2025 New Laws (Part 1)

Agenda

❖ Buyer representation agreements – Legally mandated and enforceable by the DRE

❖ Balcony inspection deadline extended to Jan 2026 – but not for condo associations

❖ Contractor exemptions: $500 limit for unlicensed contractor work raised to $1000

❖ Disclosure of Domestic Water Storage Tank Assistance

❖ Disclosure of local requirements re replacement of gas-powered appliances

❖ Signing a listing agreement extends foreclosure sale by 45 days

❖ Probate small-estate exception: Limit raised to $750,000 for real property used as primary residence

Agenda: Landlord/Tenant

❖ Screening fees strictly limited: Two options for collecting them

❖ Move-in, move-out and post-repair photos mandatory

❖ UD answer period extended from 5 to 10 business days

❖ “Qualified Commercial Tenant” protections for small businesses

AB 2992: Buyer Representation Agreements

Buyer-broker representation agreement will be required as soon as practicable -- but no later than the execution of the buyer’s offer to purchase.

AB 2992 does not supersede the NAR settlement which remains in force

Which transactions does this law apply to?

• Real property improved with 1 to 4 dwelling units including a unit in a stock cooperative, condominium or planned unit development

• Multiunit residential property with more than four dwelling units

• Commercial real property

• Vacant land

• A ground lease coupled with improvements, and

• A manufactured home or a mobile-home when offered for sale or sold through an agent pursuant to the authority contained in Section 10131.6 of the Business and Professions Code.

This law does not apply to:

• Leases and rental agreements

• Sale of state or federal land

• Loan brokering services

AB 2992

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Buyer Representation Agreements

Terms that must included in the agreement:

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1. Buyer’s agent’s compensation

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2. Services to be rendered

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3. When compensation is due and

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4. Date of expiration

   
   

3- month limit: The agreement cannot last longer than three months from date made (unless buyer is a corporation, LLC or partnership).

Renewals:

• Renewals cannot last longer than three months from the date the renewal was made.

• Any renewal must be in writing and must be dated and signed by all parties to the agreement.

• A buyer representation agreement shall not renew automatically

Agency Disclosure

- The Agency Disclosure must be provided prior to execution (C.A.R. Form AD).

Void and Unenforceable

- A buyer representation agreement that is made in violation of these provisions is void and unenforceable.

Enforceable by the DRE

- Violations of AB 2992 are a violation of the real estate licensing law, and an agent is subject to discipline by the DRE.

What are the Differences between AB 2992 and the NAR settlement?

• AB 2992 does NOT supersede the NAR settlement which remains in force.

• AB 2922 requires a buyer rep agreement as soon as practicable but no later than execution of the buyer’s offer to purchase.

• Compare: The NAR settlement requires a written agreement before showing a home when “working with a buyer.”

• DRE will enforce AB 2992. Violations can be disciplined under the Real Estate Law.

• Compare: The DRE does not enforce the terms of the NAR settlement.

• AB 2992 applies to all real estate transactions including commercial, vacant land and 5+ residential

• Compare: The NAR settlement encompasses residential 1 to 4 sales

• AB 2992 voids buyer rep agreements if more than 3 months in length or made in violation of any provision of AB 2992.

• Compare: The NAR settlement has no such provision; However, the C.A.R. forms incorporate the 3-month rule

AB 2992

Balcony Inspection Deadline Extended to Jan 2026 – But Not for Condo Associations

Current Law for a building that:

• Contains 3 or more units

• Has balconies, decks, stairways or other structures (“Elevated Elements”)

• Which extend beyond the exterior walls of the building and are at least six feet above ground level, and

• Supported in whole or in part by wood or wood-based products,

• Current law requires that an inspection of the Elevated Elements be completed by January 1, 2025, and at least every six years thereafter.

AB 2579extends deadline by one year: 12-month extension to the deadline for the inspection requirement thereby delaying the inspection deadline from January 1, 2025, to January 1, 2026.

Deadline NOT extended for condo associations: There is a similar inspection requirement for the association of a condominium project inspect Elevated Elements every nine years, with the deadline for completion of the initial inspection set at January 1, 2025. However, this deadline has not been extended and remains January 1, 2025.

Will the Wooden Balconies and Stairs Addendum (C.A.R. form WBSA) be revised?

AB 2579

Contractor Exemptions: $500 Limit for Unlicensed Contractor Work Raised to $1000

$1000 Exemption Limit: The contractors licensing law does not apply when

• The aggregate contract price for labor, materials, and all other items on a work or operation on one project or undertaking is less than $1000 and

• The construction does not require a building permit

This exemption does not apply when

• The work of construction is only a part of a larger or major operation, whether undertaken by the same or different contractor, or

• Division of the operation is made in contracts of amounts less than $1000 for the purpose of evasion of the licensing law.

• A person employs another person to perform, or assist in performing, the work or operation.

AB 2622

Disclosure of Domestic Water Storage Tank Assistance

When a private water well had gone dry or was destroyed by natural disaster and the household received assistance –

starting Jan 2025

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This new law requires:

• A seller of any real property who received domestic water storage tank assistance, or is aware the real property received such assistance and the real property currently still has the domestic water storage tank, must disclose:

▪ The property has a domestic water storage tank provided by a county, community water system, local public agency, or nonprofit organization.

▪ The tank was made available to households that had a private water well that had gone dry, or had been destroyed due to drought, wildfire, other natural disasters, or was otherwise nonfunctioning.

▪ The tank might not convey with the real property.

▪ Due to the water well issues that led to this property obtaining assistance, the buyer is advised to have an inspection of the water well and to have a professional evaluate the availability of water to the property to ensure it suits the purposes for which the buyer is purchasing the property.

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SB 1366

Disclosure of Domestic Water Storage Tank Assistance

When a private water well had gone dry or was destroyed by natural disaster and the household received assistance

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TDS-Related Disclosure: Disclosures under this law are subject to the same application, exemptions and statutory termination rights as the Transfer Disclosure Statement.

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This disclosure applies to:

• residential real property

• improved with one to four dwelling units, or mobile-homes.

• Exemptions include sales of property in probate, bankruptcy, foreclosure, REOS and certain trusts, among others.

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A buyer may terminate the purchase agreement within five days of delivery of this disclosure (or three days if delivered personally).

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Questions pertaining to this disclosure requirement will be integrated into the Seller Property Questionnaire (C.A.R. Form SPQ).

Disclosure of Local Requirements re Replacement of Gas-Powered Appliances and Electrical System Inspection – Commencing January 2026

If aware of the requirements or restrictions a seller must disclose:

• The existence of any state or local requirements or restrictions -- Relating to replacement of existing gas-powered appliances -- That are being transferred with the property

• “gas-powered appliance” includes, but is not limited to, appliances fueled by natural gas or liquid propane.

This law also requires a statutory notice advising the buyer to obtain an inspection of the electrical system.

“In a purchase of real property, it may be advisable to obtain an inspection by a qualified professional of the electrical system(s) of any buildings, including, but not limited to, the main service panel, the subpanel(s), and wiring. Substandard, recalled, or faulty wiring may cause a fire risk and may make it difficult to obtain property insurance. Limited electrical capacity may make it difficult to support future electrical additions to the building(s), such as solar generation, electric space heating, electric water heating, or electric vehicle charging equipment.”

SB 382