Legislatively, it’s looking to be a positive year for REALTORS® in California. The second year of the Legislature’s two-year session wrapped up in early September, and we have three sponsored bills sitting on the Governor’s desk as of this writing. Senate Bill 1178 (Corbett) will extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and are now facing foreclosure. C.A.R. sponsored this critical piece of legislation to protect homeowners in foreclosure from attempts by lenders to sue the homeowners for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan. California has protected borrowers from so called “deficiency” liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires that the statute be updated. Current law says if a homeowner defaults on a mortgage used to purchase their home, the homeowner’s liability on the mortgage is limited to the property itself. The 1930s law does not extend the protection for purchase money mortgages to loans that re-financed the original purchase debt – even if the refinance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages, yet almost no one realized that by re-financing their mortgage to obtain a lower rate, they were forfeiting their protections. These borrowers became personally liable for the balance of the loan. Should the Governor sign SB 1178 into law it would correct this deficiency, protecting people who refinanced their home for a lower interest rate, without taking any money out of their home. Senate Bill 1427 (Price) would require local governments to provide the owner of a foreclosed property a notice of violation for overgrown weeds, broken windows, or other similar problems, and an opportunity to correct those violations before imposing a fine or penalty. Costs of nuisance abatement measures, if provided by local government, should the property owner not make those repairs themselves, must not exceed the actual and reasonable costs of nuisance abatement. Currently, some local governments are imposing civil fines and penalties up to $1,000 per day for failure to maintain a vacant property. Properties need to be maintained so as to not to cause blight, bringing down the value of an entire neighborhood. An extremely high rate of fines will deter buyers from purchasing, fixing and getting these homes occupied, which is the ultimate goal. Should Governor Schwarzenegger sign this bill, it will be a good compromise for all parties involved, Assembly Bill 1927 (Knight), would maintain an owners right to rent in a common interest development, if that right existed at the time the property was purchased. It is unfair to remove a property owner’s right to rent that property after time of purchase. Similar legislation was sponsored by C.A.R. in 2008 and approved almost unanimously by the Legislature, but vetoed by the Governor. In the Governor’s veto message he said that owners of a unit in a common interest development agree to abide by the rules when they purchase their unit, and understand these rules can be changed by the HOA voting process. The new legislation requires twothirds of unit owners in a common interest development to approve, by written ballot, any amendment of the governing documents that would prohibit owners from renting or leasing their unit. We are hopeful the Governor will approve of the new version of this bill and sign it into law. C.A.R. also had success with two bills we opposed. Assembly Bill 1919 was gutted and amended several times, meaning existing bill language and meaning of the bill was completely changed. At time of introduction, Orlando area legal firms for injury cases were up in arms about the possible ramifications, they made sure their voices were heard.This bill focused on informing the Public Utilities Commission when a termination of service resulted in death or serious injury. The bill was then amended authorizing County Supervisors to expand the existing monument preservation fund to all homes, and not just those in rural areas using monuments to mark property lines. C.A.R. opposed this version of the bill, because homeowners in urban developments not using monuments should not be forced to pay for their preservation. This bill was then gutted and amended again, and the final version dealt with the Public Employees Retirement System. This bill was held over by the Senate Rules Committee. SB 1316 was also gutted and amended leading to C.A.R.’s opposition. The version we opposed would create a state tax credit for investments in low income communities that would have been funded with revenues obtained from a capital gains tax increase on 1031 exchanges that would exchange a California property for a property out of state. C.A.R. opposed SB 1316 because it limited the state’s conformity with federal tax law relating to 1031 exchanges. If this bill had passed, tax deferred exchanges, while still allowable under federal law, would not enjoy the same tax deferred treatment for the state tax purposes if the in-state property is exchanged for a property outside the borders of California. This bill was held over and died in the Senate Appropriations Committee. As reviewed in this column last month, the next big state legislative hurdle for REALTORS® is the state budget, which may come next month or next year depending on how long it takes both sides of the aisle to agree to a compromise. It is speculated the State will have to begin issuing IOU’s in October, which may lead to a budget compromise more quickly. The 2011 Legislative session will begin in January, with a new crop of Assembly Members and Senators elected in November.