Stubbs, K.

English

University of San Diego

1REGULATORY AGENCY ACTIONcommenced on November 13. Thechanges have been adopted and resub-mitted to OAL.New Regulations Covering Disclosureof Defects in Property. New legislation(commencing at Civil Code section1102), which became effective January 1,1987, limits the liability of real estatebrokers for failure to disclose defects inthe property they sell. The law waspassed in the legislature last year inresponse to a California appellate courtdecision broadening brokers' liability fornondisclosure. In Easton v. Strass-burger, 152 Cal. App. 3d 90, 199 Cal.Rptr. 383 (1984) agents were held liablefor failing to disclose soil defects onproperty. The court held that a broker"had a responsibility to make more thana general inquiry of the seller." The deci-sion has been interpreted to hold brokersliable not only for intentional conceal-ment or misrepresentation of knowndefects, but also for failure to disclosedefects they should have known about,thereby adopting a negligence standard.The new law attempts to clarify thatliability by setting forth a lengthy formwhich lists information brokers mustascertain from sellers and provide topotential buyers. The form requestsinformation on the condition of theproperty, including drainage and flood-ing problems, and neighborhood noise.The law applies to real property trans-actions involving one to four residentialunits. The new legislation requires thebroker to make the requisite inquiries,fill out the form, and have the sellersign it.LEGISLATION:AB 3746 (Lancaster-Montoya) be-comes operative January 1, 1988. Thisbill establishes in law, for the first time,standards for the performance of realproperty appraisal services when theclient specifies that a certified appraisalis desired. The standards are based onguidelines established by major appraisalorganizations and may be enforcedthrough civil actions or through injunc-tion or other equitable relief. The use ofa "certified appraisal" is not mandatory,but users can expect that when the desig-nation of "certified" appears on anappraisal, the report was prepared pur-.suant to statutory standards.AB 1034 (Connelly-Grisham) alsobecomes operative January 1, 1988. Thisbill will require that listing and sellingagents in real estate transactions provideboth buyers and sellers with specifiedwritten and oral disclosures. The listingagent must deliver a specified writtendisclosure form to the seller prior to thetime of listing, and the selling agent mustdeliver the same disclosure to the buyeras soon as practicable, but prior to exe-cution of an offer. The disclosure formsets forth the various forms of agencyrelationships between buyers and sellersand real estate licensees, and the dutiesowed by these licensees, depending ontheir agency relationship to the buyerand seller. The buyer and seller must signfor receipt of the disclosure.The bill will also require that licenseesdisclose to the buyer and seller, as soonas practicable, whether he/she is actingas the seller's agent, the buyer's agent, ora dual agent. Finally, licensees must con-firm the agency relationship in writing ina contract to purchase or lease or in aseparate writing executed by the seller,buyer, and the selling agency. The lawwill apply to real property transactionsinvolving one to four residential units.The law is meant to eliminate manyproblems which occur when a brokerrepresents both the buyer and the sellerin a single deal.SB 491 (Montoya), sponsored by theDepartment of Real Estate, becomesoperative July 1, 1987 and requires man-datory education for licensees on agencyrelationships in real estate transactions.The bill requires that after July 1, 1987,all real estate licensees must include,among 45 hours of continuing educationcourses, a three-hour course in agencyrelationships; the required number ofhours of courses related to consumerprotection is reduced from 21 to 18.The change will provide a means forensuring that licensees have a betterunderstanding of the subject of agencyand their duties and responsibilities asagents. The Department will publicizeboth the changes in educational re-quirements and the agency disclosures tobe made in real property transactionsinvolving one to four residential unitsthroughout 1987.Commissioner Edmonds stated thatDRE is currently establishing the regula-tory procedures and course approvalmechanisms necessary for implementa-tion of both of these agency-rerated bills.He believes that both licensees and con-sumers will significantly benefit from thenew legislation. The Commissioner hasalso sent a letter to the California Asso-ciation of Realtors setting forth histhoughts on enforcement of the newprovisions in the law addressing agencyrelationships.RECENT MEETINGS:The Department of Real Estate, inconjunction with the California Associa-tion of Realtors, met in San Diego onOctober 10. Discussion topics includedclarification of existing licensing andcontinuing education requirements, andthe new requirements under SB 491(Montoya).DRE also clarified advertising require-ments. Many inquiries are received bythe Department regarding advertising ofa licensee's availability to perform a ser-vice for which a real estate license isrequired. The applicable law is codifiedin section 10140.6 of the Business andProfessions Code, and requires the licen-see to include the appropriate designa-tion (i.e., broker, agent, realtor) in theadvertisement and to disclose that thelicensee is performing acts for which areal estate license is required. Further, asalesperson must also include the nameof his/her employing broker (pursuantto Commissioner's Regulation 2770) inany advertisement in which the salesper-son's name appears. These provisionsmust appear despite the fact that anagent's firm is easily recognized as a realestate firm.FUTURE MEETINGS:To be announced.DEPARTMENT OF SAVINGSAND LOANCommissioner: William J. Crawford(415) 557-3666(213) 736-2798The Department of Savings and Loan(DSL) is headed by a commissioner whohas "general supervision over all associa-tions, savings and loan holding com-panies, service corporations, and otherpersons" (Financial Code section 8050).DSL holds no regularly scheduled meet-ings, except when required by the Admin-istrative Procedure Act. The Savings andLoan Association Law is in sections5000 through 9001 of the CaliforniaFinancial Code. Departmental regula-tions are in Title 10, Chapter 2, of theCalifornia Administrative Code.MAJOR PROJECTS:Commissioner's Actions. February,1987 marks the end of William Craw-ford's second year as the Commissionerof the Department of Savings and Loan.During his second year, CommissionerCrawford has taken a tough regulatorystance toward savings and loan institu-tions in an effort to eliminate detri-mental factors within the industry. SinceThe California Regulatory Law Reporter Vol. 7, No. 1 (Winter 1987)REGULATORY AGENCY ACTION 6taking office in 1985, for example, he hasallowed no new state chartered savingsand loans in California, in the belief thatCalifornia is an area already overservedby savings and loan institutions, andthere is no need for new business. Addi-tionally, the Federal Savings and LoanInsurance Corporation (FSLIC), whichinsures the savings and loan industry, isexperiencing a cash flow problem. Untilthe federal government finds ways tofund FSLIC, the Department is unlikelyto approve any new savings and loans.Commissioner Crawford also workedclosely with Senator Rose Ann Vuich tostrengthen the laws governing savingsand loans. In particular, SB 2452 (seeCRLR Vol. 6, No. 4 (Fall 1986) p. 67)imposes a fiduciary duty on directorsand officers of savings and loans to pro-vide sound management to the associa-tion. The new law, which was signed bythe Governor on September 25, requiresthat savings and loans inspect largeproperties after appraisals and restrictsloan amounts to single borrowers. SB2452 also gives the commissioner morecontrol in that it requires his/her appro-val before a savings and loan may trans-act with its directors or employees, andallows him/her to remove savings andloan officers while court cases againstthem are pending. The stricter laws areaimed at alleviating problems in theindustry, such as financial difficultiesdue to large real estate loans made onunder-valued property and difficultiesCAL-OSHADirector: Ronald T. Rinaldi(916) 557-3356California's Occupational Safety andHealth Administration (Cal-OSHA) isan integral part of the cabinet-levelDepartment of Industrial Relations. Itadministers California's program ensur-ing the safety and health of California'swage-earners.Cal-OSHA was created by statute inOctober 1973 and its authority is out-lined in Labor Code sections 140-49. It isapproved by, monitored by and receivessome funding from the federal OSHA.The Occupational Safety and HealthStandards Board (OSB) is a quasi-legis-due in part to incompetent management.Personnel Policies. The Departmenthas announced a new personnel policydirected at reducing instances of unre-ported violations of law and regulationsand other misconduct which, accordingto DSL, "have contributed to significantfinancial losses." The Department hasdetermined, pursuant to section 8050 ofthe Financial Code, that the board ofdirectors of each savings and loan asso-ciation should adopt a resolution to pub-lish and distribute to staff the board'spolicy and procedures through whichstaff may confidentially report incidentsof violations of law and regulations andother misconduct. The published infor-mation should include at least a name,local address, and telephone number ofthe statutory auditor, and the name of anofficial with whom confidential contactcan be made. DSL required distributionof the information on or before Decem-ber 31, 1986, as well as upon hiring ofnew staff and upon any revision of thepolicy required by the Department. Theassociation must review its policy annu-ally and recommend either retention orchanges as deemed necessary by theboard of directors or the board of trus-tees. DSL cites "the fiduciary responsi-bilities [which] dictate the need forpersonnel policies that promote a freeexchange of critical or sensitive informa-tion between an institution's staff and itsstatutory auditors, and regulatory agen-cies" as its reason for the new policy.lative body empowered to adopt, review,amend and repeal health and safetyorders which affect California employersand employees. Under section 6 of theFederal Occupational Safety and HealthAct of 1970, California's safety andhealth standards must be at leastas effective as the federal standardswithin six months of the adoption of agiven federal standard. Current pro-cedures require justification for theadoption of standards more strenuousthan the federal standards. In addition,OSB may grant interim or permanentvariances from occupational safety andhealth standards to employers who canshow that an alternate process wouldprovide equal or superior safety totheir employees.The seven members of the Board areappointed to four-year terms. LaborCode section 140 mandates the composi-tion of the Board as two members frommanagement, two from labor, one fromthe field of occupational health, onefrom occupational safety and one fromthe general public.The duty to investigate and enforcethe safety and health orders rests withthe Division of Occupational Safety andHealth (DOS H). DOSH issues citations,abatement orders (granting a specifictime period for remedying the violation)and levies civil and criminal penalties forserious, willful and repeated violations.In addition to making routine investiga-tions, DOSH is required by law to inves-tigate employee complaints and anyaccident causing serious injury and tomake follow-up inspections at the end ofthe abatement period.The Cal-OSHA Consultation Serviceprovides on-site health and safetyrecommendations to employers who re-quest assistance. This consultationguides employers in adhering to Cal-OSHA standards without the threat ofcitations or fines.The Hazard Evaluation System andInformation Service (HESIS) was devel-oped to provide employers and workerswith up-to-date critical information onthe health effects of toxic substances andmethods for using these substances.The Appeals Board adjudicates dis-putes arising out of the enforcement ofCal-OSHA's standards.MAJOR PROJECTS:AB 111I. One of OSB's major ongoingprojects is compliance with AB 1111, aprocess which has been moving veryslowly: The OSB submitted a plan to theOffice of Administrative Law (OAL) forreview of Cal-OSHA's health and safetystandards.Proposed Budget Cuts. GovernorDeukmejian recently proposed budgetcuts which would eliminate Cal-OSHA'sregulatory and appeals activity, as wellas its enforcement of private businessviolations. Although the proposedbudget cuts would allegedly eliminatestate programs which are duplicated byfederal programs, several legislatorshave expressed concern that a number ofCal-OSHA occupational safety lawshave no federal counterpart. Thus, with-out a separate state enforcement agency,workers could lose some of the protec-tions they now have through Cal-OSHA.The California Regulatory Law Reporter Vol. 7, No. 1 (Winter 1987)qDEPARTMENT OFINDUSTRIAL RELATIONS

Department of Savings and Loan

https://digital.sandiego.edu/cgi/viewcontent.cgi?article=2949&amp;context=crlr

Department of Savings and Loan

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