OC REALTOR®: May/June 2021 by Orange County REALTORS®

IN THE INTEREST OF FAIRNESS Although we once naively believed fairness would be the inevitable result of our having declared that all are created equal, experience has shown us otherwise. Often uncomfortable with diversity, we need to address our implicit biases before we can consistently encourage equality, equity, and inclusion. Featured in the May/June issue of OC REALTOR© are articles intended to aid this process. on pages 24–31

M E E T T H E C A N D I D AT E S F O R YO U R B O A R D O F D I R E C T O R S

on pages 16–19

CONTENTS Think Fair, Sell Fair, Be Fair

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Although we once naively believed fairness would be the inevitable result of having declared that all are created equal, experience has shown us that it is not so. The Civil Rights Act of 1866 prohibited all racial discrimination in the sale or rental of property, but more specific legislation was needed to accomplish its noble goals. A century later, President Lyndon Johnson signed into law the Civil Rights Act of 1968. Title VIII of this Act, which is known as the Fair Housing Act, declared a national policy of fair housing throughout the United States. Because this Act was signed on April 11, April has since been celebrated as Fair Housing Month. But the failures reported by Newsday in its November 2019 exposé titled “Long Island Divided” revealed that fair housing needed to be not only declared as national policy and celebrated during a particular month but also practiced every day, all year long. Featured in this May/June issue of OC REALTOR© are articles to help REALTORS® celebrate fair housing every day and educate themselves and others regarding how to recognize and prevent discriminatory practices in real estate.

President's Message 8

Features 16

Following the Letter of the Law in the Spirit of Fairness

Tools to Address Bias in the Real Estate Industry

Board of Directors Annual Election

Lori Namazi encourages REALTORS® to sharpen their fair housing skills by taking advantage of the classes and other resources that NAR and OC REALTORS® offer.

Rudhir Krishtel defines implicit bias and describes what REALTORS® can do to recognize and address it in themselves and to drive meaningful change in society.

Nine candidates are running to fill five three-year positions and one one-year position on the OC REALTORS® Board of Directors. Voting begins on May 10 and ends on May 24.

Cover Story: Think Fair, Sell Fair, Be Fair 24

Drawing a Line Daniel Doepke describes the ways in which NAR has expanded the applicability of its Code of Ethics to hold members accountable for discriminatory speech and conduct. 4

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Diversity, Equity, and Inclusion: What’s the Big Deal? Robert Morris asserts that embracing diversity, equity, and inclusion presents more opportunities for everyone and benefits us all.

32 HOA Deal Killers Scott Clements tells REALTORS® what to watch for when they represent clients who are selling or thinking about purchasing property in a Homeowners’ Association.

Senate Bill 668 Needed to Buy Time for California Families Jon Coupal asserts that the February 16, 2021, effective date of Proposition 19 did not give families enough time to plan for intergenerational property transfers.

Insuring Your Health Sherri Butterfield interviews Roger Smith about the health insurance plans that are available to Association members from the Benefits Store.

Departments

10 15 22

Names in the News Mentions Education Central: Upcoming Classes by Track

On the Cover: Think Fair, Sell Fair, Be Fair by Ivan Salmeron This graphic is part of the collateral designed by Orange County REALTORS® for a campaign to celebrate and practice fair housing all year round and is being made available on the OC REALTORS® website for your use to promote fair housing on your social media. To see more, visit www.ocrealtors.org/fair-housing-toolbox.

The Orange County Housing Update Steven Thomas explains that, because of low mortgage rates, strong demand, and limited supply, home values are rising rapidly.

REALTOR® MAGAZINE

25552 La Paz Road Laguna Hills, CA 92653

10540 Talbert Avenue, Ste. 225 West Fountain Valley, CA 92708

949-586-6800

714-375-9313

2021 OFFICERS Lori Namazi President Adam Rodell President-Elect Joyce Endo Treasurer Danielle Corliss Immediate Past President Dave Stefanides Chief Executive Officer

2021 BOARD OF DIRECTORS Mary Jane Cambria Matt Cortez Sandra Deering Dorinda Francois Michele Harrington Julie Hile Jeff Jackson Joyce Leonard Liz Lewis Yami Martinez Chip McAllister

Ed Molina Charleen Nagata-Newhouse Pamela Pedego Joe Pierce Vinil Ramchandran Lacy Robertson Lisa Schulz Jessica Siguenza Lynne Suzanski Scott White

MAGAZINE STAFF Sabrina Blair

Breanna Reed

Sherri Butterfield

Ivan Salmeron

Director of Communications sabrina@ocrealtors.org Communications Specialist sherri@ocrealtors.org

Accounting Administrator breanna@ocrealtors.org Print & Marketing Specialist ivan@ocrealtors.org

Online Magazine Love the Orange County REALTOR®? Did you know that you can read it online, anytime? Read past issues at www.ocrealtors.org/magazine.

Mission Statement The mission of the OC 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 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 OC 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 OC REALTOR® (USPS 025-445, ISSN 1945-2179) Volume 12, Issue 3, 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 OC REALTOR® magazine. OC REALTOR® cannot be responsible for unsolicited materials. Publisher: Orange County REALTORS® Printer: The Monaco Group

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PRESIDENT'S MESSAGE

in the Spirit of Fairness

Sometimes, something that comes naturally or seems innocent can be damaging and discriminatory. Sorely needed is sufficient sensitivity to recognize what’s wrong before harm is done so that both words and actions are consistently fair. By Lori Namazi 2021 PRESIDENT, ORANGE COUNTY REALTORS®

raditionally, spring is the time of year when we refresh our homes, revisit our New Year’s resolutions, and revitalize our business knowledge. Characterized by rebirth and renewal, this season is a welcome reminder of growth, hope, and love. We recognize April as National Fair Housing Month because it was on April 11 that President Lyndon Johnson signed into law the Civil Rights Act of 1968, Title VIII of which is known as the Fair Housing Act. During this month, Orange County REALTORS® hosted a Fair Housing Week filled with dynamic conversations and valuable training sessions. If you missed them, they are available at www.ocrealtors.org/fair-housing-week.

FAIR

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This year, the National Association of REALTORS® (NAR) made available several new training opportunities, including the At Home with Diversity Certification at

https://www.nar.realtor/education/designationsand-certifications/ahwd, the Fairhaven scenario

simulator (Fairhaven.realtor), and Implicit Bias training. These training opportunities will be available to members throughout the year, and I encourage you to complete all three of them. I did! I remember studying the Fair Housing laws when I obtained my real estate license nearly twenty years ago. It all seemed so obvious to me. In my business practice, I was careful not to discriminate. It was not until November 2019, when I read the Newsday exposé titled “Long Island Divided” (https://tinyurl.com/u275cv8r), that I realized I had been oblivious to many of the discriminatory practices that were taking place around me. This article left me shocked and disappointed that so many agents had failed so miserably in providing equal treatment to homebuyers in New York. And it opened my eyes to the reality that practices of this kind continue across our nation even today.

PRESIDENT'S MESSAGE When I began sharing this exposé in trainings I conducted, I realized that agents were not aware that some of their words or their actions could be discriminatory. In fact, I recognized that, early in my career, I, too, may have inadvertently said or done the wrong thing, placing my own bias on the options I was presenting to clients. I knew then that we had a long way to go to get the word out and that we needed to change some of our business practices.

Our goal as REALTORS® is to provide housing for those who need our services.

Fast forward to the summer of 2020, when newspaper headlines raised awareness of the unequal treatment given to many of our fellow humans, simply because of their appearance. We began seeing more education about Implicit Bias and more conversations about diversity, equality, equity, and inclusion. Resources became available to teach agents how something that came naturally to them, or seemed innocent, could be both damaging and discriminatory.

If you have not read the FHDA or it has been a while since you did so, now is a good time to refresh your memory so you can be certain that you understand what your role and obligations are to both sellers and potential homebuyers. Sellers should understand that the criteria they use in selecting an offer can be discriminatory, and the same goes for landlords of property that is rented or leased. To avoid actual discrimination or even the appearance of discrimination, have this conversation with your clients at the start of your relationship so everyone understands what is expected.

Now, we are having candid conversations across many platforms to discuss what is happening, how our role as REALTORS® requires of us a higher standard, and what all of us can do to bring about real and lasting change in the world. Individually, we are part of the solution, one member at a time.

Summer will soon be here, and the housing market is crazy. The demand for homes is far exceeding the supply. Listed homes are attracting multiple offers and selling quickly. But a crazy market is not a reason to compromise behavior because market conditions do not reduce either the responsibility or the risk. I encourage you to take some time to sharpen your skills by participating in the training programs I have mentioned in this article. If you are looking for additional fair housing resources, I invite you to join the Deliberately Fair Housing Facebook Group (https://www.facebook.com/ groups/deliberatelyfairhousing), where you can make a difference.

In October 2020, the California Association of REALTORS® (C.A.R.) released its new Fair Housing and Discrimination Advisory (FHDA) for use as an attachment to all lease and sale contracts. This form spells out what actions constitute discrimination, lists the twenty-two protected classes in California (the state list is longer and more inclusive than the federal list), describes who must comply with the laws, and lists the federal, state, and local agencies that are resources for clients when an agent violates any of these laws.

REAL ESTATE

FO R SALE

FAIR

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Photos by Marion Butterfield

NAMES IN THE NEWS

Dirissy Doan Honored as a Woman of Distinction In celebration of Women’s History Month, state Senator Tom Umberg (D–34th District) honored six Women of Distinction in the categories of the Arts, Business, Community Service, Education, Health Services, and Public Safety.

OC REALTORS® Director Lynne Suzanski Honored as a Woman of Distinction In celebration of March as Women’s History Month, Assemblywoman Cottie Petrie-Norris (D–74th District) honored Orange County REALTORS® Director Lynne Suzanski as a 2021 Woman of Distinction for Huntington Beach. Lynne, who was identified during the announcement as both a REALTOR® and an advocate for veterans, has given back to the Surf City community through programs like OCAR Cares, which assists Association members who are experiencing unanticipated financial hardship, and the Veterans Association of Real Estate Professionals (VAREP), which is dedicated to ensuring sustainable homeownership. Chosen as 2021 Woman of the Year for Assembly District 74 was Professor Dr. Barbara FinlaysonPitts, director of the Air UCI Institute and a professor in the Chemistry Department at the University of California, Irvine. Also named as Women of Distinction representing other cities in the district were Laura Suk, Costa Mesa; Carol Choi, Irvine; Dawn Price, Laguna Beach; Margaret Pearlman (who was celebrating her 102nd birthday), Laguna Woods; and Peggy Fort, Newport Beach.

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Honored in the Business category was OC REALTORS® Government Affairs Director Dirissy Doan. This year, Dirissy is celebrating fifteen years of dedicated service to Orange County REALTORS®, where her titles also have included Member Services Team Leader and Director of Strategic Partners. In these positions, she has created positive and productive partnerships with organizations throughout Orange County and has found ways to burnish the REALTOR® brand while providing opportunities for Association members to be of service to the wider Orange County community. In addition, Dirissy has served on the boards of directors for several civic, political, and professional organizations, including the California Women’s Leadership Association, OC Forum, and the South Orange County Economic Coalition. Dirissy’s personal commitment, enthusiastic involvement, and exceptional leadership in each of these capacities earned for her special recognition during the Greater Irvine Chamber of Commerce’s 2019 “40 Under 40” event, where she was honored as someone who is making strides in her industry while making a difference in the community. It is for Dirissy’s business acumen, her commitment to professionalism, and her contributions to both real estate and the Orange County community that she was honored on this occasion.

REALTOR® Sherri Lex Honored as a Legislative Woman of the Year

Assemblywoman Laurie Davies (R–73rd District) named REALTOR® Sherri Lex as the 73rd District Legislative Woman of the Year. Sherri is president of RSM Cares Food Pantry, a food distribution center in Shepherd of the Hills Methodist Church on Avenida de Las Flores in Rancho Santa Margarita. The 73rd Assembly District contains thirteen cities and communities, including Aliso Viejo, Coto de Caza, Dana Point, Ladera Ranch, Laguna Hills, Laguna Niguel, Las Flores, Mission Viejo, Rancho Mission Viejo, Rancho Santa Margarita, San Clemente, San Juan Capistrano, and Trabuco Canyon. Sherri was selected for this special honor from among 61,500 eligible women in the district.

Photo by Marion Butterfield

NAMES IN THE NEWS

Author Dan Smith Interviews Kosi Stobbs

In March, Dan Smith, the author of Failing Greatly: Your Guide to Achieving Success After Failure, interviewed Kosi Stobbs as part of the Real Interviews Series. As a teenager, Kosi worked at Burger King to support himself while attending college. He bought his first property when he graduated at the age of twenty-two and became the owner of more than ten properties by the time he was thirty. A contributor to Forbes and Entrepreneurship magazines, Kosi is the author of F$CK BROKE, Let’s Get Rich, a New Age book about building wealth from scratch, and is a strong proponent of real estate investment.

Carolyn Cavecche Honored as a Legislative Woman of the Year

Assemblyman Dr. Steven Choi (R–68th District) honored Carolyn Cavecche as the 68th Assembly District Woman of the Year. Carolyn served first on the Orange City Council and then spent six years as the directly elected mayor of Orange. She believes that government’s core mission is to provide strong public safety and meet community infrastructure needs in a fiscally sound manner. Since 2012, Carolyn she has been president and chief executive officer of the Orange County Taxpayers Association (OCTax), where she leads that organization in fulfilling its mission to make taxes fair, understandable, costeffective, and good for the economy.

Orange City Council Appoints Kathy Tavoularis to Represent the Third District The Orange City Council appointed Kathy Tavoularis to represent that city’s northern Third District, filling the vacancy created by the March 8 resignation of Mike Alvarez. Alvarez stepped down following a judge’s ruling that he broke city term limit rules when he ran for, and won, a third consecutive term in November 2020. Tavoularis, a county employee who has lived in Orange since 1981, was one of seven people to apply to represent the Third District. She will serve until November 2022, when voters will decide whether she will complete the rest of Alvarez’s original four-year term. 12

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When Dan asked Kosi how he bought his first house, Kosi replied, “I contacted thirty REALTORS® and asked them if they owned any investment property. Most of them had one or two. When I found a REALTOR® with ten, I said, ‘Tell me what to do’ and did exactly what she said.” Dan observed, “You don’t have to time the market to be a successful investor; you just have to stick with your investment.” Kosi responded, “I’m a student of Warren Buffet on the business side. I always tell myself that, if I am buying it as an investment, I’m comfortable with owning it for twenty years.” Then he commented, “Flipping feels more like a job than an investment.” When Dan asked Kosi why he wrote his book about building wealth, he replied that his purpose was to assure readers that success was not determined by “where you start from or what you look like.” “In my experience,” Kosi added, “the real estate agents who start to buy investment property, start to sell more houses because they have a plan.” And he encouraged REALTORS® to have a conversation with their clients about using property to build generational wealth. Names in the News is intended to be primarily a place where REALTOR® and Affiliate members of Orange County REALTORS® 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 Orange County REALTORS® Writer and Editor Sherri Butterfield at Sherri@ocrealtors.org.

NAMES IN THE NEWS Local Government Relations South Committee Previews the Village at Laguna Hills

Photos by Marion Butterfield

At a mid-March meeting, members of OC REALTORS® Local Government Relations South Committee were treated to a preview of what the Laguna Hills Mall will become as the result of its transformation to the Village at Laguna Hills. Stephen Logan, vice president of development at Merlone Geier Partners, explained that the company, whose primary acquisitions are malls and shopping centers, had purchased the property in 2016, intending to revitalize it. When Macy’s, the anchor store, pulled out, all construction was stopped. The company took about a year to look at the site, knowing that it was not going to be a typical mall anymore. “Leisure is changing,” Logan explained. “People want to be outside.” The current proposal is to transform this 68-acre parcel at the intersection of El Toro Road and the I-5 Freeway into the largest mixed-use development in South Orange County. It will include 250,000 square feet of retail space, 465,000 square feet of office space in buildings no more than four stories high, a movie theater, a central park, a hotel with 100 to 150 rooms, and 1,500 residential units, 200 of which will be affordable with both low and moderate designations. The project is being reviewed by the Laguna Hills City Council. If all goes smoothly, construction could begin next year. And for those who might be concerned, plans call for King’s Fish House and In-and-Out Burger, both of which have long-term leases, to remain exactly where they are.

REVERSE MORTGAGES Jumbo to $4,000,000 FHA to $500,000

Six Orange County Cities Listed Among California’s Ten Safest

Of California’s 1,345 cities, ten were named the state’s safest, according to crime statistics analyzed by SafeWise, a security product services platform, and six of those safest cities were in Orange County! The top ten Golden State cities are 1. Danville, 2. Rancho Santa Margarita, 3. Moorpark, 4. Rancho Palos Verdes, 5. Aliso Viejo, 6. Lake Forest, 7. Yorba Linda, 8. Laguna Niguel, 9. Mission Viejo, and 10. Lincoln. To compile the list, SafeWise ranked more than fifty cities using recent crime statistics and data from the Federal Bureau of Investigation. “The good news is,” said Rebecca Edwards, lead safety reporter for SafeWise, “that California’s safest cities boast much lower crime rates—76 percent of them reported fewer than one hundred total violent crimes. That’s especially impactful when you consider that the average population of these cities is around 76,000.”

JUMBO To $4 Million

FHA To $500K

PAUL SCHEPER

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Photo by Marion Butterfield

NAMES IN THE NEWS

Brian Calle Brings the Village Voice Back to Life

In December, Brian Calle, former editor of the Orange County Register’s Opinion Section and current owner of LA Weekly, purchased the Village Voice through his company Street Media. At the time, he said that he planned to revive the New York alternative weekly, which ceased publication in 2018, and that both the purchase and the publication are “going to be super important when things start to go back online.”

Jose Solorio Appointed to California Water Commission

Governor Gavin Newsom has appointed Moulton Niguel Water District Government Affairs Officer Jose Solorio to the California Water Commission. The Commission consists of nine members appointed by the Governor and confirmed by the state Senate. Seven members are chosen for their expertise related to the control, storage, and beneficial use of water, and two members are chosen for their knowledge of the environment. This Commission provides a forum for the discussion of water issues, advises the Director of the Department of Water Resources on matters within the Department’s jurisdiction, approves rules and regulations, and monitors and reports on the construction and operation of the State Water Project. Jose says that, because the commissioner role is part-time, he will be able to continue working for the Moulton Niguel Water District and living in Santa Ana, where he has served on the City Council since 2016.

Dana Point Named Whale Heritage Site

Dana Point has been named the first Whale Heritage Site in the United States. Other similarly designated sites include Hervey Bay, Australia, the Bluff in South Africa, and the Tenerife–La Gomero Marline Area in Spain. According to an article by Assistant Travel Editor Mary Forgione in the Los Angeles Times, “The designation acknowledges areas known for having cultural ties and respectful interactions with whales and dolphins.” This year marked the fiftieth anniversary of the Dana Point Festival of Whales. The event, usually held over two weekends, was limited to March 6 and 7 this year because of the pandemic. 14

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MENTIONS

MENTIONS “At Home with Diversity”

I definitely enjoyed Robert Morris’s presentation of NAR’s excellent training course “At Home with Diversity”! I took it two or three years ago; however, the content is even more relevant and applicable today. Understanding how agents should operate in our diverse community and avoid pitfalls is critical. I’m really glad to have taken the updated course! Plus, it was fun to see so many familiar faces on the session! Lori Namazi 2021 President, Orange County REALTORS® EDITOR’S NOTE: This email was sent to Orange County REALTORS® Chief Executive Officer Dave Stefanides and is being reprinted here with Lori’s permission.

Your big hearts helped us exceed our goal of 5,600— to deliver almost 8,400 gift bags to 56 schools from San Clemente to Mission Viejo. You gave huge smiles and unexpected, pleasant surprises to thousands of underserved students attending CUSD schools. CUSD Insider online covered the story of how this idea came to fruition and was delivered by a community of BIG HEARTS ♥ ♥ ♥ https://cusdinsider.org/cusd-trustees-spreadvalentine-cheer-with-special-delivery/ Many, many thanks for a grass-roots effort to make a very big difference in sharing love and kindness in a season when our kids needed it most. With great appreciation,

“You Warmed Children’s Hearts” Dear Community Friends and Neighbors, You warmed children’s hearts (and ours) at a time when much cheer was needed. We cannot thank you enough for your generous outpouring of donations. The Valentine-themed gift bags filled with special treats, gift cards, nutritious snacks, and school supplies were overwhelming.

Judy Bullockus President, Board of Trustees, Capistrano Unified School District EDITOR’S NOTE: Judy’s email was written to acknowledge, in part, the efforts of Orange County REALTORS® who, with the help of Kim Cosbey (K. C. and Company), supplied more than 500 gift totes in answer to the email Judy had sent to community groups asking for help in preparing gift bags as a way of wishing a Happy Valentine’s Day to 5,600 youngsters in the Capistrano Unified School District (CUSD) who were either homeless, multi-family living, military, or in foster care.

CALL FOR MENTIONS Media postings and emails intended for possible publication in this magazine should be sent either to Director of Communications and Programs Sabrina Blair at Sabrina@ocrealtors.org or to Writer and Editor Sherri Butterfield at Sherri@ocrealtors.org. All written material may be edited for content, length, or style and may appear either online or in print. Emails become the property of Orange County REALTORS®. Although some may be answered, none will be returned. OC REALTOR® MAY | JUNE 2021 15

ANNUAL ELECTION

BOARD OF DIRECTORS

ANNUAL ELECTION Begins on Monday, May 10

Nine candidates

are running to fill five three-year positions and one one-year position. Voting in the Orange County REALTORS® Board of Directors election begins on Monday, May 10, and ends on Monday, May 24, at 5:00 p.m. Nine candidates are running to fill five three-year positions on the 2022–2024 Orange County REALTORS® Board of Directors and one one-year position on the 2022 Orange County REALTORS® Board of Directors. All REALTOR® members of the Association are eligible to vote.

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Voting Information and Instructions Beginning on Monday, May 10, at 8:00 a.m., REALTOR® members of Orange County REALTORS® may vote at www.OCRealtors.org/election. Those who choose to submit a ballot may vote for up to five candidates but may not vote more than once for the same person. Voting concludes on Monday, May 24, at 5:00 p.m. You no longer need to access an email to vote. You simply need to know your OCRealtors.org (My Account) user ID and password to log into the voting site, which is accessible directly from www.OCRealtors.org/election. The election will be held exclusively online—no more paper ballots. However, if you need assistance with the voting process, you may contact Votenet Solutions on 1-866-984-3125 between 9:00 a.m. and 5:00 p.m. EDT or email help@eballot.com.

ANNUAL ELECTION

Remember to Vote! Candidates The nine candidates are listed below in ballot order. This order conforms to the randomized drawing of letters of the alphabet conducted by the California Secretary of State’s staff on April 6, 2021, for the Assembly District 79 Special Primary Election.  Eileen Oldroyd  Erin Barry  Len Herman  Jill Scognamiglio

 Lacy Robertson  Leslie Eskildsen  Lisa Yi  Jeffrey Jackson  Gerald Koller

Candidate statements for these nine candidates appear in ballot order on pages 17–19 in this issue of OC REALTOR®.

Eileen Oldroyd This past year has taught us that the REALTOR® community is adaptable and resilient. Orange County REALTORS® led the way for many Associations regarding how to pivot and thrive during a pandemic. However, we have more work to do. It would be a privilege to use my years of experience as part of the team that continues to provide value to our members, builds leaders for our industry, takes our Association to the next level—and beyond!

Nine candidates are running to fill five three-year positions and one one-year position on the Orange County REALTORS® Board of Directors.

◊ All REALTOR

members of the Association are eligible to vote. ®

◊ Voting begins on Monday, May 10, at 8:00 a.m. ◊ Voting takes place exclusively online. Visit

www.OCRealtors.org/election to access the ballot.

◊ To log into the voting site, you need to know your

OCRealtors.org (MyAccount) user ID and password.

◊ You may not vote more than once for the same candidate.

◊ Voting concludes on Monday, May 24, at 5:00 p.m. If you have questions, contact Votenet Solutions on 1-866-984-3125 between 9:00 a.m and 5:00 p.m. EDT or email help@eballot.com.

Voting begins on Monday, May 10, at 8:00 a.m. Voting concludes on Monday, May 24, at 5:00 p.m.

» NAR Leadership Academy, 2021 » Chair, NAR Sustainability Advisory Group, 2020 » Member, C.A.R. Strategic Planning and Finance Committee, 2021 » Trustee, OC REALTORS® Political Affairs and Elections Committee, 2019–2021 » Member, OC REALTORS® Finance and Budget Committee, 2019–2021 » State President, Women’s Council of REALTORS®, 2020 » National Liaison, Women’s Council of REALTORS®, 2021

Continued on Page 18

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ANNUAL ELECTION Continued from Page 17

Erin Barry

Len Herman

Our REALTOR® Associations are the only organizations looking after the interests of the American homeowner while also protecting the relevancy and integrity of our industry. We must uphold our status as business professionals who are a vital, necessary part of the real estate process. We can do so only through education and support of legislation. Knowing this, I believe that I can contribute in a proactive and positive manner by working with others on the OC REALTORS® Board.

I have been volunteering at Orange County REALTORS® since 2005, when I was asked to join the Multiple Listing Service (MLS) Committee. This was the beginning of my continuous volunteer service at our Association. I have served several terms as a Director and was Association President in 2013. My goal is to support our profession whenever, wherever, and however I can. My experience as a Director and a Past President makes me uniquely qualified to serve you, the Member.

» Director, California Association of REALTORS®, 2015–2021

» Director, National Association of REALTORS®, 2012–2014

» Trustee, C.A.R. Issues Mobilization Political Action Committee, 2021–2022

» Director, California Association of REALTORS®, 2009–2018

» Member, OC REALTORS Grievance Committee, 2021

» REALTOR® of the Year, 2012

» Trustee, OC REALTORS Political Affairs and Elections Committee, 2020

» Member, Vice Chair, and Chair, OC REALTORS® MLS Committee, 2005–Present

» Member, Women’s Council of REALTORS® National Communications and Outreach Steering Committee, 2014

» President, SoCal MLS, 2011; led the merger with CRMLS

» Executive Officer, Smart Coast California

» President, Orange County REALTORS®, 2013

» Recipient, Orange County REALTORS® President’s Award, 2008, 2014, 2017, and 2020

» Recipient, National Association of REALTORS® Commitment to Excellence endorsement

Jill Scognamiglio I have the knowledge and expertise to make a difference and to support and advance the Orange County REALTORS® mission. My real estate career has been successful over the years, and I would like to give back by taking this opportunity to serve. I am dedicated, committed, impartial, and straightforward. I am able to lead by being a positive influence for others. I value discretion and confidentiality and have the utmost respect for our Association. » Trustee, OC REALTORS® Political Affairs and Elections Committee, 2020 to Present » Director, Pediatric Brain Tumor Foundation, 2014–2021 » REALTOR® since 1987

Lacy Robertson Lacy Robertson has more than seventeen years of mortgage and real estate experience and is no stranger to taking on big business when it is hurting the little man, as can be seen in her successful fight against PACE loans and other predatory lending practices. Robertson protects our industry’s interests by expressing opinions with a quiet, unwavering conviction. If equipping REALTORS® with ongoing education, advocating affordable home ownership, and protecting homeowners' property rights resonate with you, elect Lacy Robertson to your Board! » Director, Orange County REALTORS®, 2018, 2019, 2020, and 2021 » Member, OC REALTORS® Education Committee, 2020 » Trustee, OC REALTORS® Political Affairs and Elections Committee, 2019 » Chair, OC REALTORS® Local Government Relations South Committee, 2019 » Vice Chair, OC REALTORS® Local Government Relations South Committee, 2018 » Member, OC REALTORS® Local Government Relations South Committee, 2017, 2018, 2019 » Member, OC REALTORS® Grievance Committee, 2017 »

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OC REALTOR®

ANNUAL ELECTION

Leslie Eskildsen

Lisa Yi

As a result of my experience with the Orange County REALTORS® Leadership Academy, the California Association of REALTORS® Board of Directors, and various C.A.R. and OC REALTORS® committees, I believe it is time for me to increase my participation in Orange County REALTORS® in a leadership capacity to give back to an organization that has supported my twenty-oneyear career in real estate. Also, I have excellent written and verbal communication skills, which can be helpful in many situations.

Being able to work successfully with colleagues is extremely important. My years of experience working with industry and Association professionals have made me an ideal candidate for a position on the OC REALTORS® Board of Directors. As a proud member of one of the largest REALTOR® Associations in the nation, I will work to increase professional standards in our industry, continue to support fair housing and homeownership rights, and promote diversity and minority visibility in our wonderfully vibrant Association.

» Director, California Association of REALTORS®, 2018–2021

» State Legislative Key Contact (AD-68), California Association of REALTORS®, 2017–2021

» Member, C.A.R. Legislative Committee » Member, C.A.R. Homeownership Committee » Member, OC REALTORS Multiple Listing Service Committee, 2021 ®

» Member, OC REALTORS Professional Standards Committee, 2020 ®

» Graduate, OC REALTORS® Leadership Academy, Class of 2017–2018 » Contributing Columnist, Orange County Register Real Estate section, since 2010

» Chair, OC REALTORS® Local Government Relations South Committee, 2021 » Graduate, OC REALTORS® Leadership Academy, 2017–2018 » Member, OC REALTORS® Global Business Alliance Committee, since 2019 » Member, OC REALTORS® Education Committee, 2017, 2019 » Member, OC REALTORS® Young Professionals Network, 2017–2019 » Vice Chair, OC REALTORS® Strategic Partners Committee, 2018

Jeffrey Jackson I want to continue serving Orange County REALTORS® by advocating for community and governmental involvement, for education for both incoming and experienced REALTORS®, and for improvement and innovation of dedicated platforms and the MLS to keep our members technologically current and by contributing my experience, education, and abilities to the OC REALTORS® Board of Directors and the REALTOR® community. Much has changed in the past three years, but not my dedication and enthusiasm for this Association. I would appreciate your vote in May! » Federal Political Coordinator (CA-45), National Association of REALTORS®, 2019–Present

Gerald Koller I started in real estate in 1981 and have spent my entire adult life working in this industry. I care deeply about the integrity of our profession. I enjoy serving the REALTOR® community and working with the Board to better our industry. I am the owner of a medium-sized brokerage and believe that I bring a wide range of insights to the table. » Director, California Association of REALTORS®, 2020 » Vice Chair, OC REALTORS® Independent Brokers Alliance, 2020 » Member, OC REALTORS® Leadership and Personal Development Committee, 2020

» Director, California Association of REALTORS , 2016–2019, 2021

» Member, OC REALTORS® Local Government Relations South Committee, 2020

» Director, Orange County REALTORS®, 2019–2022

» Graduate, OC REALTORS® Leadership Academy

» Member, OC REALTORS Bylaws, MLS, and Risk Management Committees, 2021

» Owner, Real Estate Brokerage

» Chair, OC REALTORS® Political Affairs and Elections Committee, 2018 » Member, CRMLS Finance Committee, 2020–2021 » BA, MPA, and JD from Indiana University; MBA from Washington State University OC REALTOR®

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COVER STORY

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COVER STORY

Drawing a Line Changes to the NAR Code of Ethics hold members accountable for discriminatory speech and conduct. By Daniel Doepke

DIRECTOR OF MEMBER POLICY, NATIONAL ASSOCIATION OF REALTORS®

uring the 2020 REALTORS® Conference & Expo, held virtually in November, the National Association of REALTORS® (NAR) Board of Directors approved recommendations from the Professional Standards Committee regarding the applicability of the Code of Ethics to discriminatory speech and conduct. These changes can be grouped into three broad categories.

1. Changes to the Way in Which the Code of Ethics Applies to REALTOR® Activities Previously, the policy statement in the Code of Ethics and Arbitration Manual limited the applicability of the Code to real estate–related activities and transactions involving REALTORS®. As such, members could engage in conduct and speech that was discriminatory and abhorrent, but unless it could be tied to a real estate– related activity or transaction, the Code of Ethics— specifically, Article 10—did not apply. The new policy expands the applicability of the Code of Ethics to all activities in which a REALTOR® engages.

NAR’s approved “changes should make it

clear to members and Associations alike that discriminatory speech against protected classes is a violation of the Code of Ethics and is subject to appropriate disciplinary action, even if that discriminatory speech occurs outside a real estate–related activity or transaction.

”

2. A New Standard of Practice 10-5 The new Standard of Practice 10-5 provides that REALTORS® must not use harassing speech, hate speech, epithets, or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.

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COVER STORY

FOR RENT

STOP HATE SPEECH

3. Revisions to the Definition of the Term “Public Trust” The definition of the term “public trust” was expanded to include all discrimination against protected classes under Article 10 of the Code of Ethics and all fraud, and to limit the reporting requirement to final ethics decisions involving real estate–related activities and transactions. Previously, the definition of “public trust” included demonstrated misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm. This revision expands the definition to include all discrimination against the protected classes under Article 10 and all fraud. The NAR Board of Directors also approved enhancements to the Code of Ethics and Arbitration Manual consistent with these three categories.

Why Now? These are significant changes, and many Associations are curious about both the reasoning behind them and the method of enforcement. For context, it is important to note that not only did NAR receive an unprecedented number of complaints during 2020 about REALTORS® using discriminatory speech online, but also state and local Associations experienced an increase in similar complaints.

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Many Associations struggled to find explicit and direct justification for disciplinary action under either NAR’s Code of Ethics or their own bylaws. NAR’s approved changes should make it clear to members and Associations alike that discriminatory speech against protected classes is a violation of the Code of Ethics and is subject to appropriate disciplinary action, even if that discriminatory speech occurs outside a real estate–related activity or transaction. When it comes to enforcement of these changes, keep two things in mind. First, this does not mean that the Code of Ethics will apply to all portions of a REALTOR®’s personal life. Most articles and standards of practice remain specific to real estate transactions and other real estate–related activities. The focus of these changes is meant to be narrow, applying only to discriminatory speech against the protected classes identified in the Code of Ethics. Second, the concern has been raised that terms such as “hate speech” or “epithets” can be subjective. To assist Associations with the consistent application of these policies, NAR has also adopted a new Appendix XII to Part Four of the Code of Ethics and Arbitration Manual (https://www.nar.realtor/code-ofethics-and-arbitration-manual). NAR will roll out further guidance, including comprehensive training, for Associations and members in the coming months. Meanwhile, feel free to contact narpolicyquestions@nar.realtor with any questions you might have. This article is being reprinted from REALTOR® AE Magazine by permission of the National Association of REALTORS®. © Copyright 2021. All rights reserved.

COVER STORY

Tools to Address Bias in the Real Estate Industry

All of us have biases—both for and against various things, ideas, and types of people— that are products of the beliefs we were exposed to in childhood, the environment in which we grew up, and the way we saw people who did not look or live like us presented in the media.

By Rudhir Krishtel, Krishtel Coaching In the wake of the 2019 Long Island investigation (http://projects.newsday.com/long-island/realestate-agents-investigation/) that uncovered widespread evidence of discrimination in real estate, the industry has a new opportunity to talk about implicit bias. While this topic tends to float in and out of our national consciousness—often on the wings of a scandal—the experience of bias and its consequences remain constant realities. First, let's not take this personally. The data are clear. All of us have biases—both for and against various things, ideas, and types of people. They are a product of the beliefs we were exposed to in childhood, the environment (social and geographic) we grew up in, the way we saw people who did not look or live like us presented in the media. All these things communicate a million messages that we internalize over time. But implicit bias has a huge impact on how communities, as well as wealth distribution and determination, are shaped over the long term. So how can we make a difference to change this? It starts with investigating ourselves. Why might we be biased? Where would our biases come from? How can addressing these biases help improve the real estate industry?

“In truth, we are biologically conditioned to favor people we perceive as being ‘like us’ in any number of ways.” What Is Implicit Bias? In simple terms, implicit bias equals distortion. It’s like looking at the world through a filter that most of us don’t know we have. More specifically, implicit bias refers to the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious way. Unlike conscious or intentional acts of discrimination, implicit bias has nothing to do with your character or your professionalism. Implicit bias is not rooted in rational thinking but, instead, is a biological fact that helps our minds process a world full of information. The quickest, easiest way to do so is to generalize, that is, to use limited knowledge and experience to understand society at large. In everyday life, this means categorizing and making assumptions. In the rare event that we become aware of this pattern, we typically believe our choices are based on objective judgment. In truth, we are biologically conditioned to favor people we perceive as being “like us” in any number of ways. OC REALTOR®

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COVER STORY Although unconscious biases cannot be eliminated completely, pretending they do not exist gives them free reign to control our decision making. Just as we would not drive with our eyes closed and expect to get where we wanted to go, our everyday decisions cannot be equitable unless they are made from a compassionate, logical space.

Know your reactions. Be more mindful of your

How Can We Address Implicit Bias?

Notice assumptions. The more we reflect on

So, what can we do about implicit bias? As always, humility comes first. It is easy to label the latest offenders in the news as industry outliers and move on. It is harder to acknowledge that the biases uncovered in the Long Island report are also about us.

Develop community across difference. The word

Consider your own social circle. Ask yourself whom you gravitate toward, who looks most approachable in a room full of strangers. Implicit bias is often as benign as “you make me feel safe because you’re familiar,” not, “I don’t trust you because you’re different.” The fact that implicit bias seems so harmless makes it easy to dismiss.

“Implicit bias is not rooted in rational thinking but, instead, is a biological fact that helps our minds process a world full of information.” Yet the harm is that those who do not give us this sense of comfort, likeness, or approachability receive less favorable treatment by default. When considered in the context of searching for a new home, their application is subject to more scrutiny. We ponder whether they are the “right fit” for the neighborhood just a little longer. The person who is most dissimilar to us starts out with less of a chance than the person who is more similar. This is not a disadvantage we can afford to enable, especially those of us who can have such a large impact on people’s lives So, what comes next? Now that we are practicing humility, we are free to do the inner work without taking things personally. One easy way to begin to address implicit bias in your own life is to make a daily commitment to being K.I.N.D.

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thought processes, until that awareness becomes second nature.

Inquire about your behavior. Ask yourself why you feel the way you do. Where did the underlying beliefs come from and how did they become ingrained?

assumptions that belie bias, the more we realize just how irrational those biases are. In truth, there are far more differences and variations between individuals than there are similarities within groups. “community” is key because superficial or casual relationships with people from different walks of life do not reduce bias. To be truly impactful, friendships across difference should be based on mutual respect, involve substantial interaction, and be free from unequal power dynamics.

How Can We Drive Meaningful Social Change? Ultimately, meaningful social change happens at the personal, interpersonal, and systemic levels. All three must occur simultaneously for us to make a shift. This does not make our actions unimportant. In fact, it means just the opposite. Addressing our implicit biases creates more equitable real estate practices, which creates more diverse neighborhoods, which gives others the opportunity to dismantle their own biases. In this way, we reconstruct the world by working on ourselves. To dive deeper into the topic of implicit bias, join me on June 7 from 11:00 a.m. to 12:30 p.m. for an interactive webinar titled “Tools for Improving Communication on DEI Issues, Including Through Mindful Listening.” During this session, you will learn how to listen effectively and mindfully, to be present with someone who is expressing concern, and to receive what you hear with understanding (rather than with judgment). Ultimately, these tools will help you understand how to sit with the discomfort that arises when listening rather than reacting.

COVER STORY

“. . . implicit bias has a huge impact on how communities, as well as wealth distribution and determination, are shaped over the long term.”

This program will offer further awareness and exploration of some key diversity, equity, and inclusion (DEI) concepts and definitions, and provide insights into how to use that active listening during difficult conversations, including for working with the defensiveness that often arises during these important conversations. Sign up for this session at

www.ocrealtors.org/dei-issues.

Rudhir Krishtel practiced law for fifteen years as a federal clerk, patent litigation partner at Fish & Richardson, and then as senior patent counsel at Apple before becoming an executive coach and consultant. Rudhir specializes in creating the space for having difficult conversations and growth at the intersection of leadership, well-being, and DEI issues. He focuses on corporate healing and provides tools for those affected by the most challenging aspects of work.

Celebrate and uphold Fair Housing all year by educating others on preventing discrimination in real estate. Check out the Think Fair, Sell Fair, Be Fair campaign collateral on our website for your use to promote fair housing on your social media. www.ocrealtors.org/fairhousing-toolbox

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COVER STORY

Diversity, Equity & Inclusion:

What ’s the Big Deal?

Embracing diversity, equity, and inclusion does not mean that someone wins and someone else loses. It presents more opportunities for everyone and benefits us all.

By Robert Morris, REALTOR® & INSTRUCTOR

Hello to all of you, my Orange County REALTORS® Family! I would like to extend a heartfelt thank you to all who attended our At Home with Diversity (AHWD) certification course in February. The topic of Diversity, Equity, and Inclusion is so very timely and relevant in our society today. All who attended were attentive, focused, and engaged the entire day, which made for a fun-filled, knowledge-based educational experience for all—including me! Now, what’s the big deal about diversity, equity, and inclusion? That’s a great question! Let me explain why it is important.

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We are living in challenging times right now, dealing with a deadly pandemic, a major health crisis, serious financial stress, and rising racial tensions, while trying to create a “new” normal or get back to some kind of “old” normal. To adjust and acclimate ourselves to this new normal, a new way of life, we must » adopt a new way of doing business and

nurturing our personal relationships, » embrace new opportunities to communicate

with one another, » design and develop business practices that

will survive this crisis and carry us into the future in our real estate careers.

COVER STORY

1. Sign up, attend, and complete the new AHWD certification course and become certified. Your Association is graciously offering this certification quarterly (at no cost!) to its members. You can sign up for a future session at www.ocrealtors.org/ahwd.

“We are in a time for new beginnings with new opportunities to grow, discover, and learn. Let’s seize this moment to make a difference and be the positive change in our world.”

Doing so will require us to consider all people as unique and to recognize, understand, and appreciate their individual differences. Embracing diversity, equity, and inclusion does not mean that someone wins and someone else loses. It presents more opportunities for everyone and benefits us all. We are in a time for new beginnings with new opportunities to grow, discover, and learn. Let’s seize this moment to make a difference and be the positive change in our world. I challenge each of you to accept the “Fair Housing Challenge” issued by 2021 National Association of REALTORS® President Charlie Oppler earlier this year. He asked us to do the following three things:

2. Complete the one-hour Implicit Bias Training (no cost) available at https:// www.nar.realtor/videos/bias-overrideovercoming-barriers-to-fair-housing. 3. Complete the Fairhaven simulation training (no cost) available at https://www.nar. realtor/fair-housing/fairhaven. I know you can do this. You have the skills. You have the knowledge. Now, I need your desire! Do it. You’ll be glad you did. I promise! Last, but not least, I will be back on June 18, 2021, at 10:00 a.m. to share with you a quick, yet informative, one-hour session titled “The Secrets to Embracing Diversity, Equity, and Inclusion.” I am looking forward to seeing you all there! Sign up at www.ocrealtors.org/embracing.

Robert Morris has been in real estate since 1985 and is a selling broker with Parks Realty in Smyrna, Tennessee. He has been honored as REALTOR® of the Year and is currently serving as 2020–21 President of the Middle Tennessee Association of REALTORS®. Robert is a recognized instructor and consultant whose designations and certifications include At Home with Diversity (AHWD), Certified Real Estate Brokerage Manager (CRB), Real Estate Negotiation Expert (RENE), and the Graduate REALTOR® Institute (GRI). He can be reached at teamrobertmorris@gmail.com.

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HOMEOWNERS' ASSOCIATIONS

Because properties within Homeowners’ Associations (HOAs) make up a significant portion of the available housing stock in Orange County, transactions involving an HOA are becoming more common. By Scott Clements

ecause the number of Homeowners’ Associations (HOAs) in Orange County numbered more than 2,600 in 2020, properties within HOAs make up a significant portion of the available local housing stock. As a result, transactions involving an HOA are becoming more common. Unique issues are involved when buying or selling property located in a common interest development. Outlined below are some issues to be aware of when representing clients who are selling or are considering purchasing in an HOA.

Mortgage Financing Obtaining mortgages for units within a condominium project may involve more than the credit worthiness of the buyers and the appraised value of the unit. Whether the mortgage is from a private lender or from a lender approved by the Federal Housing Administration (FHA), the HOA itself must demonstrate fiscal soundness. Because the FHA is the largest insurer of mortgages for entry-level housing, the inability of an HOA to qualify for FHA financing can severely limit mortgage options.

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Delinquencies The maximum delinquency rate allowed under FHA guidelines is 15 percent; therefore, HOAs with assessment collection issues and high delinquency rates will be excluded from loan products involving federally insured mortgages. Although some private lenders allow delinquency rates above 15 percent, the added risk the lender absorbs will be reflected in the rates and terms of these loans, making them more expensive than traditional products. REALTORS® are encouraged to have prospective sellers obtain a copy of the HOA’s most recent financial statement (unit owners are entitled to this information, accessible within ten business days, per California Civil Code Section 5210) and review the delinquency report. If it is high, encourage the seller to work with the HOA in reducing the delinquency rate to an acceptable level.

High Rental Rates Units within HOAs with high rental rates—that is, more than of 65 percent of the units rented—

HOMEOWNERS' ASSOCIATIONS

“

HOAs with high rental rates are known to have more maintenance and financial issues than communities in which a high percentage of the

”

units are owner-occupied.

would be disqualified from FHA-insured loans. Many private lenders impose similar rental restrictions. Non-owner–occupied units tend to resist assessment increases to maintain the facilities; therefore, HOAs with high rental rates are known to have more maintenance and financial issues than communities in which a high percentage of the units are owner-occupied. Lenders know this and respond accordingly.

Poorly Funded Reserves Reserve funding is carefully reviewed in the underwriting process. A poorly funded HOA is more likely to impose special assessments and dramatically increase the regular assessments on its members. The impact of these assessments can sometimes inhibit the mortgage holder’s ability to fulfill his or her obligations to the home loan. Foreclosing on a unit with little equity in a poorly funded HOA is an undesirable option for the lender because possession of the unit would obligate the lender to assume the financial responsibilities accompanying it. It can be challenging to find financing for units in poorly funded communities. For FHA-insured loans, the minimum reserve contribution rate—that is, the amount of money placed into the reserve fund from the operating income—is 10 percent. HOAs contributing less would need to increase their contribution rate for units within to qualify for federally backed mortgages. In addition, most FHA lenders have interpreted the requirement to include a minimum 10 percent funded level. Some private lenders require a funded level of more than 10 percent. Federally insured loans will require a reserve study conducted within the past twenty-four

months so that the lender can review the funding needs. Without a current reserve study, the lender—and potential buyers—cannot gauge the soundness of the HOA’s finances. Will there be a special assessment? If so, how much might it be? When will it be due? Could there be more than one special assessment? How much are regular assessments expected to increase in the next ten years? Without a current reserve study, nobody knows the answers to these questions. California law requires that all HOAs provide a reserve study, among other financial documents, to their members annually. REALTORS® are encouraged to ensure that complete financial information is included in all transactions within an HOA.

Assessment History A history of special assessments, spikes in regular assessments, or assessments that are unjustifiably low are red flags for lenders. They indicate a lack of planning and prudence. Well-managed associations have sufficient reserves and, therefore, have no need to collect special assessments from the members for routine repairs and replacements. Operating cost increases are generally consistent with inflation; therefore, HOAs should be capable of planning for small regular increases to the assessments to avoid large year-overyear spikes. Reserve studies include replacement and expenditure schedules which illustrate the anticipated future expenses. Statutory reporting requires that budgeted-versus-actual expense comparisons be displayed in financial reports. An HOA collecting insufficient funds to cover both the operating expenses and future capital expenditures may be rejected because of anticipated future special assessments.

Use Restrictions Conditions, Covenants and Restrictions (CC&Rs) and other governing documents, such as operating rules and regulations, can be long and detailed. Learning of restrictions after escrow can lead to dissatisfaction and potential liability. Use restrictions that often get overlooked in the transaction process include those that govern parking, keeping pets, operating a home business, renting out the unit, and changing the size or appearance of the unit.

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HOMEOWNERS' ASSOCIATIONS

Parking Many communities prohibit overnight parking of commercial vehicles outside an individual closed garage. Others prohibit any vehicle from parking overnight outside an individual closed garage. Most limit parking of recreational vehicles or trailers to specific timeframes and locations. Multi-unit properties typically prohibit unit household members from using designated visitor parking areas and may limit the number of spaces or the hours that visitor parking is allowed. In carcentric Southern California, where many people use their vehicle in their work, these are important issues for home purchasers to consider.

Keeping Pets Many associations limit the number or type of pets that can be housed. They often establish weight limits, such as fifty pounds, which are intended to keep out larger, more dangerous, types of canines. Personally, I have never encountered a dangerous English Bulldog, nor seen an adult one that weighed less than fifty pounds. But rules are rules. People with multiple pets, large dogs, and overfed cats should be aware of these rules and limitations. In addition, the keeping of many species of exotic pets may be restricted or prohibited. Prospective purchasers who want to raise livestock, primates, or reptiles should do so outside an HOA.

Operating a Home Business Most HOAs have limitations or exclusions on operating commercial businesses from individual units, and those that do allow commercial activity typically impose conditions and restrictions on those rights. These restrictions may include prohibitions and limits on the numbers of customers, employees, or service providers that can visit a unit. And they often prohibit any manufacturing or assembly of products within a unit or any shipping of products from a unit. If potential purchasers have, or are interested in opening, a home-based business, they should read the HOA governing documents carefully before buying.

Renting Out the Unit Many HOAs have rental restrictions. The laws and regulations for short-term rentals, such 34

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as AirBnB, continue to evolve. Some associations prohibit rentals of any type. This is common in active adult communities. Others may specify minimum terms of rentals, such as six months or one year. Associations may also impose fees to offset the costs of accommodating rental units. It is important to note that unit owners are still responsible for the unit and the activity of its occupants. If renters damage the common area, the unit owner could be held liable for the repair expenses. If renters’ actions result in fines levied by the HOA, the unit owner will be held financially responsible. If rental usage is desired, it would be prudent to recommend that the information be reviewed by a competent real estate attorney.

Changing the Appearance or Size of the Unit Changing the appearance of a unit or expanding its features is usually subject to architectural review. Although this provision is intended to ensure the consistent look and aesthetic appeal of the community, it may also limit improvements or changes to the property. An owner’s ability to install pools, decks, and out-buildings is typically limited in the governing documents. Changes to driveways, walkways, and landscaping may also be restricted. Many associations have limitations on the types of materials that may be used, and color options are often restricted to a list of preapproved tones. All operating documents—including those that spell out the rules, regulations, and limitations—must be distributed annually (California Civil Code Section 5300) and be made available for review by members within ten days of request (California Civil Code Section 5205). It is important that clients are aware of these limitations to ensure that their expectations are consistent with HOA policies. Because each HOA is unique, REALTORS® are encouraged to assist in procuring information about the association in which clients are considering a purchase to ensure that they have copies of all the relevant documents they need to make an informed purchase decision. Scott Clements is chief executive officer of Reserve Studies, Inc. He serves on the Education Committee for Community Associations Institute Orange County Regional Chapter. A popular author and speaker about common interest development, Scott was recognized as 2010 Educator of the Year.

LEGISLATION

Needed to Buy Time for California Families Proposition 19 expanded a tax break for some homeowners but repealed an important taxpayer protection for families. Because the effective date of this change was February 16, before most Californians even knew what had happened, additional time is needed to give families an opportunity to plan.

By Jon Coupal

PRESIDENT OF THE HOWARD JARVIS TAXPAYERS ASSOCIATION

t’s hard to imagine anything more callous than the government’s sending a giant tax bill to a bereaved family, but thanks to Proposition 19, many California families will have that unfortunate experience. Proposition 19, which passed by a razor-thin margin in the November election, expanded a tax break for some homeowners but repealed an important taxpayer protection for families. The effective date of this change was February 16, before most Californians even knew what had happened. Here’s what happened: homes that are transferred between parents and children are no longer excluded from reassessment. Previously, children would continue to pay the same property tax bill that their parents had paid, with increases in the assessed value capped by Proposition 13 at a maximum of 2 percent per year. Not anymore. Now children inheriting their parents’ home or other property will receive a new tax bill based on a current market-rate assessment.

There are only limited exclusions for a family farm and for a home that is the primary residence of the parents if the home becomes the primary residence of the child within one year. Otherwise, the home and any other properties, such as small businesses or rental homes, will be reassessed as of the date of transfer. The new annual tax bill will be 1 percent of the market value, which will easily double or triple the property tax bills of most transferred properties. Unfortunately, the costly advertising campaign pushing Proposition 19 never mentioned the loss of this “intergenerational transfer” protection, and the fact that this happened to families in the midst of a pandemic made it difficult or impossible to get information from government employees or even to record documents. There was little time to consult an attorney or revise an estate plan before the February 16 deadline arrived.

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LEGISLATION

“Now children inheriting their parents’ home or other property will receive a new tax bill based on a current market-rate assessment.”

As families discover the harm of Proposition 19, more and more people are contacting the Howard Jarvis Taxpayers Association (HJTA) and telling us that they want to see the exclusion from reassessment for parent-child transfers of property reinstated. We agree. We are urging lawmakers to support a legislative constitutional amendment that reverses the damaging part of Proposition 19 and restores the constitutional protections that it quietly removed. HJTA is also sponsoring Senate Bill 668, authored by state Senator Patricia Bates (R–Laguna Niguel), to delay the effective date of this portion of Proposition 19 for two years, until February 16, 2023. Such a delay is within the Legislature’s power. Even though the effective date of the measure is now part of the state Constitution, a 2007 court ruling in the case of Strong v. State Board of Equalization ruled that the definition of “change of ownership” may be altered by legislation. This offers a path to a reprieve for pandemic-weary Californians now at risk of a sudden and unaffordable tax increase during a time of bereavement.

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We now know that Proposition 19 blindsided voters, who were never informed as to its real impact. The parent-child transfer exclusion from reassessment was written into the state constitution in 1986 by Proposition 58. California voters had already abolished the state inheritance tax and prohibited any future inheritance taxes, but with property appreciating in value so quickly, children who inherited their parents’ property faced the equivalent of an inheritance tax when the property was passed to them and reassessed to market value. Children who could not afford to pay the taxes were forced to sell the family property. The uproar was such that the state Legislature unanimously passed a proposed constitutional amendment enacting the parent-child transfer exclusion and put it on the ballot as Proposition 58. It was approved by more than 75 percent of voters. Proposition 58 also wrote into the Constitution what had already been written into state law: property passed between spouses was excluded from reassessment.

LEGISLATION

Senate Bill 668 would extend the period of time before a “change of ownership” would be defined as including parent-child transfers of a home and other property. This is an extremely important bill, not only to California families that will suffer under Proposition 19, but also to county assessors and the state Board of Equalization (BOE). The speedy implementation date for Proposition 19’s changes to intergenerational transfers left assessors and BOE members scrambling to get answers to a long list of specific questions that the measure left unclear or ambiguous. SB 668 would temporarily enable a more orderly and equitable process for taxation of property that is passed to the next generation. Longer term, the Proposition 58 parent-child transfer exclusion should be reinstated in its entirety. Californians who are ready to join this fight should contact their state representatives—look them up at findyourrep.legislature.ca.gov—and urge them to restore Proposition 13 for our children.

This article was published in the Orange County Register on Sunday, March 14, 2021, and distributed via email to members of the Howard Jarvis Taxpayers Association on Monday, March 15, 2021. It is being reprinted here with the expressed written permission of HJTA President Jon Coupal.

are urging lawmakers “toWe support a legislative

constitutional amendment that reverses the damaging part of Proposition 19 and restores the constitutional protections that it quietly removed.

”

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MEMBER BENEFITS

Insuring Your Health: An Interview with Roger Smith, President and CEO of the Benefits Store

Ironically, worrying about healthcare costs can slow your recovery. Choosing the right health plan and having the right coverages in place can speed the recuperation process by giving you the peace of mind you need to relax and get better. By Sherri Butterfield WRITER AND EDITOR

What is the Benefits Store? The Benefits Store is a trusted professional insurance agency and a third-party administrator of benefits plans that has been serving the California real estate industry since 1984.

In what way are you connected with the Benefits Store? I am the founder of the Benefits Store and now serve as its president and chief executive officer.

What products and services does the Benefits Store offer? We offer specialized health insurance programs for REALTOR® Association members, fast on-line quoting and enrollment, and personalized services to fit members’ needs through our large selection of plans and payment options. Choices include primary coverages for medical, dental, and vision; ancillary coverages of life, disability, and long-term care; and coverages for identity theft and legal protection. 38

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We appreciate Association members and will take the time to listen to them, to understand their needs, and to match them with the best program we have to offer. Our service is all about getting it right from the very beginning and developing a relationship, not only for now but for the future.

Who is eligible to sign up for these products and services?

Our programs are open to all Association members, including REALTORS®, Affiliates, and members of their staffs.

More specifically, what types of insurance policies or healthcare plans are available through the Benefits Store? For REALTOR® Association members, we offer exclusive group coverage with more than twenty Kaiser plan choices, including grandfathered plans with special rates for individuals and families (only available through the Benefits Store) and more

MEMBER BENEFITS of Orange County REALTORS®. Supplemental coverages, such as those for disability income and business overhead expense, help protect established earnings and income. Supplemental coverages, such as those for vision and dental care, help established members protect their professional image. Seasoned Members should be considering several options, including Medicare at age 65, and selecting the right Medicare supplement, prescription drug supplement, or Medicare Advantage Health Maintenance Organization (HMO) plan, with which we can also help. Supplemental coverages, such as those for long-term care, help ensure that funds are available for future occasional or continuing care. Supplemental coverages, such as those for vision and dental care, help seasoned members protect their professional image. New Members in transition to real estate as a career should contact the Benefits Store to go over subsidized programs, such as Covered California with the new American Rescue platform. As certified agents with Covered California, we can review all the subsidized options, answer questions, and help members find the right coverage fit. And our services are free.

than sixty Anthem Blue Cross plans with the largest and best provider networks, networks that are not available to individual consumers in California. Our plans provide enhanced benefits, including dental and group life insurance, for a complete package.

What criteria should someone use in deciding which policy to purchase or which plan to sign up for? Choosing an insurance plan is always about focusing on the benefit-and-budget balance. Members in different stages of their life and their career face different budget challenges and have differing insurance needs. Established Members should be contacting the Benefits Store to review high-deductible health plans (HDHPs) that can be leveraged with health savings accounts (HSAs). These plan combinations provide significant tax savings and lower premiums. We can help take the mystery out of the process in selecting the best HDHP and HSA combination. Our assistance is free and provided at no charge to members

How might this selection process differ for someone with a diagnosed preexisting condition? What criteria should someone with an ongoing health history use in deciding which policy to purchase or which plan to sign up for? For those who fit a more standard health profile, choosing insurance plans is about benefits, prescription coverage, premiums, and provider networks and how to prioritize them. Each of us is an individual, so you want to be able to fine-tune your health insurance plan to your unique song. Our plan descriptions have several examples and scenarios to help consumers understand how the plan will work. Reading these scenarios will provide you with knowledge that is helpful in making specific benefitversus-budget comparisons and choices. Members with an ongoing health history should review the last two years of their health needs and then project what they may need for health care during the next year or two. Worrying about your health care can slow the healing process. Get the right coverage, then be gentle on yourself. OC REALTOR®

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MEMBER BENEFITS

Is there a specified enrollment period or a deadline for signing up or can members sign up anytime throughout the calendar year? Each plan has an annual Open Enrollment (OE) period, typically for one or two months each year. Special Enrollment Periods (SEP) are always available during the plan year when a member experiences any one of several circumstances or meets specific criteria.

What questions about the Benefits Store are you asked most frequently? We receive many comments about our name, which everyone likes. Common questions are about our location, who can use our services, and how to choose among the many and varied options we offer.

Where are you located? We have offices in both Southern California and the Bay Area.

Are your Association group plans available only to Association members? Yes, you need to be an Association member to be eligible to enroll.

With all these plan options, how does a potential enrollee make a wise choice? I recommend that eligible members contact us and let us help them prioritize their needs and work out the plan from there, keeping in mind that a particular plan is not forever and that adjustments can be made during each enrollment period as health needs evolve and budget demands change.

What is the best way for those who are eligible to contact either you or the Benefits Store? REALTOR® and Affiliate members of Orange County REALTORS® can reach us either by email (Info@BenefitsStore.com) or by phone (800-446-2663) during normal business hours or can visit our website at www.BenefitsStore.com. In addition, for client convenience, we offer prescheduled phone appointments for early evenings and Saturdays.

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OC REALTOR®

THE ORANGE COUNTY HOUSING UPDATE

No End in Sight As real estate prices continue soaring to record levels, many buyers wonder if they are overpaying, but that is not what the data show.

By Steven Thomas REPORTSONHOUSING.COM

At the beginning of the COVID-19 pandemic, everybody rushed to the supermarket to purchase toilet paper. At Costco, people waited in line for an hour before the store opened simply to get their hands on a bulk package of Kirkland bath tissue. There was a run on toilet paper. In no time at all, the shelves were empty, and many shoppers were left to worry that the supply they had at home would run out. As shoppers agonized over their personal toilet paper inventory, little did they know that the tissue plight would foreshadow a similar dilemma in the housing market. There are not enough homes on the market to keep up with today’s intense buyer demand. There is a run on housing. Homes are flying off the market faster than they are coming on, and the inventory has been dropping further as the year progresses. Housing’s momentum lines up strongly in favor of sellers. In looking closely at the housing economic model of supply, demand, mortgage rates, affordability, buyer demographics, and market velocity, the data illustrate that the current trajectory of the housing market is not going to change anytime soon.

"Homes are flying off the market faster than they are coming on, and the inventory has been dropping further as the year progresses." At the start of 2020, prior to any lockdown measures and the beginning of the pandemic in the United States, mortgage interest rates had dropped from 3.75 percent to 3.5 percent, an excellent level that had been reached only a few times since 2013. Throw in an increase in buyer demand as a result of the strongest demographic patch of prime first-time home buyers, 32-year-olds, in twenty-six years (which will continue for the next four years), and it was no surprise that the market was hot in February 2020. The inventory was at its lowest level since 2013, a crazy year for housing, demand was at its hottest point since 2017, and the velocity of the market was the strongest it has been since 2013. Then the pandemic hit, demand stalled, and so did the inventory. Yet, as mortgage rates dropped to record-low levels—sixteen record lows last year— OC REALTOR®

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THE ORANGE COUNTY HOUSING UPDATE

On April 1, the active inventory was 2,240 homes, and the demand was 3,162 pending sales. There were 922 fewer homes available to purchase than were needed to meet the demand. The Expected Market Time was at 21 days, the lowest level since tracking began in 2004.

demand heated up and the inventory continued to drop. The lower rates dropped, the hotter the market became. In fact, the market reached its hottest point by year’s end with an Expected Market Time (the time between hammering in the For Sale sign and opening escrow) at 37 days. With mortgage rates in the low 3 percent range—a level never reached before last year— today’s housing market is one of the strongest on

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OC REALTOR®

record, and it has everything to do with supply and demand. The number of home available to purchase at the beginning of April was less than the demand readings, and this is the first time this phenomenon has occurred since tracking began in 2004. The active inventory on April 1 was 2,240 homes, and demand (the past 30 days of new escrow activity) was 3,162 pending sales. There were 922 fewer homes available to purchase than were needed to meet the demand. Homes are

THE ORANGE COUNTY HOUSING UPDATE

"Buyers should not worry about paying too much in today’s environment." flying into escrow as quickly as they are coming on the market. The Expected Market Time on April 1 was at 21 days—less than one month—the lowest level since tracking began in 2004. To put these numbers in perspective, last year, 4,183 homes were available, and demand was at 1,584 pending sales. Thus, there were 2,599 more homes available to purchase than were needed to meet demand. The Expected Market Time was 79 days. That was also the beginning of the pandemic. In 2013, which was previously the hottest year in decades, the inventory was 3,208, and demand was 2,811. There were 397 more homes available to purchase compared with demand. The Expected Market Time was at 34 days, the prior record. With an Expected Market Time of 21 days, homes priced close to their Fair Market Values attract a swarm of activity, multiple offers (that is, ten, twenty, or even thirty offers), and ultimately sell for a bit more than the asking price and, in some instances, a lot more. It depends on the home. Buyers worry about paying too much, often the record for a particular development. Everyone’s head immediately retreats to the last time there was a comparable buying frenzy in housing, the years leading up to the Great Recession. However, there were more than six times the number of homes available to purchase in 2006, a year before the start of the Great Recession, 16,000 homes. Homes were far less affordable with mortgage rates at 6.5 percent. Lender qualifications were loose with a disproportionate number of subprime, zero-down, and pick-a-payment loans, tons of cash-out refinances, and fraudulent lending practices. The transgressions of the real estate industry ultimately led to the deep recession where values plummeted. In contrast, today’s housing has an extremely strong foundation with years of tight lender qualifications, large down payments, plenty of nested equity, and limited cash-out refinances.

Buyers should not worry about paying too much in today’s environment. Mortgage rates are in the low 3 percent range, demand is unbelievably strong, the supply of homes is at record low levels, and values are rising swiftly. The underlying ingredients that make up today’s housing market are not going to change anytime soon. Instead, buyers should look at their family budget, determine how much they can comfortably afford, and then aggressively pursue a home. Waiting is not really an option as home values are on the rise and mortgage rates are slowly rising right now as well.

A Tip for Buyers:

In competing against a multitude of offers, sharpen your pencil, make the offer as agreeable as possible, and pack your patience. Sometimes an offer above the listed price is necessary to be the winning bidder. Stretching an offer by an additional $10,000 may be enough to get past the finish line. At a 3.19 percent mortgage rate, the additional $10,000 means that the monthly payment goes up by $43.19 and the down payment rises slightly as well. Remember, only one buyer wins the bidding war. For everyone else, it is back to the drawing board. Steven Thomas has a degree in quantitative economics and decision sciences from the University of California, San Diego, and more than twenty years of experience in real estate. His bimonthly Orange County Housing Report is available by subscription and provides housing market analysis that is easy to understand and useful in setting the expectations of both buyers and sellers. His website is www.ReportsOnHousing.com.

OC REALTOR®

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