American Home Shield was gracious enough, for the fourth year in a row, to sponsor a legal update with Gov Hutchinson, Assistant General Counsel and Staff Vice President of the CALIFORNIA ASSOCIATION OF REALTORS®.
All staff and agents from PMZ attended to hear about the latest laws and form updates.
Here is some interesting information:
Three year moratorium on Short Sale income tax reporting
The President has signed legislation implementing a law that eases the tax burden for homeowners who have had debt forgiven on a mortgage due to a foreclosure or short sale.
Previously, the tax code required a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower had been forgiven. Then, if the property was sold at foreclosure or was sold for less than what was borrowed, the difference was considered income and subject to be taxed. The new legislation provides a temporary, three-year change to the tax code to eliminate taxes homeowners might face when banks renegotiate the terms of a home loan and forgive a portion of the outstanding mortgage balance. The change in the tax law will cap untaxable forgiven debt at $2 million and apply only to principal residences.
Gov mentioned that similar legislation should pass through California State law.
For more information, view the White House fact sheet: Mortgage Forgiveness Debt Relief Act of 2007.
California’s anti-deficiency law saves short sale sellers
When you short sale a home in California, seller’s may be protected from paying the deficiency of the sale to the bank. California’s Code of Civil Procedure, Section 580(b) in plain English states that the bank cannot seek a deficiency judgment against the borrower if the loan was for purchase money on a residential one-four owner-occupied property. These loans are commonly referred to in the lending industry as “non-recourse” loans. The borrower has to live there—if it is an investment property or vacation home, then 580(b) may not save the borrower.
Full details of California CCP 580(b)
Laws regarding rentals
Immigration status - When screening tenants for rental eligibility, property owners can no longer ask the prospective tenant their immigration status. They will need to focus on other eligibility requirements such as income, employment, etc. More info on California Civil Code § 1940.3
Firearms - Similar to no tolerance procedures for drugs, property owners can evict tenants who own illegal firearms, un-permitted firearms, etc.
DRE Licensing Laws
The DRE can revoke or suspend a real estate license if an agent is convicted of a misdemeanor or felony, but only if it is Real Estate related.
There is a good chance that it will be required next year to include your DRE license number on your business cards, so consider jumping on board the bandwagon early or just ordering seven months worth of business cards if you are close to running out.
Those are just a few interesting facts I picked up today from the meeting. Thanks a lot for coming Gov!
Note: This article is not to be used or construed as tax or legal advice. Please consult with a tax professional for tax related inquiries or a lawyer for legal counsel.
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