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SHORT
INTRODUCTION TO CALIFORNIA REAL ESTATE PRINCIPLES,
©
1994 by Home Study, Inc. dba American Schools
Click on link to go to:
Table of Contents; Chapter I: Real Property;
Chapter II: Legal Ownership;
Chapter III: Agency & Ethics;
Chapter IV: Contracts;
Chapter V: Real Estate Mathematics;
Chapter VI: Financing;
Chapter VII: Mortgage Insurance;
Chapter VIII: Appraisal;
Chapter IX: Transfers of Real Estate;
Chapter X: Property Management;
Chapter XI: Land Control;
Chapter XII: Taxation;
Chapter XIII: Fair Housing Laws;
Chapter XIV: Macroeconomics;
Chapter XV: Legal Professional Requirements;
Chapter XVI: Notarial Law;
Chapter XVII: Selling Real Estate;
Chapter XVIII: Trust Funds Handling;
Glossary;
Index.
Chapter
XI: Land Control By Government
Educational
Objectives:
Learn about Subdivision Map Act, Planning and Zoning, Environmental
Impact Report, Superfund, National
Environmental Policy Act, Clean Air Act, Solid Waste Disposal Act, Federal
Water Pollution Act, Coastal Zone Management Act,
Earthquake danger disclosure requirement, Interstate Land Sales Full Disclosure Act, R. E.
TERMS GLOSSARY, INDEX.
PUBLIC LAND USE CONTROL
Property
continues to be limited by government powers including the power of taxation,
police power, the right of eminent domain and escheat. The right of eminent domain and escheat
relate to involuntary transfer of property. Police power is
the right of the public to control and limit an owner's use of private property.
Police
power is the constitutional authority and inherent power of government to adopt
and enforce laws and regulations to promote and support the public health,
safety, morals, and general welfare.
It is in essence, policy
power, controlling such functions as zoning, city planning, subdividing,
building codes and environmental protection.
Zoning
authority is the power of government officials to specify the types of uses to
which properties may be put in specific areas. Zoning
generally divides land use into the four broad categories of residential,
commercial, industrial and agricultural.
In addition to specifying
the land use, zoning laws may impose additional restrictions, such as size of
structure, minimum square feet, height limits and set back requirements.
Zoning
was first used primarily to promote fire safety. However, as
with so many other useful tools, its use has expanded over the years. It is used to:
1. preserve the integrity of residential areas,
2. ensure a healthful environment by providing adequate light,
air and space,
3. prevent
congestion and overcrowding, preserve natural resources,
4. assist
the community in establishing and preserving pleasant and efficient urban
areas, and
5. influence the quality, quantity and pace of development.
Zoning
is basically a mapping process whereby all the land in a community is labeled
with respect to the general nature of permissible development.
The
general categories of zoning designations are agricultural, residential,
commercial and industrial. There
are several subcategories which are called "districts" but are also
commonly referred to as "zones.
"
Each
Zone contains specific regulations delineating such items as minimum lot size,
height of structures, bulk and placement of buildings, yard areas and open
space.
Zoning laws are
enforced by requiring a building permit from an appropriate governmental
authority. Nonconforming use is
permitted when that use was previously lawfully established and maintained. In case of substantial destruction by fire or other means,
the zoning statutes probably will prohibit reconstruction for nonconforming use
caused by a change in zoning. New
usage not conforming to established zoning regulations will require a variance
or any amendment to the ordinance.
A
variance from the terms, standards and criteria that pertain to an allowed use
category within a zoning district as authorized by the zoning ordinance may be
granted, in whole, in part, or upon reasonable conditions, only upon a finding
that:
1. The
application of the ordinance to the particular piece of property would create
an unnecessary hardship;
2. Such
conditions are peculiar to the particular piece of property involved;
3. Relief,
if granted, would not cause substantial detriment to the public good, or impair
the purposes and intent of the ordinance or the "master" plan; and
4. The
variance, if granted, would be the minimum necessary to alleviate the
unnecessary hardship.
City
planning is an attempt to regulate in a general way the long-range physical
geography of the city. These plans will incorporate such items
as land use, flood control, sewage disposal, streets, recreation, and solid
waste disposal into a comprehensive plan which will guide the city as it is
required to make specific decisions about proposed projects, population growth,
and other matters affecting the public welfare. Private actions
which may contravene a city "master or comprehensive" plan will be
prohibited by a planning commission unless those initiating such action can
carry the burden of showing that the action is in substantial compliance with
the plan.
Private
development or subdividing of land may be regulated at the federal, state or
local level. State and local governments have powers
to control development of land in subdivisions by requiring developers to
conform to city master plans, to provide adequate public utilities, to obtain
subdivision permits, and to provide property for public recreation, etc. Zoning laws also serve to control development of subdivisions
by controlling the use of various areas located within municipal boundaries.
Municipal
regulations as to buildings, structures and land are made in accordance with a
comprehensive plan and are mostly designed to accomplish any of the following
objectives:
1. To lessen congestion in the streets;
2. To secure safety from fire, panic and other dangers;
3. To promote health and the general welfare;
4. To provide adequate light and air;
5. To prevent the overcrowding of the land;
6. To promote historical preservation;
7. To avoid undue concentration of population; or
8. To
facilitate the adequate provision of transportation, water, sewerage, schools,
parks and other public requirements.
Building
codes are designated to provide minimum standards to safeguard the health,
safety, and welfare of the public by regulating and controlling the design,
construction, quality, use and occupancy, location and building line, and
maintenance of all buildings and structures. Rules established by local governments for building
restrictions are not always uniform and may vary widely from community to
community.
Violations
of building codes may render a property unmarketable. Proposed
construction must conform to local zoning and building codes, and must
generally be inspected and approved before completion and occupancy. Upon satisfactory completion, an
occupancy certificate may be issued.
Nonconformance to building
codes can result in forced demolition.
Conditional
Use Permits. Zoning ordinances often list special
land uses that are authorized in a zone subject to the granting of a
conditional use permit or special use permit. Land uses
requiring such permits are usually potentially incompatible with other
activities existing in the zone. The proposed land use can create
spillover effects such as noise, traffic congestion or air pollution that
adversely affect the public's health, safety, or welfare. Conditional use permits may authorize
the use as long as the project proponents agree to abide by conditions that
alleviate the spillover effects.
(The
following is reprinted by permission from the CalBRE Reference Book, p. 523-544, 703-704)
Subdivision Map Act
The Subdivision Map Act
requires that every city and every county must adopt a subdivision ordinance to
regulate subdivisions for which a tentative and final map, or a parcel map, is
required. In addition the Map Act
permits cities and counties to adopt ordinances for subdivisions for which no
map is required. A diagram showing typical steps in
subdivision procedure under the Map Act is shown below.
Subdivided
Lands Law
The
Subdivided Lands Law is statewide in its operation and is directly administered
by the Real Estate Commissioner. Its objective is to protect purchasers of
property in new subdivisions (subdivided lands) from fraud, misrepresentation,
or deceit in the marketing of subdivided lots, parcels, units and undivided
interests in the State of California.
The
public report is not issued until the commissioner is satisfied that the
subdivider has met all statutory requirements with particular emphasis on the
establishment of financial arrangements to assure completion and maintenance of
improvements and facilities included in the offering and a showing that the lots
or parcels can be used for the purpose for which they are being offered.
Standard Subdivision
In
general, it may be said that a subdivision is a standard subdivision when the
land is divided and there are no common or mutual interests or rights of ownership
or use among the owners of the lots or parcels created by the land division.
Redevelopment
Community
Redevelopment Law authorizes a local government to adopt an ordinance subject to
referendum to establish a redevelopment agency for the purpose of correcting
blighted conditions in a project area within its territorial jurisdiction. A project area for redevelopment is not
restricted to buildings, improvements, or lands which are detrimental to the
public health, safety, or welfare, but may also consist of an entire area in
which such conditions predominate and injuriously affect the whole area.
A
project may also include lands, buildings, or improvements which are not
detrimental to the public health, safety or welfare, but whose inclusion is
found necessary for the effective redevelopment.
Community Apartment Project.
Community
apartment projects, having five or more apartments are within the definition of
a subdivision. Operation, maintenance and control are
usually exercised by a governing board elected by the owners of the fractional
interests.
In a
community apartment project, defined in Business and Professions Code Sections
11004 and 11004. 5, the purchaser
receives an undivided interest in the land together with the right of exclusive
occupancy of an apartment located thereon.
Purchasers
generally receive a leasehold interest in the apartment, while in a condominium
the purchaser customarily receives a fee interest in his unit in space.
Condominium
Project
A
"condominium project" means a common interest development consisting
of condominiums. A condominium consists of an undivided
interest in common in a portion of real property coupled with a separate
interest in space called a unit, the boundaries of which are described on a
recorded final map, parcel map, or condominium plan in sufficient detail to
locate all boundaries thereof. The area within these boundaries may be
filled with air, earth, or water, or any combination thereof, and need not be
physically attached to land except by easements for access and, if necessary,
support. The description of the
unit may refer to (i) boundaries described in the recorded final map, parcel
map, or condominium plan, (ii) physical boundaries, either in existence, or to
be constructed, such as walls, floors, and ceilings of a structure or any
portion thereof, (iii) an entire structure containing one or more units, or
(iv) any combination thereof.
In effect this
provides that an owner of a condominium owns in fee simple the air space in
which the owner's particular unit is situated, has a deed thereto, gets a
separate tax assessment, may apply for and acquire a title insurance policy on
the property, may indeed deal with it just as the buyer of any type of real
property does. In addition to this the owner has an
undivided interest in common in certain other defined portions of the whole
property involved. Here again an
elected governing board performs the management function.
Stock Cooperative
Project
A
"stock cooperative" is a corporation which is formed or availed of
primarily for the purpose of holding title to improved real property, either in
fee simple or for a term of years.
An essential element is
that all or substantially all of the shareholders of such corporation receive a
right of exclusive occupancy of a portion of the real property, title to which
is held by the corporation, which right of occupancy is transferable only
concurrently with the transfer of the share or shares of stock in the
corporation held by the person having such right of occupancy.
Limited Equity Housing
Cooperative
A
Limited Equity Housing Cooperative is a special type of stock cooperative
financed in whole or in part by federal, state or local government for the
benefit of low and moderate income families.
Time-Sharing
Projects
Stated as simply as
possible, a time-sharing program involves long-term rights to use and occupy
real property for short-term use periods into which the property has been
divided (for example, the right to use a dwelling unit for two weeks of each
year for the next 10 years). In some cases, a time-share purchaser
acquires an undivided interest in the real property (a time-share estate) as
well as the periodic use right. In others, the purchaser acquires only a
right to use (time-share use). In either case, the right to use may be
specified, for example, the first two full weeks in July each year or it may be
on a first reserved, first served basis.
Time-share
offerings in apartments and hotel or motel rooms are covered. So are time-share estate offerings in real property that is
not a structural dwelling place, for example, campgrounds and recreational
vehicle parks.
Land Project
Developments
in some subdivisions located in sparsely populated areas of the state contain
50 or more parcels are referred sometime as "Land Projects". Buyers of such parcels have a right
within a certain time period to rescind their purchase and receive a full
refund.
SUBDIVIDER
/ DEVELOPER
Many
real estate brokers decide to become active in the specialized field of
"subdividing. "
When
selling subdivided property, the broker must make sure that two important
requirements of the subdivision law are observed. First, the
broker must furnish the prospective buyer with a copy of the Commissioner's
Subdivision Public Report and give the prospective buyer an opportunity to read
it before the prospect signs up to purchase, as evidenced by a signed receipt
from the prospective buyer. Secondly, the broker must handle the
deposit or purchase money in accordance with the law. Moreover, since out-of-state subdivision offerings are
treated as real property securities under the provisions of Sections 10249,
10249. 1, 10249. 2, and 10249. 3 of the Business and Professions Code the licensee should
pay special attention to the requirements imposed before agreeing to act as an
agent to handle such properties.
In the
development process these large suppliers customarily:
(a)
Carry a large inventory of raw, semi-finished, and finished products, usually
for lengthy periods and for several ongoing projects, which may be widely
separated as to physical location;
(b) Must finance the
project through use of their own funds or negotiate loans from financial
institutions, for development, construction, and permanent loans;
(c) Take title to the land
to be developed in their own name or in that of a trustee; and
(d) Assume large risks for
any misjudging of the market which may result in costly delays in selling the
inventory and great losses due to interest payments, carrying charges,
overhead, possible local government delays in processing, as well as hidden
costs constantly eating into projected profits.
Environmental
Impact Reports
Environmental
Impact Reports may be required by local government prior to approval of the map
for the subdivision.
The
California Environmental Quality Act of 1970 (CEQA) plays a major role in
planning. A primary purpose of CEQA is to provide
a means of informing government decision-makers and the public of the
environmental consequences of alternative development schemes not covered under
the General Plan. The state has
adopted the CEQA Guidelines to implement the CEQA process.
Alquist-Priolo
Special Studies Zones Act is a zoning act designed to control development in
the vicinity of hazardous earthquake faults for the benefit of public safety. The act is directed solely at the problem of surface fault
rupture. Although seismic shaking
effects are more damaging than fault rupture, the act is not directed at the
other earthquake hazards.
(End of the CalBRE
Reference Book excerpt)
With
regard to cleanliness and pollution, local and state health departments control
commercial ventures such as restaurants, heavy industry, and transportation. State and federal environmental protection laws and
regulations have been passed to control both public and private pollution. The primary regulating body at the federal level is the
Environmental Protection Agency. This
agency has the power to regulate and enforce such laws as the Clean Air Act,
the Water Pollution Control Act, the Solid-Waste Disposal Act, and others. If private development is such that environmental factors are
endangered or conservation of natural resources is jeopardized, the EPA will
most likely have jurisdiction to oversee and regulate such development.
At the
state level, the departments regulating health and water pollution are the
primary agencies charged with regulation of environmental matters. These agencies have the power to
regulate actions, especially purely intrastate actions, that may have an impact
on the environment. Municipalities may also play a role in
environmental control through ordinances and zoning.
Superfund
The 1980
Comprehensive Environmental Response, Compensation and Liability Act, sometimes
called "Superfund" or "CERCLA," indicates that lack of
negligence or fault is not a defense in environmental issues. Owners, lessors, and even those who transport hazardous
materials have been held liable.
Under
the provisions of CERCLA present owners and operators, past owners and
operators, those who transport hazardous substances and those who generate
hazardous substances are financially liable for waste cleanup.
Sara
The
Superfund Amendments and Reauthorization Act of 1986 (SARA) defines who is
liable to pay for the cleanup of environmentally impacted properties.
SARA
amended CERCLA by creating the "innocent purchaser" as a defense of
responsibility. To prove innocence the owner must
demonstrate that when the property was being acquired there was "no reason
to know" the property was contaminated and that "all good commercial
or customary practice" was done to detect the potential of contamination. In addition the landowner must show there was a diligent
inquiry into the prior uses of the property to detect the potential for
contamination. So far, however, the Environmental
Protection Agency has never released anyone under the innocent purchaser
provisions.
FEDERAL LAWS REGARDING LAND AND THE ENVIRONMENT
These
laws primarily affect large development but could have implications for even a
single residential transaction. No longer can real estate practitioners
concern themselves with local rules and regulations only. Today, land-use decisions must conform with applicable state
and federal environmental standards and other federal and state public controls. Below are listed some of the major federal laws and a brief
description of their intent.
1. National
Environmental Policy Act: 42 USC 4321
The
purposes of the National Environmental Policy Act 18 (NEPA) are:
to
encourage productive and enjoyable harmony between people and their environment;
to
promote efforts to prevent or eliminate damage to the environment and biosphere
and to stimulate the health and welfare of people;
to
enrich the understanding of the ecological systems and natural resources
important to the nation;
to
establish a Council on Environmental Quality for land use planning.
NEPA created the Environmental
Protection Agency (EPA) to set and enforce federal environmental standards. Under NEPA, certain large developments are required to file
an Environmental Impact Study (EIS) which is an investigation and analysis of
the long-run effects of the development, or land use, on its surroundings. In addition, the EIS must discuss the
long-run economic and social effects on other people who are not directly
related to the development. The EIS must contain at least five
elements:
a)
Positive effects of the project.
b) Negative
effects of the project.
c)
Alternatives to the project.
d) Short-term uses
of the resources involved versus the long-term productivity of these resources.
e)
Potential irreversible commitment of resources.
2) Clean Air Act: 42 USC 1857
The purposes
of the Clean Air Act are:
a. to
protect and enhance the quality of the nation's air; to promote the public
health and welfare and the productive resources capacity of its population;
b. to
initiate and accelerate national research and development programs to achieve
the prevention and control of air pollution;
c. to
provide technical and financial assistance to state and local governments in
connection with the development and execution of their air pollution prevention
and control programs; and
d. to
encourage and assist the development and operation of regional air pollution
control programs.
This
Act is just one of many federal laws designed to regulate air pollution. The 1970 legislation, however, considerably broadens federal
authority over the emission of pollutants into the air. The Act focuses primarily on air pollution as it affects
human health and secondarily on the effects of air pollution on the
environment, vegetation, visibility, climate, property, and personal comfort
and well being of all citizens. Note: Developers considering the
construction of industrial or certain commercial facilities must be very
careful that the design of these improvements conforms with federal air
pollution guidelines.
3. Solid Waste
Disposal Act: 42 USC 6902
Incorporated
into the Resource Conservation and Recovery Act (RCRA) of 1976, and amended in
1988, the Solid Waste Disposal Act deals primarily with the disposal of
hazardous solid waste. The specific objectives of this law are
to:
a. Provide
technical and financial assistance to state and local governments and
interstate agencies for the development of solid waste management plans
(including resource recovery and resource conservation systems) which will
promote improved solid waste management techniques (including more effective
organizational arrangements), new and improved methods of collection,
separation, and recovery of solid waste, and the environmentally safe disposal
of nonrecoverable residues;
b. Provide
training grants in occupations involving the design, operation, and maintenance
of solid waste disposal systems;
c. Prohibit
future open dumping on the land, and require the conversion of existing open
dumps to facilities that pose no danger to health or the environment;
d. Ensure
that hazardous waste management practices are conducted so as to protect human
health and the environment;
e. Require
that hazardous waste be properly managed at first, thereby reducing the need
for corrective action in the future;
f. Minimize
the generation of hazardous waste and the land disposal of hazardous waste by
encouraging process substitution, materials recovery, properly conducted
recycling and reuse, and treatment;
g. Establish
a viable federal-state partnership to carry out the purposes of this chapter;
h. Provide
for stated guidelines for solid waste collection, transport, separation,
recovery, and disposal practices and systems;
i. Promote
a national research and development program for improved solid waste management
and resource conservation techniques, more effective organizational
arrangements, and new and improved methods of collection, separation, and
recovery, and recycling of solid wastes and environmentally safe disposal of
nonrecoverable residue;
j. Promote
the demonstration, construction, and application of solid waste management,
resource recovery and resource conservation systems that preserve and enhance
the quality of air, water, and land resources;
k. Establish
a cooperative effort among the federal, state, and local governments and
private enterprise to recover valuable materials and energy from solid waste.
Recognizing
the serious consequences of careless disposal of hazardous wastes, the RCRA
calls for severe civil and criminal penalties in the event of noncompliance. The courts may impose a civil fine of
up to $25,000 per day of violation.
Criminal violations of the
Act can result in fines up to $25,000 per day and prison time up to one year. A person who knowingly engages in the transportation,
treatment, storage, or disposal of hazardous waste without the required permits
may be fined up to $50,000 per day of violations and up to two years in prison. Congress allows for even more serious punishment. If the court finds the violator knew that his/her actions
placed another person in imminent danger of death or serious injury, and that
the action shows an unjustified and inexcusable disregard for human life, a
fine of up to $250,000 may be levied and a jail term of up to two years imposed. In certain instances, the violator may serve up to five years
in prison. Organizations can be
fined up to $1,000,000 per day of violation.
Note:
Any licensee engaged in business dealings that directly or indirectly involve
hazardous waste should seek competent legal counsel to ensure strict compliance
with all applicable rules and regulations.
4. Federal
Water Pollution Control Act: 33 USC 1251
This
Act established a comprehensive plan for making waters safe for swimming and
fishing by 1983 and for eliminating pollution from navigable waters by 1985. Water pollution is divided into two categories: point source
and non-point source pollution. Point source pollution results from such
things as industrial and municipal discharges into streams, rivers, lakes, and
oceans. Agricultural and urban runoff are classified as non-point
sources of pollution.
Congress
states its policy to prohibit the discharge of toxic pollutants in toxic
amounts; to provide federal financial assistance to construct publicly owned
waste treatment works; to develop and implement area-wide waste treatment
management planning processes to assure adequate control of sources of
pollutants in each state; to encourage major research to develop technology
necessary to eliminate the discharge of pollutants into the navigable waters, waters
of the contiguous zone, and the oceans.
Further,
Congress supports the states' efforts to prevent, reduce, and eliminate
pollution, and supports research relating to prevention and elimination of
pollution by providing aid from federal agencies. Congress also
encourages the President and Secretary of State to do whatever necessary to
ensure that all foreign countries prevent, reduce, and eliminate pollution in
their waters and in international waters to at least the same extent as the
United States does under its laws.
To administer this Act,
Congress provides an Administrator of the Environmental Protection Agency; and
the Congress encourages and supports public participation in the development,
revision, and enforcement of any regulation, standard, effluent limitation,
plan or program established by the Administrator or any state under this Act.
Note:
Licensees involved in development that results in the discharge of pollutants
into state or private waters need be aware of the requirements of this Act. Failure to adhere to the rules and regulations of the Clean
Water Act may result in civil or criminal penalties.
5. Coastal Zone
Management Act: 15 USC 1452
The
foundation of this Act can be stated as follows: The Congress finds and declares
that national policy is to:
a. Preserve,
protect, develop, and where possible, to restore or enhance, the resources of
the nation's coastal zone for this and succeeding generations;
b. Encourage
and assist the states to exercise their responsibilities in the coastal zone
through the development and implementation of management program to achieve
wise use of the land and water resources of the coastal zone, giving full
consideration to ecological, cultural, historic, and aesthetic values as well as
to needs for economic development;
c. Encourage
the participation of public, of federal, state, and local governments, and of
regional agencies in the development of coastal zone management programs; and
d. For
all federal agencies engaged in programs affecting the coastal zone to
cooperate and participate with state and local governments and regional
agencies in carrying out the purposes of this law.
To
help implement such management programs, the national policy is to encourage
cooperation among the various state and regional agencies, including
establishment of interstate and regional agreements, cooperative procedures,
and joint action particularly regarding environmental problems.
Note:
Licensees whose business requires them to deal with property on or adjacent to
beaches should be very familiar with the federal rules and regulations
governing the coastal zone.
SOME SOURCES OF ENVIRONMENTAL PROBLEMS
Hazardous
Waste: may be any one of a number of chemicals or biological or even
radioactive materials. These
substances may contaminate soil, surface or ground water and pose great health
and/or safety risks to people, plants and animals.
Though
these are most frequently thought of in connection with commercial and
industrial activities there are many residential properties where commercial
activities have been conducted. Some of these may have created hazardous
waste.
In
addition, properties within one-half mile of dumps, land fills, waste sites,
petroleum storage or delivery facilities and other possible pollution sources
may cause even residential properties to become a risk for buyers, sellers and
brokers.
The
Environmental Protection Agency maintains a list of locations that are known
hazardous sites. Properties within
one half mile of one of the sites is cause for concern.
Asbestos:
is any one of a number of fibrous materials which is extremely durable and fire
resistant. Asbestos fibers, when
inhaled, may cause cancer or asbestosis, a degenerative disease of the lungs. Asbestos was used in many kinds of
buildings, including residences, until the early 1970's.
Asbestos
was used in vinyl floor tiles and linoleum, on siding, in shingles and felts,
in ceiling tiles, fuse boxes, as insulation for water pipes and boilers, and
even in air duct lining.
Water
Supplies: especially on rural properties may be potential sources of problems. Water from municipal water supplies is usually safe. However, water from a well, even one that is filtered, may
not be.
Lead solder in a home water system may
be a problem in some homes. Lead solder is a metallic gray material
that appears around water supply tubes.
Copper tubing with lead
soldered joints were commonly placed in all construction until 1986.
Lead
based paint has recently become one of the hottest issues concerning
environmental hazards. Some finance-related institutions such
as FHA have recently mandated a lead based paint disclosure.
Radon:
is a naturally occurring gas, the molecules of which may attach to dust particles. These particles may be inhaled, attach to the linings of the
lungs and emit radioactive particles.
PCBs (Polychlorinated Biphenyls): were
commonly used as insulating material in electrical equipment such as
transformers and the ballasts in florescent light fixtures until 1979. Leaking electrical equipment may allow PCB's to contaminate
soil, water and food. While PCB's are a known carcinogen, it
is believed they do not constitute a great threat to humans unless ingested.
Common interest development dispute resolution
Effective 1994, the California
Civil Code, Section 1354, was amended to enact "Alternative Dispute
Resolution" (ADR) procedures.
The law requires that before a common interest development or an
individual owner in such association file a lawsuit against the other, for any
declaratory or injunctive relief in connection with a claim of money under
$5,000 (other than association assessments), or for enforcing association
governing documents rules, the filing party has to attempt to submit the
dispute to mediation, negotiation, and binding or non-binding arbitration (an
alternative dispute resolution).
This
is initiated by serving an ADR form upon the other party according to Small
Claims Court service procedures. The form describes the dispute, a
request for ADR, a notice that response must be received within 30 days or
request will be deemed rejected, and a copy of Civil Code Section 1354. The ADR must be completed within 90 days. If a lawsuit is started, the party filing the complaint must
submit to the court a Certificate of Compliance with Civil Code Section 1354.
Licensees
should warn prospective buyers of common interest development units of these
new legal limitations imposed upon eventual claims. Failure to comply with the new law may result in the loss of
the rights to a lawsuit in case of a dispute. Unless parties
agree to the disclosure, evidence and documents presented in the ADR procedure
are not admissible in a later civil action.
Possible earthquake danger disclosure
requirement
After January 1st, 1993, the transferor of any residential
dwelling built prior to January 1, 1960, with one-to-four living units of
conventional light-frame construction, as defined in Chapter 25 of the 1991
edition of the Uniform Building Code of the ICBO, has to deliver to the
buyer-transferee a copy of the "Homeowner's Guide to Earthquake Safety”
published per Section 10149 of the Business and Professional Code and complete
in writing an earthquake hazards disclosures. These
disclosure deal mainly with:
1. Whether
the structure was bolted, anchored or strapped according to Code to the
foundation.
2. The
existence of perimeter cripple walls, or any other first-story walls that are
not braced with plywood or diagonal metal or wood braces.
3. The
existence of a perimeter foundation composed of unreinforced masonry.
4. The existence of unreinforced masonry dwelling walls.
5. The
existence of a water heater which is not anchored, strapped or braced.
6. The
existence of any corrective measures that were taken regarding above and of
which the transferor is aware.
The
duty imposed by the statute upon real estate licensees is limited in providing
the seller with a copy of the Homeowner's Guide to the Earthquake Safety for
delivery to the transferee.
If the
property is located in a specially designated seismic hazard zone, licensees
have also the obligation to disclose such in writing. Usually this
will be done in the real estate contract and receipt for deposit.
Interstate Land Sales Full
Disclosure Act: 15 USC 1701
The
purpose of full disclosure is to deter or prohibit the sale of land by the
mails or other channels of interstate commerce through misrepresentation of
material facts relating to the property.
The Secretary of Housing
and Urban Development (HUD) and the Office of the Interstate Land Sales
Registration administer this law. This
Act requires the developer to file a statement of record with HUD accurately
disclosing relevant information about any development of 100 or more lots. Lots larger than five acres are not covered by the Act. In addition, the developer also must deliver a property
report to purchasers of the property containing essential information about the
property, such as distance to the nearest paved road, number of homes currently
built and occupied, type of title the buyer will receive and the type of liens,
if any, in existence.
Brokers
and agents should understand that if a buyer feels he/she has been misled by
advertising falling under the guidelines of the Act, the buyer may sue the
seller for civil damages under federal law. Note: Failure
to comply with the Act may subject a developer or licensee to criminal
penalties of up to five years in prison and a $10,000 fine for every violation.