- Tax Alternative to 3.33% California Withholding: Effective January 1, 2007, a seller required to have 3.33% of the sales price withheld for income tax purposes may elect an alternative withholding. The alternative withholding is an estimate of the seller's tax liability calculated by multiplying the recognized capital gain by the highest state tax rate for individual taxpayers (or the corporate tax rate for corporations), regardless of the taxpayer's actual tax bracket. Under existing California law, a buyer must withhold 3.33% of the sales price from the seller's proceeds unless an exemption applies, such as when the property is the seller's principal residence, the property is in a 1031 exchange, or the seller will not realize any capital gains. The new law applies to non-exempt sellers who may now elect to have less than 3.33% withheld. A seller opting for this tax alternative withholding must certify the amount to be withheld in writing under penalty of perjury. C.A.R.'s Standard Forms Advisory Committee is considering the impact this new rule will have if any on the "Seller's Affidavit of Nonforeign Status and/or California Withholding Exemption" ( Form AS ). Source: Assembly Bill No. 2962.
- 60-Day Notice to Terminate Revived: Beginning January 1, 2007, a residential landlord must generally give a 60-day notice to terminate a month-to-month tenant. However, a 30-day notice to terminate is permissible if any tenant or resident has lived in the property for less than one year, or if the landlord has sold the property in the manner specified by the law. The 60-day notice does not apply to fixed-term leases (e.g. a one-year lease). It also does not apply if it is the tenant, not the landlord, who terminates a month-to-month agreement, in which case the tenant may give merely a 30-day notice. To comport with this new law, C.A.R. will release a new standard form 60-day notice of termination which will also set forth the requirements for the 30-day exception when landlords sell their properties. This law will sunset on December 31, 2009. Source: Assembly Bill No. 1169.
- No More Hand-Held Phones While Driving: Effective July 1, 2008, any cell phone used while driving must be designed to allow for hands-free listening and talking and used in that manner. Exceptions include calls made for emergency purposes and calls made while driving on private property. Any violation of this law will be an infraction punishable by a base fine of $20 for the first offense and $50 for each subsequent offense. Source: Assembly Bill No. 1613.
- Interest-Bearing Trust Accounts for Commercial Loan Servicing: Beginning January 1, 2007, a real estate broker who collects payments or otherwise services a commercial property loan for an institutional investor as defined may receive the benefits accruing from placing trust funds into an interest-bearing account. The real estate broker and institutional investor must agree to this arrangement in writing. This law only applies to a loan secured by "commercial real property" which is defined as real property improved with other than a one-to-four family residence. Source: Assembly Bill No. 2602.
- Homeowners' Associations Reserve Planning and Funding: Starting January 1, 2007, the standard-form operating budget that a homeowner's association is required to provide its members must be expanded to include the following additional information: (1) any deficiency in reserve funding on a per unit basis; (2) any decision (including a justification) for deferring or not undertaking the repair or replacement of any major component with a remaining life of 30 years or less; and (3) any outstanding loans of more than one year made by the association. Furthermore, the reserve study an association conducts every three years must be expanded to include a reserve funding plan indicating how the association intends to fund its obligation to repair or replace major components with a remaining life of 30 years or less. Beginning January 1, 2009, a summary of the reserve funding plan must be distributed to all members. Source: Assembly Bill No. 2100.
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