California Water-Saving Plumbing Law Effects Investment Property Owners, Sellers, Property Managers and Property Management Companies

A California law enacted in 2009 is finally taking effect and causing concerns among property owners, sellers, buyers, and realtors.  California Civil Code Section 1101.4 requires owners of single-family residences which were “built or available for use on or before January 1, 1994” which will be altered or improved on or after January 1, 2014 to install water-conserving plumbing fixtures only when the existing plumbing fixtures are “non-compliant” by certain dates specified below.

A noncompliant plumbing fixture is defined by California Civil Code Sec. 1101.3 as:

1)    Any toilet manufactured to use more than 1.6 gallons of water per flush;

2)    Any urinal manufactured to use more than one gallon of water per flush;

3)    Any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute; and

4)    Any interior faucet that emits more than 2.2 gallons of water per minute.

Single-Family Residences are Required to be Compliant by January 1, 2017

California Civil Code Section 1101.4 requires that if a single-family residence is altered or improved on or after January 1, 2014, the installation of such fixtures must be a condition of the final building permit approval.  In addition, all single-family residences must generally be equipped with such fixtures by January 1, 2017.

Multi-Family and Commercial Properties have Similar Requirements for Compliance

California Civil Code Section 1101.5 states that all multi-family residential properties and commercial properties with noncompliant plumbing fixtures must comply with the following requirements.  As of January 1, 2014 all such properties must, as a condition of final building permit approval, replace all plumbing fixtures with water-conserving fixtures if:

1)    Permits are obtained to increase the floor area of the building by more than 10%; or

2)    Building alterations or improvements exceed $150,000 in costs; or

3)    Permits are obtained for a room with plumbing fixtures.

In addition, by January 1, 2019, all multi-family and commercial properties must comply with this law by replacing all noncompliant plumbing fixtures.  Sellers of such properties must disclose to the prospective buyer whether the property includes any noncompliant plumbing fixtures.

Effect on the Transfer Disclosure Statement (TDS)

A disclosure relating to this new law was added to the California TDS in the form of a check box on page one where a seller must disclose whether the property has water-conserving plumbing fixtures or not.  As of now there is no requirement for the entire property to be compliant unless a triggering event occurred prior to sale, thus, the California Transfer Disclosure Statement has an explanatory note on page two.

What This Means During a Sales Transaction

Because the law does not fully require all properties to be fully compliant each seller, buyer, real estate agent, and property manager must fully understand the details, the deadlines, and the nuances of this law.  If a seller checks the “Water-Conserving Plumbing Fixtures” box on page one of the TDS that does not mean that all of the plumbing fixtures are compliant.  Thus, it is imperative for each seller, real estate agent, and property manager be fully aware of the deadline dates and the details of this law such that a proper disclosure can be made to a prospective buyer.

It is also a prudent practice to provide a prospective buyer with an Advisory or a disclosure representing the law (California Civil Code Sections 1101.1 through 1101.9) and the information available to the seller and/or the seller’s agent when entering into a sales transaction with a prospective buyer.  It is also prudent to recommend that prospective purchasers consult with a competent California Real Estate Attorney prior to purchase.  Professional property managers and property management companies must be mindful of this law to prevent the temptation of having work or repairs performed which do not comply with the new law.

Local Jurisdictions May Adopt Stricter Requirements

Finally, California Civil Code 1101.8 allows local jurisdictions like cities, counties, and towns to adopt stricter requirements.  It is important to stress the possibility that local ordinances and laws may be stricter than California law and as such each prospective purchaser should also check with the local building department or community development department for the latest local plumbing requirements.  Property managers who manager multiple residences for their clients should be out front on this new law as they are typically involved in the renovations and remodels of these types properties.

Real Estate Professionals Can Help Property Owners in these Situations

An experienced realtor can help owners and sellers in these circumstances.  An experienced realtor typically has the training, expertise, and procedural knowledge to help keep owners and sellers abreast of these changes in the law which seemingly occur each and every year.

SHELLY ROBERSON

Alain Pinel Realtors

23+ Years’ Experience, 600+ Closed Transactions

sroberson@apr.com

http://shellyroberson.com

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1-650-464-3797

New Flood Insurance Law Provides Relief for Palo Alto Property Owners

In March of this year President Obama signed into law the Federal Homeowner Flood Insurance Affordability Act of 2014 which amends previous law – now homeowners in flood plains and districts, like Palo Alto, East Palo Alto, and Menlo Park will be provided relief.

Due to ever-increasing flood insurance premiums many Palo Alto homeowners took measures to help reduce the premiums they were paying for coverage pursuant to the Biggert-Waters Flood Insurance Reform Act of 2012.  The measures included the procedure of applying for a Letter of Map Amendment (LOMA) which exempted properties within flood zones from mandatory flood insurance if the LOMA could show that the individual property was at a higher elevation then the most at-risk properties.  The new law repeals the removal of the grandfather clauses which previously existed, thus allowing the property owners relief from the Biggert-Waters provisions, which means lower insurance premiums.  Even though Congress hasn’t been fully engaged yet Palo Alto homeowners should be happy as their premiums will be lower.

All of Palo Alto is in a flood-zone, but only certain portions along San Francisquito Creek are designated “high-risk” Special Flood Hazard Areas (SFHA).  In fact most of Palo Alto is located within a designated area that doesn’t require flood insurance, but the burden is on the property owner to prove that to their lender.  Thus, to prevent the unnecessary insurance a property owner must hire a surveyor to provide an “elevation certificate” for a fee (usually between $500 and $2,000).

Federal regulations require that loans for properties in SFHAs must have flood insurance if the property is collateral for a loan or is free of encumbrances.  Clever Palo Alto residents in this predicament have procured surveyors to get LOMAs.  Importantly, not all people in this situation know about LOMAs or this option.  With the implementation of the Homeowner Flood Insurance Affordability Act of 2014 properties can retain their subsidized premiums (grandfather clause) instead of being forced into premium increases when existing policies terminate or the properties are sold.  In a bonus section of the law FEMA is required to refund policy holders who have overpaid for premiums under the old law.

A flood insurance presentation will be on display on Wednesday, April 23 at 730P at the Palo Alto City Council Chambers.  The meeting will also be broadcast on cablecast Channel 26.

SHELLY ROBERSON

Alain Pinel Realtors

23+ Years’ Experience, 600+ Closed Transactions

sroberson@apr.com

http://shellyroberson.com

http://www.facebook.com/ShellyRobersonAPR

http://twitter.com/sroberson2

1-650-464-3797

Home Improvements Cost-Value Cash-On-Cash Returns Rise as the Overall Market Rises

I am often surprised when I see homeowners getting their homes ready to sell without anticipating doing any repairs or improvements.  I am even more surprised when I see realtors counseling their clients not to do repairs or improvements because “the market is hot, let’s just get it on.”  Notwithstanding the period of time during the Great Recession, where improvements did not give the cost-value returns we are used to seeing, properly thought-out home improvements will typically give homeowners very nice cash-on-cash returns when they list and sell their homes.

Cost-Value Ratio Defined

Recently, Remodeling Magazine combined with the National Association of Realtors completed their 2014 Cost vs. Value report that showed for the second straight year that the cost-value of remodeling is on an upswing.  One would be correct to assume that the cost-value of remodeling improvements mirrors the fluctuations in the overall real estate market.  The cost-value ratio is defined as the resale value of remodeling improvements as a percentage of the cost of construction.  Thus, if value and cost are identical the cost-value ratio is 100 percent.

Timing Is Everything

Some examples of recent annual cost-value ratios show consistency in the theory that real estate market trends coincide with cost-value ratios.  In 2005 prior to the market peak and crash the national cost-value ratio was approximately 86.7% which continued downwards for the next eight (8) years until the 2013 rebound.  In 2014 the national ratio is approximately 66% which represents 5% points higher than 2013.

If we all had crystal balls we probably wouldn’t have to work as hard as we do.  However, without one, we need to be mindful of the current environment and trends to make the best remodeling decisions.  For example, if you remodeled and dialed-in your bathrooms and kitchen eight years ago and they are still cutting edge and in-style you would be looking at covering your costs based on improved property values in pretty much the entire country (and you enjoyed those improvements for the last eight years).  If you installed these same improvements in the Bay Area you probably did really well – maybe even 2X or 3X cash-on-cash returns (where can you get 200-300% cash-on-cash returns in the investment world?).

How Does Your City Rank in Cost-Value Ratio?

Residential real estate markets are very localized, and this fact, along with whether or not your long-term plans include staying in your particular neighborhood should be the two primary factors in your decision to take the plunge into a major remodeling project.  The value of your remodeling decisions at the time of sale is another crystal ball question; however, location, design, workmanship, and buyer demand for your specific installations all come into play. 

Honolulu ranked number one for cost-ratio values at 111%, San Francisco was 2^nd at 109%, and San Jose was 3^rd at 100%, San Diego, CA was 4^th, Bridgeport, CT was 5^th, Fort Meyers, FL was 6^th, Charleston, SC was 7^th, Oklahoma City, OK was 8^th, Washington, DC was 9^th and Austin, TX rounded out the top ten.

What Projects Have The Best Cost-Value Ratio?

If you are considering improvements to your home please take into consideration the data from this report which shows the highest return on investment (ROI) for individual projects:

-         Entry door replacement (20 gauge steel);

-         Deck addition (wood);

-         Garage door replacement (mid-range);

-         Garage door replacement (luxury);

-         Attic bedroom addition;

-         Minor kitchen remodel;

-         Window replacement (wood);

-         Siding replacement;

-         Back-up power generator;

-         Basement remodel; and

-         Window replacement (vinyl)

The 2014 report suggested that these following projects were very important to buyers: 1) granite or similar stone countertops; 2) kitchen island and double sink; 3) energy efficient windows, appliances, and programmable thermostats; 4) a walk-in closet; and 5) a great room.

Pools Are Not For Everyone

Pools were not included on the above list for good reason.  Traditionally, pools are not good returns on investment.  A lap pool might be a great idea for owners who would like to stay in shape but they are not attractive to a young family with kids who value flat, free roaming back yards without the maintenance costs associated with a pool.  Importantly, some buyers fill in pools the moment they close escrow to limit liability and create usable space for their children.

Seek Advice and Counsel of an Experienced and Competent Realtor

Not all realtors are created equally.  The better realtors will offer complimentary services including making recommendations, referring vendors, contractors, designers, and even managing day-to-day scheduling of tasks for your contemplated renovation projects.  No matter what project you are considering you should consult with an experienced and knowledgeable realtor to get some market input and another set of experienced eyes looking at your home (through the eyes of a prospective buyer).  Remember remodeling projects almost always go over budget and if you are looking for a high cost-value ratio and high cash-on-cash returns a local experienced realtor can give you a good idea of the current market trends in your neighborhood.  The bottom line is don’t do this project alone – get help.

SHELLY ROBERSON

Alain Pinel Realtors

23+ Years’ Experience, 600+ Closed Transactions

sroberson@apr.com

http://shellyroberson.com

http://www.facebook.com/ShellyRobersonAPR

http://twitter.com/sroberson2

1-650-464-3797

New Shared Fence Law As Of January 1, 2014

Have you ever heard “Good fences make good neighbors?”  Now, adjoining landowners are statutorily equally responsible for shared fences and boundary fences pursuant to California Civil Code Section 841 which took effect January 1, 2014.  Adjoining or contiguous landowners are now faced with a presumption that because they share an equal benefit of a shared or boundary fence that they are equally responsible for the reasonable costs of construction, maintenance, or necessary replacement of the fence.   Property managers or rental property management companies whose clients’ properties are affected by this new law must be mindful of the change and be aware of the procedural requirements dictated by the state legislature.

Statutory Notice Requirements for Repairing or Replacing Fencing

Landowners, or property managers, who wish to replace an existing common boundary fence, must give each affected adjoining landowner a 30-day prior written notice of any intent to incur costs for a common or boundary fence.   For those who manage properties for clients here is where you need to pay attention.  The statutory ‘Notice of Intent’ must including the following elements:

1)    A notice of the presumption of equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence;

2)    A description of the nature of the problem with the shared fence;

3)    The proposed solution for the problem fence;

4)    The estimated construction or maintenance costs to address the problem;

5)    The proposed cost sharing approach; and

6)    The proposed timeline for addressing the problem fence.

On a personal note, along with the statutory notice I would include or attach a copy of the law and a reference to the state website, and any other supporting documentation to help facilitate the neighbors understanding that the law has changed.  If they are initially resistant I would also counsel them to review the law, the state website, and any other resource material to help them understand their obligations.

Burden of Proof to Show Inability to Pay is on the Objecting Landowner

A landowner who wishes to repair or replace a fence will have to sue to enforce the statutory presumption if their neighbor objects.  Objecting landowners have a right to contest their new statutory obligations, but the burden of proof is all on them.  An objecting contiguous or adjoining landowner has the burden to overcome the presumption described in the new state law by adequately demonstrating to a court (which means a judge) by a preponderance of the evidence (which means evidence that is slightly greater than evidence against it) that imposing equal or shared responsibility on them would be unjust.  To determine whether equal or shared responsibility for the reasonable costs of common or boundary fence repair or replacement would be unjust, a court will consider the following evidence through testimony and documents:

1)    Whether the financial burden on the objecting landowner is substantially disproportionate to the benefit conferred upon the proponent landowner;

2)    Whether the cost of the new fence would exceed the difference in value of the (burdened owner’s) property before and after it’s installation;

3)    Whether the financial burden to the objecting landowner would impose an undue financial hardship given that party’s financial circumstances as demonstrated by reasonable proof;

4)    The reasonableness of a particular construction or maintenance project, including the extent to which the costs appear to be unnecessary, excessive, or the result of one landowners personal aesthetic, architectural, or other preferences; and

5)    Any other equitable factors appropriate under the circumstances.

Many times the cost of the fencing divided by two or three parties will be low enough to handle these cases in a small claims division of the local superior court house.  If the case is in small claims court attorneys will not be involved so costs for this type of lawsuit will be minimal.  It is paramount that any property management personnel involved with conversations with neighbors relating to these issues be memorializing all conversations including taking notes and sending letters to the neighbors.  An accurate written record of all conversations will help preserve precisely what occurred during the period negotiation between neighbors should something end up in court.

You Need to be an Advocate Selling the New Fence to the Neighbor

When the fencing around the perimeter of your property fails and needs replacement, nine times out of ten cooperation of each neighbor seemingly carries the day and allows for a smooth transaction and replacement of the fence.  However for those occasions when the neighbor objects and does not want to pay or participate in the project please be mindful of the above procedures so that you can help fully and faithfully through these issues.

Prior Existing Law is Repealed

The new law does not apply to a city, county, political subdivision, public body, or public agency.  Prior existing law enacted in 1872 which required a landowner who fully enclosed a property to refund their neighbor a just proportion of the value of a division fence is repealed due to this new law.

SHELLY ROBERSON

Alain Pinel Realtors, Palo Alto, CA

23+ Years Experience - 600+ Closed Transactions

http://twitter.com/sroberson2

http://www.facebook.com/ShellyRobersonAPR

sroberson@apr.com

1-650-464-3797

High Energy Efficiency of Your Heating and Air Conditioning Systems Makes Your Home Comfortable and Cost Effective

With the rising costs of energy making your home more energy efficient is tantamount to a comfortable and cost effective living environment. Comfortable interior environments make for a more friendly and welcoming home.  Improving the efficiency of your mechanical systems helps with comfort, but more importantly will save you money over the long haul.

Periodic Inspections Are Important

Every mechanical system (which moves warm or cool air throughout your home) requires maintenance and periodic tune-ups.  Equipment the is functioning properly will make your home more comfortable and it won’t “short-cycle,” which is when a system comes on and turns off frequently.  A competent and qualified heating, ventilation, air conditioning contractor (HVAC) can help evaluate your mechanical systems and make necessary adjustments. Easy maintenance such as replacing the filters and cleaning vents can be done by the homeowner, but balancing, and fine-tuning should be done by a pro. 

Digital Thermostats are the Rage

There are some pretty sophisticated digital thermostats on the marketplace these days.  Set these thermostats such that you can control the temperature swings and keep the equipment from cycling on and off. Ideally, the home will maintain a constant temperature which would be the most cost effective environment because the systems will use less energy than if there were big temperature swings where the equipment is turning on and off.  Some of the more advanced thermostats can be remotely controlled via a computer or hand-held mobile device (ideal for vacation homes).

When you are away from home for long periods of time a thermostat with remote access is a real nice feature to have.  You can turn the heat up or down a few hours before you show up such that the interior environment is perfect when you arrive.  This will allow you to maximize the comfort level but at the same time not spend money for energy you are not really using.

Modern Windows are Energy Efficient

Installation of energy efficient windows is critical to having a comfortable interior and a better looking home.  New dual-glazed windows will help your home stay comfortable (warm or cool) and it will improve the overall aesthetics of your house.  In the winter months curtains can be spread out to let the sun’s warmth in.  During the spring and summer months curtains can be used to deflect heat.   There are numerous energy programs which could provide an avenue to replace windows based on the amount of savings you will get from the new windows.  The best of both worlds would be to find a program that allows you to replace windows while reducing your energy bills.

Attic and Subarea Insulation Works Wonders

There are dozens of new insulation products on the market.  Several types are spray-on, spray-in, and batt-type.   The bottom line is that if your home has no insulation your money if going straight up through your ceilings and into the atmosphere.  Proper caulking and insulation around the perimeter of doors, windows is paramount.  Insulation blown into the walls is also important, but is the last place to insulate after the attic and crawlspace underfloor.  Insulation helps improve comfort and it will reduce energy consumption. 

Central Air Conditioning Units are Critical in Warm Climates

If you live in an area that is hot for several months during the year you can appreciate a system air conditioning system.  If you have a swamp cooler or an older insufficient air conditioner you are not getting the quality or quanity of cool air that you need.  Install an upgraded energy efficient central air system as soon as possible.

Dress to Accommodate the Temperature

A sweater or sweatshirt in the house may make the difference in whether or not you have to turn the heat up or air conditioner down. Try snuggling in a blanket or donning a sweater before you crank up the heat when it gets colder. 

There are Many Ways to Improve Energy Efficiency and Your Energy Bill

There are a dozens of ways to make your home a more efficient cooling and heating environment while reducing monthly payments.  Making  a adjustments and small sacrifices, making lifestyle choices which don’t include freezing or being uncomfortable, your home could be energy efficient and save you money at the same time.

SHELLY ROBERSON

Alain Pinel Realtors, Palo Alto, CA

23+ Years Experience - 600+ Closed Transactions

http://twitter.com/sroberson2

http://www.facebook.com/ShellyRobersonAPR

sroberson@apr.com

1-650-464-3797

Seven (7) Things to Consider and Research before Buying a Home

So you’ve made the decision to stop renting and buy a home.  Buying a home is very emotional, incredibly stressful, and requires diligence and strategy.  To make sure your pursuit is not fraught with pitfalls you should consider the following ideas:

1)    Location is paramount to your decision.  Where you purchase your home is critical.  If you want a certain neighborhood, a certain school district, a certain proximity to a certain shopping center these criteria should all take precedence over anything else.  Using these parameters will often limit your market area where you are looking.  If these criteria are not that important your scope of search could be a lot broader.  However, the most important decision is that the location you desire to search should not be compromised.

2)    Make many visits to your search area.  It is important to visit the areas you are looking during all different times of the day to see the broad activity that occurs over the period of time from morning, noon and night.  A home or neighborhood may seem quiet and peaceful at 10A, but during the afternoon commute it might be busy and bothersome.  The neighborhood school during the summer may look cute, but in the school year will be buzzing with activity and traffic.  The little league park or the soccer fields look like great places for kids to play in the off-seasons, but when the leagues are in session the traffic, noise, and activity may be overwhelming for you.

3)    Neighbors talk.  All neighbors have information that is not 100% public knowledge.  Walk around the neighborhood and talk to as many neighbors as possible.  They will all have different stories to tell and information to gossip.  The neighbors know where all the “bodies are buried” so to speak.

4)    Get the neighborhood association documents.  If the neighborhood you are considering has an HOA, get the documents and read them all.  There are records, minutes, and notes about all of the dirty details that have occurred during the history of the property.  There will be any records of litigation or disputes as well which would be important to know.

5)    Local news might have information.  Contact the local news agency to see if there is any information about the community or neighborhood.  Are there any long-term problems or issues about the neighborhood that is common knowledge but no one talks about?  Have there been any notorious events in the neighborhood?

6)    Coming developments, construction, freeways.  Are there any major construction projects or large developments coming that can change the texture of the neighborhood?  City hall will be the proper location to check on any major projects in the pipeline.

7)    Explore the surrounding area.  A neighborhood might seem great, but the peripheral surrounding areas will also have an impact and affect your neighborhood.   Make sure to check out all of the surrounding areas such that you are comfortable with the idea of those adjoining neighborhoods being close to yours.

The decision to buy a home is a process which has many moving parts.  When buying a home research, diligence and a comprehensive strategy should begin with hiring a competent and experienced real estate agent.  To make your home search fruitful and enjoyable learn everything about your potential neighborhood such that you are almost a neighborhood expert before you decide to make an offer.

SHELLY ROBERSON

Alain Pinel Realtors, Palo Alto, CA

23+ Years Experience - 600+ Closed Transactions

http://twitter.com/sroberson2

http://www.facebook.com/ShellyRobersonAPR

sroberson@apr.com

1-650-464-3797

Palo Alto Main Library Has a New Name “Rinconada”

After a long drawn out process Palo Alto’s main library has been renamed to “Rinconada Library” by the Palo Alto City Council.  Supporters of the new name have consistently argued that the library is not the main library because it is not the biggest library in the system, nor is it the administrative center of the library system.

Rinconada is a Spanish word for “insider corner” or “elbow” and was adopted because the land on which Palo Alto was developed was part of the land grant known as Rancho Rinconada del Arroyo de San Francisquito.

The Rinconada library name change was timely as it is currently undergoing renovations for a new program room, new study rooms, and upgraded electrical and mechanical systems.

Several opponents of the name change argued that the library should be named after a local notable person instead of a place or a thing.  One name that was offered was “Birge Clark” who was a prominent, distinguished local architect who designed 450 buildings in Palo Alto and Stanford University.