by David Hamerslough

The California legislature has passed a number of new laws that will impact real estate transactions and activities in 2024. This article looks at three of those laws that will affect residential real estate transactions.

Residential Exclusive Listing Agreements Act (Civil Code § 1670.2), Effective January 1, 2024

This law applies to exclusive listing agreements or a contract or agreement to enter into an exclusive listing agreement on residential property (1-4 dwelling units), residential stock cooperatives, condominiums, PUDs, and mobile homes or manufactured homes.

The law prohibits an exclusive listing agreement on any such properties from lasting longer than 24 months from the date the agreement was made. It also prohibits any automatic renewal and requires that any renewal be in writing and dated and signed by all parties to the agreement. It also prohibits any renewal from lasting longer than 12 months from the date the renewal was made.

These prohibitions do not apply to an exclusive listing agreement entered into between a broker and a corporation, an LLC, or a partnership.

The law further prohibits the recording or filing with a County recorder, or any attempt to do so, of an exclusive listing agreement of any duration or any memorandum or notice of such an agreement. The law further prohibits any attempt to enforce an exclusive listing that is made or is presented for recording or filing with a County recorder in violation of this law.

Finally, any exclusive listing that is made or presented for recording or filing with a County recorder in violation of this law is void and unenforceable and entitles the homeowner who entered into the listing agreement to retain any consideration received as a result of the agreement entered into.

Any licensed real estate professional who is found violating this law shall be deemed to have violated that individual’s licensing law as well as having violated Civil Code § 1770 (the Consumer’s Legal Remedies Act).

Amendment To The Natural Hazard Disclosure Law And Statement (Civil Code § 1103.2), Effective January 1, 2024

The current Natural Hazard Disclosure Statement (NHDS) requires a disclosure with regard to fire hazard severity zones only when the property is located in a “very high” zone. The new law now requires the NHDS to specify whether the property is located in a “high” or “very high” fire hazard severity zone. It also requires the NHDS to include whether the property is located within a “high” severity zone in a state responsibility area and if in a “very high” severity zone whether it is a state responsibility area or a local responsibility area.

The new NHDS accounts for current fire hazard zone models and maps. The additions to the NHDS will assist licensees in assessing whether disclosures regarding defensible space and/or fire hardening will be required. If the property is located in any of the three fire hazard severity zones, then disclosures regarding defensible space will be required. In addition, a disclosure regarding fire hardening would be required if the property was built before 2010.

Finally, this new information will enable buyers to have more information to evaluate the risks and obligations that they may be assuming as a result of where the property is located.

Disclosures By “Flippers” (Civil Code § 1102.6h) Effective July 1, 2024

This law supplements the Transfer Disclosure Statement laws currently in effect. The same exemptions and cancellation rights apply to this new law. The law applies to any contract entered into on a single-family residence on or after July 1, 2024.

This law requires the seller of a single-family dwelling (1-4 units) who sells that property to a buyer within 18 months of purchasing it to disclose the following information:

(1) room additions, structural modifications, or other alterations or repairs made to the property since the seller purchased it that were performed by a licensed contractor with whom the seller entered into a contract; and

(2) the name of the licensed contractor and any contact information for that contractor provided by the contractor to the seller. The obligation to provide the name of the licensed contractor only applies to contracts where the aggregate contract price for labor, materials, and all other items exceeds $500.00. This disclosure obligation may also be satisfied by providing a list of the additions, modifications, etc. performed by and provided by the licensed contractor. In addition, the law requires the seller to provide a copy of any permit that the seller obtained for any such work. If the seller contracted with a third party for any of that work and the seller was not provided with a copy of any permits that were obtained, the seller may satisfy this obligation by informing the buyer that any information on permits may be obtained from the third party and providing the contact information for that third party that was providing by the third party to the seller.