Legislative Review

• Publication year: 2022
• Author: Michael Maurer

Legislative Review

Michael Maurer

Michael Maurer practices Municipal Law as an attorney at Best Best & Krieger LLP. In addition to advising cities on the legalities of their day-to-day operations, Mike provides exceptional guidance to public agencies in the areas of land use, public infrastructure and construction, and open government and ethics laws. Mike serves as city attorney for the cities of La Habra Heights and San Jacinto, where he advises the city councils at each of their meetings. He also serves as assistant city attorney for the City of Arcadia.

I. INTRODUCTION

I want to start this year's Legislative Update by expressing my sadness at the passing of Bob McCormick, who authored this article for a number of years. I have collaborated with Bob on this project since 2014, and he prepared the annual legislative update for many years before that. Bob was an extremely gracious co-author, who not only dedicated time to preparing this article each year but also served as a mentor to me, helping to identify points of interest from the legislation and consider how to convey the information clearly and thoughtfully. As any attorney knows, a compendium of new legislation can be pretty dry—but also necessary—reading material. Bob put a lot of effort into how this important information could be conveyed to members of the real property section in both a meaningful and interesting way. His dedication to the real property section was apparent, and I am sure many section members were fortunate enough to interact with Bob through the years. He will be missed. This annual update is, and will always be, Bob's article.

Turning to the legislation, there was one clear and overwhelming topic this year, which touched nearly every piece of real estate-related legislation: housing. The Legislature adopted, and the Governor signed, a housing package consisting of 31 bills. (And yes, all 31 are discussed below.) Following a pandemic-shortened 2020 legislative session, many expected that 2021 would see a heavy output of new bills. In that regard, the Legislature did not disappoint and certainly made strides to address one of the most significant crises facing our State. However, the Legislature's approach to housing has remained disappointingly myopic, focusing primarily on the demonization of local government land use policies. No bill exemplified this approach more than Senate Bill (SB) 9, the so-called "duplex" bill that officially ends single family zoning in California. The bill requires local governments to approve lot splits and second units ministerially. While SB 9's goal of creating more housing development opportunities is laudable, the bill's one-size-fits-all approach is nonsensical, will have unintended consequences and will be difficult to implement. As one example: SB 9 prohibits cities from requiring owners to dedicate rights-of-way, which might reduce some development costs, but apparently no one considered the concept of sidewalks.

Despite the multitude of housing bills, the Legislature still has not addressed the elephant in the room. A decade ago, Legislature ended redevelopment to close short-term budget gaps, taking with it an important tool for encouraging the development of affordable housing and a key source of funds for investing in affordable housing. The closest meaningful replacement was would have been SB 5 from 2019, which would have established a dedicated funding source for local governments to access, but Governor Newsom vetoed that bill because it would have required $2 billion in annual costs. With the combination of a massive budget surplus and a critical housing crisis, the time is overdue for the Legislature to start partnering with local governments to invest in housing, as well as the economic and physical infrastructure to support it.

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Finally, there was one other common theme in much of this year's legislation: equity and inclusion. A number of meaningful bills were passed to provide thoughtful support to a broad range of inclusionary interests, from providing expedited real estate licenses for military spouses, to enabling intergenerational housing for youth transitioning from foster care or homelessness, to expediting the removal of virulent and racist restrictive covenants from property titles. A number of bills discussed below will improve California for the better.

II. APPRAISALS

A. Assembly Bill (AB) 948, Holden. Bureau of Real Estate Appraisers: Disclosures: Demographic Information: Reporting: Continuing Education.

Amends sections 11340 and 11360 of, and adds sections 11310.3 and 11424 to, the Business and Professions Code, adds section 1102.6g to the Civil Code, and amends section 12955 of the Government Code, relating to real estate.

AB 948, the Fair Appraisal Act, contains various measures to address explicit and implicit bias in the real estate appraisal process. As to explicit bias, the Fair Appraisal Act makes it unlawful for any appraiser to discriminate in making their services available. It also prohibits appraisers from basing an appraisal of the market value of property on the basis of race or certain other protected classifications (see below). The bill requires that, after July 1, 2022, contracts for sales of single-family residential property must contain a notice stating that the appraisal must be unbiased, objective, and not influenced by improper or illegal considerations.

To address potential violations of the Act, or race-based below market valuations, the Act requires the Bureau of Real Estate Appraisers to receive complaints of below-market valuation opinions and to compile voluntarily-provided demographic information of those making complaints. To address implicit bias, the bill contains educational requirements that licensed appraisers and applicants for licenses must complete. Starting on January 1, 2023, applicants must complete one hour of cultural competency training. Licensed appraisers must then complete another hour of cultural competency training every four years and two hours of elimination of bias training before renewing a license.

The bill's author stated that Fair Appraisal Act is intended to address what he referred to as "redlining 2.0"—the appraisal of homes owned by Black homeowners at a lower value than that of their predominantly White neighbors. The author indicates that the bill is the start of "a much-needed conversation" about ongoing discrimination in the home buying, selling, and refinancing process, where the appraised value plays a key role. The Fair Appraisal Act was supported by the California Association of Realtors.

The anti-discrimination provisions of the Act specifically prohibit discrimination on the basis of race, color, religion, gender, gender expression, age, national origin, disability, marital status, source of income, sexual orientation, familial status, employment status, or military status of either the present or prospective owners or occupants of the subject property, or of the present owners or occupants of the properties in the vicinity of the subject property, or on any other basis prohibited by the federal Fair Housing Act.

III. BROKERS

A. AB 263, Rubio. Real Estate Applicants and Licensees: Education Requirements: Fair Housing and Implicit Bias Training.

Amends, repeals, and adds sections 10151, 10153.2, and 10170.5 of the Business and Professions Code, relating to real estate.

Beginning on January 1, 2023, AB 263 will require applicants for real estate broker or salesperson licenses, and brokers and salespersons renewing their licenses, to receive training related to implicit bias.

For existing brokers and salespersons, there is a 45-hour continuing education requirement, which must now include a two-hour implicit bias training.

For new applicants, the real estate practice course that must be completed will have to include a component on "implicit bias, including education regarding the impact of implicit bias, explicit bias, and systemic bias on consumers, the historical and social impacts of those biases, and actionable steps students can take to recognize and address their own implicit biases." The legal aspect of real estate course will have to contain a component on fair housing laws. It cannot simply be a lecture; the fair housing component must include an "interactive participatory component, during which the applicant shall role play as both a consumer and real estate professional."

B. AB 830, Flora. Business: Department of Consumer Affairs: Licensed Professions and Vocations.

Amends (in relevant part) section 10140.6 of the Business and Professions Code.

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AB 830 is a larger omnibus bill, which in part allows brokers and salespersons who legally change their surnames to continue using their prior name for business purposes. In general, a broker or salesperson must disclose their name and license identification number on all solicitation materials directed to consumers, as well as on purchase and sale agreements. To continue utilizing a former name, the broker or agent must register both names with the Department of Real Estate.

A common theme amongst many of the bills this year is equity and inclusion. While this bill is not limited to name changes due to marriage, it provides an option for married persons who choose to take their partners' names to not have to modify their business brand. This may be particularly beneficial to brokers and salespersons whose brand value may be inextricably tied to their names. AB 830 allows such individuals to make family or lifestyle decisions without sacrificing their business goodwill.

C. SB 800, Archuleta. Real Estate: Licenses & AB 107, Salas. Licensure: Veterans and Military Spouses.

SB 800 amends sections 10050, 10083.2, 10147, 10148, 10150, 10151, 10151.5, 10153.8, 10159.5, 10162, 10165.1, 10166.07, 10167.3, 10167.9, 10167.95, 10170.8, 10176.1, 10177, 10231.2, 10232.1, 10232.2, 10235.5, 10236.2, 10249.3, 10249.8, 10249.9, 10471, 10471.1, 11003.4, 11010, 11011,...