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2016 Q&A Revisions

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The Water Conserving Plumbing Fixtures Q&A (revised December 8, 2016) has been updated as follows:

  • Question 3 explains that there is no obligation for either agents or brokers to ensure that WCP fixtures have been installed since it is not a point of sale requirement. However, agents should impress upon the seller the necessity of carefully and accurately completing the appropriate disclosure forms.
  • Question 5 clearly explains to a seller what his or her obligations are under the law.
  • Question 6 offers that even though the WCP fixtures law does not create a point of sale requirement, it is possible for a lender to require it a condition of offering a loan.
  • Question 8 lists all of the forms that may be used for a seller to meet their disclosure obligations.
  • Question 11 offers advice to a seller on how to complete the TDS.
  • Question 12 offers advice to a seller on how to complete the SPA  (or ESD if TDS-exempt).
  • Question 13 offers advice to a principle as to how they would know for sure if the property has non-compliant plumbing fixtures.
  • Question 14 explains what agents need to know about the WCP fixtures law.
  • Question 15 states which part of the RPA-CA can be used to negotiate the installation of WCP fixtures.
  • Question 16 offers sample language for this purpose.
  • Question 31 clarifies that a city or county law put in place prior to July of 2009 is grandfathered in.
  • Question 32 clarifies that a city or county may enact a law that requires greater water savings than required under state law.

The Pocket Listings Q&A (revised October 21, 2016) has been updated as follows:

  • Question 7 has been supplemented with a reference to the disclosure components C.A.R. has included in its standard form listing agreement (RLA) and seller exclusion from MLS (SELM) outlining the many advantages of submitting a listing to the MLS so that seller is made aware of them and what would be waived by agreeing to a pocket listing.

The Limited Service Brokers and Open Listings Q&A (revised October 21, 2016) has been updated as follows:

  • Questions 4 and 7 have been supplemented with additional information about listing broker's responsibility to satisfy any offer of compensation made/communicated through the MLS, even when stating it is to be paid directly by the seller.

The Government Assessor Access to the MLS Q&A (revised October 21, 2016) has been updated as follows:

  • Question 1 added reference to the specific appraisal license identified in California law as the one eligible to join the MLS - the one under the Office of Real Estate Appraisers or ("OREA"), currently under the Department of Consumer Affairs. [See Cal Civil Code, Section 1086, et seq.]
  • Questions 4 and 5 add further information about how the MLS Rules governing the scope of participation and permissible use would not allow an appraiser to share MLS information with a government entity.

The Protect Your Brokerage from Cybercrime Q&A (revised October 14, 2016) has been updated as follows:

  • Question 1 has been expanded to include 14 red flags from FinCEN which help to identify cyberfraud scams.
  • Question 19 has also been revised to highlight the same advice and to provide a link to the FinCEN advisory.

The "Double-Whammy": Due-On-Sale - Prepayment Penalty Prohibition Q&A (revised September 19, 2016) has been updated as follows:

  • Question 12 was added to indicate that under the Dodd-Frank Ability to Repay rules, for “qualified” mortgages, prepayment penalties cannot exceed 2% if paid off within the first two years of the loan and 1% if paid off in the third year. After the third year, they cannot be claimed at all.

The Team Names Q&A (revised September 16, 2016) has been updated as follows:

  • Question 7 and 8 have been revised to indicate that the responsible broker’s license number no longer need be displayed on team name advertising. This is now optional.

The Fictitious Business Names and Team Names Q&A (revised September 15, 2016) has been updated as follows:

  • Question 35 has been revised to indicate that the responsible broker’s license number no longer need be displayed on team name advertising. This is now optional.
  • Question 41 has been revised to indicate that the responsible broker’s license number no longer need be displayed on agent-owned DBA advertising. This is now optional.
  • Question 42 has been revised to indicate that for both team name and agent-owned DBA advertising the “responsible broker identity” does not require the display of the broker’s license number, but is optional.

The Rental Property and Foreclosure Q&A (revised September 2, 2016) has been updated as follows:

  • Question 23 was added indicating that a property manager has no liability for failing to disclose a Notice of Default to prospective tenants unless the landlord has given direct written instructions to do so, or possibly if the property manager has a direct fiduciary duty to the prospective tenants as their own representative.

The Record Retention: How Long You Should Keep Documents Q&A (revised September 1, 2016) has been updated as follows:

  • Question 5 was added. Even though CalBRE requires transaction records to be maintained for three years, many risk management and defense litigation attorneys recommend that their broker clients maintain their files for five years or more.
  • Question 8 was added. CAR sponsored legislation which took effect in 2015 generally excludes texts and Tweets from the record retention requirements.

The Mello-Roos District and 1915 Bond Act Disclosure Requirement Q&A (revised August 10, 2016) has been updated as follows:

  • Question 9 was added to indicate that the standard C.A.R. purchase agreements require the inclusion of tax information when providing a NHD zone report.

The Disclosure of Death and AIDS and the Prohibition Against Discrimination on the Basis of AIDS Q&A (revised August 3, 2016) has been updated as follows:

  • Questions 10, 11 and 13 were revised to indicate that the SPQ and ESD forms require the seller to affirmatively state, if aware, whether a death has occurred on the property within the last three years. Even without this contractual obligation, then the disclosure of a death within the last three years before the offer to purchase was made would still be necessary if it constituted a material fact.
  • Question 16 was added to discuss the disclosure obligations pertaining to haunted or stigmatized houses. The question cites the New York case of Stambovsky v Ackley from 1991 which ruled that the seller had a duty to inform the buyer of the possible existence of poltergeists or spectral apparitions where the seller himself had reported the information in both national and local publications.

The Balloon Payment Notices and Restrictions Q&A (revised July 29, 2016) has been updated as follows:

  • Question 1 has been added to explain that since the implementation of the Dodd-Frank Ability to Repay rules in 2014, residential consumer loans with balloon payments have been nearly eliminated in standard lending. Generally, the Ability to Repay rules, apply to any lender who makes five or more consumer loans secured by a residence in a year.

The Carbon Monoxide Detectors Q&A (revised July 28, 2016) has been updated as follows:

  • Question 8 was added to indicate that even though installation of CO devices is not a point-of-sale requirement, the RPA-CA requires their installation as a contractual term.

The Option Contracts and Leases with Option to Purchase Q&A (revised July 28, 2016) has been updated as follows:

  • Question 20 was revised to emphasize that if a sale is disguised as an option that may mean that the seller will have no right to retain the option consideration.

The Contract Law and Real Estate Transactions Q&A (revised July 20, 2016) has been updated as follows:

  • Question 25 was added indicating that the RPA-CA contains an assignment provision, and that form AOAA may be used to facilitate either a partial or total assignment.

The Commissions Q&A (revised July 20, 2016) has been updated as follows:

  • Question 6 indicates that an exclusive listing which omits a definite termination date is not necessarily void. While the broker may subject to discipline by the BRE, he or she may still be entitled to payment if the services have been fully performed and the owner has received its benefits.
  • Question 7 explains that under the standard C.A.R. listing agreements, the listing broker is entitled to a commission upon securing a ready, willing and able buyer whose offer to purchase is then accepted by the seller. In 2013, the standard listing agreements were changed to require that the seller accept an offer before a commission was earned, even though a ready, willing and able buyer had been procured.
  • Question 17 explains that in probate sales requiring court confirmation, no commission can be earned until the sale has been confirmed and consummated. If no court confirmation is necessary, it would be possible to enter into a limited service listing in order to receive compensation earned on a task-by-task basis.

The Trust Funds Q&A (revised July 20, 2016) has been updated as follows:

  • Question 6 states that the default under the standard C.A.R. purchase agreements is for the buyer to deliver their good faith deposit money directly to escrow rather than give it to the cooperating broker to hold until acceptance.
  • Question 9 provides available resources for locating banks that offer broker trust accounts including C.A.R.’s list of such banks, a Sample Letter for requesting a bank to open a broker trust account and a link to the BRE’s memo on opening a broker trust account.
  • Question 12 explains a new law which allows unlicensed employees with authority to withdraw trust funds to obtain fidelity bond coverage with up to a 5% deductible.
  • Question 30 lists various BRE articles pertaining to trust fund handling and audits.   

The Security Breach of Computerized Records with Personal Data Q&A (revised July 18, 2016) has been updated as follows:

  • Question 2 adds both medical and health insurance information to the category of “personal information” under the security breach notification law.
  • Question 6 details what information should be contained in a security breach notification letter.
  • Question 7 provides the statutory sample form which may be used for a security breach notification letter.
  • Question 8 explains what additional information would be required if the security breach involves a password or a security question.
  • Question 9 explains how a security breach notification letter may sent electronically.

The Range Pricing Q&A (revised July 18, 2016) has been updated as follows:

  • Question 4 now states that a commission would not typically be earned under the standard C.A.R. listing agreements regardless of whether a seller rejects an offer at either the high or low end of a range price listing. This is because in addition to requiring the procurement of a ready, able and willing buyer, the standard listing agreements require that the seller “accept” the offer as a condition of earning a commission.

The  How a Seller May Cancel a Purchase Agreement: Checklist and Q&A (revised July 14, 2016) has been updated as follows:

  • Question 6 was added to explain that cancellation of the purchase agreement is not the same as cancellation of the escrow which requires mutual agreement from both the buyer and seller.
  • Question 8 was added to provide a reprint of the Sample Letter, “Receipt of Subsequent Offer Letter,” which explains to the seller the problems of reselling the property to a second buyer while there is an unresolved first escrow.
  • Question 13 now indicates that the RPA-CA requires as a default that the buyer or seller when using the Demand to Close Escrow form give the other party at least three days to close escrow.
  • Question 15 now indicates that the RPA-CA requires as a default that the Demand to Close Escrow may be delivered no earlier than three days prior to the scheduled close of escrow.

The Online Privacy Laws Affecting REALTORS® Q&A (revised July 8, 2016) has been updated as follows:

  • Questions 7 explains what a Do Not Track signal is.
  • Question 8  states that the California Online Privacy Protection Act (CalOPPA) does not require a website operator to forego tracking by complying with the DNT signal.
  • Question 9 explains what CalOPPA does require in terms of disclosure in the privacy policy.
  • Question 12 notes that the Attorney General’s office claimed that non-compliant app operators could be penalized $2500 per download.
  • Question 13 includes a sample privacy policy that addresses the issue of a website’s DNT policy.

The Requests for Repair and Use of the RR and RRRR Forms Q&A (revised June 16, 2016) has been updated as follows:

  • Question 2 now includes a practice tip regarding us of form “FHA or VA Notice and Addendum” (FVA) when making a request to repair.
  • Question 4 now provides a clearer and more detailed explanation of how the RR form works.
  • Question 4 also includes two practice tips. This first notes that the contingency removal on the RR form for “investigations” is for the physical contingency alone, and that to remove the investigation contingency in full, the seller should attach to the response form CR and check box 2A4 for all buyer investigations.
  • Question 4’s second practice tip explains the necessity for the buyer to sign the CR form when agreeing to the seller’s response. This is a new requirement on the revised forms RR and RRRR. Otherwise the process for finalizing the request for repairs is incomplete and the seller is not bound by contract to complete those repairs.    
  • Question 5 now provides a clearer and more detailed explanation of how the RRRR form works.
  • Question 7 now includes a practice tip advising that if the seller is agreeing to pay for either a section 1 or 2 wood destroying pest control clearance, the listing agent should attach to the seller’s response form CR with box 2A(4) checked to remove all remaining buyer investigations, thereby including contingencies for wood destroying pests, in the seller’s response.

The Regulation Z Advertising Disclosures Q&A (revised June 15, 2016) has been updated as follows:

  • The introduction notes that the Dodd-Frank Act granted the Consumer Financial Protection Bureau (CFPB) rulemaking and enforcement authority under TILA and Regulation Z. In general, this revised Q&A provides ample citations to the CFPB’s official comments to Regulation Z.
  • Question 5 has been added has been added to explain that Regulation Z does not prescribe specific type size or placement.
  • Questions 6, 7 and 8 have been added to explain the clear and conspicuous standard in various media.
  • Question 10 has been added explaining the prohibition against advertising the APR simultaneously with other rates.
  • Question 11 has been added to explain how “buydowns” or “points” may be advertised and how they affect the APR.
  • Question 12 has been added to explain how discounted variable-rate transactions may be advertised and how they affect the APR.
  • Questions 15, 16, 18 and 19 have been added to provide definitions of phrases “down payment,” “payment period,” “balloon payment,” and “finance charge” respectively.
  • Questions 23 through 26 provide details of special rules applicable to advertisements for credit secured by a dwelling when more than one rate is advertised or the amount of any payment is advertised.
  • Questions 27 through 34 explains various prohibitions related to “misleading” advertisements including misleading advertising related to “fixed” rates; misleading comparison advertising; misleading use of the lender’s current name; misleading claims of debt elimination; misleading use of the term “counselor”; and misleading foreign-language advertisement.

The Residential Listing Agreements Between Seller and Broker Q&A (revised May 24, 2016) has been updated as follows:

  • Question 4 was revised to include a practice tip. In using the Single Party Compensation Agreement (C.A.R. form SP), the buyer’s agent may additionally deliver to the seller along with form SP the Seller Non-Agency Agreement (C.A.R. form SNA) which will make crystal clear that the buyer’s agent is indeed representing the buyer exclusively and that the seller will be representing him or herself.
  • Questions 6, 7 and 8 pertaining to the protection clause now state that a broker must deliver to the seller the list of protected buyers no later than the end of the listing period or any extension or cancellation.

The Broker Compensation Under C.A.R. form RPA-CA Q&A (revised April 14, 2016) has been updated as follows:

  • Paragraph references were updated to reflect the 2015 version of the RPA.

The Liquidated Damages and Deposit Disputes Q&A (revised April 7, 2016) has been updated as follows:

  • Question 2 and 3 were added to discuss the advantages and disadvantages of a liquidated damages provision to both the buyer and seller.
  • Questions 10, 11, 12 and 13 were added to explain in detail how the liquidated damages amount is calculated.
  • Questions 14, 15, 16 and 17 were added to explain the circumstances in which a liquidated damage provision may be challenged.
  • Questions 20, 21 and 22 were added to discuss non-refundable deposit provisions and why they should be avoided.
  • Questions 26, 27, 28, 29 and 30 were added to explain under what circumstances an escrow will release the deposit from escrow.
  • Question 31 references the two Sample Letters “Demand for Deposit for Contingency Cancellation” to be used by the buyer and “Demand for Deposit Buyer Failure to Close” to be used by the seller. 
  • Question 33 references the “Small Claims Court Assistance Manual for REALTORS and Their Clients” which provides practical tips and information on how to present a deposit dispute case in small claims court.
  • The name of this Q&A was changed from “Liquidated Damages and Deposit Forfeitures.”
  • Translations of this Q&A into Chinese, Korean, Spanish, Tagalog, and Vietnamese are no longer available.

The C.A.R. Interboard Arbitration Q&A (revised April 1, 2016) has been updated as follows:

  • Question 33 has been updated to reflect that the fee for a continuance request escalates for each continuance granted during the arbitration process.
  • Question 43 has been updated to reflect the the Presiding Officer of the original arbitration hearing panel is involved in a Director Review hearing.
  • Questions 47 and 48 describe the new C.A.R. arbitration enforcement policy (rule change effective January 1, 2016), which is a process that can be initiated by the prevailing party to address non-payment of an award.
  • Question 49 describes the judicial process that a party to an arbitration can initiate in order to confirm and enforce an award.

The RPA Timeline of Events Chart (revised March 18, 2016) has been updated as follows:

  • The RPA Timeline of Events was updated so that the paragraph references reflect the December 2015 version of the RPA.
  • The reference to the SSD form was changed to instead refer to the ESD form.

The Probate Commission Chart Q&A (revised March 23, 2016) has been checked to ensure that all citations are current, and its revision date has been updated.

The Use of An "As Is" Clause Q&A (revised March 18, 2016) has been updated as follows:

  • It has been rewritten in the form of a Q&A.  Previously, it was in the form of an article.
  • Question 1 has been added to indicate that the C.A.R. purchase agreements contain “as is” clauses.
  • Question 2 has been added stating that it is not necessary to include additional language in the purchase agreement to ensure that the property is sold “as is.”
  • Questions 3 and 4 have been added to explain that a seller may have a limited duty in certain circumstances to perform repairs despite the existence of the “as is” clause.
  • Question 5 has been added to indicate that a seller still retains a duty to make all disclosures despite the “as is” clause.
  • Questions 6 and 7 have been added to emphasize that the “as is” addendum does not impair the buyer’s contingency or investigation rights.
  • Question 8 has been added to explain what the main purpose and advantages of an “as is” provision are.
  • Question 9 has been added to emphasize that an “as is” clause does not relieve the seller from liability for active misrepresentations or a knowing failure to disclose.

The Counter Offer Form Q&A (revised March 15, 2016) has been updated as follows:

  • It has been renamed, “Counter Offer Forms (C.A.R. Forms SCO, BCO and SMCO),” and rewritten in the form of a Q&A. Previously, it was in the form of an article.
  • Question 1 has been added discussing the differences between the Seller Counter Offer (SCO) and the Buyer Counter Offer (BCO).
  • Question 2 and 3 have been added to explain how the counter offer forms may be numbered.
  • Question 7 has been added to discuss the importance of correctly referencing the prior document.
  • Question 8 has been added to explain how a counter offer may be withdrawn.
  • Question 10 has been added to explain that the confirmation of acceptance is not required to create a binding agreement.
  • Question 11 has been added to explain who is authorized to personally receive a counter offer (or offer) for the purpose of creating a binding agreement.

The Contingencies and Contingency Removal Q&A (revised March 14, 2016) has been updated as follows:

  • Question 6 now confirms that the TDS cancellation right may be exercised by even sophisticated buyers of mixed-use commercial and residential property.
  • Question 18  references and discusses the buyer’s possible cancellation rights under paragraph 10.A.(6) and (7) of the RPA-CA.

The Probate Sales of Real Property Q&A (revised March 14, 2016) has been updated as follows:

  • Question 10 has been revised to explain which forms are necessary for the taking of a probate listing. A snapshot of a completed Representative Capacity Signature Disclosure is provided as an example. 

The Conditional Offers of Compensation Q&A (revised March 14, 2016) has been updated as follows:

  • Question 10 has been added regarding a builder’s offer of commission conditioned upon an agent accompanying the buyer to the property on their first visit.

The Subdivided Lands Law Q&A (revised March 14, 2016) has been updated as follows:

  • Question 1: Not only does a public report provide information apprising the buyer of various aspects of the subject property but also requires adherence by the seller to affirmative standards covering suitability for the intended use and fair dealing before a property is offered for sale.
  • Question 11: Time-shares are no longer regulated pursuant to the Subdivided Lands Act. Although the CalBRE still oversees public reports regarding time-shares it does so pursuant to the Time-Share Act of 2004. To come within coverage of this Act, the time-shares must consist of eleven or more interests, must be more than three years duration, and must cost at least $3000.
  • Questions 14 and 15: TICs consisting of between five and fifteen units require a public report only for the initial marketing and creation. Per CalBRE guidelines, the resale of TICs do not require a public report if the resale is by persons who were not involved in the initial creation or sale of such interests.
  • Question 19 has been expanded to include various exclusions from the Subdivided Lands Act including: the builder to builder exemption; nonbinding intents for conversions to condominiums; out-of-state subdivisions; and limited equity cooperatives.
  • Question 48 indicates that the Consumer Financial Protection Bureau has responsibility for administering and enforcing the Interstate Land Sales Full Disclosure Act. Previously this federal law was enforced through the Department of Housing and Urban Development.
  • Question 54 references a host of publications available from the CalBRE explaining and dealing with the Subdivided Lands Act.
  • Appendices incorporating the CalBRE sample forms for rescission rights for both time-shares and land projects have been deleted. 

The Virtual Office Websites (“VOWs”) Q&A (revised February 12, 2016) has been updated as follows:

  • Questions 38, 41 and 42 have been changed to account for the required VOW "parity principle" implicated in NAR's recent mandate that MLSs include pending listing status in IDX feeds, thus requiring that this status now be included in VOW feeds as well. 
  • Question 44 has been supplemented to show the data display disclaimer required in VOW displays.

The Internet Data Exchange (IDX) Q&A (revised February 12, 2016) has been updated as follows:

  • Question 8 has been changed to reflect recent NAR and CAR IDX policy changes.
  • Questions 28-31 have been changed to reflect NAR's latest mandate that MLSs include pending and sold listing statuses in IDX feeds.
  • Question 36 has been added to address the data display disclaimer required in IDX displays.

The California Withholding Tax on the Sale of Real Property Q&A (revised February 12, 2016) has been updated as follows:

  • Questions 1 and 3 have been modified to clarify the seller’s election to have the withholding amount calculated on the maximum tax rate applied to the taxable gain rather than 3 1/3 percent of the gross sales proceeds.

The Social Networking Q&A (revised February 8, 2016) has been updated as follows:

  • Introduction changed to eliminate outdated or defunct social media platforms.
  • Question 20.  Information added recent changes to the NAR Code of Ethics and interaction of those changes with CalBRE regulations.

The Landlord-Tenant Guide for REALTORS® Q&A (revised January 29, 2016) has been updated as follows:

  • Question 7 includes a list all protected statuses under both federal and state fair housing laws. Additionally, effective January 1, 2016, it is illegal under the California Unruh Civil Rights Act to discriminate on the basis of immigration status, citizenship or primary language.
  • Question 14 indicates that the jurisdictional limit in small claims court is $10,000 in most situations where the claim is brought by a natural person. C.A.R’s Legal Q&A “Small Claims Court” is now referenced.
  • Question 28 is new: As of January 1, 2016, a residential landlord must locate smoke alarms to comply with current building standards. Presently, current building standards for single family properties require a smoke alarm to be located in 1) each bedroom 2) centrally located outside each sleeping area and 3) on every floor including the basement regardless of whether there is a sleeping area on the floor or the basement (California Building Code [F] 907.2.10.1.2). However, the law will not require the landlord to replace existing alarms unless they are inoperable. Then, of course, they must replace them with the newer ones approve d by the State Fire Marshall. There is no requirement to upgrade to hard-wired if the alarms are presently battery operated.
  • Question 31 adds that the landlord’s right of entry may be for the purpose of installing, repairing, testing and maintaining single station smoke alarms.
  • Question 31 adds that the landlord’s right of entry includes the right to hold an open house on the weekend pursuant to the Dromy case.
  • Question 44 is revised to explain the notice and termination rules for a month-to-month or fixed term residential tenant in possession at the time a property is sold in foreclosure.
  • Question 52 now lists the “non-curable” reasons for terminating a tenancy: unpermitted assignment or subletting, “waste,” nuisance and unlawful use. To evict on this basis, a landlord may serve C.A.R. form, “Notice to Quit” (Form NTQ).
  • Question 58 is revised to explain the notice and termination rules for a month-to-month or fixed term residential tenant in possession at the time a property is sold in foreclosure.
  • Question 59 discusses the requirement to change locks or permit a tenant to change locks upon request of a “protected tenant.”
  • Question 62 discusses the rights and obligations of the landlord and tenant under C.A.R “Residential Lease Agreement” when there is a major disaster such as an earthquake.
  • Question 63 discusses the landlord’s obligation to provide a special statutory notice that must be given to a tenant or possibly tenants of adjacent units when the landlord or the landlord’s agent applies any pesticide without a licensed pest control operator. This law went into effect on January 1, 2016.

The following questions have been revised to reference the C.A.R. Sample Letters:

  • Question 13 now references the C.A.R. Sample Letter “Security Deposit Return” for use in itemizing deductions and returning the security deposit.
  • Question 15 now references the optional C.A.R. Sample Letter “Instructions When Tenant Vacates on Termination of Tenancy” which provides helpful instructions to a tenant to ensure a smooth transition out of the property.
  • Question 32 now references the C.A.R. Sample Letter “Owner to Tenant Security Deposit” for use by a seller when transferring the security deposit to either the tenant or the buyer when the property is being sold.
  • Question 43 now references the C.A.R. Sample Letter “Lease Expiration Letter” for use to terminate the tenancy of a tenant at the expiration of a lease.
  • Question 46 now references the C.A.R. Sample Letter “Abandoned Personal Property (Residential) Letter” for use when a tenant vacates a property and leaves personal property behind.
  • Question 47 now references the C.A.R. Sample Letter “Belief of Abandonment Residential (Real Estate) Letter” for use when a landlord believes that a tenant has abandoned the (real) property.

The Taxation of Foreclosures and Short Sales Q&A (revised January 20, 2016) has been updated as follows:

  • Question 9 indicates that the federal Mortgage Debt Relief Act has been extended through December 31, 2016, including discharges of indebtedness pursuant to a binding written agreement entered into on or before that date. Under the Debt Relief Act, the discharge of acquisition indebtedness (up to $2,000,000 of debt used to acquire or substantially improve a qualified principal residence) is treated as a reduction in purchase price (capital gains) and not as COD income. As before, single or joint tax filers selling a principal residence can use the appropriate $250,000 or $500,000 capital gains exclusion. 
  • However, California has not adopted conforming legislation, and it is unclear whether the FTB will or will not treat forgiven debt on a short sale as taxable income.

The Abandoned Personal Property after Termination of Tenancy Q&A (revised January 14, 2016) has been updated as follows:

  • When a landlord disposes of personal property left behind after a tenant has vacated, the California Civil Code provides both forms and an optional procedure to clarify the rights of the landlord and tenant. C.A.R. has made these forms – along with instructions for their use -- available in ZipForm through the CAR Sample Letters. This Q&A now references two sample letters: one for residential tenancies called, “Abandoned Personal Property (Residential) Letter” and one for commercial tenancies called “Abandoned Personal Property (Commercial) Letter.” 

The Federal Withholding: Foreign Investment In Real Property Tax Act Q&A (revised January 6, 2016) has been updated as follows:

  • The FIRPTA withholding rate has been increased from 10% to 15% effective February 17, 2016. However, if the property acquired is to be used as the buyer’s residence and the property price is $1,000,000 or less, then the 10% withholding rate would still apply. 

For any questions about this Web page, please contact the Legal Editor, Neil D. Kalin, Esq.


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