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If they haven’t done so already, California owners of single-family residences have slightly less than thirty days to replace any noncompliant plumbing fixtures on their property with water-conserving ones.

This requirement is the result of a state Senate bill (SB 407, Padilla) that was signed into law in 2009. The bill spelled out a number of requirements and restrictions going forward from the time of its passage until its last mandate – dealing with multi-family and commercial property – that takes effect January 1, 2019.

So, what are the noncompliant plumbing fixtures that need to be replaced? That is spelled out in section 1101.3(c) of the California Civil Code.

“(c) ‘Noncompliant plumbing fixture’ means any of the following:

(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.

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

Of course, many homes are already compliant. Federal law has required such fixtures be sold since 1992.

SB 407 also contained a disclosure requirement that comes into effect January 1, 2017. It is stated at section 1101.4(c) of the Civil Code. “On and after January 1, 2017, a seller or transferor of single-family residential real property shall disclose in writing to the prospective purchaser or transferee the requirements of subdivision (b) [that all noncompliant fixtures be replaced] and whether the real property includes any noncompliant fixtures.”

The required disclosure has two parts. First, the seller – not the agent – must tell the buyer tha the law requires that the property have compliant plumbing fixtures. Secondly, the seller must tell the buyer whether the property has any noncompliant fixtures.

Currently, there is some potential for confusion and/or uncertainty here.

Probably the most important matter has to do with point-of- sale requirement. That is to say,“Does the law mean that escrow cannot close unless all noncompliant fixtures are first replaced with compliant ones?” No. As a 2012 article (Water-Conserving Plumbing Fixtures) provided by the California Association of Realtors® (CAR) states, “There is nothing in the law that requires the installation of water-conserving fixtures as a condition of sale.”

Note, though, that some local jurisdictions (counties or cities) may have their own ordinances dealing with these matters.

More than a few people have noted that the existing statutory disclosure document (the Real Estate Transfer Disclosure Statement, or, commonly, TDS) already contains a question regarding Water-Conserving Plumbing Fixtures. It is the last “check box question” in the three column array at Section II A. of the TDS. The box is to be checked if the subject property has water- conserving plumbing fixtures. Does checking the box suffice to meet the new disclosure requirement at Civil Code §1101.4(c)? No.

For one thing, the TDS check box format does not meet the requirement that the seller inform the buyer of the law requiring compliant fixtures. Secondly, it does not inform the buyer of the existence of any noncompliant fixtures. (Suppose you had a low-flush toilet, but not a water-conserving shower head. How would that information be conveyed via the check box format?)

At this point, CAR, through its Standard Forms Advisory Committee has proposed to add a question to its commonly used, but not legally mandated, Seller Property Questionnaire (SPQ). This would ask the seller, in a yes-or- no format, if he or she is aware of “Plumbing fixtures on the Property that are non-compliant plumbing fixtures as defined by Civil Code Section 1101.3.” While this would satisfy part of the new disclosure requirement, it would not comply with the requirement that the purchaser be told that the law mandates that all such fixtures be replaced.

To do a proper job of making the required disclosure, it is probably going to be necessary for brokerages, and perhaps local Realtor® associations, to craft a separate disclosure form.

"If you can read this, thank a teacher. If it's in English, thank a veteran.” That message from my all-time favorite bumper sticker is particularly apt this week. Friday, November 11 is Veteran’s Day. The day before, November 10, is the 241 st birthday of the United States Marine Corps. Happy birthday, Marines. Thank you, veterans -- all of you.

During the past few years, regardless of where one stood on our military involvements, there has been a near unanimous outpouring of support and appreciation for our military. Those expressions of support, I fear, are occurring less frequently as so many are focused on worries about their jobs, their homes, vanishing retirement funds, and, now, their health insurance.

But we owe those servicemen and women no less now than we did when employment was high, homes were appreciating and life seemed pretty comfortable in the U.S.A.

A few years ago my wife and I were riding on a bus with a group of people who were the beneficiaries of what we called a “political event.” It was sponsored by a state legislator. We were going to a ball game. On the bus was a person who was employed by a large, well known, California company. He was, essentially, a lobbyist.

We heard him chatting with people around him about some of his experiences as a pilot stationed on an aircraft carrier. Later, after the talk had died down, we asked him about his experiences. He was a naval aviator during the Vietnam War. We thanked him forhis service.

He told us that we were only the second persons who had ever said that to him. The first was a South Vietnamese woman whose parents had immigrated to the United States. She was now working in a government-related job in Sacramento. Her family had lost everything in the war. She thanked him for what he had done and what he had made possible for her.

So what does all this have to do with real estate? Everything. In up markets and down, we still enjoy the right to own private property. There is still an American dream. There is a dream of home ownership, of getting ahead, and of making a future for the next generation. We’ve been in a rough patch for a while now; but the dream is still there, and still being realized in millions of lives. That dream is secure, because, all around the world, young American men and women are standing on a wall. They are putting their lives on the line to defend our country and our dreams. They are there because of the dream; and it endures because they are there.

Does what these people do actually mean anything to any of us? Ask Richard Phillips, Captain of the Mersk Alabama. I hope the young men and women who wear the uniform won’t have to wait as long asour friend did before they hear a word of thanks. Please – walking down the sidewalk, waiting at an airport, shopping at the grocery store – if you have the opportunity, thankthem for their service.

Three years ago my wife and I were privileged to attend a memorial ceremony at the home of the Fifth Marine Regiment at Camp Pendleton, California. The principal speaker was General John Kelly, formerly Commanding General of the United States Southern Command. General Kelly’s son, a lieutenant with the Fifth Marines, was killed in combat at Sangin, Afghanistan.

My column this week was going to relate to Veteran's Day, Nov. 11, but I would like to take another tack.

Instead of reading a column by me, I encourage you to give your attention to a YouTube video of General Kelly’s remarks that day. His words far surpass anything I could say. It takes longer to listen to his remarks (a bit over 16 minutes) than it does to read one of these columns. Believe me, it would be time well spent. What he says may not be politically correct; but it is a searing reminder of the debt of gratitude that we owe to so many.

Go to 

https://www.youtube.com/watch?v=eneC8eYKiX8. 

Thank a veteran on November 11, and any time you have the opportunity.

Most homeowners in a common interest development probably understand that it can be a real hassle to get into a dispute with the Homeowner Association (HOA). Not so many, though, may know that it can become pretty expensive as well. A recent case from California’s Fourth Appellate District Court of Appeal makes the latter point abundantly clear. (Rancho Mirage Country Club Homeowners Association v. Thomas B. Hazelbaker et al., August 9, 2016)

Thomas and Lynn Hazelbaker owned a condominium in the Rancho Mirage Country Club development. The development was subject to regulations and CC&Rs which were enforced by the Rancho Mirage Country Club Homeowners Association (Association). According to the Court record, here’s what happened:

“In November 2011, defendants [Hazelbakers] applied for and received approval from the Association’s architectural committee to make certain improvements to the patio area of their property. Subsequently, however, the Association contended that defendants had made changes that exceeded the scope of the approval, and which would not have been approved had they been included in defendant’s November 2011 application.

“On June 19, 2012, the Association sent defendants a request for alternative dispute resolution pursuant to [Civil Code §5930], identifying the disputed improvements and proposing that the parties mediate the issue. Defendants accepted the proposal and a mediation was held on April 8, 2013. A ‘Memorandum of Agreement in Mediation’ dated April 9, 2013, was reached … Theagreement called for defendants to make certain modifications to the patio, in accordance with aplan newly approved by the Association… The agreement provided for the modifications to becompleted within 60 days from the date of the agreement. It also provided for a specialassessment on defendants’ property to pay a portion of the Association’s attorney fees incurredto that point…

“The modifications described in the mediation agreement were not completed within 60 days. The parties each blame the other for that circumstance.”

On September 4, 2013, the Association filed a lawsuit seeking specific performance of the mediation agreement. Subsequently, the parties reached an agreement regarding the modifications, slightly different from those agreed to in mediation. Those modifications were completed in September 2014. However, the parties continued to have disagreements about who should bear the costs of litigation to that point.

On October 15, 2014 the Association filed a motion seeking attorney fees. The motion was based on Civil Code §5975(c) which is part of a large body of law, commonly referred to as the Davis – Stirling Act, concerning common interest developments. §5975(c) says, “In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.”

On December 2, 2014 the trial court issued an order granting the Association $18,991 in attorney fees, plus $572 in costs. The Hazelbakers appealed.

The central question for the Appellate Court was “…is a lawsuit to enforce an agreement thatwas reached during mediation (or another form of ADR) an action ‘to enforce the governingdocuments’ in the meaning of section 5975, where the mediation was initiated pursuant to theDavis – Stirling Act? And the Court’s answer was “yes”, at least in circumstances similar to thiscase. (The Court acknowledged that the answer might have been ‘no’ had the mediation involvedother matters.)

The Hazelbakers also questioned the amount the trial court had awarded. They should have beensatisfied with what was assessed. The amount initially requested by the Association was$31,970. In any event, the Appellate Court upheld the trial court’s figure of $18,991, noting that“It is well settled, however, that the trial court was not required to issue any explanation of itsdecision with regard to the fee award.”

Finally, the Appellate Court noted that, as prevailing party in the appeal, the Association isentitled to recover its appellate attorney fees. That figure will be set by the trial court. 

We don’t know what the patio improvement itself cost; but we do know that you can add to thatfigure the Hazelbakers own attorney fees plus those of the Association.This all started with a decision to depart from or modify the plans as approved by theAssociation. Typically, it would really be a bother to go back to the architectural committee andseek approval for the change. But it might have been a whole lot cheaper. Maybe there’s alesson there.

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Bob Hunt is a director of the California Association of Realtors® and is the author of Real Estate

Over 55 Controls 2/3 of Home Equity Baby boomers and other homeowners over the age of 55, which number about 67 million, control about two-thirds of the nation’s aggregate home equity, which computes to about $8 trillion.

These numbers put this group in a position to greatly influence where the housing market will go in the next decade, according to Freddie Mac Chief Economist Sean Becketti in a blog post on Wednesday.

“Whether they decide to move from their current homes or age in place, the cumulative impact of their decisions on mortgage demand, affordable housing supplies, and the housing options available to Millennials and other aspiring homeowners will be substantial,” Becketti wrote.

Baby Boomer Survey Freddie Mac’s survey of nearly 4,900 homeowners age 55 and over (a mix of men, women, Caucasian, African-American, and Hispanic, and Asian), revealed that the majority of baby boomers are satisfied with their current homes (about 64 percent) and that 90 percent believe people their age should own a home. Nearly everyone surveyed said home ownership makes sense for married people with children (96 percent), and a majority said it makes sense for people without children (85 percent).

About 63 percent of respondents said they prefer to age in place, which would compute to about 42 million homeowners spread out across the entire 55+ demographic. However, that still leaves approximately 40 percent of boomers (27 million) who said that if they had complete control, they would move at least one more time. According to Freddie Mac, 19 million of those boomers plan to buy a home and eight million plan to move in the next four years.

Big Numbers “These are big numbers with the potential to tighten home buying competition in the housing market, especially for millennials and other first-time homebuyers,” Becketti wrote. “They also have the potential to generate significant new demand for mortgage credit. Whether the borrower is financing age-in-place renovations or buying a new house, even a relatively modest increase in lending to 55+ homeowners could add trillions of dollars in new originations in a relatively short time. One way or another, the baby boomers’ housing decisions over the next few years will take our market to brand new places.” - Bob Hunt

This is the best real estate article ever written.  You don’t believe that, and you shouldn’t.  Which is precisely the reason that the statement – that in some sense or other may be considered false – is neither misleading nor deceptive.  It fools no one.  It is puffery.

 Puffery, like most terms, is subject to varying definitions; but these seem to be the most common elements:  It is an expression of opinion, not a representation of fact. It typically involves subjective qualities (taste, feel, appearance), not objective features.  A reasonable person, from the audience to which the puffery is directed, will not take it seriously.  It will not influence any reasonable person to consume, purchase, or engage the product, service, individual, or company that it appears to endorse. The key to puffery, then, is that those to whom it is directed will know that it is puffery.

 The employment of puffery is not against the law. In a 1983 Policy Statement on Deception, the Federal Trade Commission wrote, “The Commission will not pursue cases involving obviously exaggerated or puffing representation, i.e. those that the ordinary consumers do not take seriously.”  At the same time, it acknowledged, “The term ‘Puffing’ refers generally to an expression of opinion not made as a representation of fact.  A seller has some latitude in puffing his goods, but he is not authorized to misrepresent them or to assign to them benefits they do not possess…  Statements made for the purpose of deceiving prospective purchasers cannot properly be characterized as mere puffing.”

 (For a comprehensive examination of laws relating to puffery, see David Hoffman, “The Best Puffery Article Ever”, Iowa Law Review, vol. 91, 2006)

 The Realtor® Code of Ethics, which at Article 12 requires a “true picture” in all advertising, does not contain an exception for puffery.  Nonetheless, on the basis of practice, it would appear that members assume that there is an implicit exception.

 No one files an ethics complaint when someone advertises their listing as the “best value in town” or the “cutest cottage on the lake”.  (Though, in the latter case, they might complain if that cute cottage turned out to be a ½ mile up the road from the lake.)  The public knows that terms such as “best value” and “cutest” are mere expressions of opinion.   No one is deceived or misled by them.

 But real estate agents advertise more than the properties they have listed; they also advertise themselves.  In this arena there seems to be a greater propensity for sliding from exaggerating puffery (“the best agent in California!”) to claims that apparently assert facts (“the top 1% in the nation!”)

 A few years ago, then Chief Counsel of the California Department of Real Estate, Wayne Bell, (who is now Commissioner) wrote an article entitled “Consumer and Industry Warning: False and Misleading Designations and Claims of Special Expertise, Certifications and/or Credentials”. At that time, some readers may recall, the real estate industry was awash with experts and specialists.  Mr. Bell wrote, “A growing number of individuals and companies, many of whom are unlicensed, purport to be ‘experts’ in the area of short sales, ‘certified’ forensic loan auditors, short sale ‘specialists’, loan modification ‘specialists’, loss mitigation ‘experts’, ‘fraud investigators’, and the like, and many of these designations and claims seem to be nothing more than marketing ploys by unscrupulous fraudsters to capitalize on the desperation and vulnerability of unsophisticated and/or financially strapped homeowners.”

 Calling yourself an expert or a specialist in those contexts can’t be defended as puffery.  It is not exaggeration where the audience knows it is exaggeration. Rather, unless verifiable, it is misrepresentation intended to mislead.

 In that article, Mr. Bell also pointed out that the California Business and Professions Code prohibits falsely claiming designations, certifications, or membership.  Even using the term “realtor", if one is not a member of the national and state associations, is a violation of the Code (§ 10177(e)). The penalty?  License suspension or revocation.

 The lesson?  It may be ok to “puff” your listings; but be careful what you claim about yourself.

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