Summary of Laws and Codes

These are some of the most important codes, statutes, and laws governing the transfer of real property. Your property may be affected by some or all of these.

San Francisco City & County Requirements

Energy & Water Conservation. Since September 20, 1982, the San Francisco Residential Energy Conservation Ordinance has required that all residential properties built before 1978 be brought up to specified standards. Your property must be inspected by a certified energy inspector and a report must be recorded. There are varying dollar limitations on the amount of work required, depending upon the type of property. Requirements include attic insulation, insulation of heating ducts, weather stripping exterior doors, and water heater insulation. Water conservation requirements include low-flow shower-heads (2.5 gallons per minute), low-flush toilets (1.6 gallons or less per flush), as well as aerators on sink faucets.

3R Report. A copy of the Report of Residential Building Record must be provided to the buyer of every residential property. This report includes the authorized use of the property, the number of legal units, building permits that have been issued, zoning, and related information.

Rent Control Ordinance. This comprehensive law may substantially affect an owner's rights regarding the use of a property. The ordinance is enforced by the San Francisco Residential Rent Stabilization and Arbitration Board. If laws are not strictly followed, it can create serious liability for an owner. When purchasing rent-controlled property, an owner who wishes to occupy may be required to provide money for moving expenses to any displaced tenants.

Underground Storage Tanks. The city requires all underground storage tanks to be removed or otherwise made safe when discovered. The property owner is responsible for the cost and related contamination clean up. This is required even if the property is not sold.

California State Requirements

Seismic Hazards Mapping Act. This act requires that the California Division of Mines and Geology develop maps delineating areas subject to earthquake hazards. These hazards are: liquefaction, enhanced ground shaking, earthquake induced landslides, and various types of ground failure. The delineated areas are called "Seismic Hazards Zones." New development in a Seismic Hazard Zone will only be permitted if the developer can show that geologic hazard mitigation can make the site acceptably safe. This act places a disclosure obligation on sellers and real estate agents. Specifically, the agent for sellers of real property located within a mapped Seismic Hazard Zone must disclose this information to prospective purchasers. Zephyr will arrange for a geologic service to provide the mandated information.

Earthquake Safety Disclosure. Zephyr will provide you with a copy of the publication "The Homeowners Guide to Earthquake Safety," which also includes a Residential Earthquake Hazards Report Form. Sellers must fill out this disclosure and buyers must sign it before close of escrow.

Real Estate Agency Relationships Disclosure. A real estate broker must disclose the duties and responsibilities of agency to all clients. Brokers representing buyers are also required to make this disclosure. The form of agency in the transaction must always be clearly disclosed to all parties. There are three forms of agency: Seller's Agent, Buyer's Agent, and Dual Agent.

Real Estate Transfer Disclosure. All sellers of buildings with four or fewer residential units are required to provide the buyer with a written disclosure that outlines the condition of the property in detail. The buyer has three days after receipt of this statement (five days if received by mail) to rescind the contract. In San Francisco a Seller's Supplement to the Transfer Disclosure Statement is also customary.

Environmental Hazards Disclosure. All sellers of residential property are required to disclose known environmental hazards to buyers. Zephyr will provide you with a copy of the publication required by law that makes the necessary general disclosures. This publication was prepared by the California Department of Toxic Substances Control, in cooperation with the California Air Resources Board and the California Department of Health Services. It is not intended to disclose specific hazards which sellers may be aware of on their properties. These must be disclosed separately.

Condominium Disclosures. All sellers of condominiums must provide the buyer with a statement from the homeowners' association disclosing the financial status of the association, including major maintenance or repair expenses, planned assessments, and delinquent assessments. The first time a converted condominium is sold, the seller is required to give the buyer a written statement disclosing any known defects in the property and common areas. All management documents (such as CC&Rs, bylaws, articles of incorporation), plus minutes of recent homeowners' meetings, are required to be presented to the buyer.

California State Income Tax Withholding. Buyers are required to withhold tax from sellers who are not California residents. The California income tax to be withheld is an amount equal to 3.33% of the selling price. There are some exceptions to this requirement. Zephyr will help sellers determine if any of these apply.

Smoke Detector Ordinance. California law requires that every single-family dwelling must have an operable smoke detector, approved and listed by the State Fire Marshal. Sellers are required to certify that the property is in compliance with state law prior to transfer

Carbon Monoxide Detector Requirements. Although not a point of sale requirement, California law requires that every single-family dwelling and condominium must have an operable carbon monoxide detector - if there are gas burning appliances on the premises. Some appraisers will not complete their report without these devices being installed.

Water Heater Bracing, Anchoring or Strapping. California law requires that all new and replacement water heaters and existing residential water heaters be braced, anchored or strapped to resist falling or horizontal displacement. Sellers are required to certify that the property is in compliance prior to transfer.

Megan's Law. This law requires that every sales contract for residential real property contain a specific written notice that a prospective purchaser can access the database containing information about registered sex oenders. It provides that upon delivery of the foregoing written notice the seller is not required to provide additional information regarding the proximity of registered sex oenders. This notice is included in the San Francisco Association of REALTORS® sales contract.

Federal Requirements

Federal Lead Hazards Disclosure Requirements. All sellers of real property are required to disclose the presence of any known lead hazards and to provide purchasers with the pamphlet "Protect Your Family From Lead in Your Home."

Foreign Investment in Real Property Tax Act. FIRPTA requires buyers of any property owned by a "foreign person" to withhold 10% of the gross sale price and forward it to the Internal Revenue Service. In order to avoid this, sellers must fill out an adavit certifying that they are not a "foreign person."

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San Francisco Real Estate Group
San Francisco Real Estate Group