All posts by Ann

Don’t Get Bitten By Service Animals

The Federal Fair Housing Act was enacted in 1968 to prevent discrimination in the housing market based upon race, color, religion, sex or national origin.  In 1989, the Fair Housing Act was amended to broaden the definition of “protected class” to include persons with disabilities.  The Fair Housing Act, the Americans with Disabilities act and the Rehabilitation Act all require that tenants and applicants for vacancies in residential units be provided with “reasonable accommodations” as may be needed to allow them full use and enjoyment of their housing.

Many landlords and property managers do not know that people with disabilities have the right under these Federal laws as well as under California law to use the services of a guide, signal or service animal and to keep those animals in their residences.  In fact, under these laws a “service animal” is specifically defined to no be considered a pet.  They are given the same definition as an auxiliary aid such as a wheelchair, walker etc.

A service animal can be any species.  Also, there is no legal requirement that a service animal be specifically trained or be certified in some fashion.  The Fair Housing Act considers companion animals to be a type of service animal.

If requested by a person with a disability, a landlord or property manager must make reasonable accommodations for the animal.  The California Fair Employment and Housing Department specifically states on its website that one reasonable accommodation that a landlord or property manager must make is an exception to any “no pet” policy so as to allow a tenant or applicant to have a service animal in the rental unit.

Landlords and property managers are allowed to “reasonably regulate” the presence of the service animals in rental units but the law does not provide clear guidance on what would be considered a reasonable regulation.  However, the law is clear that an extra charge or security deposit may not be imposed.  Tenants remain liable for any damage caused by their service animals.

A landlord or property manager may ask a tenant or applicant for medical verification of the need for a service animal.  However, the request can only be for verification that the tenant or applicant is disabled within the meaning of the law and that there is a need for the service animal.  The landlord or property manager cannot ask for any information about the nature of the disability.

Wire Transfer Fraud

Over the last six months, the lawyers here at Carlson Law Group, Inc. have seen an email scam perpetrated with a frightening regularity.  Approximately a dozen clients, insurance companies and insurance brokers have reported to us that funds are being misdirected via wire transfers to bank accounts overseas.  The scam is always perpetrated in the same way.

The fraudsters hack into the email account of someone involved in an open escrow.  We have seen compromises in the email accounts of escrow companies, buyers, sellers and Realtors.  After hacking into an email account, the fraudsters monitor the account undetected waiting for an email that contains wire transfer information.  They then reconfigure the email account directing all legitimate email to the trash folder.  The fraudsters then create a false URL (website address) that is nearly identical to the genuine URL.  They then send emails from the fake URL that look exactly like the genuine account (even down to logos, photos, fonts, etc.) that change the wire instructions to send the funds to banks overseas.  Banks in China and Indonesia have been the most popular hosts for this scheme.

The person whose money is stolen then brings suit against everyone else in the transaction trying to recoup the loss.  Resolving this type of lawsuit is difficult as person or company whose email was hacked is also a victim of the scam.  Also, most errors and omissions insurance policies contain exclusions for claims involving the embezzlement or misappropriation of escrow and other funds.

There are a few ways to combat this scam.  The most important is to protect all computers by implementing a multi-layered security protocol that includes a firewall, spam filtering, regular patch management for all software (Java, Adobe, Microsoft, etc.), routinely changing passwords, eliminate the use of third party cloud applications such as Dropbox and routine back ups.  Another key protection is to follow up emails regarding wire transfers with a telephone call instructing the recipient to not change instructions without an email and verification by a telephone call.  As always, common sense is an important defense.  Most clients do not have overseas bank accounts.  Wire instructions seeking to send money out of the country should be viewed with suspicion.

The perils of “Section One”

The California Association of Realtors Residential Purchase Agreement (RPA) has not contained terms allocating the cost of repairing items appearing in a termite report for over 15 years.  The amendments to the RPA in 2002 eliminated the terms allocating the costs of repairing “Section One”  and “Section Two” items.

At that time, the custom in the marketplace was for the seller to repair Section One items so that the Pest Control Operator could issue a certification declaring that the home was free from signs of active infestation by wood destroying organisms.  Conversely, the custom at that time was for the buyer to pay for the costs of repairing conditions that could lead to future infestation.

Apparently, CAR recognized in 2002 that brokers and agents have a hard time changing their habits so they released the Wood Destroying Pests Addendum (WPA) at the same time that the RPA was overhauled.  This allowed brokers and agents to continue to allocate Section One repair costs to the seller and Section Two costs to the buyer.

With the recent amendments to the RPA, CAR discontinued the use of the WPA.  Therefore, the costs of repairing both Section One and Section Two items is to be negotiated between the buyer and seller as is any other item that a buyer may request be repaired.

We have seen that brokers and agents are still clinging to the concept that Section One items must be paid by the seller and are adding language in the “Other Terms” section of the RPA to allocate that cost to he seller.

This practice is dangerous for several reasons.  The WPA contained language dealing with allocation of costs of inspection and repair if the pest control operator found signs of infestation extending into inaccessible areas.  There were also terms relating to re-inspection and certification.  If an agent simply puts in a term that says “Seller to pay Section One items” these terms will be absent from the new RPA.

Also, obligating the seller to pay Section One items is always attendant with some amount of risk.  If there is no termite report before a seller commits to repairing Section One items, then the seller has essentially written a blank check to cover those costs.  Even where the seller has obtained a termite report before an offer comes in, there is no way of knowing whether a buyer will obtain a second report.  If that report contains a higher cost to repair Section One items, there will be a dispute between the seller and buyer as to the scope of appropriate repairs.

Therefore, the best and safest practice is to follow the procedure CAR has been steering agents toward for almost thirteen years – let Section One items be negotiable between the buyer and seller.

Cite and Fine Implemented

The “Cite and Fine” statute contained within Business and Professions Code Section 10080.9 is a little more than a year old, Brokers and Agents can learn from how the Bureau of Real Estate is using its citation powers.

According to the Bureau of Real Estate, the most issued fines fall into these categories:

  • Mortgage Brokers not filing required quarterly reports.
  • Advertising violations
  • Brokers and Agents not updating licensing and personal information with the Bureau in a timely manner
  • Minor trust fund shortages.

The maximum fine allowable by statute is $2,500.  However, the Bureau has reported that the average fine is $1,200.

SALESPERSON WEBSITES

The California Bureau of Real Estate (Cal BRE views websites maintained by salespersons as solicitation of business on behalf of the responsible broker.  As salesperson must act through his or her responsible broker, the Cal BRE views such a solicitation is an act that requires a license.

Because the Cal BRE views salesperson websites as solicitations on behalf of the responsible broker, the website itself is both a transaction requiring a license and an advertisement.  As such, Cal BRE Regulation 2725 is controlling in this situation.

Regulation 2725 provides that the responsible broker must exercise reasonable supervision over the activities of his or her salespersons which includes the establishment of policies, rules, procedures and systems to review, oversee, inspect and manage transactions that require a real estate license and advertising of any service for which a license is required.

Regulation 2725 also provides that the form and extent of such policies, rules, procedures and systems shall take into consideration the number of salespersons employed and the number and location of branch offices.  A responsible broker with hundreds of salespersons probably will not be obligated to look at each salesperson website daily.  However, some policy is required.

A responsible broker should, at a minimum, require salespersons to provide a list of all url’s that they maintain or create.  The responsible broker should also require that salespersons notify the responsible broker when significant changes to their websites are made.  The responsible broker should also be informed of the source of any automatically populated data that is pushed to the salesperson website.  Lastly, the responsible broker should have some regular interval at which a designee inspects each salesperson website.

The absence of any policy to monitor salesperson websites is nearly certain to be viewed by the Cal BRE as a violation of Regulation 2725.