2018 – A Year in Review

Keith B. DunnaganToday, we take time to look and reflect on some of the legal changes in 2018. From cannabis, to the Dynamex and Black Sky decisions, to the mid-term election results. Many interesting things happened last year and we expect more to come next year.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.

Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact me to setup a date and time.

2018 – A Year In Review

By: D. Keith B. Dunnagan, Esq.

2018 was a year of interesting changes here at BPE Law and in the world of the law. For BPE we saw the addition of several new office personal that have assisted us in our service to our clients and real estate community.

In the world of the law — the year was opened with legalization of recreational cannabis. However, concern arose almost immediately, as then Attorney General Jefferson Sessions on January 4, 2018 revoked the Cole Memorandum. The Cole Memorandum was a policy document that had the DOJ take a hands-off approach to enforcement of federal cannabis laws in states where cannabis was legal under state law so long as certain federal policy goals were maintained. The revocation of the Cole Memorandum and the potential for civil forfeiture under federal law combined with new enacted municipal ordinances defining the scope of legal grow vs. illegal grow created difficult maze of law for property owners.

While the property owner had some breathing room under the civil forfeiture laws (for truly innocent and unknowing owners) the municipal laws were crafted with a much more draconian strict liability standard. Local agencies are beginning to realize that there may need to be modification of the strict liability penalties in the cannabis laws as the local ordinances may create unintended consequences that impact a tenant’s quiet enjoyment rights. One thing is certain the law is ever changing in this area.

Then in April of 2018 the California Supreme Court announced a new test related to the independent contractor vs. employee analysis in the Dynamex case. The case created a new three-part test to determine whether a person was an independent contractor or an employee and went on to state that if any one of the components of the test is failed, then the person is an employee. While this analysis has not yet been applied to the real estate industry, considering the trends in California and the Barasani case (which was settled) from a couple years ago it is likely that challenges to the independent contractor model may continue and what will the impacts be in the real estate industry if the industry moves to more of a employee based model. The impacts of Dynamex are not certain yet, but the test may prove problematic for many industries. Again, it is the unintended consequences of creating a new set of legal standards.

Then there was the Black Sky decision that was granted review by the California Supreme Court. This case has the possibility to significantly change 60 years of mortgage law predicated on California’s strong policy restricting the ability of lenders to pursue deficiency judgments following a foreclosure. In 2019 we will be definitely watching for the outcome to this significant case.

Then in midterm election season there were a two of ballot initiatives (Prop. 5 – property tax portability and Prop 10 – rent control) both failed at the ballot box. Prop. 5 sought to expand the use of property tax portability (the ability to transfer property tax basis in certain situations). CAR has acknowledged for some time that the proposition was going to be difficult to pass and it is likely that a new proposition will be sponsored for 2020. Prop 10 involved rent control. The topic continues to get traction as housing costs rise across California and especially here in the Sacramento metro region. However, housing supply has long been the dominating factor for rising costs. So long the growing population continues to outpace the expansion of the housing supply, costs will continue to increase. There is some legislation in the works to seek to provide ways to streamline the permitting process for building ADU’s (accessory dwelling units or granny flats). This will help some. But additional construction of multi-family and single-family dwellings will have to be part of the housing supply solution. Rent control will not solve a supply problem.

2018 was a great year. Full changes and opportunities. We look forward to the challenges and opportunities that 2019 will bring. Have a Happy Holiday Season!!

The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.