Perhaps the best description of real estate law in 2015 is "enter with a bang, end with a whimper." We started 2015 with a real estate market rapidly recovering from the great recession and prices climbing back towards the 2007 record prices. However, by late Spring, buyer demand was cooling off both from market fears as well as affordability. For upside–down owners, the news was even worse. Lenders seeing the rising prices refused to cooperate with loan modifications and kicked up the pace of foreclosures as they sought to clean troubled loans off their books by forcing short sales or trustee sales. Sadly, both the Fed and CA taxing agencies refused to extend Debt Forgiveness Tax Relief so those who were forced to sell faced a possible huge tax hit as well. This process will continue into 2016.
Demand for our legal services increased substantially in multiple directions: (1) representation of developers and investors acquiring land and bringing new housing projects to the market; (2) representation of buyers, sellers, and agents with Trust or Probate authority, as well as non–disclosure, title, and contract issues; (3) resolution of BRE Complaints against agents; and of course (4) continuing to advise upside–down owners.
Possibly the most concerning issue of 2015 has been the rise of cases such as Barasani vs. Coldwell Banker which have attacked the independent contractor status of real estate agents. Though the brokerages have so far prevailed in the various legal actions, the risks of further challenges remains large, especially in related high–profile cases such as Uber and FedEx where labor commission rulings have given the challengers that which they could not achieve in the courts. Look for these issues to continue in 2016.
The biggest risk I see for agents in 2016 is the exposure to liability for violations of the Home Equity Sales Contract Act (see my November update). The ticking time–bomb of 10–year–old interest–only loans resetting to fully amortized will drive many owners into default even when they have equity in their homes. If that occurs during an escrow, the Act may apply. Failure to be aware of the Act’s requirements could spell huge liability for buyers and all agents involved.
Despite these challenges, I remain very bullish on the real estate market for 2016, especially since economists are projecting slowdowns in the stock and bond markets. Money will always chase opportunity and the relative stability of real estate ownership both for residence and investment should become even more attractive.
On behalf of all of us at BPE Law Group, PC, we sincerely thank you for your referrals and allowing us to assist you and your clients in dealing with legal concerns and maximizing opportunities. If you or your clients would like a consultation with us, please call our office at (916) 966–2260 or email me at email@example.com.– Attorney Steve Beede