BE BETTER PREPARED FOR AN AUDIT
JUST CAUSE EVICTION AND RENT CONTROL
on page 36
on page 16
FIRE INSURANCE AND HOUSING AFFORDABILITY on page 10
NAR FORBIDS “POCKET LISTINGS” on page 32
JANUARY | FEBRUARY 2020
Success
2020 President Danielle Corliss and her team cruise in style into the New Year. on pages 26–29 At two end-of-the-year Appreciation Parties, Orange County REALTORS® thanked its Affiliates for their active and loyal support throughout the year. on pages 42–43
CONTENTS p. 24
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President’s Message 08 M eet Danielle Corliss, 2020 President of Orange County REALTORS® She is challenging members to think about how they can make the world better, to listen carefully, to find their light, and to prepare to do amazing things!
Features Cruising into a Successful Year
A classic red Cadillac convertible carries members of the Executive Team smoothly on the road to success.
Cover Story
26 The Installation of Danielle Corliss and the 2020 Board of Directors
Featuring photos of the new Officers and Directors and of the REALTOR®, Affiliates, and Volunteer of the Year.
10 T ackling Two California Crises: Fire Insurance and Housing Affordability
C.A.R. 2020 President Jeanne Radsick tells REALTORS® how they can help clients keep current insurance coverage or find new coverage if necessary and urges them to encourage the Legislature to build more housing.
Election 2020
20 S plit-Roll Effort Based on False Premises
Carolyn Cavecche tells readers why they should not sign the petition to qualify this Proposition 13 initiative for the November 2020 ballot.
22 C alendar for the March 3 Presidential Primary Election Tells you when Voter Information Guides will be mailed, when to register, when vote centers open, when polls close, and when the Registrar will certify the election results.
p. 10
Protection Act of 2019—Just Cause Eviction and Rent Control Attorney Stephen C. Duringer describes the provisions and requirements of AB 1482, which was signed by Governor Gavin Newsom on October 8, 2019, and went into effect on January 1, 2020.
30 T he Orange County Housing Update
State Update
p. 8
16 S tate Legislation: The Tenant
p. 20
p. 30
Steven Thomas calculates the costs associated with sitting on the fence and “Timing the Market.”
32 N AR News: Board Forbids “Pocket
Listings” and Changes Code of Ethics Training Requirement Listings must be submitted to the MLS within one business day of marketing a property to the public, and Code of Ethics training now must be taken every three years instead of two.
36 R isk Management: Navigating Your Risks, Part Two—Audits
Tiffany Gardner Wood interviews the DRE’s Veronica Kilpatrick about the purpose of an audit, the most common violations found, and what you can do to be better prepared.
44 M embership: Emeritus and Honorary Orange County REALTORS® congratulates sixteen NAR Emeritus Members, twenty-two C.A.R. Honorary Members-for-Life, and five Affiliates who have been elected Affiliate Members-for-Life.
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CONTENTS
ORANGE COUNTY
® REALTOR MAGAZINE
p. 22
25552 La Paz Road Laguna Hills, CA 92653
10540 Talbert Avenue, Ste. 225 West Fountain Valley, CA 92708
949.586.6800
714.375.9313
www.ocar.org 2020 OFFICERS Danielle Corliss President Lori Namazi President-Elect Bob Wolff Treasurer Matt Clements Immediate Past President Dave Stefanides Chief Executive Officer
p. 36
2020 BOARD OF DIRECTORS Olesya Drozdova Joyce Endo Dorinda Francois Michele Harrington Bob Hartman Tim Hayden Len Herman Julie Hile Jeff Jackson Debbie Krumboltz
Departments 12 24 40 42 43 46
Names in the News Education Central: Upcoming Classes by Track Turkey Bowl 2019 Affiliate Appreciation Party—North Affiliate Appreciation Party—South Affiliates in Action: New REALTOR® Orientations
Sherrie LeVan Liz Lewis Chip McAllister Charleen Nagata-Newhouse Joe Pierce Lacy Robertson Adam Rodell Lisa Schulz Jessica Siguenza Scott White
MAGAZINE STAFF Sabrina Blair
Breanna Reed
Director of Communications sabrina@ocar.org
Accounting Assistant breanna@ocar.org
Sherri Butterfield
Albert Ornelas
Communications Specialist sherri@ocar.org
Multimedia Specialist albert@ocar.org
Online Magazine
Love the Orange County REALTOR®? Did you know that you can read it online, anytime? Read past issues at www.ocar.org/magazine.
Mission Statement
The mission of the Orange County REALTORS® is to promote the REALTOR® Code of Ethics; to provide education, services, and resources to our members; and to advocate the protection of real property rights.
Notice to All Members
p. 32
On the Cover This photo of the 2020 Executive Team in a classic red Cadillac convertible—which includes (from left to right) President-Elect Lori Namazi, President Danielle Corliss, Treasurer Bob Wolff, and Past President Matt Clements—was taken at the Marconi Automotive Museum in Tustin by Albert Ornelas.
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It is the long-established policy of this Association, the California Association of REALTORS®, and the National Association of REALTORS® to adhere to both the letter and spirit of the federal and state antitrust laws. For their own protection, members should be aware of the antitrust laws as they affect their specific business activities. Any illegal activity under the state and federal antitrust laws is not in compliance with Association policy, nor is it in the interests of the Association or its members. Participation in Association activities must occur only in harmony with these very important laws. Federal law prohibits discrimination based on race, color, sex, religion, or national origin in connection with the sale or rental of residential real estate, in advertising the sale or rental of housing, in the financing of housing, and the provision of real estate brokerage services. The Orange County REALTOR® editor reserves the right to review and edit all submissions. Orange County REALTORS® makes no warranties and assumes no responsibility for the accuracy of the information contained herein. The opinions expressed in articles are not necessarily the opinions of the Orange County REALTORS®. Orange County REALTORS® does not necessarily endorse the companies, products, or services advertised in this magazine unless specifically stated. The Orange County REALTOR® (USPS 025-445, ISSN 1945-2179) Volume 12, Issue 1, is published by the Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653. Periodicals postage paid at Laguna Beach, CA, and additional mailing offices. POSTMASTER: Send address changes to Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653-5127. Annual membership dues include $3.13 for a one-year (6 issues) subscription to the Orange County REALTOR® magazine. The Orange County REALTOR® magazine cannot be responsible for unsolicited materials. Publisher: Orange County REALTORS® Printer: The Monaco Group
PRESIDENT’S MESSAGE
Meet Danielle Corliss, 2020 President of
Orange County REALTORS® She is challenging members to listen carefully, find their light, and prepare to do amazing things! By Sherri Butterfield WRITER AND EDITOR
“You’re off to great places! Today is your day! Your mountain is waiting, So . . . get on your way!” — Dr. Seuss
Oh, the Places You’ll Go!
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Photo by Orange County REALTORS® / Albert Ornelas
D
anielle Corliss is a one of those rare California residents who grew up in the Golden State and has never lived anywhere else. Because her father attended the University of Southern California, she says that she was “born a Trojan.” She earned her Bachelor of Arts in Communications from USC while paying her own way by working three jobs—an experience that taught her the value of money, hard work, and time management. After graduation, Danielle’s first job was in insurance. Her father, Chuck Torres, whom she admires very much, sold life and medical insurance. When Chuck told Danielle that he would like to work with her but that he was not going to train her, she got a job with another insurance company selling life and medical insurance. Although Danielle excelled at selling and was named Agent of the Month, she discovered that she did not like insurance sales. Because Danielle was interested in insurance and seemed to have a knack for it, she stayed in the industry but moved from sales to management. For a time, she worked at State Farm, where she managed the Employee Benefits Division for the Southern California Region. Then, after nine years with State Farm, she went to Pacific Life, where she was hired to set up and staff a sales center for the western half of the United States. Danielle’s challenge was to transform a large empty room into an efficiently operating office by ordering desks and office supplies, developing procedures, writing manuals, establishing workflows, and hiring and training employees. Within eighteen months, she had fifty-one people reporting to her. Having accomplished the task for which she had been hired, Danielle asked herself, “What next?” She explains, “If you are not
Photo by Marion Butterfield
PRESIDENT’S MESSAGE
challenged or growing in a job, then it’s time to move on.” Danielle went to Pacific Life’s Human Resources Office and made arrangements to be sent to a company that would assess her natural aptitudes, evaluate her skills and interests, and provide her with a strategy for redirecting her career. After both indepth interviews and extensive testing, Danielle, who readily admits to being “neat and tidy,” was told that she appeared to be best suited for placement as a janitorial supervisor. Feeling somewhat discouraged by these results, Danielle began looking for a completely different line of work. A family friend who was a REALTOR® told Danielle that she would be good at real estate and suggested that Danielle shadow her for two weeks. Danielle took her suggestion, and the rest is history. Before the first day had ended, Danielle knew what she would do next. After a successful ten-year career in insurance sales and management, Danielle had found her passion—real estate. That was twenty-three years ago. At first, Danielle and her husband Jim Corliss worked for large brokerages, where they truly enjoyed helping people buy and sell homes. In 2008, they opened Corliss Realty because they wanted to work as a team, to put their collective experience into practice, and to customize the service they could provide to their clients. Danielle says that, because real estate is her career, it is incredibly important to her that she do her part to improve the industry. And she has been generous in sharing her time and talents with Orange County REALTORS®. For three years, she chaired the Independent Broker Alliance, the committee that schedules Independent Broker Forums and secures speakers for these gatherings. In 2017, Orange County REALTORS® President Craig Borner appointed her to the Board of Directors, where she served as the liaison between the Independent Broker Alliance Committee and the Board. Later that same year, Danielle ran successfully for a three-year term as a Director. More recently, the Board of Directors chose Danielle to serve as 2020 President. During her presidential year, Danielle wants to find ways to “inspire and empower others.” She says that her primary focus will be “on helping people and our Association become more successful and on helping REALTORS® convey their value.” As she explains, “When even a nine-year-old can find a house on the
internet, finding a house is not what our clients need us for. What do clients need REALTORS® for? “They need us to listen carefully, to hold their hand when they feel insecure, to negotiate on their behalf, and to use our knowledge to keep them out of legal trouble,” responds Danielle. She explains, “So many times, people just want to be heard.” And she adds, “Listening is an underutilized skill.” Danielle’s faith is very important to her. She values ethics, honesty, and professionalism. “Integrity is nonnegotiable. Scruples should be neither diluted nor compromised,” she says. While in office, Danielle plans to follow the tenets of her faith, her education, her experience, and her heart. And she has a very special place in her heart for OCAR Cares, the relief fund established to assist REALTOR®, Affiliate, and Management Team members of Orange County REALTORS® who are experiencing temporary financial hardship. During 2019, this fund received twenty-four requests for help and gave out grants totaling more then $44,000. Danielle wants to make members more aware of the fund and to make the fund better able to help members in need. Danielle’s desire to make the relief fund more visible and more capable is derived, in part, from personal experience. When Danielle was eighteen, her Orange Park Acres home was threatened by a rapidly approaching wildfire. Danielle and her family were told to evacuate, but Danielle’s father refused to go. Instead, he remained behind to save the house. Because he did not report to the evacuation center as expected, the family became concerned about what had happened to him. When they were allowed to return home, they were relieved to find Chuck sitting on the driveway, covered in soot and exhausted, but alive. He had saved the house, but the fire had done $80,000 in damage. In her Installation speech on December 4, Danielle recommended that audience members read Oh, the Places You’ll Go. Written and illustrated by Dr. Seuss and released on January 22, 1990, this story-inrhyme is about the journey of life and its challenges and was the last book released by Dr. Seuss during his lifetime. Danielle encouraged her audience to “think about what can we do to make the world a better place.” She said, “I challenge you to find your light, and with that we will do amazing things together.” n
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STATE UPDATE
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STATE UPDATE
Tackling Two California Crises: Fire Insurance and Housing Affordability By Jeanne Radsick C.A.R. PRESIDENT
The California Association of REALTORS® (C.A.R.) has prepared materials to help you keep your clients informed about how to protect their homes and how to keep their insurance coverage—or to obtain new insurance if they need it.
I
am very excited to begin my term as your 2020 C.A.R. President. First, I’d like to thank our outgoing President, Jared Martin, for serving this organization so well over the past year. I know he put in many miles traveling around the state to meet as many of you as possible. Thank you, Jared, for your enthusiasm and your commitment to organized real estate. I’m a second-generation REALTOR® with thirty-three years of experience at Century 21 Jordan-Link & Company in Bakersfield. I’ve been active in organized real estate for more than twenty-five years, serving more than twenty of those years as a C.A.R. Director. I’ve also been involved in many aspects of the Bakersfield Association of REALTORS®, including serving as its President in 2000. Our industry has some clear challenges ahead of it, including a shifting market, an unpredictable state Legislature, and an affordability crisis that won’t abate. But as long as REALTORS® show up, participate, and learn, I’m confident we can succeed.
Photo by Piper Ferguson
C.A.R. Leadership Team
I’ll be joined by a very talented 2020 Leadership Team comprised of President-elect Dave Walsh, Treasurer Jennifer Branchini, and C.A.R. Chief Executive Officer Joel Singer. I plan to work with this team to ensure that C.A.R. is focused, relevant, and ready to execute. I’m looking forward to serving you with this incredible team.
Fire Insurance
Each month in this newsletter, I’ll bring you important issues and topics to keep you informed. This month, I’ll start with fire insurance since California has recently suffered another outbreak of wildfires throughout the state. I’m sure you know that insurance companies are raising premiums or outright refusing to renew policies in fire-prone areas. C.A.R. has prepared materials to keep your clients informed about how to protect their homes, keep their current insurance coverage, and find new coverage if necessary. (www.car.org/marketing/clients/fireinsurance)
Housing Affordability Crisis
As I mentioned earlier, there’s no immediate end to the state’s housing affordability crisis, so C.A.R. is continuing to fight for the only real solution to the crisis—increasing supply. REALTORS® play an essential role in this fight. It’s imperative that legislators, our clients, and the public hear from us so that the Legislature and the governor take decisive action to build more housing. Please join us in this important fight by adding your name to our “Let’s Get Serious” about housing supply petition so that lawmakers know that it’s critical to take action immediately. Our state’s future depends on it. (www.housingforcalifornia.com) n
This column is based on and has been excerpted from the Monthly Message by C.A.R. President Jeanne Radsick that was distributed via email on November 15, 2019. It is being reprinted here with permission. OC REALTOR®
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NAMES IN THE NEWS
LGR-S Committee Encourages OC REALTORS® Board To Support Increased Water Storage Capacity
Touring the Irvine Ranch Water District’s Syphon Reservoir Improvement Project are (from left to right) Dirissy Doan, Irvine Ranch Water District General Manager Paul Cook, Mary Rampone, Local Government Relations South Committee Chair Lacy Robertson, Committee Vice Chair Kevin Smith, Dennis O’Connor, Scott White, Mike Ameel, Gerald Koller, Communications LAB President Brian Lochrie, Matt Cortez, and IRWD Engineer Jose.
In mid-November 2019, members of the Orange County REALTORS® Local Government Relations South Committee went on site to learn more about the Syphon Reservoir Improvement Project operated by the Irvine Ranch Water District (IRWD). This project recycles water from dishwashers, showers and bathtubs, sinks, toilets, and washing machines for use to irrigate landscapes, cool office buildings, and fight wildfires. Convinced that more storage capacity is needed, Committee members recommended to the OC REALTORS® Board of Directors that they support IRWD’s efforts to increase water storage capacity.
And the Academy Award Goes to . . . For the first time this year, the Orange County REALTORS® Leadership Academy presented Academy Awards. The Class of 2019 chose its MVP (Most Valuable Participant), and Academy alumni from the classes of 2017–2019 chose a winner for their MVP Alumni Award. Recognized as the 2019 MVP was Patty Carpenter from PrimeLending (on the left). Also nominated for this award were Bryan Ahn (Citi Bank), Jay Ramos Co (HomeSmart Evergreen Realty), Joe Pierce (Iron Key Escrow), and Corvi Urling (loanDepot). Chosen to receive the 2019 Alumni MVP Award was Olesya Drozdova (on the right). Olesya was a member of the Academy Class of 2018 and has been serving as 2019 Alumni Chair.
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NAMES IN THE NEWS
Brian Goodell Becomes Mayor of Mission Viejo
On November 20, 2019, at a meeting of the Local Government Relations North Committee, Orange County Sheriff Don Barnes (on the left), who is pictured here with 2019 Committee Chair Joyce Endo and 2020 Committee Chair Matt Cortez, talked about the damage done to public safety by Proposition 47, the so-called Safe Neighborhoods and Schools Act, which was approved by voters in 2014. Barnes said that this Act reclassified the two largest categories of crime—property crime and drug crime—from felonies to misdemeanors with the result that social failures have fallen on the shoulders of law enforcement. Barnes added, “I never thought I’d be more of a social worker than a law enforcement officer.”
At a meeting in December 2019, the Mission Viejo City Council chose Brian Goodell (shown here with his wife Vicki) to succeed Greg Raths as mayor. Brian moved to Mission Viejo with his parents in 1968. As one of the original members of the famed Mission Viejo Nadadores swim team, he became the first Olympic gold medalist from that team when he won both the 1,500-meter and the 400-meter freestyle swimming events at the 1976 Olympic Games in Montreal. Brian and Vicki, who have been married for thirty-four years, are REALTORS® and partners in the Gold Medal Group.
Photo by Marion Butterfield
Orange County Sheriff Don Barnes Discusses the State of Public Safety
Continued on Page 14
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NAMES IN THE NEWS
Continued from Page 13
OC Forum Discusses 2020 Housing Outlook
A
t a lunch meeting on December 2, 2019, OC Forum members heard panelists Sharon Quirk Silva (65th Assembly District), Susan Hori (land use partner and OC administrative partner for Manatt), and Paul Johnson (executive vice president of community development for Rancho Mission Viejo) discuss the 2020 Housing Outlook. Assembly Member Silva said, “Housing is an issue that we all should be concerned about. This is not just about homeless people. It is about housing people throughout Orange County. If we don’t have homes for people, we will not be able to fill jobs.” Johnson said, “We are entitled to build 14,000 units and, at the end of next year, will be at 4,000 units. Our focus is to build housing that is affordable for young folks who want to move here and call Orange County home. We believe the market will be strong enough in 2020 to move through our entitlement. We anticipate some slowing in 2020.” Hori responded, “Density has become a dirty word. One of the things we are looking at is shopping malls with their extensive parking lots. We want to recycle these properties to build denser developments. We will be looking at traffic impacts in terms of miles traveled.” Gathered in front of the Pacific Club Christmas tree for a photo following the panel discussion are (from left to right) Ed Molina, Ron Pascual, Mary Rampone, Jay Ramos Co, Lacy Robertson, Lisa Dunn, and David Girling.
YPN Marks a Milestone
Young Professional Network Chair David Lee (on the right) and Vice Chair Melissa Chelius celebrate YPN’s having amassed one thousand hours of volunteer service.
Happy Birthday, Dirissy!
At the November 20 meeting, members of the Local Government Relations North Committee surprised OC REALTORS® Government Affairs Director Dirissy Doan with an enormous sheet cake in honor of her birthday.
Eileen Oldroyd Elected State President of WCR
Congratulations to Eileen Oldroyd, who will be installed as state president of the Women’s Council of REALTORS® (WCR) on February 4 at the Anaheim Marriott. Eileen— whose motto is “Live, love, lead!”—joined the South Orange County chapter of WCR in 2012, when Vivian Vanderwerd was president, and has held offices at the county, state, and national level. She says that one of her goals as president will be to help members truly understand the definition of servant leadership and realize that “working with a group of volunteers requires an entirely different skill set from managing a home, a team, or a transaction.”
William Lyon Homes to Merge with Taylor Morrison
In early November 2019, William Lyon Homes, one of Orange County’s oldest independent home builders, announced that it would merge with Arizona’s Taylor Morrison, thereby creating the nation’s fifth-largest home builder, based on 2018 closings. In 1954, William Lyon, a combat veteran and commercial air pilot who is affectionately known as “the General,” founded Lyon Homes in Newport Beach to build homes for soldiers returning from the Korean War. The deal with Taylor Morrison, which involves stock purchases and requires approval by shareholders of both companies, is expected to close during the first quarter of 2020.
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NAMES IN THE NEWS
Assemblyman Tyler Diep Honors Adam Rodell and the Elizabeth Do Team
On December 5, 2019, Assemblyman Tyler Diep recognized five of the 72nd Assembly District’s outstanding leaders. Among them were Adam Rodell, who was honored as REALTOR® of the Year, and the Elizabeth Do Team, which was honored as the Real Estate Team of the Year. Specifically mentioned were their ongoing efforts to help constituents realize the American Dream of homeownership.
Larry Labrado Leaves Edison for Disney
Larry Labrado, principal manager of government relations at Southern California Edison, announced in an email that, after sixteen years, he was leaving SCE and joining the team at Disneyland Resort, where he will be the new director of corporate social responsibility and strategic initiatives.
home of RV Storage Depot, will soon become a Delivery Station for Amazon. According to Amazon, the new station, which is slated to open later this year, will speed up deliveries for Orange County customers and create hundreds of part-time and full-time jobs starting at $15 per hour.
Newspapers Are an Endangered Species
Newspapers have become an endangered species. According to a study published by the University of North Carolina’s School of Journalism and Media, the United States has lost nearly 1,800 papers since 2004, including more than 60 dailies and 1,700 weeklies. The primary reasons are increased labor costs, reduced readership, and loss of advertising dollars. The latest local casualty is OC Weekly, which ceased operations shortly before Thanksgiving.
Gene James Elected to the San Clemente City Council
In what is certainly a sign of the times, the old Mission Viejo Unisys site on Jeronimo Road, between Alicia Parkway and Los Alisos Boulevard, which has more recently been the
In a November 5, 2019, write-in election to fill the vacancy created by the death last May of former Mayor Steven Swartz, Security Consultant Gene James received 8,325 votes, defeating runner-up Jackson Hinkle by more than 3,500 votes. James campaigned on the issues of public safety, fiscal responsibility, and quality of life for city residents.
Passings William “Bill” Woollett, Jr.
Henry “Hank” Wedaa
Amazon Logistics to Open in Mission Viejo
When Bill Woollett passed away in early November 2019 at the age of ninety, he left behind an amazing legacy of municipalities. A native Angeleno and long-time public administrator, Woollett helped establish the new cities of Rosemead and Temple City, served as city manager of Monterey Park, became the first city manager of Irvine (where he remained for seventeen years), and guided Aliso Viejo following its incorporation as a city in 2001. Irvine’s competitive pool complex is named for him—the William Woollett Jr. Aquatic Center.
During a lifetime that spanned ninety-five years, Hank Wedaa spent thirty years on the Yorba Linda City Council and was mayor five times. Often fondly referred to as one of Yorba Linda’s “founding fathers,” he is credited with having cultivated the philosophy of low density and slow change that guides the city to this day. Long before entering politics, Wedaa made bombing runs over Nazi Germany in a B-24 Liberator. He was decorated for his service and retired as a captain in the Air Force Reserves.*
This Names in the News column is intended to be primarily a place where Orange County REALTORS® and Affiliate members can share both personal and professional news—about births (of children or grandchildren), graduations, weddings, anniversaries, accomplishments, awards, and other milestones—with one another. If you have news to share, email it to OC REALTOR ® Writer and Editor Sherri Butterfield at Sherri@ocar.org. OC REALTOR®
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STATE LEGISLATION
The Tenant Protection Act of 2019:
Just Cause Eviction and Rent Control (AB 1482)
This legislation will make leases longer and more complicated, but it will not create a single stick of new housing in the Los Angeles area. By Sherri Butterfield
O
n November 21, 2019, at the Orange County REALTORS® Laguna Hills office, Stephen C. Duringer, an attorney with the Duringer Law Group, gave an overview of the Tenant Protection Act of 2019 (AB 1482), declaring that it would “change the way we do business.” Duringer has had more than thirty years of experience in the rental housing industry, and his Duringer Law Group is frequently called upon to handle evictions and debt collections. This article consists of excerpts from a report Duringer wrote about AB 1482 and remarks (in quotation marks) he made during his November 21 presentation. INTRODUCTION The Tenant Protection Act of 2019 (AB 1482), which was signed by Governor Gavin Newsom on October 8, 2019, requires just cause prior to termination of tenancies and imposes statewide rent control. “This is typical legislation that comes out
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of Sacramento,” Duringer observed. “It’s legislation by committee and will need to be cleaned up by judges and lawsuits. But it’s not as bad as it could have been.” “The underlying philosophy for a lot of this legislation,” Duringer continued, “is that landlords are bad, but we know socialized housing does not work. How do we keep the Legislature out of our business? We follow the rules.” “And to follow the rules,” continued Duringer, “REALTORS® who are landlords or have responsibility for managing property need to know the rules.” This new law will apply to all California residential real property except residential real property that is subject to a local ordinance requiring just cause for termination adopted on or before September 1, 2019, or to residential real property subject to a local ordinance requiring just cause for termination adopted or amended after September 1, 2019, that is more protective than the provisions of AB 1482.
Photos by Marion Butterfield
WRITER AND EDITOR
STATE LEGISLATION
“Whatever the more restrictive rent provisions are,” added Duringer, “they apply.” The new law also does not apply to residential real property that is alienable separate from the title to any other dwelling unit (i.e., single-family residences, townhomes, and condominiums) provided the owner is not a real estate investment trust, a corporation, or a limited liability company in which a member is a corporation and the tenants have been given written notice that the residential property is exempt using the methods and language included in the new law.
are added, unless exempt, termination of tenancies requires “just cause.” There are two types of just cause: (1) at fault just cause and (2) no fault just cause.
AT FAULT JUST CAUSE At fault just cause includes the following: n D efault in the payment of rent, or a breach of a material term of the lease, after being issued a notice to correct the violation if the breach is curable; (“For example,” said Duringer, “violating the lease might include keeping a pet when the lease clearly prohibits doing so.”) Other exceptions are n Maintaining, n owner-occupied duplexes committing, or and owner-occupied permitting a nuisance; single-family residences n Committing waste; with accessory dwelling n Refusal to execute a units; written extension or n housing restricted by deed renewal of a lease that to affordable housing for terminated on or after persons or families of very January 1, 2020, for low, low, or moderate an additional term of Stephen Duringer explains the Tenant income; similar duration with Protection Act of 2019 (AB 1482) to Orange n transient and tourist similar provisions; County REALTORS® members. hotels; n Criminal activity on the n school dormitories; property, including the n housing accommodations in a nonprofit common areas; hospital or in a religious, extended-care, n Criminal activity or threat on or off the elderly, or adult-residential facility; and property directed at the owner or the n housing that has been issued a certificate owner’s agent; of occupancy within the past fifteen n A ssigning or subletting the premises in years. violation of the lease; n Tenant’s refusal to allow entry to the “This bill is not going to create a single premises as authorized by law; stick of housing in the Los Angeles area,” n Using the premises for an unlawful Duringer observed. “The first part of this purpose as described by law; bill relates to terminating tenancy. Under n Employee, agent, or licensee’s failure the provisions of this bill, you have to have a to vacate the premises following reason, a ‘just cause.’ As a result, leases will termination of employment; and get longer and more complicated.” n Tenant’s failure to vacate the premises after tenant’s delivery of notice of TERMINATION OF TENANCY: JUST CAUSE the tenant’s intention to vacate the EVICTION premises. After a tenant has resided in the rental unit for “This is all about you guys keeping control one year, or two years if any additional adults of your property,” added Duringer. Continued on Page 18
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STATE LEGISLATION Continued from Page 17
Relocation Assistance When a lease is terminated based on At Fault Just Cause, the tenant is not entitled to receive relocation assistance.
and to ensure that owners received no more than a fair return. But says Duringer, “Housing stock in Santa Monica has gone down 30 percent. Rent control killed it.” “Nobody in California wants rent control,” NO FAULT JUST CAUSE Duringer continued, “but Sacramento No fault just cause includes the following: does not listen to the rest of California. n Intent to occupy the premises by the The Legislature is reactive. Our legislators owner or certain defined relatives respond to angry letters and phone calls (provided a lease entered on or after from constituents by crafting legislation, July 1, 2020, includes specific language); some good, most not. This legislation will not n Withdrawal of the property from the create a single additional housing unit here in rental market; California, and it will do absolutely nothing to n Government Agency or Court Order, or increase the housing supply. Our industry is local ordinance requiring not the problem and certainly that the property be doesn’t need any more vacated (In this instance, interference.” relocation assistance is Effective January 1, 2020, not required if the Order annual gross rent increases is issued as a result of will be limited to 5 percent tenant fault.); and plus the regional Consumer n Owner intends Price Index (CPI) where the to demolish or residential real property “substantially remodel” is located or 10 percent, (as defined) the rental whichever is less, of the property. lowest gross rental rate charged for that dwelling or Relocation Assistance unit at any time during the Orange County REALTORS® 2020 President When a lease is terminated twelve months prior to the Danielle Corliss greets attorney Stephen Duringer following his presentation in based on No Fault Just effective date of the increase. Cause, the tenant is entitled Laguna Hills on November 21. In determining the lowest to receive the equivalent gross rental amount, any rent of one month’s rent through either a direct discounts, incentives, concessions, or credits payment or a waiver of the last month’s rent. offered by the owner and accepted by the tenant shall be excluded. Note: The tenant is not entitled to retain CPI means the percentage change from the relocation assistance if the tenant fails to April 1 of the prior year to April 1 of the timely move out. The owner can recover these current year in the regional CPI Index as damages in an unlawful detainer complaint. published by the U.S. Bureau of Labor Statistics (BLS.gov), or by the Department RENT CONTROL of Industrial Relations (DIR.CA.gov) if the Rent control was adopted by Santa Monica regional index is unavailable on BLS.gov. voters in April 1979 in response to a shortage [The current allowable rent increase is of housing units, low vacancy rates, and 5 percent plus the CPI of 3.3384 percent, rapidly rising rents. The law was intended to a total of 8.3384 percent for the Los Angeles, alleviate the hardship of the housing shortage Long Beach, Anaheim region; 7.79 perent
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for the Riverside, San Bernardino, Ontario region; 7.2062 percent for the San Diego, Carlsbad region, or 8.3424 percent if your region is not listed on BLS.gov.] If gross rent was increased on or after March 15, 2019, but prior to January 1, 2020, the increase cannot exceed 5 percent plus your regional CPI or 10 percent, whichever is less. If the gross rent increase exceeded the allowable amount, the gross rent effective January 1, 2020, will be calculated based on the lowest gross rental amount plus the allowable increase as of March 15, 2019. Although the rental rate may adjust downward on January 1, 2020, the owner is not required to return or credit the tenant for the excess that was due prior to January 1, 2020. If gross rent was increased after March 15, 2019, but prior to January 1, 2020, in an amount less than the allowable increase, rent may be increased within twelve months of March 15, 2019, up to the allowable amount. Vacancy Decontrol (Costa-Hawkins) is unaffected. Upon a unit’s becoming vacant, either after eviction or as the result of voluntary move-out, the rent can be adjusted to market without restrictions. “The Costa-Hawkins Rental Housing Act was enacted in 1995, which was the last time we had bipartisan support in California to do anything,” Duringer explained. “It places limits on municipal rent control. When tenants leave, rents readjust to market.” AB 1482 does not change existing law, and it sunsets (is no longer effective) as of January 1, 2030.
What You Need to Do Now “You don’t have to revise your rental agreement,” said Duringer, “but you do have to serve notice of the changes.” If you have issued a notice of change of terms increasing the rent that resulted or will result in a new rental rate as of January 1, 2020, that exceeds the allowable percentage increase, then you should provide notice to your residents that, effective January 1, 2020, the new rental rate will be reduced to the maximum allowable rental rate. For example, if your rent on March 15, 2019, was $1,000.00 and you have increased it since to $1,250.00, and you are in the Los Angeles, Long Beach, Anaheim region, your maximum allowable rental rate on January 1, 2020, would be $1,083.38. You should notify your resident that the rent due on January 1, 2020, will be $1,083.38. CONCLUSION “You can’t run your business like you did twenty or thirty years ago,” admonished Duringer. “Be careful whom you rent to.” Thorough tenant screening is critical. Get to know your prospective residents before they become your problems. Actively manage, use your Association’s soon-to-be revised tenancy forms, update regularly as required, and improve your documentation of activity during the tenancy. AB 1482 provides certain challenges and hurdles and will change how we do business; however, it also provides opportunities that did not exist previously. Don’t panic—we’ll be just fine! n
Disclaimer: This article is intended to be a general summary of the provisions of new state legislation and not to provide legal advice regarding any specific circumstance. Readers who have questions regarding how to handle a specific situation involving landlord-tenant relations or property occupancy should consult an attorney who specializes in that area of the law.
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ELECTION 2020
Split-Roll Effort Based on False Premises Although deceitfully described as a tax on “big corporations,” this $11 billion tax increase will affect almost every business in California, raise the price of the products and services you use every day, and result in the loss of an estimated 400,000 jobs across the state.
Sound desperate yet? They’ve already had some help from state Attorney General Xavier Becerra, who changed the wording in the new initiative from “tax increase” to “increasing funding for schools and local services by changing tax assessments.” Kind of like putting lipstick on a pig. This second initiative is now on the street and in front of grocery stores in your neighborhood looking for signatures. The higher-tax crowd is hoping this new language will not only sway you to sign the petition and get it on the ballot for November 2020 but also persuade you to vote for it as well. They are willing to pay millions to make that happen. Please don’t sign it. A split-roll property system, which removes Proposition 13 protections from commercial properties, is bad news for California taxpayers. It will result in fewer jobs and reduced wages, as well as raise prices for most anything we buy in a store or services we use in our daily lives. I am always surprised when people state that they don’t care if businesses have to pay higher taxes. The problem is that businesses won’t be paying the increase—we will. Think about every business you walk into: grocery store, nail salon, movie
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www.istockphoto.com/Mehaniq
I
guess desperate times call for desperate measures. But I am keeping my fingers crossed that California voters, already living in the highest-taxed state in the nation, will see through the political antics of the desperate. In 2018, some of California’s largest labor organizations and civil rights groups filed an initiative to raise taxes on businesses by removing their Proposition 13 protections and creating a split-roll property tax system. They spent more than $3 million to collect over 855,000 signatures to qualify the initiative for the ballot. Polling showed that their initiative would By Carolyn Cavecche most likely go down in flames, so they decided PRESIDENT AND CEO ORANGE COUNTY TAXPAYERS to refile a new initiative with some minor changes ASSOCIATION that polled better. Proponents will now need to collect almost one million signatures at a cost that could go beyond $5 million.
theater, restaurant, dog groomer, gas station, car dealership, big-box retailer, even your accountant’s office. Each and every business will be passing this $11 billion tax increase down to the consumer. The exemption that proponents are touting for small businesses is practically worthless. This is not just an attack on “big corporations.” It will impact just about every business in California. The estimate today is a loss of close to 400,000 jobs in a state that is already ranked dead last for businesses. And the irony is that the authors themselves seem to understand this will hurt small business owners. The initiative itself has language that allows for some small businesses to defer the tax increase to give them time to find a new place to lease,
ELECTION 2020
stating that they recognize “that the impact of this measure will be different for each property.” That’s code for, “Sorry your lease is being raised, hurry up and move your business to a new location, most likely in another state.” One of the biggest red herrings used by Proposition 13 opponents is the argument that there is a loophole that helps businesses get around being reassessed when they are sold. The irony to that argument is if there is a problem, it isn’t with Proposition 13, but with the California Legislature itself. Proposition 13 did not define the term “change of ownership” when it was overwhelmingly passed by voters in 1978. The Legislature did that later. And if Sacramento wanted to change that definition, they could. Orange County Senator Pat Bates has been trying for years. She has authored legislation year after year, only to watch her bills die in committee. The authors of the split-roll initiative state that California has a funding shortfall. Apparently, they believe that we don’t send Sacramento enough of our money. The facts don’t support this. Tax revenue to Sacramento has never been higher. The 2019–2020 California general
fund budget is $144.2 billion, an increase of $20 billion over the 2017–2018 budget. I don’t know about you, but “funding shortfall” is not a term I would use when describing the California budget. Will they ever have enough? Proposition 13 has protected all Californians for over forty years. Whether you own a house, rent an apartment, or shop at a brick-and-mortar business, Proposition 13 has kept property taxes at the same level for everyone. Don’t kid yourself into believing that this initiative will only hurt big business. This is just the first step in an effort to eliminate Proposition 13 completely. n Carolyn Cavecche served as the directly elected mayor of Orange before becoming president and CEO of the Orange County Taxpayers Association (OCTax) in 2012. OCTax is the only countywide organization whose exclusive focus is to represent taxpayers on government tax and spending policy issues. Carolyn’s article, which appeared during November 2019 in the Orange County Register, is being reprinted here with her permission. Her email address is Carolyn@OCTax.org. OC REALTOR®
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ELECTION 2020
Calendar for the March 3 Presidential Primary Election
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January 23
Mailing of the Voter Information Guide begins approximately on this date and is completed on February 22.
February 3
Registrar of Voters begins mailing vote-by-mail ballots.
February 17
Last day to register to vote for the Presidential Primary Election.
February 18–March 3
Conditional Voter Registration period. During the fourteen days prior to Election Day and including Election Day, individuals can go to the office of their county elections official, to a satellite office, or to a vote center to conditionally register to vote and vote a provisional ballot.
February 22–March 3
Beginning ten days before the day of the election and continuing daily up to Election Day, select vote centers are open to the public.
February 22
Last day to mail Voter Information Guides.
February 29
Beginning three days before the day of the election and continuing daily up to Election Day, additional vote centers are open to the public.
March 3
Election Day. Polls will be open from 7:00 A.M. to 8:00 P.M. Ballots will be centrally counted at the office of the Registrar of Voters.
April 2
The Registrar of Voters will certify the election results on or before this date.
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COVER STORY
The Installation
of Danielle Corliss
and the 2020 Board of Directors Following their Installation on December 4, 2019, at the Marconi Automotive Museum, 2020 President Danielle Corliss and her team are cruising toward a successful year. By Sherri Butterfield WRITER AND EDITOR
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Photos by Orange County REALTORS® / Albert Ornelas
O
n Wednesday, December 4, 2019, Affiliate and REALTOR® members of Orange County REALTORS® and their guests gathered at the Marconi Automotive Museum in Tustin for the Installation of Danielle Corliss and the 2020 Orange County REALTORS® Board of Directors. Serving as master of ceremonies was Chip McAllister. Danielle’s husband Jim Corliss led audience members in the flag salute, and Martha Karelius offered an inspirational message. Chip said, “Our night here in the Marconi Automotive Museum was made possible in large part by a generous group of sponsors that included the California Regional Multiple Listing Service (CRMLS) represented by Art Carter, J&J Coastal Lending represented by John Soricelli, the Mazzo Group represented by JJ and Kimberly Mazzo, and Kinecta Federal Credit Union represented by Erik Jenner and Michael Lynch. Next, Chip introduced a group of VIPs that included Eileen Oldroyd, state presidentelect for the Women’s Council of REALTORS®; Yami Martinez, Orange County President of the National Association of Hispanic Real Estate Professionals (NAHREP); Laguna Board of REALTORS® 2019 President David Csira, 2020 President Jim Ardery, and Association Executive Bobbie Jordan; Newport Beach Association of REALTORS® 2020 President Rob Norquist and Executive Vice President
Photos by Marion Butterfield
COVER STORY
Kimberly Foreman; and CRMLS Chief Executive Officer Art Carter and his staff. Then, Chip gave Orange County REALTORS® 2019 President Matt Clements an opportunity to say a few words. Matt thanked the REALTORS® who had served as committee chairs and vice chairs during 2019, saying, “Thank you for faithfully carrying out the mission and strategic plan of the Association. We could not have gotten so much done without your hard work.” He thanked his mom, dad, and Grandpa Jack, saying he could not have been a REALTOR® without their support and inspiration; and he thanked Jessica Siguenza for being a mother to their son Noah. Matt presented President’s Awards to Adam Rodell, who started the REALTOR® and Affiliate Wellness (RAW) Group, a program that originated here and is now being copied across the country; to Treasurer Lisa Shulz, who chaired the Finance Committee and was, in Matt’s words, “a super star”; and to Eric Wu, who led the Young Professionals Network (YPN) in Orange County. Huntington Beach Council Member and Orange County REALTORS® Past President Barbara Delgleize asked the 2019 Orange County REALTORS® Officers and Directors to stand, thanked them for their service to the Association, and declared their offices vacated. Then, she asked the following 2020 officers and directors to come forward as their names were called: President-Elect Lori Namazi, Treasurer Bob Wolff, Immediate Past President Matt Clements, and Directors Olesya Drozdova, Joyce Endo, Dorinda Francois, Michele Harrington,
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COVER STORY
Bob Hartman, Tim Hayden, Len Herman, Julie Hile (not pictured), Jeff Jackson, Debbie Krumboltz, Sherrie LeVan, Liz Lewis, Chip McAllister, Charleen NagataNewhouse, Joe Pierce, Lacy Robertson, Adam Rodell, Lisa Schulz, Jessica Siguenza, and Scott White. Once they were assembled, Barbara asked them to raise their right hands, and she administered the oath of office in which they promised that they will, in all their acts, “be governed by the principles of honesty, justice, and fair play, and in every manner possible endeavor to promote and safeguard the best interest of our state and our community, the high purpose of our Association, and the welfare of its membership.” Barbara pinned on Danielle the President’s Commemorative Pin, which identifies Danielle as the President of Orange County REALTORS®. This year, Danielle instituted a new custom in which eleven past presidents of Orange County REALTORS® lined up in the order of their service and passed the President’s gavel from one to another, each offering as they did so some words of advice for Danielle. Their words of advice (and the years of their service) were as follows: n Nancy Hunt (1995, 1996) “Everybody love each other and treat each other with kindness.” n Paula Cosenza (2004): “Keep the members close to your heart.” n Barbara Delgleize (2005): “Orange County REALTORS® are there for you; I know you will be there for them.” n Jean Tietgen (2011): “Always listen with kindness. Always be in control of your meeting. Use Robert’s Rules of Order. And always have a Director in mind who knows how to call the question.” n Maria Elena Banks (2012): “Listen with your heart.” n Len Herman (2013): “Each President gets one year of 365 days. The universe has given you an extra day because 2020 has 366 days. Use it wisely.”
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n Mike DeLeon (2014): “Go with the flow, lead the troops, and you’ll have a successful year.” n Rita Tayenaka (2015): “Lead with your heart and listen to the members.” n Craig Borner (2017): “Everybody loves you, especially me. I wish you the best.” n Tammy Newland-Shishido (2018): “Keep the politics out and keep the policy in place.” n Matt Clements (2019): “Smile a lot. Have fun. Enjoy the process. We’re here for you, so lean on us. This gavel is yours. It carries with it the duties and responsibilities of the office to which you have been elected. I congratulate you and wish you well.” Chip McAllister returned to the microphone to announce that it was time to present the Of the Year Awards, beginning with the Committee of the Year. Presenting the award was Jeff Jackson, who was chair of the Political Affairs and Elections Committee (PAEC) when it was named 2018 Committee of the Year. Receiving the 2019 Committee of the Year Award on behalf of the Global Business Alliance was its chair, Spencer Hoo. Next, 2018 Affiliate of the Year South Kevin Kaltenbach (Senior Financial Group) announced that Aaron Rosen (Arc 23 Insurance) was the 2019 Affiliate of the Year South, and 2018 Affiliate of the Year North Josh Atwood (Finance of America Mortgage) announced that Kimberly Mazzo (the Mazzo Group) was the 2019 Affiliate of the Year North. Then, 2018 Volunteer of the Year Jessica Siguenza announced that the 2019 Volunteer of the Year was Elle Daniels of Generations Escrow. And finally, 2018 REALTOR® of the Year Adam Rodell (RE/MAX Select One) revealed that Orange County REALTORS® Past President Tammy Newland-Shishido (Keller Williams Realty in Seal Beach) had been chosen as the 2019 REALTOR® of the Year. Chip McAllister congratulated the winners and the concluded the evening by reminding the audience of one of his favorite Bible verses: “And whosoever of you will be the chiefest shall be servant of all” (Mark 10:44, King James Version). n OC REALTOR®
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THE ORANGE COUNTY HOUSING UPDATE
TIMING THE MARKET? Fence-sitting buyers who are trying to “time the market” will be kicking themselves down the road for delaying their purchase of a home. By Steven Thomas REPORTSONHOUSING.COM
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ot too long ago, the headlines screamed about the lack of homes on the market. There simply were not enough homes to satisfy the incredible demand. That supply-and-demand issue tilted heavily in favor of sellers. Multiple offers, buyers tripping over themselves to be the first to see a home placed on the market the day before, and open houses with no place to park—that was the market from 2012 through the first half of 2018. Being a buyer was hard. Those days are coming back in 2020. It is understandable that buyers want to wait until they have the upper hand. They are waiting for the “perfect time,” totally unaware that the data, charts, and statistics all point to a strong housing market on the horizon. Instead, they hear that the real estate market is doomed, that housing is on the verge of a bubble, or how the next downturn will be worse than the Great Recession. Many buyers are sitting on the fence and waiting for it to be their turn. It is inevitable, right? Unfortunately, all the noise, is just that— noise. Simply put, the facts and data paint a completely different picture. During the heydays of 2012 through May 2018, everybody was acutely aware that there was a supply problem. That changed last year when the active inventory ballooned from August through Thanksgiving. Finally, supply increased, but that was the result of a demand problem. Demand dropped as mortgage rates climbed all the way to 5 percent in November. Everyone thought it was the beginning of the end of housing’s six-year run-up.
THE ORANGE COUNTY HOUSING UPDATE
But that was then, and rate was 5 percent, the values were in the past is “Looking at where this is now. Mortgage payment on that same an exercise in futility. There housing is today and rates today are at mortgage would have is no way to turn back the where it is headed next been $3,758, an eye3.75 percent. The year clock. Looking at where year, it makes sense for opening extra $516 every 2019 has been all about housing is today and where recovering from the sting single month. it is headed next year, it buyers who have been of high interest rates But, let’s take it a makes sense for buyers who waiting on the sidelines and low demand. Rates step further. In 2020, have been waiting on the to get off the fence and with a supply problem and dropped continuously sidelines to get off the fence into a home.” and bottomed at low mortgage interest and into a home. n 3.5 percent in September. rates, forecasts are that Steven Thomas has a Their 1.5 percent plunge in such a short home values will appreciate between degree in quantitative period of time was unprecedented. 2 and 4 percent. Even if rates remain economics and decision As a result of the low interest rates, the same, at 4 percent appreciation, sciences from the University of housing has transitioned from a slight that $700,000 mortgage would become California, San Diego, and more Buyer’s Market at the beginning of the $728,000, and the monthly payment than twenty years of experience year, to a Balanced Market in February, would be $3,371. That’s an additional in real estate. His bimonthly to a slight Seller’s Market through the $129 per month or $1,548 annually. Orange County Housing end of 2019. In fact, the market picked What if rates grew to 4.25 percent? A Report is available by up steam during the last four months of mortgage rate of 4.25 percent would still subscription and provides housing market analysis that the year, and the Expected Market Time be a great rate and would not rock the is easy to understand and (time from originally listing to opening housing boat much at all. With 4 percent useful in setting the escrow) dropped to its lowest level of appreciation and a rate that is a half expectations of both buyers the year in mid-November. Typically, percent higher, the monthly mortgage and sellers. His website is that honor is reserved for the spring. payment would be $3,581. That is an www.ReportsOnHousing.com. But late in 2019, the Orange County additional $339 per month or $4,068 housing market heated up with the annually. active inventory dropping like a rock and For housing, there is often a cost to demand remaining relatively flat. waiting. Looking back longingly at where From July to the start of December, the active listing inventory had shed 2,666 homes, a 35 percent drop. That was the largest decline since 2012. At the same time, demand (last 30 days of pending sales) had only dropped by 20 percent. The Orange County housing market had not looked that good since 2011. Consequently, the Expected Market Time dropped from 91 days at the end of July to 68 days, a slight Seller’s Market (from 60 to 90 days), which is when there is not a lot of appreciation and sellers get to call more of the shots during negotiations. Housing was already knocking on the door of a hot Seller’s Market (less than 60 days), where there are multiple offers and home values appreciate. While it may be frustrating for buyers to hear that the supply problem is back and that the market is getting hotter, these frustrations can be overcome by The Cost of Waiting. For housing, there is often a cost to waiting. A $700,000 mortgage has a monthly payment of $3,242 today. Last year, when the interest focusing on the payment and diving rate was 5 percent, the payment on that same mortgage would have been into the market now, before it heats $3,758, an additional $516 every month. And if interest rates grow to 4.25 up further. A $700,000 mortgage has a percent, the monthly mortgage payment would be $3,581, an additional $339 monthly payment of $3,242 today. For per month or an increase of $4,068 annually! perspective, last year, when the interest OC REALTOR®
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NAR NEWS
NAR Board Forbids “Pocket Listings,” Changes Code of Ethics Training Requirement, and Revises Its Standards of Practice
W
hile meeting in San Francisco on November 11, 2019, the National Association of REALTORS® Board of Directors voted to require listing brokers who are participants in a Multiple Listing Service (MLS) to submit their listing to the MLS within one business day of marketing the property to the public, extended the period between required Code of Ethics training sessions from two to three years, and revised some of its Professional Standards. MLS Submission Becomes a Must on May 1 On November 11, the National Association of REALTORS® Board of Directors approved MLS Statement 8.0, also known as the Clear Cooperation Policy. This policy requires listing brokers who are participants in a Multiple Listing Service (MLS) to submit their listing to the MLS within one business day of marketing the property to the public. NAR’s MLS Technology and Emerging Issues Advisory Board proposed the policy to address the growing use of off-MLS listings. The Advisory Board concluded that leaving listings outside the broader marketplace excludes consumers, undermining REALTOR® commitment to provide equal opportunity to all. The policy does not prohibit brokers from taking officeexclusive listings; nor does it impede brokers’ ability to meet their clients’ privacy needs. MLS Statement 8.0 reads as follows: Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public-facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multibrokerage listing-sharing networks, and applications available to the general public. Multiple Listing Services can adopt the policy any time, but they must adopt it no later than May 1, 2020. Code of Ethics Training Requirement Will Be Every Three Years after 2021
Since 2001, REALTORS® have been required to take Code of Ethics training to retain their membership. Originally, the training was required every four years; but in 2017, NAR changed the requirement to every two years. Continued on Page 34
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NAR NEWS
Continued from Page 32
A presidential advisory group (PAG), appointed in 2018, made several recommendations to the NAR Leadership Team. One of these recommendations was to extend the requirement to every three years to give members more time to fit it into their continuing education schedule and to give local Associations adequate time between cycles to administer the program. The Leadership Team sought feedback from
several committees before bringing the proposal to the Board of Directors. The Board approved an extension of C.A.R.’s Code of Ethics training requirement from every two years to every three years, including an extension for the current Cycle 6 deadline from December 31, 2020, to December 31, 2021. The next cycle, Cycle 7, will begin January 1, 2022, and end December 31, 2024.
Separately, the Leadership Team approved several recommendations of the PAG that did not require a Board vote:
1.
hat the learning objectives for the T existing-member Code of Ethics training be revised to include content on professional conduct, courtesies, business etiquette, and real-life scenarios.
2.
hat NAR establish Code of Ethics T training equivalency options that members can take to satisfy the Code of Ethics training requirement and that the Commitment to Excellence (C2EX) endorsement be an equivalency option.
3.
hat only courses and equivalencies T provided by a local, state, or national REALTOR® Association can satisfy the Code of Ethics training requirement.
4.
hat an implementation team be T appointed to develop a microsite that compiles all available options for fulfilling the Code of Ethics training requirement, including C2EX ethics modules, NARapproved online courses, and links to Association-approved courses.
5.
hat the Core Standards requirements be amended to clarify an T Association’s duties regarding administration of the Code of Ethics training requirement.
Professional Standards Are Revised The Board adopted a new Standard of Practice under Article 3 that REALTORS® may not refuse to cooperate on the basis of a broker’s race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. As part of an ongoing effort to review and update the Code of Ethics to ensure adequate protection of consumers, clarity in requirements, and legal defensibility, the Board deleted Standard of Practice 12-2 and amended Standard of Practice 12-1. And the Board extended the California Association of REALTORS® Lateral Discipline Pilot program, except that the California Association will not be required to make further reports to NAR regarding the program. The scope of the pilot program remains the same as previously approved by the NAR Board of Directors. n This article is a compilation of information contained in press releases posted online and issued via email to member REALTOR® Associations regarding the actions taken during the National Association of REALTORS® (NAR) Conference and Expo that was held in San Francisco November 8–11, 2019, and on an article written by Stacey Moncrieff on November 12 for the NAR online publication REALTOR®, which was distributed on November 17. 2019.
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RISK MANAGEMENT
Navigating Your Risks:
A Three-Part Interview with Veronica Kilpatrick from the Department of Real Estate
Part Two: Audits
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RISK MANAGEMENT
If you are a broker, preparation for an audit by the Department of Real Estate (DRE) is one way to ensure that your policies and practices are in compliance with Real Estate Law and with the Commissioner’s Regulations so that following them will enable you to avoid the most common violations.
By Tiffany Gardner Wood RISK MANAGER
D
uring the Orange County REALTORS® RExpo in September 2019, I had an opportunity to interview Veronica Kilpatrick, who was representing the Department of Real Estate (DRE) at that event. Veronica received her Bachelor of Arts from the University of California, Los Angeles, and her Master of Public Administration from the University of Southern California. She has been with the DRE since 2007 and currently serves as the District Manager and Southern California Government, Public Interest, and Law Enforcement Liaison. In this capacity, she is responsible for supporting the Deparment’s mission to safeguard and promote the public interests in real estate matters through licensure, regulation, education, and enforcement in this geographic jursdiction. Veronica answered questions about real estate advertising, Department audits, and discipline removal. This article, the second in a three-part series, deals exclusively with audits conducted by the Department of Real Estate.
Who can be audited by the Department of Real Estate? Real estate brokers and real estate corporations.
What is the purpose of an audit?
The purpose of an audit is to protect the public by determining if a broker is in compliance with the provisions of the Real Estate Law and the Commissioner’s Regulations, especially those related to the handling of trust funds.
Photo: www.istock.com/alvarez
What are the types of audits?
The first type is an investigative audit, which is an audit related to a complaint or is a follow-up to some previous disciplinary action or report. The second type of audit is a proactive routine audit. The subjects of these audits are often brokers who handle a large volume of trust funds.
What happens during a typical audit?
When contacted by a DRE auditor, a broker will be asked, at a minimum, to provide for review the following books and records relating to a specific period of time: Continued on Page 38
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RISK MANAGEMENT Continued from Page 37
n Bank statements for all trust fund accounts used in connection with real estate or mortgage brokerage activities, n Trust fund records of receipts and disbursements and separate records for each beneficiary, n Cancelled checks and deposit slips for these trust accounts, n Broker-salesperson relationship agreements, and n Transaction files. Failing to provide the requested information may be grounds for disciplinary action. Depending on the size of the company and the number of accounts and transaction files to be reviewed, an examination may last anywhere from a day or two to several weeks. At the conclusion of the audit, the auditor will conduct an exit interview with the broker to discuss the findings. The violations discovered (if any) will dictate what happens next. If technical violations are discovered, the broker may be told to correct them. Minor violations may result in a corrective action letter that will outline specific violations and instruct the broker to correct them. If the violations are serious, a referral to the DRE Enforcement Section will be made to initiate formal action. The formal action may consist of a Desist and Refrain Order, which requires the broker to cease a practice that is contrary to the Real Estate Law, or an accusation against the licensee, which may lead to revocation of the license.
What are the most common violations you have noticed during audits?
The most common violations found during audits involve the following Business and Professions Code (B&P) sections and DRE Regulations:
B&P Code Section 10140.6/Regulation 2773 – Disclosure of Licensed Status and License Number and, if a mortgage loan originator, the unique identification number assigned to the licensee by the Nationwide Mortgage Licensing
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System and Registry on all solicitation materials intended to be the first point of contact with consumers on real property purchases.
B&P Code Section 10159.5/Regulation 2731 – Use of False or Fictitious Name. The exception to this is a “team name” as defined in B&P 10159.7(a)(3).
Regulation 2831 – Trust Fund Records to Be
Maintained, which includes the date received, name of payee/payor, amount received, date of deposit, amount paid out, check number and date, and daily running balance.
Regulation 2831.1 – Separate Record for Each Beneficiary or Transaction
Regulation 2831.2 – Trust Account Reconciliation. Accounting records must be reconciled at least once a month except when the account did not have any activity.
Regulation 2832.1 – Trust Fund Handling for
Multiple Beneficiaries (Trust Fund Shortages). The balance of the bank account is less than the total trust fund liability of the broker to all owners of the funds; and there was no written authorization from all the owners of the trust funds prior to the disbursement that caused the shortfall.
B&P Code Section 10145/Regulation 2832 –
Trust Fund Handling. Within three days of receipt of trust funds, the broker must deposit the trust funds into a trust account held in the broker’s name or broker’s dba as trustee. If the broker is performing transactions under the exemptions from the Escrow Law (Section 17000 et seq. of the Financial Code) and performing acts for which a real estate license is required, then the trust funds must deposited not later than one business day after receipt into the broker’s trust account.
B&P Code Section 10145/Regulation 2834 –
Trust Account Withdrawals can be made from the trust account of the broker only by the signature of
RISK MANAGEMENT
the broker or officer of the corporation, or one or more of the following: na real estate salesperson licensed to the broker, na broker associate, or na n unlicensed employee of the broker, if the broker has a fidelity bond or insurance coverage equal to at least the maximum amount of the trust funds to which the unlicensed employee has access at any time.
B&P Code Section 10145/10176(e)/ Regulation 2835 – Commingling. A broker shall not commingle his or her own money or property with that of others he or she receives or holds.
B&P Code Section 10159.2/Regulation 2725 – Broker Supervision. A broker must exercise reasonable supervision over the activities of salespersons and broker associates.
For additional information about these violations, refer to the handout titled “Ten Most Common Violations in DRE Audits,” which can be found on the Department of Real Estate website www.dre.ca.gov.
The DRE says that a broker must provide “reasonable supervision” for licensees. In this context, what does the term “reasonable supervision” mean? A broker must exercise reasonable supervision over the activities of salespersons and broker associates. Reasonable supervision includes, as appropriate, the establishment of policies, rules, procedures, and systems to review, oversee, inspect, and manage some or all of the following activities: n t ransactions requiring a real estate license; nd ocuments that may have a material effect on the rights or obligations of a party to the transaction;
n filing, storage, and maintenance of such documents; n the handling of trust funds; n advertising of any service for which a license is required; n familiarizing salespersons with the requirements of federal and state laws relating to the prohibition of discrimination; and n regular and consistent reports of licensed activities of salespersons. The form and extent of such policies, rules, procedures, and systems must take into consideration the number of salespersons and broker associates retained and the number and location of branch offices. A broker must establish a system for monitoring compliance with these policies, rules, procedures, and systems. A broker may use the services of brokers and salespersons to assist in administering the provisions of this section so long as the broker does not relinquish overall responsibility for supervision of the acts of salespersons and broker associates licensed to the broker. A broker may appoint a licensee as a manager of a branch office or division of the broker’s real estate business and delegate to that manager responsibility to oversee and supervise operations and licensed activities. An appointment of a branch or division manager must include a written contract whereby the manager accepts the delegated responsibilities.
What is the best way for a broker to prepare for an audit by the DRE?
A broker can prepare for a DRE audit by using the Broker Compliance Evaluation Manual and Broker Self Evaluation (Form RE 540), both of which are posted on the DRE website. The DRE also has a Trust Account Reconciliation (Regulation 2831.2) PowerPoint presentation that is very helpful.
Self-auditing and proactively instituting best practices and policies to manage compliance could help you avoid these most common violations. Watch for the next article in this three-part series, which focuses on the public posting of disciplinary actions and the process for having them removed. n
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EVENT
O
n Wednesday, November 20, REALTOR速 and Affiliate members of Orange County REALTORS速 gathered at Fountain Bowl in Fountain Valley for an afternoon of bowling in support of friendship, camaraderie, and a good cause. For the third year in a row, the trophy
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winners were the Orange County Young Professionals Network team, which included David Lee, Sarah Piazza, Gabe Smith, Daniel Wu, and Eric Wu. All proceeds from Turkey Bowl went to OCAR Cares, the Orange County REALTORS速 member relief fund. n
EVENT
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Thursday, December 5 • SeaCliff Country Club
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Monday, December 9 • Mission Viejo Country Club
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MEMBERSHIP
Members of Orange County REALTORS® Who Have Achieved ®
NAR REALTOR Emeritus Status
T
o be eligible for National Association of REALTORS® (NAR) Emeritus Status, a person must have held continuous membership as a REALTOR® or REALTOR® Associate in one or more Associations of REALTORS® for a cumulative period of forty years and must have completed at least one year of service at the National Association level. In this context, the term service is defined as “serving as an officer, director, committee member, federal political coordinator, president’s liaison, or regional coordinator to a country with which NAR holds a reciprocal agreement.” For applications filed through 2020, the one-year service requirement can be met through service at the national level. REALTOR® Emeritus Members are exempt from paying dues to the National Association of REALTORS® (commencing with the dues year immediately following approval) and from the Code of Ethics Training requirement.
Orange County REALTORS® congratulates the following sixteen REALTOR® Emeritus Members:
l Gus Alba, First Team Real Estate l Dennis Asbury, Asbury Brokerage Services l Maria Elena Banks, Coldwell Banker Residential Brokerage l Jerry Barbanell, RE/MAX Select One l Barbara Delgleize, RE/MAX Select One l Shirlene Diamond, Century 21 Award l Frank DiLauro, Regency Real Estate Brokers l Kim Douglas, Kim M. Douglas, Broker l Carol Haacker, Homesmart Evergreen Realty l Carole Mc Iver, Carole Mc Iver Real Estate l Douglas Merlino, Beach Pointe Properties, Inc. l Tim Morissette, Coldwell Banker Residential Brokerage l Dorothy Morrison, Homesmart Evergreen Realty l Adrienne Oranges, First Team Real Estate l Patti VanLeeuwen, Landmark REALTORS® l Glenda Virdinis, Realty One Group West
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MEMBERSHIP
REALTOR® Members of Orange County REALTORS® Who Have Been Elected
Affiliate Members of Orange County REALTORS® Who Have Been Elected
C.A.R. Honorary Members-for-Life
Affiliate Members-forLife
REALTOR® and REALTOR® Associate members of the California Association of REALTORS® (C.A.R.) who have served the Association for a minimum of twenty-five years and who have attained the age of seventy-five are eligible to be elected Honorary Members-for-Life. Upon election, an Honorary Member-for-Life is exempt from paying annual dues to the California Association of REALTORS® (commencing with the year following election) and is entitled to all the rights and privileges of C.A.R. membership.
Affiliates members who have served the Association for a minimum of twenty-five years cumulative are eligible to be elected Affiliate Members-for-Life.
Orange County REALTORS® congratulates the following twenty-two members, each of whom has been elected a C.A.R. Honorary Membersfor-Life: l Reine Baillargeat-Murray, Realty Network l Melanie Callahan, Century 21 Rainbow Realty l Kathleen Chocek, Colonial Realty Group, Inc. l Marty Elliot, Coldwell Banker Platinum Properties l John Evans, The Evans Group l Patricia Fry, Fry Realty l James Gibby, Conrad REALTORS®, Inc. l Jim Haacker, Homesmart Evergreen Realty l Phyllis Heflin, Heflin Realty, Inc. l William “Van” Heflin, Heflin Realty, Inc. l Barbara McCulloch, RE Home Source l Kathy McIntee, Seven Gables Real Estate l Heidi McVey, Superior Real Estate Group l Douglas Merlino, Beach Pointe Properties, Inc. l Barbara Meyer, Miles Farquhar, Broker l Patricia Morgen, Pat Morgen, Broker l Kathleen “Dollie” Poulos, First Team Real Estate l Steven Price, @Vantage Real Estate l Joan Reynolds, Regency Real Estate Brokers l Gary Thomas, Evergreen Realty l John Williams, Harcourts Prime Properties l Edwin Wright, Help-U-Sell of Mission Viejo
Orange County REALTORS® congratulates the following five Affiliate members, each of whom has been named an Affiliate Member-for-Life: l Kristine Anderson, Guardian Escrow (2019) l Nancy Feathers, Mission Country Escrow (2018) l David Findeisen, Fidelity National Title (2018) l Bob Fox, Escrow Leaders (2018) l Sandy McGrath, Stewart Title of California (2018) (Note: The year shown in parentheses following the company name indicates the year in which that Affiliate became eligible to be an Affiliate Member-for-Life.)
Are You Eligible? REALTOR® and REALTOR®-
Associate members of Orange County REALTORS® who wish to be considered by NAR for REALTOR® Emeritus Status or by C.A.R. as possible Honorary Members-for-Life must apply. Affiliate members of Orange County REALTORS® who wish to be considered for Affiliate Memberfor-Life must apply by October 1, 2020. The next application deadline for REALTOR® Emeritus status is April 2, 2020. Applications to be recognized as an Honorary Member-for-Life may be sent at any time; however, they must be received by C.A.R. a minimum of fifteen days prior to a C.A.R. Directors’ Meeting to qualify for submission and consideration at that meeting. For dues to be waived in the coming year, all applications must be submitted before the last C.A.R. Business Meeting of the current year, which generally takes place in September. Thus, to ensure timely consideration, Honorary Memberfor-Life applications should be submitted no later than mid-August.
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AFFILIATES IN ACTION
Affiliates Assist at New REALTOR® Orientations in November Orange County REALTORS® thanks the Affiliates who assisted at the New REALTOR® Orientations on November 2 and November 19, and congratulates the new REALTOR® members who joined Orange County REALTORS® on those occasions.
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Laguna Hills
Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on November 2 in Laguna Hills were (from left to right) Peter “G” Giammarinaro, The Termite Guy; Michael Matthews, Canopy Mortgage; “Dsny” Debbie Sinclair, Amethyst Locksmith; Van Gordon, Farmers Insurance; Gary Bridge, First American Title; and 2019 Affiliate South Chair Joe Pierce, Iron Key Escrow.
November 19 w
Fountain Valley
Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on November 19 in Fountain Valley were (from left to right) Jennifer Haro, Prominent Escow; John Soricelli, J&J Coastal Lending; Andrea Baleta, First American Title; Hamid Parsa, Carpet Depot Costa Mesa; 2019 Affiliate North Co-Chair Kerri Finch, J&J Coastal Lending; and Elric Navatel, Monaco Video Productions.
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