California Association of REALTORS® Guidance Statement

Coronavirus

“Governor Newsom and the State Public Health Officer issued Executive Order N-33-20 requiring all Californians to stay home except as needed to maintain continuity of operations in 16 infrastructure sectors. This supersedes all existing local city and county orders that are less restrictive. The real estate industry is not exempt from this prohibition except as needed to maintain “continuity of operation … of … construction, including housing construction.” Therefore, REALTORS® should cease doing all in-person marketing or sales activities, including showings, listing appointments, open houses and property inspections. Clients and other consumers are also subject to these orders and should not be visiting properties or conducting other business in person. 

Property management and repair work, which generally involves maintaining sanitary and safety conditions is permissible. Additionally, many other aspects of the real estate industry can continue to occur without in-person contact, including documentation and signing, and in many circumstances, closings. Other activities may also be managed remotely, though there may be some difficulties.”

Disclosure of Potential COVID 19 Exposure

What to do if an agent learns that a visitor to the property, including potentially another agent, tested positive to COVID 19 — is disclosure required or recommended?

This information would be material to anyone at risk for potential exposure but raises the question of whether it’s a property concern or a people concern. Is the concern that the property site itself might have been or is contaminated? Or is the risk of having been around a particular person? And was this person on or offsite from the property?

Legally, known material conditions related to the property should be disclosed. Per the CDC, it’s possible the virus can spread from contact with infected surfaces or objects on a property, meaning a person could get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads. However, the more relevant aspect to potential exposure pertains to the timing of contact with the property and the infected person and any others who came for a period thereafter. This is not purely or a per-se property condition. But to be on the safe side, a disclosure could be made. Disclosing through the MLS would not be the most effective way to communicate this information because (a) no further showings should be ongoing under the order of March 19, 2020, and (b) the concern at issue is backward-oriented and person-focused (and not a permanent property condition) for those potential visitors and/or agents identifiable from lockbox or other records as having been at the property during that time period with the exposed person. Notice could then be given in a targeted way.   

If making a disclosure, it should be done in a generic way so as not to invade privacy or implicate personal information. This would mean not using names but a general description along the line of “a visitor to the property on Xdate has tested positive for COVID 19.” 

“© California Association of REALTORS®, Inc. Reprinted under a limited license with permission.”

What responsibilities does a tenant have?

Tenants and Landlords

The tenant’s duty to maintain

If the leased premises is in need of repair, whether minor or major, the tenant needs to notify the landlord of the condition. The notification may be made orally, or in writing.

After advising the landlord of the need for repairs, the tenant may make the repairs and deduct the cost of the repairs from the next month’s rent if:

  • the landlord fails to make the necessary repairs within a reasonable time after notice of the defect; and
  • the cost of repairs does not exceed the amount of one month’s rent, called the repair and deduct remedy.

The repair and deduct remedy may not be used more than twice in any 12-month period. [CC §1942(a)]

However, the repair-and-deduct remedy is not available to the tenant when the need for repair is created by the tenant’s conduct. [CC §1942(c)]

Over the course of the tenancy, normal wear and tear is expected to occur. Thus, the landlord may not charge the tenant for any minor defects due to normal wear and tear that are discovered in the pre-expiration inspection.

However, the tenant breaches their duty to care for and maintain the premises when the tenant:

  • contributes substantially to the dilapidation of the premises; or
  • substantially interferes with the landlord’s duty to maintain the premises. [CC §1941.2(a)]

For example, a tenant does not notify their landlord of a leak in the roof that is causing damage to the ceiling of the rental unit. Eventually, the ceiling falls down, causing damage to the tenant’s personal property, the walls and the floor coverings. Here, the tenant interfered with the landlord’s duty to maintain the property since the tenant failed to:

  • notify the landlord of the leak in the roof; or
  • repair the leak.

Therefore, the tenant is liable to the landlord for the cost of repairing the damaged ceiling since they neglected to report the water seepage.

A reasonable time for the landlord to make necessary repairs after notice is 30 days, unless the need to repair is urgent and requires more immediate attention. [CC §1942(b)]

The landlord’s duty to maintain

A residential landlord has a general obligation to:

  • put a residential unit in a condition fit for occupancy prior to leasing; and
  • repair all unsafe and unsanitary conditions that occur during occupancy that would render the unit uninhabitable.

Further, all residential rental and lease agreements automatically contain an implied warranty of habitability. The unwritten warranty imposes a contractual duty on a landlord to keep their residential units fit for human occupancy at all times. [Green v. Superior Court of the City and County of San Francisco (1974) 10 C3d 616]

The landlord’s statutory obligation to maintain their residential units requires the landlord to correct major defects interfering with the tenant’s ability to live on the property, such as a lack of hot water or a leaky roof.

The residential landlord has an obligation to care for and maintain all major and structural components of residential rental units. They are also further obligated to repair minor defects. Minor defects include such conditions as:

  • leaky faucets;
  • faulty electrical switches; and
  • failed locks or latches.

Typically, a residential landlord agrees in the rental or lease agreement to care for and maintain the property, which includes the repair of minor defects. [See RPI Form 550]

The landlord’s failure to repair or replace minor defects constitutes a breach of provisions in the rental or lease agreement. The landlord who breaches the lease agreement by failing to make minor repairs is required to reimburse the tenant for reasonable costs incurred by the tenant to cure the defects.

So that both tenant and landlord are on the same page about the unit’s condition upon move-in, they need to complete a Condition of Premises Addendum. [See RPI Form 560]

When the unit is furnished, the landlord and tenant also need to complete a Condition of Furnishings Addendum. [See RPI Form 561]

Before the tenant vacates, the landlord needs to conduct a pre-expiration inspection. If the landlord finds any damage sustained to the unit, fixtures or furnishings, they will record these on a statement of deficiencies. The cost to repair any defects not corrected before the tenant moves out will be deducted from their security deposit. Further, the landlord may demand payment for any damages exceeding the security deposit. [Calif. Civil Code §1950.5(b)]

Provided by ft Editorial Staff

Understanding “CAP Rates”

Net Operating Income

In commercial real estate, the capitalization rate or “cap rate” is a formula utilized to analyze real estate markets and compare investment opportunities. A property’s capitalization rate can be calculated by dividing its net operating income by its purchase price. The cap rate provides a snapshot of a property’s earning potential. Both investors and business owners utilize cap rates when shopping for commercial real estate, as a higher cap rate means a higher return for the investor.

Cap Rate 
Net Operating Income /Purchase Price = Cap Rate

In the example below, an investor purchases a doctor’s office for $500,000. The property has a long-term tenant, with a 10-year NNN lease. The monthly rental income is $2,500, with an annual net income of $30,000. In this scenario, the property’s cap rate is 6%. In addition to providing a measuring stick to compare similar properties against, cap rates provide investors with an expected rate of return. In this scenario, the 6% cap rate means the investor received a 6% annual return on their capital (in addition to any appreciation).

6%        =  $30,000 / $500,000

A property’s cap rate offers a very practical way to analyze its value, by comparing its earning potential and purchase price. Like a weather barometer, cap rates can be used to measure the economic health and investment activity within a community. Currently, national cap rates for commercial properties range from 4% to 10%, with Reno’s cap rates ranging from 5-7%.

In today’s low interest rate environment, with money markets paying less than 2%, local commercial real estate continues to offer investors 5-7% annual yields. Known for being a stable asset class that preserves wealth, commercial properties remain an attractive investment for individuals, businesses, retirement plans, and trust funds.

My Home Appraisal Came in Low

Appraisal Came in Low

Your appraisal came in lower than your accepted offer price. The first thing your agent should do is review the appraiser’s report for errors.  Appraisal challenges are not easy but what if your challenge fails?  There are essentially four options.

  • Ask for a new appraisal. You can ask the lender to order an appraisal from a different company. This could certainly be met with resistance and the lender could flat out just say no.
  • While not the best option for the seller, the price could be reduced to the appraised value and the sale could move forward.
  • The buyer could increase the amount of money they put down. If the seller is digging in their heals and won’t budge the buyer could increase their down payment to make up the difference in the appraised value.
  • The fourth option is actually a combination of the last two options. This is an option that I have personally seen work on a few occasions. Like anything else in life the buyer and seller compromise with the seller reducing the price and the buyer coming up with an additional amount of funds. In this scenario both parties contribute and the sale goes on as planned!”

Remember appraisal’s are not the ultimate judgment of a home’s value. A home’s true value is what a “qualified” buyer will pay for it.

Lake Village

Lake Village

Lake Village is a planned unit development of 330 townhouses spread out over 52 acres of forestland at Stateline, Nevada. It was designed and built in the early 1970s with homes ranging from 1 bedroom, 2 bath up to 4 bedroom, 3½ bath.  Two and three bedroom units are the most common. Some even have private outdoor hot tubs.

Both residents and guests have access to the seasonal, heated outdoor swimming pool. There are also four tennis/pickleball courts, a basketball hoop, and a year-round outdoor hot tub. Dry saunas, and a picnic area with propane barbecues are available, as well as nearby hiking and bike trails.

Nevada Beach is an approximate 15-minute walk through the meadow across Highway 50.  Stagecoach and Boulder Lodges at Heavenly are only a seven-mile drive up Kingsbury Grade. These advantages make Lake Village a popular destination in both summer and winter.

All the townhouses are privately owned. Some of Lake Village’s owners live here year round and while some use Lake Village as their second, or vacation home. Many also rent their homes out for long-term or short-term vacation use too. For more information or to schedule a time to view this area contact Robert Stiles, REALTOR® at CHASE INTERNATIONAL 530-314-0352.



Could refinancing save you money?

Refinance Your Home

If you’re a homeowner, you might think that all the recent talk of low mortgage rates doesn’t affect you. But that isn’t true — they may be your key to savings.

Even if you had a sizable down payment or received a competitive interest rate at the time, refinancing your home now could mean saving thousands over the life of your loan. Ask yourself these four questions before making up your mind:

  1. Have your finances improved? If you have a better financial profile now than when you bought your home, you may be able to make a larger monthly payment with a lower interest rate, speeding up your mortgage repayment. If your credit score has improved or you have a higher income, this applies to you.

  2. How much have interest rates dropped? Mortgage rates fluctuate with changes in the economy. You may be able to obtain a more cost-effective mortgage today than when you first purchased the property, even if rates have only dropped by a percentage point.

  3. How much will refinancing cost? The process will likely cost you a percentage of the amount you borrow. Remember the application and appraisal fees when you bought your home? They apply here too. Another thing to consider: If your home interest payment is a tax deduction, a decrease in your interest amount could lower that deduction.

  4. How much longer will you be in the home? If you’re not planning to stay in your current home very long, and therefore won’t need to pay off the mortgage, refinancing shouldn’t be your top priority. Spending the time and money on that process won’t pay off like it would if you stay in your home for another 10 years or more.

Are you ready to refinance? Do you have specific questions about your situation? Reach out today. Norm Hansen | nhansen@rpm-mtg.com | Cell: 775.720.2826