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Legislative, Law and Rule Changes
We have included links to additional information that we receive regarding
legislation and law at the bottom of this page.
A Message From REIA Founders
Fox and Shirley Henderson
Real estate investing can be fun and lucrative, either as a full time career or a casual investment strategy. The "get rich quick" schemes are more the subject of late-night infomercials than reality--real estate investing takes hard work, time, ingenuity, education and integrity. There are many creative approaches that we all use as real estate investors, but creativity should never cross the line of deception or anything less than completely ethical, legal business dealings. That is even more true when we work with property owners and properties that are in distress.
As in any industry, we have our share of scammers and con artists. Our elected officials are likely doing everything they can to improve consumer protection and for that they should be applauded. They do, however, appear to be in the unenviable position of writing laws without knowledge of many of the ways that we real estate investors do business every day. Nor could they conceivably know that consumers will lose by passage of many of these laws.
Our legislators have proposed, and in some cases passed, legislation that impacts all of us. Making our voices heard, including contacting our State Legislators by email and letter, along with attending public hearings, is vital to help us support and educate our lawmakers about what we do as real estate investors. These efforts are not just the responsibility of REIA; they are the responsibility of ALL OF US. Check back often, contact lawmakers, attend hearings and GET INVOLVED to keep real estate investing a viable industry in WashingtonState.
Updated information on changes, or proposed changes, in our State Legislature, Federal Government, law and rules will be updated on this page periodically. As always, consult your attorney for additional information about legislation, laws and rules and how they affect you and your business.
REIA was founded and is managed with ethical real estate investing as our foundation. As we all know, not all who profess to be "investors" do the same. It is up to us who invest legally and ethically to remain diligent in our business practices and moral obligations and do all that we can to make our industry shine.
Fox and Shirley Henderson REIA Founders
Legislative, Law and Rule Changes
Washington State Carbon Monoxide Detector Requirements
"The legislature recognizes that carbon monoxide poses a serious threat. According to national statistics from the centers for disease control, carbon monoxide kills more than five hundred people and accounts for an estimated twenty thousand emergency department visits annually. Specifically, Washington state has experienced the dire effects of carbon monoxide poisoning. In the storms that struck Washington in December 2006, it was estimated that over one thousand people in the state were seen at hospital emergency rooms with symptoms of carbon monoxide poisoning, and eight people reportedly died of carbon monoxide exposure. It is the intent of the legislature to implement policies to prevent similar tragedies from occurring in the future."
The "new" Washington State law requires, in part, that carbon monoxide detectors must be in ALL rental housing units - whether the unit has a source of Carbon Monoxide or not - by July 01, 2011. Requirements are also in place for new construction and "...any owner-occupied single-family residence that is sold on or after July 26, 2009...".
Please click here to read the original RCW, here to read the SBCC (State Building Code Council) memo changing the implementation date to July 01, 2011 and use the links below to read the full requirements.
U.S. Environmental Protection Agency Rule on Lead in Paint, Dust and Soil: Renovation, Repair and Painting
The U.S. EPA Rule requirements, in part: "Common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
To protect against this risk, on April 22, 2008, EPA issued a rule requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, beginning in April 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination."
The EPA web page, available by clicking here, further states that "After April 22, 2010, property owners who perform these projects in pre-1978 rental housing or space rented by child-care facilities must be certified and follow the lead-safe work practices required by EPA's Renovation, Repair and Remodeling rule."
Please refer to the EPA website by clicking here or the NAHB (National Association of Home Builders) website by clicking here for additional information.
HFR-5271-P-01: S.A.F.E. Mortgage Licensing Act
The Housing and Economic Recovery Act of 2008 is a comprehensive act that addresses many topics. Title V of this act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also known as the S.A.F.E. Mortgage Licensing Act of 2008, establishes national minimum standards for mortgage training – both pre-licensing and continuing education - to offer Owner Financing in whole or part of your own property.
H.R. 1728: Mortgage Reform and Anti-Predatory Lending Act
As many know by now from the scores of emails landing in the inboxes of real estate investors, H.R. 1728 has PASSED the House. The votes can be seen by clicking here; all Washington State Members of the House voted Yea EXCEPT Representative Doc Hastings and Representative Cathy McMorris Rodgers.
The Bill is said to adversely affect real estate investors who sell properties using Seller Financing and, perhaps, other modes of creative financing. While REIA believes that FAILING TO TAKE ACTION would be inappropriate in view of our civic duty and as real estate investors we also believe saying this Act could "crush" our industry, as many gurus are now saying, is too far to the other extreme.
The status of this Bill and other Federal legislation can be followed at www.govtrack.us.
RCW 61.34: Distressed Property Conveyances (formerly Equity Skimming) The Legislative Findings of RCW 61.34 are as follows:
"The legislature finds that persons are engaging in patterns of conduct which defraud innocent homeowners of their equity interest or other value in residential dwellings under the guise of a purchase of the owner's residence but which is in fact a device to convert the owner's equity interest or other value in the residence to an equity skimmer, who fails to make payments, diverts the equity or other value to the skimmer's benefit, and leaves the innocent homeowner with a resulting financial loss or debt."
Much of this law applies to owner-occupied preforeclosures including lease-backs, subject-to's and "saving" homeowners from foreclosure. A full description can found in the RCW itself on the Washington State Legislature website or by clicking here.
Our attorney, Bob Penfield, tells us "the penalty for engaging in a "pattern" of equity skimming that is set forth in the Distressed Property Conveyances Act is found in RCW 9.94A, as a Class B Felony, Level II offense" - which can include confinement in a state correctional institution, fine or both.
This "new" law is wrought with issues, many of which focus on the great number of preforeclosures that are now generally "off limits" to real estate investors. We believe the harsh "new' laws are more of a disservice to those in foreclosure than not. We also firmly believe that the majority of real estate investors work honestly and toward everyone's best interest - including and especially the homeowner in distress. That said, whether we agree or not we all have an obligation to comply. As an Association, REIA will not offer support for those working in the preforeclosure arena including through education related to preforeclosures, short sales, (preforeclosure related) subject-to's or loss mitigation.
REIA STRONGLY recommends that real estate investors READ THE LAW and work with the real estate attorney on their team BEFORE involving themselves in any of the areas the "new" law covers.
Real Estate Excise Tax (REET)
As was discussed at past REIA meetings, Members of the REIA Board of Directors attended a meeting with the Washington State Department of Revenue (DOR) pertaining to the interpretation of laws that dictate the collection of REET pertaining to Short Sales. The topic, and the meeting, have been controversial in light of some of the current economic conditions. The DOR has since reversed their position on application of REET to Short Sales. More information is available from the DOR in the link at the bottom of this page, including the possibility of refunds to those who paid REET on the difference between the ("shorted") purchase price and the amount of the debt. DOR notification of changes was issued on January 13, 2009 and can be viewed here.
Septic Inspection and Recording Requirement
Seattle and King County requires all sellers of properties with onsite sewage systems to have their on-site septic system inspected by a King County licensed On-Site System Maintainer. Before closing the seller must record a Notice of On-site Sewage System Operation and Maintenance Requirements (OSSM) at King County Office of Records and Elections. The document acknowledges the property is served by a septic system and describes the owner's responsibilities for maintaining the system. For more information click here.
For information about requirements in other jurisdictions, please contact the appropriate jurisdiction.
Contractor Registration Law & Rules
Substitute House Bill 1843, and the resulting law,requires "property owner developers", including flippers, to be registered and bondedas general contractors. This Bill is said to have been introduced to protect consumers by enabling a means of getting monetary relief for negligent or poor quality workmanship by making a claim on the renovator / contractor's bond.
Many real estate investors purchase one or two properties every year. Many others, typically more active real estate investors, purchase through multiple entities for both asset protection and to ease the tax burden. Law changes resulting from SHB 1843 affects entities of ALL SIZES.
The affect of SHB 1843 is to require that all of our entities become contractors or to create contracting business(es) that are on title of each and every property. Every residential investment property that we intend to resell within twelve months and that we anticipate spending more than $500 on is subject to the changes caused by SHB 1843.
For more information contact the Washington State Department of Labor & Industries, visit the Washington State Legislature website to review RCW 18.27 by linking below or here, read the Department of Labor & Industries Memo by clicking hereand consult with the real estate attorney and/or insurance professional on your team!
As always, we have a lot on our plates from a legislative standpoint. This page will be updated as warranted, so check back often!
This REIA Legislative Updates page includes commentary from REIA, updates on legislation and related links to many changes in Legislative, Laws and Rules Changes but IS NOT intended to include ALL changes OR all information related to the changes listed. For a complete list of Legislative Issues that affect real estate investors, including landlords, please follow the links (above) to the Washington State Legislature, check other Local and Federal websites and consult with an attorney.
REIA is a Responsible Association.
Be a Responsible Investor.
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