New Federal Reporting Requirements Ordered in Five California Counties
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes. Over the last year FinCEN has been issuing Geographic Targeting Orders ("Orders") requiring the reporting of information regarding certain real estate transactions.
The most recent Order went into effect August 28, 2016 and it impacts five counties in California, namely Los Angeles, San Diego, San Francisco, San Mateo and Santa Clara Counties. Under the Order, title companies are required to report specific information about the individuals conducting the transaction if certain criteria are met. The covered transactions are sales of properties in the amount of $2,000,000 or more, wherein the property being sold is residential. They buyer must also be a legal entity, paying all cash (no loan), wherein any portion of the funds paid toward the purchase price were not wired.
This Order is currently in effect through February 23, 2017. If you are involved in any such transactions during this time period be prepared to provide the information required by the title company to meet this reporting requirement.
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Case of the Month
Intelligent Investment Corp. v. Miguel Gonzales
This month's case involves an appeal wherein a tenant was denied his motion for attorney fees after the voluntary dismissal by his landlord of its unlawful detainer action against him. The tenant contended that he was entitled to attorney fees pursuant to the fee shifting provision under Los Angeles Municipal Code (LAMC) section 162.09(A)(5), which applies to unlawful detainer actions involving property in the City of Los Angeles Rent Escrow Account Program (REAP). That program allows tenants to pay their rent into an escrow account instead of to the landlord when the City determines that the property has habitability issues with the intent that it will encourage the landlord to make the property habitable. While a property is encumbered by a REAP and for a year thereafter restrictions are placed upon the ability of the landlord to evict the tenant.
As background, on June 2, 2014 the landlord filed an unlawful detainer action against defendant, based on service of a three-day notice to perform covenants or quit. The tenant answered the following week, generally denying each allegation in the complaint and asserting several affirmative defenses, including breach of the warranty of habitability, violation of the Los Angeles Rent Stabilization Ordinance, and retaliation. Two weeks later the landlord voluntarily dismissed the action. Thereafter, the tenant filed a motion for attorney fees. The tenant argued the property was in REAP when plaintiff commenced the unlawful detainer and contended that he was the prevailing party as a result of the voluntary dismissal. The trial court denied the request for attorney fees.
On appeal the landlord argued that the tenant waived any claim in this case pursuant to the REAP rules by not alleging that fact or asserting it as a defense in his answer, and that he was therefore estopped from asserting it as a basis for fees after the case was dismissed. The appellate court disagreed, finding that LAMC section 162.09 specifically applied and authorized tenant to raise a defense on any ground set forth in the section which was done in this tenant's answer. The attorney fee clause is ancillary and subsequently entitles the awarding of such fees if the tenant prevails on any such defense.
The appellate court also found that the tenant was the prevailing party. Generally, such a determination would have to be made by the trial court, which did not occur here. Notwithstanding, the opinion in this case held that any finding by the court that defendant was not the prevailing party would be "a clear abuse of discretion." Based thereon the trial court's denial of attorney fees to the tenant was reversed. As such, the tenant will now be entitled to attorney fees for his original defense of the complaint by the landlord and for this appeal. The landlord, on the other hand, is out rent, his own attorney fees and the tenant's attorney fees, all for failing to heed the limitations on eviction resulting from the placement of his property into a REAP.
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California Approves Notary Fee Increase
On August 17, 2016, Governor Jerry Brown signed a bill that will increase the maximum allowable notary fees in the State of California. Assembly Bill 2217 will allow a notary public to charge an additional $5.00 for a number of services, including taking a signature for an acknowledgment or proof of a deed or other instrument, which raises the cap to $15.00 per signature. The maximum fee to complete a jurat will also be increased to $15.00.
The last time maximum allowable fees were increased in California was 1993, when the current cap was set to $10.00 for acknowledgements and jurats. The law does not change the existing rule that the charging of a notary fee is not required; it only sets the maximum amount allowable. The bill goes into effect January 1, 2017 so the maximum fee for acknowledgements and jurats is still $10.00 through the end of the year.
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Upcoming Speaking Engagements
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September 12
Conejo Simi Moorpark Association of Realtors 2016 Senior Forum
September 14
Ventura County Escrow Association Dinner Meeting
September 15
Escrow Associates of San Gabriel Valley Dinner Meeting
September 20
San Diego County Escrow Association Dinner Meeting
September 22
REFAT 11th Annual Fraud Awareness Forum
For details about any of these events feel free to contact our office.
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