Today's Law As Amended


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SB-1174 Commercial real estate: disclosures.(2017-2018)



As Amends the Law Today


SECTION 1.

 Section 10176 of the Business and Professions Code is amended to read:

10176.
 The commissioner may, upon his or her own motion, and shall, upon the verified complaint in writing of any person, investigate the actions of any person engaged in the business or acting in the capacity of a real estate licensee within this state, and he or she may temporarily suspend or permanently revoke a real estate license at any time where the licensee, while a real estate licensee, in performing or attempting to perform any of the acts within the scope of this chapter has been guilty of any of the following:
(a) Making any substantial misrepresentation. A substantial misrepresentation includes, but is not limited to, the inaccurate reporting of, or failure to report, any of the following: 
(1) Any and all dues associated with the property, including, but not limited to, dues charged by a common interest development, including a commercial common interest development.
(2) Taxes imposed on the property, including, but not limited to, special taxes.
(3) Fees associated with the property.
(4) Liens on the property.
(5) Environmental issues on the property.
(6) Health concerns or issues on the property.
(7) Any obligations or agreements with associations that create a financial impact on the property.
(8) All active and current reports regarding the property that affect the value of the property.
(9) All ongoing or pending litigation affecting the property.
(b) Making any false promises of a character likely to influence, persuade, or induce.
(c) A continued and flagrant course of misrepresentation or making of false promises through licensees. real estate agents or salespersons. 
(d) Acting for more than one party in a transaction without the knowledge or consent of all parties thereto.
(e) Commingling with his or her own money or property the money or other property of others which is received and held by him or her.
(f) Claiming, demanding, or receiving a fee, compensation, or commission under any exclusive agreement authorizing or employing  a licensee to perform any acts set forth in Section 10131 for compensation or commission where the agreement does not contain a definite, specified date of final and complete termination.
(g) The claiming or taking by a licensee of any secret or undisclosed amount of compensation, commission, or profit or the failure of a licensee to reveal to the buyer or seller contracting with  employer of  the licensee the full amount of the licensee’s compensation, commission, or profit under any agreement authorizing or employing  the licensee to do any acts for which a license is required under this chapter for compensation or commission prior to or coincident with the signing of an agreement evidencing the meeting of the minds of the contracting parties, regardless of the form of the agreement, whether evidenced by documents in an escrow or by any other or different procedure.
(h) The use by a licensee of any provision, which allows  provision allowing  the licensee an option to purchase, purchase  in an agreement with a buyer or seller that authorizes  authorizing or employing  the licensee to sell, buy, or exchange real estate or a business opportunity for compensation or commission, except when the licensee, licensee  prior to or coincident with election to exercise the option to purchase, purchase  reveals in writing to the buyer or seller  employer  the full amount of the licensee’s profit and obtains the written consent of the buyer or seller  employer  approving the amount of the profit.
(i) Any other conduct, whether of the same or of  a different character than specified in this section, which constitutes fraud or dishonest dealing.
(j) Obtaining the signature of a prospective buyer purchaser  to an agreement which provides that the prospective buyer purchaser  shall either transact the purchasing, leasing, renting, or exchanging of a business opportunity property through the broker obtaining the signature, or pay a compensation to the broker if the property is purchased, leased, rented, or exchanged without the broker first having obtained the written authorization of the owner of the property concerned to offer the property for sale, lease, exchange, or rent.
(k) Failing to disburse funds in accordance with a commitment to make a mortgage loan that is accepted by the applicant when the real estate broker represents to the applicant that the broker is either of the following:
(1) The lender.
(2) Authorized to issue the commitment on behalf of the lender or lenders in the mortgage loan transaction.
(l) Intentionally delaying the closing of a mortgage loan for the sole purpose of increasing interest, costs, fees, or charges payable by the borrower.
(m) Violating any section, division, or article of law which provides that a violation of that section, division, or article of law by a licensed person is a violation of that person’s licensing law, if it occurs within the scope of that person’s duties as a licensee.

SEC. 2.

 Article 1.6 (commencing with Section 1102.25) is added to Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code, to read:

Article  1.6. Disclosures Upon Transfer of Commercial Real Property
1102.25.
 (a) This article applies to any transfer by sale, exchange, installment land sale contract, as defined in Section 2985, lease with an option to purchase, any other option to purchase, or ground lease coupled with improvements, of commercial real property.
(b) For purposes of this article, the term “commercial real property” means real estate improved with other than a one-to-four family residence.
1102.26.
 (a) The transferor may elect, but is not required, to provide to a prospective transferee, either voluntarily or by request of the prospective transferee, a certified commercial real property disclosure in writing pursuant to this article.
(b) If the transferor elects to provide a certified commercial real property disclosure pursuant to subdivision (a), all of the following requirements shall apply:
(1) The transferor shall provide the disclosure without charge to the prospective transferee.
(2) The transferor shall provide the disclosure to the prospective transferee by personal delivery or by certified mail.
(3) The contract for the transfer of the property shall include an option for the prospective transferee to rescind the contract, without financial loss or punitive action, within three days if the certified commercial real property disclosure is delivered personally, or five days if the certified commercial real property disclosure is delivered by certified mail.
(4) The disclosure shall include all of the following:
(A) Any and all dues associated with the property, including, but not limited to, dues charged by a common interest development, including a commercial common interest development.
(B) Taxes imposed on the property, including, but not limited to, special taxes.
(C) Fees associated with the property.
(D) Liens on the property.
(E) Environmental issues on the property.
(F) Health concerns or issues on the property.
(G) Any obligations or agreements with associations that create a financial impact on the property.
(H) All active and current reports regarding the property that affect the value of the property.
(I) All ongoing or pending litigation affecting the property.
1102.27.
 Each certified commercial real property disclosure made pursuant to this article, and each act that may be performed in making the disclosure, shall be made in good faith. For purposes of this article, “good faith” means honesty in fact in the conduct of the transaction.
1102.28.
 The specification of items for inclusion in a certified commercial real property disclosure in this article does not limit or abridge any obligation for disclosure created by any other provision of law or that may exist in order to avoid fraud, misrepresentation, or deceit in the transfer transaction.
1102.29.
 If information included in a commercial real property disclosure in accordance with this article is subsequently rendered inaccurate as a result of any act, occurrence, or agreement subsequent to the delivery of the certified commercial real property disclosure, the inaccuracy resulting therefrom shall not constitute a violation of this article. If at the time the certified commercial real property disclosure is made, an item of information required to be disclosed is unknown or not available to the transferor, and the transferor or his or her agent has made a reasonable effort to ascertain it, the transferor may use an approximation of the information, provided the approximation is clearly identified as such, is reasonable, is based on the best information available to the transferor or his or her agent or broker, and is not used for the purpose of circumventing or evading this article.
1102.30.
 Neither the transferor nor any listing or selling agent or broker shall be liable for any error, inaccuracy, or omission of any information delivered pursuant to this article if the error, inaccuracy, or omission was not within the personal knowledge of the transferor or that listing or selling agent or broker, was based on information timely provided by public agencies or by other persons providing information that is required to be included in a certified commercial real property disclosure pursuant to this article, and ordinary care was exercised in obtaining and transmitting it.
1102.31.
 A transfer subject to this article shall not be invalidated solely because of the failure of any person to comply with any provision of this article. However, any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this article shall be liable in the amount of actual damages suffered by a transferee and shall be subject to any other civil fines or penalties allowed by law. However, a violation of this article shall not be punishable as a crime.