complete process mandates.

We have also run into situations; whereby agents have told us they or their client have hired unlicensed negotiators to process their short sales. In my opinion, this can be a major problem and several levels.

Currently, we are the banking industry and Third Party Default Services Portals refuse to authorize unlicensed negotiators, or to allow them into their system. We think this is positive action, and believe unlicensed individuals or companies should not be negotiating this form of deal in any way or matter.

The California Association of Realtors® recently noted the following concerns in a legal article, that make some important legal and practical points about only hiring licensed Parties or Attorneys to negotiate short sale transaction on behalf of clients.

Since the short sale arena will continue to be a viable and substantial portion of our real estate market, it is essential have the appropriate tools and relationships in place, so you can compete and thrive in our market:

Here are a couple tips and notes that C.A.R. Legal has rightfully suggested (Credit Given toC.A.R legal department):

• As the listing agent, you should discuss with your client the merits of retaining a SSN to help with a short sale transaction and to represent the seller in the short sale negotiations with the seller’s lender. A seller should be fully informed as to what a SSN is, the pros and cons of using a SSN, the costs if any to the seller, and the seller’s right to select a SSN of his or her own choice. It is advisable that a SSN has a SSN agreement in writing for the seller to sign;

• As the listing agent or SSN, you cannot provide your client with legal advice, so if the seller has specific legal questions regarding any SSN agreement, you should suggest in writing that the seller review the agreement with an attorney;

• Licensing: Make sure a SSN is properly licensed. A SSN must be a licensed real estate broker or a licensed salesperson who is working under a broker. An attorney is exempt from the real estate license requirement if certain conditions are met, such as the attorney is not using or attempting to use the exemption for the purpose of evading the licensing laws (Cal. Bus. & Prof. Code § 10133(a)(3)), and the attorney is not actively and principally engaged in the business of negotiating mortgage loans (Cal. Bus. & Prof. Code § 10133.1(a)(5));

• An indication that a SSN is not properly licensed is when the short sale negotiation entity is an LLC. In California, an LLC cannot get a real estate broker’s license and therefore, should not be doing short sale negotiation. It is illegal to pay an unlicensed individual or entity for doing licensed work. Even if it is technically your client who pays the SSN, as the person who effectively arranged the transaction, you may expose yourself to both criminal and civil liability, and you could have your license revoked or suspended by the DRE;

• The law generally prohibits anyone who negotiates, attempts to negotiate, arranges, attempts to arrange, or offers to perform a loan modification or other form of mortgage loan forbearance, from claiming or demanding any upfront compensation (Cal. Civil Code § 2944.7(a)). Furthermore, a SSN cannot collect an advance fee from a seller unless the advance fee agreement and materials have been submitted to the DRE for review (Cal. Bus. & Prof. Code § 10085), and any fees collected are handled in compliance with DRE advance fee and trust fund handling requirements (Cal. Bus. & Prof. Code § 10146)

• Some SSNs will suggest that the buyer’s agent pay the fee. While this is not illegal per se, it cannot be done with properties that are placed on the MLS due to the MLS prohibition on conditional offers of compensation. Under Model MLS rule 7.12, an MLS offer of compensation, “may not contain any provision that varies the amount of compensation offered based on conditions precedent or subsequent or on any performance, activity or event.” Therefore any attempt to condition payment of the commission being offered in the MLS on the buyer’s agent paying a fee of any kind would appear to violate this provision.

One other important concept when to think about when deciding on hiring a Short Sale Negotiator is the Agency concept Delegation of Duties and Responsibilities. Legally speaking, delegation of duties does not eliminate Broker/Agent liability when things go wrong.

Unless the delegation is specifically forbidden by the principal, the general rule is that an agent may delegate certain of the agent's powers to others. In review of Business and Professions Code §10232.6:

The powers which may be delegated by the agent to others are generally limited to the following:

a. When the act is purely mechanical.

b. When it is such as the agent cannot do alone and the subagent can lawfully perform;

c. When it is the usage of the place to delegate such powers, or when the principal authorizes the delegation; or

d. When such delegation is specially authorized by the principal. (Civil Code § 2349).

When delegating a power to another, the agent must exercise care in delegating the authority and in choosing and appointing the delegee.

The doctrine of respondent superior holds a broker liable for the negligent and even the intentional acts of salespersons or broker associates, when such conduct is reasonably foreseeable, and may apply even where the supervising broker unaware of the conduct (Business and Professions Code § 10159.2; 10 CCR, Chapter 6, § 2740 et seq.).

This is at least food for thought when determining whether or not to hire a Short Sale Negotiator to process your short sales.

Foreign Investment Incentive In US Real Estate : S.1746 VISIT-USA Act

S. 1746: Visa Improvements to Stimulate International Tourism to the United States of America Act

Recently, the bipartisan team of Senators, Chuck Schumer (D-NY) and Mike Lee (R-UT) have proposed an interesting foreign investment incentive in their new immigration bill that is titled, “Increasing Home Ownership by Priority Visitors.”

“Priority Visitors” is a euphemism for wealthy individuals from foreign Countries. This Senate Bill would offer non-immigrant visas to foreigners who buy at least $500,000 worth of residential US real estate. The crux of the plan is that it will offer visas to individuals who purchase residential US real estate.

· Before Anti-Immigration proponents scream about lost American jobs, look at the fine print of the bill, and notice that these are not work visas.

The Bill should be re-titled: “United States Close-Out Sale: Wealthy Foreigner Vacation Home Assistance Program”

Jokes aside, I am all for Investor incentive programs that will help stabilize distressed neighborhoods and communities, and bring the Highest and Best use out of more properties. I just had to chuckle when I first heard about this legislation, because I thought to myself, isn’t there already a tremendous incentive to purchase US real estate:

1. US Real Estate Market is off 40% to 50% from peak in certain areas;

2. Interest rates are historically low;

3. Rental pool will continue to increase with decrease in American Home Ownership percentages (foreclosure/short sale/higher loan qualification standards/credit debacle/ lack of savings and down payments by US Buyers);

4. The US Dollar is weak;

5. Global and US Stock Markets are extremely volatile and lack transparency;

6. Banks are paying yields below inflation levels, and so holding cash in a bank is costing you money;

7. Foreign Cash Reserves are massive and growing.

SOUNDS LIKE A GREAT TIME TO INVEST IN US REAL ESTATE!

The US should offer incentives to all Investors including foreign and non-foreign born to help in the real estate market recovery, but the banks should also remember, when the market does in-fact recover, and equity positions change to the positive, do not offer vulnerable and falsely secured cash-out refi’s and HELOC’s to individuals with little or no skin in the deal. That position led to the biggest heist and fleecing of the American real estate market our Country has ever seen.

It would be interesting to have a data chart, table, or statistical report that showed properties owned in foreign countries that were paid for or paid off by Cash-Out Refi’s and HELOC’s that were originated between 2000 and 2006 on American soil.

I am all for directing incentives to individuals with work ethic, proven credit worthiness, and financial intelligence. I am also all for pro-active immigration policies that will bring good minds, capital, and diversity to our Country, because that is what makes our Country great.

What I am not for, is offering any foreign investor incentives to any individuals who have strategic foreclosures on American soil in their recent past.

http://www.govtrack.us/congress/billtext.xpd?bill=s112-1746

Issues Regarding Tenant Occupied Properties in Short Sales and Foreclosures and the Impact of TITLE VII--'Protecting Tenants at Foreclosure Act of 2009'

Tenant Occupant after Trustee Sale

The Protecting Tenants at Foreclosure Act ("PTFA") is a tenant-friendly law that seeks to protect many renters in the recent wave of foreclosures when their landlords lost the leased property to foreclosure. The problem is more times than not, it leads to exploitation instead of protection, but we don’t make the rules, just play the game.

Tenants in Foreclosed Houses Must Receive 90 Days Notice to Vacate

PTFA provides that if there is a foreclosure on any dwelling or residential real estate after May 20, 2009, the person who takes legal title after foreclosure takes the property subject to the following terms:

• The new owner must give any preexisting "bona fide tenant" at least 90 days notice to vacate the premises.
• The 90-day notice requirement applies if the tenancy is for a term of years, month-to-month or terminable at-will.
• The 90-day notice requirement applies even if the renter has no formal lease but does have a verifiable history of paying rent.
• Unless the purchaser of the foreclosed property intends to occupy the premises as his or her primary residence, the new owner cannot break the lease, if the lease was entered into prior to Notice of Foreclosure.

What is a "Bona Fide Tenancy" Under the PTFA?

The Protecting Tenants at Foreclosure Act applies only to "bona fide" tenancies or leases. Under the law, a tenancy or lease is "bona fide" only if:

• The tenant is not the child, spouse or parent of the landlord in foreclosure.
• The lease or tenancy was the result of an arm's-length transaction.
• The rent under the lease is not substantially below fair market rent for the property.
• The rent has not been reduced by a federal, state or local subsidy. However, the PTFA does apply to rental units occupied by holders of Section 8 vouchers.

The Protections of the PTFA End in 2012

The Protecting Tenants at Foreclosure Act contains a sunset provision, which means that it is set to expire at a specified time. In this case, the protections of the PTFA are set to terminate on December 31, 2012. Until that time, renters whose homes have been the subject of foreclosure are protected against having their leases broken with little or no notice by the new landlords.

Opinion:

I am all for protecting the rights of the innocent, and in some situations this occurs, but from experience over the last several years, this legislation has been exploited and abused to a degree that has surely outweighed any potential benefit of the legislation.

We already had reasonable protections under CA Law, including 60-Day Notice requirements: Tenants in non-just cause eviction jurisdictions who live in foreclosed properties before May 20^th, 2009, had a reasonable right to 60 day notice to quit before the new owner was permitted to file an eviction action in court.

The new Federal Legislation has led to the systematic and fraudulent creation of leases, and has allowed squatters, former owners, trespassers, (disgruntled non-paying tenants along for the ride) Holdover Occupants in breach of an existing lease to manipulate banks and investors for higher Cash-For-Key payouts, and have rewarded individuals who have already been in default or breach for a substantial amount of time. In practice, it puts a tremendous amount of pressure on the Court system to analyze the merits of a Bona Fide Tenancy, and thus, banks, Investors, and the Court system have basically capitulated to the idea that Notice is now 90 days regardless of the merits of any alleged lease agreement.

My favorite fact pattern, is the foreclosed property that is actually occupied by one of the former title holders (usually a divorce situation), whereby one of the former title holders occupies the property with the new girlfriend or boyfriend. These facts obviously come out later in the process, but typically the generated lease is between the new girlfriend or boyfriend and the former title holder. Not really a bona fide tenancy, and definitely not arms-length, and to top it off, it is always for some ridiculous amount like $1,200.00 dollars on a property that would have a FMV rental rate of $3,500.00 a month.

Now with that being said, I certainly do feel for legitimate bona fide tenants, who have been duped by an unscrupulous Landlord. There are situations, whereby, and good hard-working Tenant is abiding by their lease term, and are willfully paying on the terms of a lease, and are unaware that the Landlord is intentionally defaulting on their mortgage/ deed of trust, and in active foreclosure. Realistically, these scenarios are far and few between, and since there is such a procedure process to non-judicially foreclose in the state of California, it is rare that a Tenant is completely in the dark regarding these matters.

Overly Opinionated:

The term Pundit is severely overused in our Political System, and unfortunately, Congress tends to hang their hat way too often on pundit theory and political firepower, rather than speaking to those of us who actually practice in the trenches. Instead of listening to Pundits and Legislating for votes, Congress should take the time to talk to Brokers, Lawyers, Landlords, Tenants, local and state governments, and actually come up with practical and relevant legislation that will not be exploited or manipulated by the masses.

We have been dealing with this legislation since May of 2009, but we are really seeing firsthand how poorly it was written, and secondly, how courts and lawyers want to avoid its implications all together. In theory, I can agree with the idea, that if a legitimate and bona fide tenant is caught in the middle of a foreclosure action, it sounds right that we should given them a 60 or 90 day notice, but in practice it is not leading to the highest and best use of property, stalling the default market recovery, and allowing individuals who are already exploiting the system, to benefit further.

Once again, Protecting Tenants at Foreclosure Act of 2009 sounds great on paper, in that it is suppose to protect Tenant interests that have been harmed by a foreclosure sale, but in practice, it has led to a massive stalemate between Banks, Investors, Occupants, and our overly inundated Court system. Ultimately, these increased time restraints restrict productive rehabilitation and alienation of Property, and will just cost the taxpayer down the road, when bank losses in this market debacle increase due to increase hold time of REO properties, and/or Investors avoiding occupied properties at Trustee Sale, or choosing to pay less in the market for properties due to the increased risks and occupancy issues.

Just Plain Old Ranting and Venting:

In looking at the big picture: Two Parties are to BLAME

• 1) Our government should think practically before they legislate, just like our Parents told us to think before we speak. The Government should also not be so naïve to think that a good plan in theory will correlate into practical and positive implementation; AND

• 2) We as a people and a culture should feel less entitled, and instead of seeing the loophole or the exploitive ability of our system of rules, maybe we should see the underlying intent and good in them, and take the higher ground.

• The truth is, we will not really see a positive change in our Country economically and/or culturally until we shake off these cobwebs of complacency and entitlement in our society. Political theory will just tell us that is the nature of an Aging Hegemon in a changing world, but a faint piece of me believes we as a people are better than that, and have proven it many times in the past. I can’t wait to see the outcome, but so far, it is not looking good.