Reasons for owners to celebrate
As toasts usher in the new year, several California real estate laws will be taking effect. Topping the list are measures affecting property tax notification, foreclosure action by homeowners associations and the ceiling for conforming loans.
Home buyers worried about unexpected property tax increases will get help from Assembly Bill 459, which requires sellers of residential properties or their agents to notify buyers that they may have to pay supplemental taxes on their new homes in addition to their regular tax bills.
The new disclosure law requires a specific notification, separate from other contract disclosures, which often are overlooked amid the mountain of paperwork that buyers face at escrow closings. Under the new law, the seller’s notification must be made as part of the purchase contract, before escrow opens and the title search begins. It does not include the amount of the additional tax, just that there may be one.
Supplemental bills reflect the difference between the previously assessed value of a property and the current assessed value. The bills are an additional, not a substitute, tax notice. Some buyers whose monthly mortgage payments include funds for property taxes mistakenly believe that the supplemental taxes will be paid by the lenders as well; they are not.
Buyers who know their assessor’s identification number (found on property tax bills) or property address and want to calculate their supplemental-tax liability before purchasing a home will be able, by January or February, to do so at the Los Angeles County assessor’s website: www.lacountyassessor.com.
“For buyers who haven’t purchased before,” said county Assessor Rick Auerbach, “this will avoid the surprise.”
Also coming into play Jan. 1 is Senate Bill 137, which will prohibit homeowner associations from starting foreclosure proceedings to collect debts of less than $1,800 or assessments of any amount that have been delinquent for less than one year. The association may initiate foreclosure proceedings even if the debt is small, providing it is more than a year late.
The bill -- signed by Gov. Arnold Schwarzenegger after he vetoed an earlier, hotly contested version with higher thresholds -- permits the initiation of foreclosure only after the association board of directors approves doing so by a majority vote, at least 30 days before the sale of the property.
“This bill gives homeowners a chance to find out more information about any claim against their property by homeowners associations, and gives them an opportunity to make things right before HOAs can take the drastic measure of selling a home through foreclosure,” said Norma Garcia, a senior attorney with the Consumers Union, a consumer advocacy group.
Karen Conlon, president of the California Assn. of Community Managers, which opposed the original legislation, said her group dropped its objections, as did the California Assn. of Realtors, after, among other issues, language was included that brings the parties together.
Another bill of note, AB 901, raises the ceiling on the amount that Californians can borrow at lower interest rates to match Fannie Mae’s “conforming” mortgage-loan cap, which currently is $359,650. The limit will be $417,000 in 2006. Jumbo, or nonconforming, loans charge higher interest rates.
Had the new limit been in effect this year, about 60,000 more California home buyers, 11% of the total, would have qualified.
Mortgage giants Fannie Mae and Freddie Mac, which buy loans and then repackage them for sale to investors, raise their conforming loan caps when housing prices move higher.
For more legislative information, visit www.sen.ca.gov.
