Real Estate is Always a Hot Topic

 

January 1, 2011

REAL ESTATE IS ALWAYS A HOT TOPIC

Even though real estate has not been kind in recent years, history shows that California real estate doubles every twenty years. It therefore continues to generate general interest and conversation in a variety of venues.

There are a number of new laws taking effect on January 1, 2011, likely the most noticeable is the common questions of REALTORS® include the following.

Question: My seller wants me to sell her home using a lottery and selling tickets.  Is that legal?

Answer: No.  Except for a few limited exceptions, conducting a lottery is a criminal violation in California.

A lottery is any scheme to distribute property by chance among persons who have paid or promised to pay any valuable consideration for the chance of winning the property whether it’s called a lottery, raffle, gift enterprise, or any other name.

Three elements must be present before “a game” is considered an illegal lottery.  The three elements are as follows: (1) the disposition of property (the prize); (2) the element of chance (luck, not skill involved); (3) consideration (something of value–payment of money typically but not necessarily).

The California Constitution also prohibits the sale of lottery tickets or any scheme by whatever name that falls within the meaning of lottery.

In fact, there is a specific prohibition for lotteries involving real estate:   “Any person, firm, corporation or co-partnership who knowingly and designedly offers or gives with winning numbers at any drawing of numbers or with tickets of admission to places of public assemblage, any lot or parcel of real property and charges or collects fees in connection with the transfer thereof, is guilty of a misdemeanor”.

There are four exceptions to the prohibition against lotteries: (1) Charitable bingo games, if authorized by the Legislature and permitted by a city or county. (2)  Raffles conducted by private, nonprofit organizations if authorized by the Legislature (at least 90% of the gross receipts must go directly to beneficial or charitable purposes in California) (3) The California State Lottery. (4)  Lottery games conducted by federally recognized Indian tribes on Indian lands in California in accordance with federal law, pursuant to compacts negotiated by the Governor and ratified by the Legislature.

Question: I am a REALTOR® and I want to give a gift to a friend for referring a client to me.  Is that legal?

Answer: The answer depends on several factors.  First, what type of property is involved in the resulting transaction? Second, is your “friend” a real estate licensee, an unlicensed person, or an employee of a company providing special services such as title insurance or pest control work?

If you deal with residential one-to-four properties and the friend is a non-licensee unaffiliated with any type of special service company, then federal law–RESPA–generally forbids the giving of a referral fee or any type of gift.  The term “generally” is used because RESPA does not forbid a referral fee if the buyer purchases the property using all cash or a loan from an individual who doesn’t typically loan money to borrowers.

If the property is residential with five or more properties or commercial or industrial or agricultural property, then a referral fee may be paid to a non-licensee who is not affiliated with a provider of special services. Finally, the same rules apply regardless of what you call the “gift” a referral fee or a finder’s fee.

Question: Can I give my tenant both a 3-day notice and a 30-day notice at the same time?

Answer: No.  Notice to a tenant cannot be in the alternative.  A 30-day notice to a tenant is not proper unless it makes a clear demand for possession with no alternative. By nature, “a 3-day notice to pay or quit” or a “3-day notice to cure a covenant or quit” gives the tenant alternative actions.

A landlord would give the tenant a “3-day notice to pay or quit” if the tenant hasn’t paid the rent in full.  If the tenant is breaching the lease in some other manner (e.g., creating a nuisance, violating any CC&Rs), the landlord would give the tenant a “3-day notice to cure covenant or quit.”

Finally, if the tenant is on a month-to-month tenancy and the landlord wants to terminate the tenancy, the landlord would give the tenant either a 30-day notice (tenant for less than a year), a 60-day notice (tenant for one year or more), or a 90-day notice (Section 8 tenant).  Things are a bit more complicated if the property is subject to local rent control laws.

If you have any questions about these issues, consult a knowledgeable and capable real estate attorney. REALTORS® are required to be knowledgeable about the law but are not real estate law practitioners.

For the California Codes (statutes) go to:

http://www.leginfo.ca.gov/calaw.html

Click on the particular code you want (e.g., Civil Code), and you can search either by a keyword or a section number.  If you enter 1102 and set the limit to 10 documents, you’ll see 6 groups of Civil Code Sections.  If you click on the first group, you’ll get Civil Code Sections 1102-1102.18.

For the California Assembly or Senate pending bills, go to:

http://www.leginfo.ca.gov/bilinfo.html

and you can search by bill number, author, or keyword.  If a bill has passed and been approved by the governor, you’ll see the word “chaptered.”

For recent California Court of Appeal or California Supreme Court opinions (e.g., “slip opinions” –prior to official publication), go to

http://www.courtinfo.ca.gov/opinions/

Kay Wilson-Bolton is the owner of CENTURY 21 Buena Vista in Ventura and Santa Paula. She always brings a regional perspective to local issues. Her opinions are derived from best available resources and she does not speak for the membership of the Ventura County Coastal Assn. of REALTORS®. She can be reached at 805.340.5025. Her web address is www.realestatemagic.com