Ringing in the new laws

On Jan. 1, California will usher in a host of new real estate laws. The most notable measures affect borrowers who seek reverse mortgages, homeowners association reserve accounts and landlord requirements for ending leases.

Borrowers contemplating a reverse mortgage will get additional protection under Senate Bill 1609. It includes requirements that lenders provide independent loan counseling for all reverse mortgage loans, contracts be translated into the language in which they were first negotiated and that completed applications not be accepted before the borrower receives housing counseling.

A reverse mortgage is a type of loan that allows homeowners 62 and older to convert some of the equity in their home to cash. The home must be a primary residence and the loan is due when the borrower sells the house or dies. Reverse mortgages avoid monthly payments, making them attractive to the elderly; they are, however, more expensive and complicated, lenders say, and require a great deal of education.

“These loans can run $16,000 in closing costs, even for a $300,000 loan,” said Lori Erskine, a broker at Beverly Hills-based CS Financial.

Another new law is Assembly Bill 2100, which requires that homeowner association boards adopt plans to adequately fund reserve accounts for the repair and replacement of items such as roofs, pools and common water heaters. The plan must be adopted at an open meeting, and any additional assessments must be approved at a separate gathering. Statements to HOA members must spell out board decisions to defer or forsake repairs or replacement of major components of the development and clearly justify that choice; any outstanding HOA loans also must be disclosed. Distribution of the plans must be provided to the membership annually, beginning Jan. 1, 2009.

The measure also prohibits association board members from participating in decisions in which they have a financial interest.

There are more than 3 million units in common-interest developments in California, according to the legislative analysis, and about half of them are more than 20 years old. AB 2100 is designed to avoid possible “budget-busting” assessments.

Another bill of note is Assembly Bill 1169, which reestablishes the requirement that landlords give 60 days’ notice of eviction to tenants who have lived in a dwelling for one year or longer and 30 days’ notice for a tenant who has resided in the dwelling for less than one year.

Some other noteworthy bills:

* Assembly Bill 2800: Standardizes sundry statutes regarding housing-related nondiscrimination provisions, making them consistent with the Fair Employment and Housing Act. The act prohibits discrimination in housing on the basis of race, color, religion, national origin, ancestry, disability, sex, marital status, sexual orientation, familial status and source of income.

* Assembly Bill 2429: Applicants for real estate licenses will be required, beginning Oct. 1, 2007, to complete all three of the courses mandated by the California Department of Real Estate before taking the license examination. The bill is designed to protect consumers from under-qualified agents.

For more legislative information, visit www.sen.ca.gov.

diane.wedner@latimes.com