Key 2017 California Law Changes and Their Impact on Homeowners

GOMEZ LAW, APC Jan. 9, 2017

A plethora of new California law changes 2017 became effective on January 1st, plus we have a new President who is promising dramatically different financial policies. The list is very long, but here are a few things we feel you might want to know.

Protections for Widowed Homeowners

California Senate Bill 1150 which takes effect January 2017, seeks to protect widowed homeowners whose names are not on the mortgage from losing their homes to foreclosure. SB 1150 allows mortgage services to file a notice of default when notified that a borrower has died, only when the following conditions are met:

  • The mortgage service must request documentation of the borrower’s death from a claimant. (A “claimant” is someone claiming to be a successor in interest.)

  • The mortgage service must provide information about the loan to the successor of interest. This must be done within ten days “of a claimant being deemed a successor of interest.”

  • Mortgage service must allow the successor of interest to take over the deceased borrower’s loan or apply for alternatives that prevent foreclosures.

Senate Bill 1150 would provide the successor of interest the same rights as a borrower.

State “Granny Flats” legislation

With California in need of a remedy for its housing crisis, efforts have been made to make it easier for homeowners to construct smaller/additional units on their properties. A “Granny Flat” is when a homeowner with a single family residence (SFR) builds a second SFR on the property. There are restrictions, such as a certain amount of space between the Granny Flat and the property boundary and a % amount of undeveloped area on the lot. Disputes have broken out between cities such as Los Angeles. Who appear to be adding more requirements to the state law; as a result some homeowners who have built Granny Flats are now be denied approval by these cities. The Bloom and Wieckowski bills will not require homeowners to provide additional parking spaces for accessory dwelling units(ADU) near transit stops, and city governments are now given ninety-days to approve applications for ADUs. They will stop cities from mandating pathways that lead to streets and limit fees for connecting to water and sewer systems.

Pesticides in Condos

California has also passed a new law controlling the use of pesticides in common interest developments. Civil Code section 4777 requires that a notice be given to residents who may be or could be reasonably affected by the pesticide being used. It must include the name of the pest being targeted, the name and brand of the pesticide, and a clause indicating that pesticides are toxic chemicals. The notice should be posted at least 48 hours before the pesticide is applied and in a manner, that is easily seen and noticed. It is permissible to provide a notice after the pesticide is applied only when the pests are of immediate threat to the health and safety of the residents, but the notice should be posted no later than an hour after the application of the pesticide.

Increasing Interest Rates

Now that the federal reserve board raised the benchmark interest rate by 0.25%, and home loan rates have increased by almost a full percentage point since the Presidential Election, Americans are worrying about the impact this may have on their finances. Rates on credit cards are bound to increase and homeowners with adjustable rate mortgages should expect a rise in their monthly mortgage payment. Aspiring home buyers may be hesitant to purchase a home as fixed rates increase; higher rates mean higher monthly payments for the same principal amount, with the result being that their buying power has become smaller. This may cause a slowdown in the housing market, meaning it could become “a buyer’s market” as the supply of buyers decreases. It is also important to note, however, that mortgage rates remain significantly low historically. It will take some time for the mortgage rate to rise back up to the historical average of 8%, so there is no reason to panic. Unfortunately, savings accounts and certificate of deposits(CDs) may not see a significant change upward. It is not uncommon for banks to disregard an increase in the federal interest rate when setting rates for savings accounts. Similarly, rates for CDs will show a minimal increase only when the interest rate is not fixed. While rising interest rates may have homeowners and potential homeowners worried, small business owners are eager to reap the fruits of the promises made by Trump’s campaign, in which he promised to lower taxes and decrease regulations