Here is the latest MORTGAGE e-ALERT (January 1, 2016) from our friends at the Thordsen Law Offices.
LEGISLATIVE UPDATE EFFECTIVE 2016
The following brief legislative summaries are some of the new laws that affect real estate licensees, subdividers, those having Limited Liability Companies and those leaving real property pursuant to a “Transfer on Death” Deed of Trust.
AB 139 TRANSFER ON DEATH DEEDS EXECUTED BY OWNERS OF REAL PROPERTY
This bill will until January 1, 2021, create the revocable transfer on death deed (revocable TOD deed) which will transfer real property on the death of its owner without a probate proceeding, according to specified rules. The bill requires that a person have the capacity to contract in order to make or revoke the deed and would require that the deed be in a statutory form provided for this purpose. The bill requires that a revocable TOD deed be signed, dated, acknowledged, and recorded, as specified, to be effective. The bill provides, among other things, that the deed, during the owner’s life, does not affect his or her ownership rights and, specifically, is part of the owner’s estate for the purpose of Medi-Cal eligibility and reimbursement. The bill voids a revocable TOD deed if, at the time of the owner’s death, the property is titled in joint tenancy or as community property with right of survivorship. The bill establishes priorities for creditor claims against the owner and the beneficiary of the deed in connection with the property transferred and limits on the liability of the beneficiary. The bill establishes a process for contesting the transfer of real property by a revocable TOD deed.
The beneficiary of the “Transfer On Death” is exposed to certain liabilities that may cause them to reject the transfer.
There is much more to this bill and it is effective as of January 1, 2016. This covers but a small portion and the entire bill should be read AND ANALYZED carefully if anyone attempts to execute a TOD on their own without an attorney. By way of example, “This deed can only be used to transfer (1) a parcel of property that contains one to four residential dwelling units, (2) a condominium unit, or (3) a parcel of agricultural land of 40 acres or less, which contains a single-family residence. The form MUST be recorded on or before 60 days after the date you sign it or the deed has no effect.”
If you desire to know more about the Transfer on Death (TOD) deed, contact Sean Thordsen at his direct line 714-662-4995.
AB 345 CONTINUING EDUCATION: MANAGEMENT AND SUPERVISION
Requires real estate brokers licensed by the Bureau of Real Estate (“CalBRE”) to complete a three-hour course in the management of real estate offices and supervision of real estate licensed activities prior to renewal of their license. This bill also allows salespersons to complete a continuing education course that assists them to better understand how to be effectively supervised by a broker or branch manager.
AB 506 LIMITED LIABILITY COMPANIES
There are dramatic changes to the laws governing Limited Liability Companies. You should consult your attorney to be certain you now comply with these changes.
This act authorizes a person to dissociate as a member of a limited liability company at any time by withdrawing as a member by express will. The act deems a person to be dissociated from a limited liability company upon the occurrence of certain events, including, among others, an individual’s death. The act provides the effects when a person, including an individual, is dissociated from a limited liability company.
Upon dissociation a person’s right to vote as a member in the management and conduct of the limited liability company’s activities terminates. If a member dies, or a guardian or conservator of the estate is appointed for the member, or a member’s interest is being administered by an attorney-in-fact under a valid power of attorney, the member’s executor, administrator, guardian, conservator, attorney-in-fact, or other legal representative to exercise all of the member’s rights for the purpose of settling the member’s estate or administering the member’s property, including any power the member had under the articles of organization or an operating agreement to give a transferee the right to become a member.
Modifies the definition of “electronic transmission by the limited liability company” and expands the definition of “person” under the act. The bill modifies what an operating agreement may provide. The bill provides that specified provisions of the Labor Code, relating to consideration for employment and employment contracts, shall not apply to membership interests issued by any limited liability company or foreign limited liability company, as specified.
Requires that the profits and losses of a limited liability company be allocated among the members and among classes of members, in the manner provided in the operating agreement, and would require that profits and losses be allocated in proportion to the value of the contributions from each member if the operating agreement does not otherwise provide.
Existing law requires the consent of all members of the limited liability company to approve a merger or conversion and to amend the operating agreement. This bill eliminates that requirement.
The limited liability company is to indemnify the agent of a limited liability company to the extent that the agent has been successful on the merits in defense or settlement of any claim, issue, or matter if the agent acted in good faith and in a manner that the agent reasonably believed to be in the best interests of the limited liability company and its members, as provided.
Under existing law, the persons who filed the certificate of dissolution are required to sign and file with the Secretary of State a certificate of cancellation of articles of organization upon the completion of the winding up of the affairs of the limited liability company, except as specified. Existing law requires the certificate of cancellation of articles of organization to include, among other things, that upon the filing of the certificate of cancellation, the limited liability company is required to be canceled and its powers, rights, and privileges are required to cease. Under existing law, a limited liability company that is dissolved continues to exist for the purpose of, among other things, winding up its affairs and prosecuting and defending actions by or against it in order to collect and discharge obligations.
A limited liability company that has filed a certificate of cancellation continues to exist for purposes, as specified.
There are now limits on the applicability of the act to acts or transactions by a limited liability company or by the members or managers of the limited liability company occurring, or an operating agreement or other contracts entered into by the limited liability company or by the members or managers of the limited liability company, on or after January 1, 2014.
AB 607 AUTHORITY TO MAKE TRUST ACCOUNT WITHDRAWAL
Authorizes unlicensed employees of a licensed real estate broker, typically accountants and bookkeepers, to make trust fund withdrawals. This bill clarifies the conditions of the withdrawals and specifying fidelity bonds held by brokers can have a deductible of up to 5 percent of the total bond amount when there is evidence of the broker’s financial responsibility sufficient to cover a loss subject to the deductible.
AB 661 CLARIFICATION OF DOCUMENTS REQUIRED TO PAY COUNTY TRANSFER FEE
Specifies which real estate instruments or documents pertaining to the sale or transfer of property are or are not subject to a $10, per document, county fee to fund the county’s Real Estate Fraud Prosecution Trust Fund.
AB 807 CLARIFICATION REGARDING PRIVATE TRANSFER FEE REQUIREMENTS
Existing law excludes from the definition of a transfer fee any fee reflected in a document recorded against the property on or before December 31, 2007, that is separate from any covenants, conditions, and restrictions, and that provides a prospective transferee notice of specified information, including the amount or method of calculation of the fee.
This bill specifies that the information shall be set forth in a single document and may not be incorporated by reference from any other document.
This bill provides that a fee reflected in a document recorded against the property on or before December 31, 2007, that is not separate from any covenants, conditions, and restrictions, or that incorporates by reference from another document, constitutes a transfer fee for the purposes of requirements relating to these fees. The bill makes unenforceable a transfer fee recorded against the property on or before December 31, 2007, that complies with the provisions described above and that incorporates by reference from another document unless it is recorded against the property on or before December 31, 2016, in a single document that complies with the provisions described above. This is so convoluted you read it twice so you can misunderstand it a third time. Check with the county recorder when recording.
SB 146 CLARIFICATION ON TEAM NAME USAGE
“team names,” are not, “fictitious business names,” and are therefore not required to register with CalBRE. This bill clarifies that team names are not required to register with the county in which the team operates.
SB 197, BLOCK. FINANCE LENDERS: COMMERCIAL LOAN: REFERRAL
Existing law defines a commercial loan as a loan of a principal amount of $5,000 or more, or any loan under an open-end credit program, whether secured by either real or personal property, or both, or unsecured, the proceeds of which are intended by the borrower for use primarily for purposes other than personal, family, or household.
This bill AUTHORIZES A LICENSED FINANCE LENDER TO COMPENSATE AN UNLICENSED PERSON IN CONNECTION WITH THE REFERRAL, as defined, of one or more prospective borrowers to the licensee for a commercial loan if certain requirements are met. These requirements includes, among other things, that the referral leads to the consummation of a commercial loan, the loan contract provides for an annual percentage rate that does not exceed a certain percentage, the licensed finance lender obtains documentation from the prospective borrower documenting the borrower’s commercial status, and that the licensee maintains records of compensation paid to an unlicensed person, as specified. The bill makes a licensee paying compensation to an unlicensed person in connection with a referral liable for any misrepresentation made to a borrower in connection with that loan made to that borrower by that licensee. The bill authorizes the commissioner to adopt regulations imposing conditions on this referral activity, as specified. The bill also requires a licensed finance lender who receives an application for a commercial loan from a prospective borrower who has been referred by an unlicensed person to provide a specified statement to the borrower regarding the referral arrangement. The bill prohibits any person receiving compensation in connection with a referral that leads to the consummation of a commercial loan from engaging in specified acts and would authorize the commissioner to order this person to desist and refrain from engaging in the business or further violating those provisions governing such referral.
SB 561, MONNING. CONTRACTORS: HOME IMPROVEMENT SALESPERSONS.
This bill provides that a home improvement salesperson is a person who is registered and engaged in the business of soliciting, selling, negotiating, or executing contracts for home improvements, for the sale, installation or furnishing of home improvement goods or services, or of swimming pools, spas, or hot tubs on behalf of a licensed home improvement contractor. The bill requires a home improvement salesperson to register with the board in order to engage in the business of, or act in the capacity of, a home improvement salesperson.
This bill makes it a crime for any person to engage in the occupation of home improvement salesperson for one or more home improvement contractors without having, at the time of the sales transaction, a current and valid registration. The bill makes it a crime for any person to engage in the occupation of salesperson of home improvement goods or services without having, at the time of the sales transaction, a current and valid registration.
This bill requires a home improvement contractor to notify the registrar in writing about the employment of a registered home improvement salesperson. The bill also requires a home improvement contractor to notify the registrar when a registered home improvement salesperson ceases to be employed by the contractor. The bill makes a home improvement contractor who fails to report this information subject to disciplinary action by the registrar.
Section 7153 can void a contractor’s mechanics lien under certain conditions
SB588AND AB970-WAGE THEFT EXTENDING MAJOR LIABILITY TO EMPLOYERS, EMPLOYEES AND SUCCESSOR COMPANIES FOR UNPAID WAGES
SB588 and AB970 expand the power of the California labor commissioner to collect back wages and penalties from bosses who fail to pay minimum wage and overtime, force employees to work off the clock, refuse to offer meal and rest breaks, or makes illegal paycheck deductions.
Employers can now be subject to stop-work orders, levies against their bank accounts and liens against their property.
EMPLOYERS, AS WELL AS OWNERS, DIRECTORS OR MANAGING AGENTS ACTING ON BEHALF OF AN EMPLOYER, CAN BE SUBJECT TO CRIMINAL AND PERSONAL LIABILITY. The liability can extend to stop-work orders, levies against bank accounts and liens against the employer property. Employers, AS WELL AS OWNERS DIRECTORS OR MANAGING AGENTS acting on behalf of an employer can be subject to the criminal and personal liability.
Companies will no longer be able to avoid judgments by changing names, as SUCCESSOR COMPANIES WILL BE DEEMED LIABLE IF THEY ENGAGE IN SUBSTANTIALLY THE SAME WORK.
The chase is on. Dissolving or abandoning the old company will not work. Anyone involved in payroll decisions with the violations can be chased including their personal assets.
DEFAULT JUDGMENTS AGAINST DEBTORS CAN BE SET ASIDE
SB 641, WIECKOWSKI. DEBT BUYING: DEFAULT JUDGMENT.
Adds Section 1788.61 to the Civil Code, relating to debt buying.
Existing law, the Fair Debt Buying Practices Act, regulates the practice of buying charged-off consumer debt, sold or resold on or after January 1, 2014, for collection purposes and prescribes the circumstances pursuant to which the debt buyer may bring suit. The act prohibits a court from entering a default or other judgment in an action initiated by a debt buyer against a debtor unless business records, authenticated through a sworn declaration, are submitted by the debt buyer to the court.
This bill permits a person to serve and file a notice of motion and motion to set aside a default or default judgment and for leave to defend an action relating to debt, if service of a summons did not result in actual notice to the person in time to defend an action brought by a debt buyer and a default or default judgment has been entered against the person in the action. The bill requires the person to make this service and filing within 6 years after entry of the default judgment or 180 days of the first actual notice of the action, whichever is earlier, except in cases of identity theft or mistaken identity, in which case the service and filing is to be made within 180 days of the first actual notice of the action. The bill prescribes requirements regarding documents to be submitted to a court in instances of identity theft or mistaken identity. The bill prescribes requirements for the filing, which would include an affidavit submitted to the court under oath stating that the person’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect. The bill permits a court to set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action. The bill would apply to a judgment entered on and after January 1, 2010, except as specified.
It is a little technical but worth the process if the debtor can fit the facts. The payment to the attorney is worth it if it is less than the amount of the judgment plus accrued interest.
NOTICE THE ALLOWANCE OF REFERRAL FEES TO UNLICENSED PERSONS FOR REFERRING COMMERCIAL LOANS AND THE CONDITIONS. Pay particular attention to the conditions. sb1997
REMINDER THAT MINIMUM WAGE IS $10 PER HOUR OR THE EMPLOYER PAYS ONE HECK OF A PENALTY FOR NOT PAYING IT
The Department of Industrial Relations (DIR) reminds California’s employers and workers that effective January 1, 2016, the state’s minimum wage will increase to $10 per hour.
State law requires employers to post information on wages, hours and working conditions at a worksite area accessible to employees. (nwsrel#2015-131-12/28/15
Post it. Pay it. OR get sued by employment lawyers who also can get you to pay their attorney fees if they prevail.
HAVE YOU UPDATED YOUR EMPLOYEE HANDBOOK FOR 2016?
All employee handbooks should be updated at a minimum in the following areas:
- Update discrimination and harassment policy to include sexual orientation & identity
- Clarified FMLA policies to include same-sex spouses
- Provisions for breaks and accommodations for nursing mothers
- Specific guidelines for off-the-clock and overtime work for hourly employees
- Three days annual paid sick leave with a posted notice
- No deductions from wages except lawfully withhold amounts (1) when required to do so by state or federal law, or (2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee’s wages, or (3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement. (Lab.C. §§ 221, 224)
- Although a wage garnishment is a lawful deduction from wages (Lab.C. §224), an employer cannot discharge an employee because a garnishment of wages has been threatened or if the employee’s wages have been subjected to a garnishment for the payment of one judgment. (Lab.C. §2929(a))
- Limited deductions as allowed by law only or by written consent
- Computer usage policy
There are more but if you are missing some of these then you definitely need your employee handbook updated. Contact Sean at 714-662-4995 for updating your employee handbook.
ORANGE COUNTY, CALIFORNIA REAL ESTATE SALESMAN PLEADS
NOT GUILTY TO ALLEGED SHORT SALE SCHEMES
On December 30, 2015 AGUSTIN IRAN BELLO a 40-year-old real estate salesman for ReMax Realty pleaded not guilty to multiple charges of grand theft in connection with an alleged short-sale scheme prosecutors say ripped off several Orange County homeowners of more than $1 million.
Agustin Iran Bello working to procure homes for Jo Cal 1st Investments when he allegedly conducted the scheme from June 2010 through March 2011, according to court papers. Orange County District Attorney investigator Donald Willie said “Bello assisted in the conspiracy to obtain and sell homes to victims that were not his to sell,” Willie alleged in court papers. “He assisted in selling the homes for cash as short sales or investment properties that were reported as being purchased by a private investor.
“He participated in finding victim buyers for these properties and selling the same properties over and over to different investors.”
Bello allegedly handed residents signed grant deeds, which were falsely notarized, Willie alleged.
“Not one bank ever received money owed to them from the sale of their properties,” Willie said. “None of the banks that owned the homes were even aware their properties were being sold.”
“Bello assisted in defrauding hundreds of thousands of dollars from multiple victim homeowners, investors and banks,” he said. “These thefts caused some victims to be sued and suffer extreme financial loss.” Some of the properties at issue were in Costa Mesa and Santa Ana, according to court papers.
Note that prosecutors are still pursuing real estate fraud that occurred over five years ago. Federally the prosecutors can go back ten years.
DEPARTMENT OF JUSTICE ANNOUNCES PROPOSED SETTLEMENT OF DISCRIMINATORY MORTGAGE LENDING CLAIMS MADE AGAINST SAGE BANK OF MASSACHUSETTS
On November 30, 2015 the Justice Department Reaches Settlement with SAGE BANK to Resolve Allegations of Mortgage Lending Discrimination. The Justice Department filed a complaint and proposed consent order to resolve allegations that Sage Bank, headquartered in Lowell, Massachusetts, violated the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) by engaging in a pattern or practice of discrimination on the basis of race and national origin in the pricing of its residential mortgage loans.
The United States’ complaint alleges that Sage Bank CHARGED AFRICAN-AMERICAN AND HISPANIC BORROWERS HIGHER PRICES FOR HOME LOANS THAN SAGE BANK CHARGED TO SIMILARLY SITUATED WHITE BORROWERS FOR REASONS UNRELATED TO THEIR CREDITWORTHINESS. Under Sage Bank’s pricing policy, each of its loan officers was assigned a “target price,” which was the price a loan officer was required to achieve on each home loan, regardless of a borrower’s creditworthiness. The complaint alleges that those loan officers whom Sage Bank assigned higher target prices disproportionately served African-American and Hispanic borrowers. The complaint also alleges that loan officers had discretion to price loans above their target prices and did so to a greater extent for African-American and Hispanic borrowers than for white borrowers. The result, the complaint alleges, was that the average African-American borrower paid approximately $2,500 more for his/her loan than did a similarly qualified white borrower; the average Hispanic borrower paid approximately $1,400 more.
Under the consent order, SAGE BANK WILL PAY $1,175,000 INTO A SETTLEMENT FUND TO COMPENSATE BORROWERS AND APPLICANTS WHO WERE HARMED BY SAGE BANK’S POLICIEs. The consent order also requires Sage Bank to establish a new loan pricing policy and a new loan officer compensation policy, have loan officers and bank employees undergo fair housing and fair lending training, and establish a monitoring program to detect future unlawful disparities in mortgage loan pricing.
To review the complaint and consent go to the hyperlinks below. (usdoj113015)
Sage Bank Complaint
Sage Bank Consent Order
I was under the impression that this had stopped at least two years ago. Apparently not.
IN NEW JERSEY EX-NFL STAR AND 74-YEAR-OLD MOTHER ORDERED TO REPAY $615K FOR MORTGAGE FRAUD AFTER HE AND MOTHER PREVIOUSLY CONVICTED OF CONSPIRING TO STEAL $1.2 MILLION
In October 2015 IRVING FRYAR, WHO SPENT 16 YEARS IN THE NATIONAL FOOTBALL LEAGUE, STARRING FOR THE NEW ENGLAND PATRIOTS, MIAMI DOLPHINS AND PHILADELPHIA EAGLES DURING HIS CAREER, convicted for his role in a mortgage fraud scheme that involved his 74-year-old mother and cost several financial institutions $1.2 million was sentenced to five years for his convictions on charges of conspiracy and theft of deception. Allene McGhee, Fryar’s mother, was sentenced to three years of probation.
Fryar and McGhee have been ordered to pay $615,600 in restitution to five lenders that were targets of a scheme that saw Fryar allegedly take out six home equity loans his mother’s home ““ AT THE SAME TIME.
Fryar is currently serving his five-year term at Jones Farm, a minimum security facility in Trenton, New Jersey, but he will now have to pay $200 a month in restitution.
During Fryar’s trial, court documents revealed that five of the six loans taken out on McGhee’s home were taken out within a six-day period and four of the loans closed on a single day.
According to a release from the state of New Jersey, Fryar and McGhee deceived the six banks by applying for and closing on the loans within a short period and purposefully failing to disclose the existence of any prior loans, so each bank funded its loan in the belief that it held the first lien on the property and the loan would be secured by adequate equity. (hw12815)
I have not seen this concurrent loan scheme in a long time. What surprises me is that as a wide receiver I would have thought he made quite a bit of money. What happened to it all?
THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. THE AUTHOR MAKES NO CLAIMS ABOUT ITS ACCURACY, COMPLETENESS, OR UP-TO-DATE CHARACTER. NO AUTHOR OR OWNER OF THIS DOCUMENT AND ITS WEBSITE IS ACTING AS YOUR ATTORNEY. LEGAL RULES AND TAX RULES CHANGE FREQUENTLY, THEREFORE, WE CANNOT GUARANTEE THAT ANY INFORMATION CONTAINED HEREIN OR ON A WEBSITE IS ACCURATE OR UP TO DATE. FOR LEGAL ADVICE PLEASE CONSULT AN ATTORNEY.
Thordsen Law Offices
151 Kalmus Drive, Suite B250
Costa Mesa, CA 92626