New Commercial Real Estate Laws in 2015
The New Year is here and so are the new laws that will affect everyone involved in a real estate transaction in California. Our focus, of course, is commercial real estate, so we will take a glance at some of the laws that the industry needs to be aware of. Starting with…
Dual Agency Disclosure – SB 1171
As mentioned in a previous article, the senate bill requires commercial real estate agents in California to disclose buyer and seller relationships. Real estate legislation on the commercial side has long favored landlords or sellers. This law intends to bring much needed protection to buyers and sellers, but especially the former. Previously, landlords held the advantage whenever a broker represented both the seller and the buyer.
This is because landlords provide most of the remuneration in a transaction. So to make a transaction economically desirable for the landlord, there could be internal talks about how much to charge for a building, looking at various factors such as the local market, how much a buyer will be willing to pay, etc.
Legally, this cannot happen anymore. Brokers/agents will have to act as messengers. Instead of potentially relaying confidential information to sellers, agents can only communicate information that is willing to be shared to the other party. The new regulations also prevent buyers from getting private information from agents.
Must Show Transfer Tax – AB 1888
Documents must show the amount of tax due and location of property to be shown when buying commercial properties. What this means for real estate professionals is that finding comparables for properties will be made easier due to it becoming publicly available information. This will also make it easier to find out the purchase price, as the tax paid is correlated with the amount paid for the property. Unfortunately, this will also make it nearly impossible for celebrities and other high-profile individuals to hide the price paid (for security reasons).
No Shill Bidding on Real Estate Auctions – AB 2039
This bill applies on and after July, 1 2015 and would bar individuals from bidding on real estate just for the purpose of increasing the bid of the property. The new amendment to the assembly bill would allow individuals to bid on the property on the seller’s behalf during a property auction – although proper notice is required that liberty for such bidding is reserved.
Installation of Electric Vehicle Charging Stations – AB 2565
A landlord of a commercial property must allow a tenant to install, at their expense, an electric vehicle charging station for any lease that is valid on and after July 1, 2015 (new and ongoing leases apply). The installation of the charging station must still meet any modification guidelines set by the landlord. However, the new regulation does not apply to commercial real estate that has less than 50 parking spaces.
Additionally, the law requires lessees to take out a $1 million general liability insurance policy. All costs, including installation, removal, repair, replacement and damage of the charging station are borne by the tenant. This law may enable people who park in high-volume parking garages while they are at work to charge their electric cars, if stations have not been installed already.
These are only a few of the regulations that will affect how certain commercial real estate practices that have changed, starting in 2015. The above is not a complete list of the new laws taking effect. Information is not legal advice and while deemed to be accurate, should be independently verified.