Realtors score big in 2013 legislative session

TALLAHASSEE, Fla. — May 3, 2013 / 7:16 PM — With an additional $1.1 billion to spend this year, there was less drama this session. Well, there was the incident this week when House Democrats protested the stalemate over healthcare reform by requiring all bills be read in full. The task was handed off to “Mary,” a mechanical auto-reader that “read” bill texts aloud for two days.

The stall tactic didn’t ultimately slow proceedings. In fact, the House moved through 75 percent of the day’s agenda on Wednesday. Nor did it impact Florida Realtors’ priorities. By Wednesday, most of our initiatives had either passed or were well on their way toward passage.

“As I travel the state, it’s exciting to see the degree to which Florida’s Realtors are involved in grassroots advocacy,” says 2013 Florida Realtors President Dean Asher, a broker-owner with Don Asher & Associates Inc. in Orlando. “After meeting with lawmakers throughout the session, I’m happy to report that the Realtor Party has produced results you’ll be happy with.”

Following are highlights of the 2013 legislative session:

BILLS THAT PASSED

Much-needed funding for affordable housing programs. Lawmakers allocated more than $200 million from the large national mortgage settlement last year to numerous housing programs. Sen. Andy Gardiner (R-Orlando) negotiated the Senate’s settlement spending plan, SB 1852 , which provides $50 million for rental assistance (State Apartment Incentive Loans or SAIL) and $40 million to refurbish existing homes for low-income families and provide down payment assistance and lease-purchase assistance (the State Housing Initiative Program, or SHIP). It also directs $20 million to Habitat for Humanity, $16 million for additional retired judges to help relieve the foreclosure caseload and $10 million in legal aid services for low- and middle-income homeowners facing foreclosure. While Florida Realtors prefers that funding for affordable housing programs come from the doc stamp taxes collected on every real estate transaction for the Sadowski Trust fund, we appreciate the Legislature’s commitment to provide affordable housing for Florida’s low-income families and the elderly. Effective when mortgage settlement money is deposited in Florida’s general revenue fund.

Tax loophole closed. This goes into the win column for Florida Realtors. Working with several legislators, language was included in different bills to close a tax loophole used by for-profit affordable housing builders to exploit the law. They accomplish this by forming non-profit subsidiaries primarily to pay lower property taxes. Thanks to Reps. Daniel Davis (R-Jacksonville) and Doc Renuart (R-Ponte Vedra) for accomplishing this via HB 437, and Sen. Wilton Simpson (R-Trilby) for placing this language in several Senate bills. Effective: July 1, 2013.

Lawmakers to squatters: Jig’s up. Homes left unoccupied due to foreclosure have brought out all kinds of opportunists, including those seeking free rent in swanky digs under the veil of adverse possession. HB 903 by Rep. Daniel Davis (R-Jacksonville) amends Florida’s long-standing adverse possession law to curb these abuses. Effective July 1, 2013, persons claiming adverse possession must:

• pay all outstanding taxes and liens levied by the state, county or municipality within one year of claiming adverse possession;

• provide the county property appraiser with their contact information, the date when the adverse possession claim began, a legal description of the property, and the dates when outstanding taxes and liens were paid. Filing this return with the property appraiser does not give an adverse possessor an enforceable interest in the property.

Squatters who don’t file a return may be charged with trespassing. If an adverse possessor leases the property to a third party, they can be charged with theft.

Citizens will shrink, but not because of higher rates. A legislative session wouldn’t be complete without an insurance reform bill. The bill that crossed the finish line, SB 1770 , started off big and controversial, calling for substantial rate increases for many of Citizens’ nearly 1.3 million policyholders and all new policyholders. The end product is still big — 75 pages — and includes a Florida Realtors priority: create a clearinghouse to enforce Citizens’ eligibility requirements. But it does not include a requirement sought by Sen. David Simmons (R-Altamonte Springs) that all new policies be actuarially sound. Simmons chaired the Senate Banking and Insurance Committee this session and negotiated a compromise between an ambitious Citizens reform bill passed by the Senate and a “lighter” version proposed by the House.

“There were so many insurance bills this session that seemed to go in so many different directions, including huge rate increases. But early on we identified the one reform — an eligibility clearinghouse — that would do the most good for the most people without unleashing rate increases that could hurt Florida’s economic recovery,” says John Sebree, Senior Vice President of Public Policy. “The legislation that did pass was the result of many long hours of negotiations between legislators, insurance companies and agents, consumer groups and Realtors.”

Here’s what the bill accomplishes:

• All applicants for Citizens coverage will have to go through a clearinghouse to establish eligibility. If applicants can obtain private market coverage at a cost that’s within 15 percent of the Citizens’ premium, they are ineligible for Citizens. Incidentally, this is current law but easily circumvented.

• Currently, homes with a replacement cost of up to $1 million are eligible for Citizens coverage. Beginning in 2015, the maximum replacement cost will drop $100,000 a year for three years. In 2017, then, homes with a replacement cost greater than $700,000 will not be eligible for Citizens coverage. This won’t apply to homes in areas where the Office of Insurance Regulation determines there’s no “reasonable degree of competition,” such as the Florida Keys.

• Removes Citizens eligibility for homes built or substantially improved seaward of the Coastal Construction Control Line after July 1, 2014.

• Expands the Citizens Board of Governors to include a consumer advocate, who will be appointed by the governor.

Effective: July 1, 2013, unless otherwise provided.

Foreclosure reform. With buyer demand increasing and inventory levels at record lows, Realtors consider foreclosures lingering in the courts as prime housing stock. To be sure, foreclosing on a mortgage is a long process in Florida — about 853 days, more than twice the national average. That should begin to change with the passage of HB 87 by Rep. Kathleen Passidomo (R-Naples). The bill allows lenders to ask the court to justify why a final order hasn’t been entered, and gives condominium and homeowners associations the right to request the court move the process along where appropriate. Consumer interests are addressed in several provisions including: (1) requiring lenders to prove they own the loan for a property before foreclosing on it; (2) reducing the time lenders can seek deficiency judgments from five years to one year and (3) providing protections for innocent parties who purchase a property without knowledge that a previous owner may have a claim to the property. For the person whose home is erroneously foreclosed on, HB 87 provides for the recovery of damages (monetary, compensatory, punitive, statutory and consequential), injunctive relief and fees. Effective upon becoming law.

Rent out homestead every year, keep tax exemption. This initiative originated in Northeast Florida, where property owners sought to rent out their homestead during The Players Championship golf tournament and the Daytona 500 without jeopardizing their homestead status for several tax exemptions. Under current law, rental for any amount of time in the second of two consecutive years triggers abandonment of homestead and loss of the homestead exemption in the second year. SB 342 by Sen. John Thrasher (R-St. Augustine) provides a “safe harbor” that lets people rent their homestead for up to 30 days a year without losing the exemption. However, rentals that exceed 30 days for two consecutive years jeopardize the homestead exemption in year two. Note that the law doesn’t address how many days beyond the 30-day threshold triggers abandonment of homestead. A Department of Revenue opinion allows for rentals of up to six months every other year if proof of substantial residency and other conditions are met. Effective: July 1, 2013.

New option: Electronic version of yearly property tax notices. Many businesses have cut down on the cost of paper and mailing by giving customers the option to check bills online. HB 247 by Sen. Jeremy Ring (D-Margate) and Rep. Bryan Nelson (R-Apopka) attempt to do the same thing for Florida, and it could impact a few real estate-related forms, such as the annual TRIM notices (property tax assessments). Currently, counties mail TRIM notices and other documents, including sample election ballots, to homeowners by first-class mail. Under HB 247, a county can opt for an online system, providing certain conditions are met, such as an “opt-in” system for collecting email addresses. Effective: Oct. 1, 2013.

Hidden liens no more. Sometimes governmental and quasi-governmental entities place liens on property that aren’t known until closing, which can disrupt an otherwise good transaction. HB 267 by Realtor and Rep. John Wood (R-Winter Haven) requires these liens to be recorded in the county where the property is located in order to be valid. This bill only applies to liens entered by a governmental or quasi-governmental entity for services, fines, or penalties, and does not affect liens for taxes, non-ad valorem or special assessments, or utilities. Effective: Oct. 1, 2013.

New disclosure for residential leases. HB 77 by Rep. Elizabeth Porter (R-Lake City) contains a number of revisions to Florida’s Landlord and Tenant Act. It also includes a new disclosure that must be given to tenants when they receive notice as to where their security deposits or advance rents are being held, if they’ll receive interest on the money and so on. The bill also contains provisions about screens, recurring tenant violations of a lease, evictions after acceptance of partial rent, non-renewal notice requirements, writs of possession and the transfer of security deposits from a previous owner to a new landlord. Property managers are encouraged to review this legislation closely. Effective: July 1, 2013.

Green energy tax incentives. In 2008, Florida voters approved a constitutional amendment providing tax breaks to residential property owners who install solar energy devices or wind-resistant materials. HB 277 by Rep. Michelle Rehwinkel Vasilinda (D-Tallahassee) and Rep. Jose Felix Diaz (R-Miami) creates rules to implement the tax break for solar energy devices installed on or after Jan. 1, 2013. The bill does not, however, shield windstorm mitigation upgrades from property taxes. That exemption was stripped out of the bill to win support from the House Finance & Tax Subcommittee. Effective: July 1, 2013.

Licensure changes for brokers, appraisers. SB 852 by Sen. Aaron Bean (R-Jacksonville) brings Florida appraisers into compliance with the Dodd-Frank Reform Act, enabling them to continue to perform appraisals on federally-related transactions. To help the Florida Real Estate Appraisal Board complete disciplinary actions within a year — a federal requirement — the state budget appropriates funds for nine new staff positions. The bill also takes a tougher stance against brokers who lose their license in disciplinary actions. If the Florida Real Estate Commission revokes an individual’s broker’s license, it also revokes any multiple licenses the broker may hold. Effective upon becoming law, unless otherwise provided.

In other appraisal news, lawmakers passed SB 1398 by Sen. Dorothy Hukill (R-Port Orange), allowing online pre-licensing courses to be offered for appraisers. Unlike real estate salespersons and brokers, appraisers currently may only take post-licensing classes via the Internet. Effective: July 1, 2013.

Budget appropriations

• $1.543 million for Florida International University to enhance the Florida Public Hurricane Loss Projection Model so it can assess flood damage resulting from hurricanes. Currently the model only assesses windstorm damage. This will help insurers better estimate the maximum loss that should be insured.

• $700,000 for the final phase of a study on ways to reduce the amount of nitrogen released from conventional septic tank systems. The study also looks at septic tank technologies.

• $500,000 to combat unlicensed activity.

• Funding for nine new positions at the Florida Real Estate Appraisal Board.

BILLS THAT DID NOT PASS

Phase out of the sales tax on commercial leases. Lawmakers understand that for Florida to be competitive with other states and online retailers, and considered pro-business by prospective employers and companies seeking to relocate, we must eliminate the sales tax on commercial leases. However, Florida still feels the pinch of lean budget years, and even a proposal to phase the tax out over six years failed to soften its $1.3 billion fiscal impact for some lawmakers. Florida Realtors will make this a priority next session, and will begin strategizing with all stakeholders early this summer. Working with Rep. Marlene O’Toole (R-Lady Lake) and Sen. Dorothy Hukill (R-Port Orange), who sponsored HB 629 and SB 656, respectively, Florida Realtors laid the groundwork on this key legislative initiative, and the House Speaker says he’ll address this and other sales tax issues next session. That may also include sales tax on online purchases, a goal of SB 316 by Sen. Nancy Detert (R-Venice), which lost steam in the final weeks of the session. “This year was about educating legislators and stakeholders about the unfairness of Florida’s sales tax on commercial leases,” says Florida Realtors President Asher. “Because of the commitments we have received from legislative leaders, I feel confident we will be successful next year in our legislative efforts to roll back this tax.”

Administrative review of property taxes. A bill sponsored by Polk County Realtor and attorney Rep. John Wood (R-Winter Haven) sought substantive changes to value adjustment boards and their review of property tax assessments. HB 1381 and its Senate companion, SB 1754 by Sen. Greg Evers (R-Crestview) contained improvements to current law, such as definitions for “just value,” “market value” and “fair market value.” However, the bills also included controversial provisions, prompting Rep. Wood to pull the measure.

Notifying tenants of pending foreclosure. HB 169 by Reps. Kionne McGhee (E-Miami) and Hazel Rogers (D-Lauderhill) and its companion Senate bill, SB 516 by Sen. Geraldine Thompson (D-Orlando), sought to give prospective tenants more notice that the property they’re about to rent is in foreclosure. Florida Realtors was concerned the bills were too big of a solution for a small problem. Landlords would have been required to provide written notice that the lease may end earlier than the stated end date.

© 2013 Florida Realtors

PRO Advocacy: Joe’s Monthly Update

Legislative Session in the Final Stretch

Every spring the Florida Legislature gets together for 60 days to pass the laws of the land. This year Florida REALTORS® had several issues they were working on, but none more important than Citizens Insurance. Several State Senators have been working on raising rates for coastal communities to unthinkable levels. Thankfully, our team in Tallahassee has been working overtime with State House members. Due to their tireless efforts, the rate increase will most likely be much lower. Session ends this week and there is sure to be plenty of negotiating and horse trading. I will let you know how it shakes out in the end.

Mortgage Interest Deduction

Last week the U.S House of Representatives Committee on Ways and Means held a hearing on Mortgage Interest Deduction (MID). They had several people, including National Association of REALTORS® (NAR) President Gary Thomas, speak in favor of keeping MID. They also had several groups, such as the Heritage Foundation, speak against MID. It was almost unanimous among the committee that MID must stay. There will be more hearings on this topic as they continue to work on the Federal tax code, but this was a small victory in what will be a continued battle. NAR is committed to continuing to fight for this very important tax deduction that helps make home ownership affordable.

A few members from PRO will be heading to DC in two weeks as part of the NAR mid-year meetings. We will deliver the message loud and clear, keeping MID is important to our industry, home buyers everywhere and at every income level, and our national economy.

National Flood Insurance Program

This week the National Flood Insurance Program (NFIP) released its rate changes that take affect October 1st. Rates will go up on average 10% across the country. Places that are less likely to flood will see increases of less than 10%, and vice versa. For more information on the NFIP and how it affects you check out this link on the NAR website.

Casino Night Hits the Jackpot!

Saturday we held the PRO Casino Night Fundraiser for RPAC. Over one hundred of your fellow members and guests attended. Thank you to the PRO Affiliate Business Partners for providing the food, music, and prizes. Members had a great time playing blackjack, poker, roulette, craps, and a 50/50 raffle. Everyone had fun and we raised over $7,500 for RPAC!

Do you have a favorite story about Casino Night at PRO? Post it to our Facebook page. You can also view photos that were taken that night on our page!

PROAdvocacy: Joe’s Advocacy Update

Here are a few important updates from Joe Farrell, PRO’s Director of Government Affairs:

PRO Recommends
Election Day for many municipalities across the country takes place in the Spring. Locally, we have 9 municipalities with contested elections set for March 12th. With that in mind the PRO Public Policy Committee screened three races in Seminole, Tarpon Springs.

In the Seminole City Council race we are proud to recommend Tom Barnhorn and Jim Quinn. Both gentleman are running for re-election, and thankfully so. They have a strong record of service. They favor increased economic development and would be open to a rollback of the millage rate should the housing market continue its positive growth.

In Tarpon Springs we recommend Tommy Frain. Young, but not new to public service, Tommy shows he is a friend to development. One of his campaign platforms is streamlining the onerous permitting process in Tarpon Springs. Tommy supports his community by being active in the Boys & Girls Club, the Pinellas County National Alliance for the Mentally Ill, and raising funds for Veterans and Cancer research.

In Oldsmar we recommend Gabby McGee. Another young, first time candidate, Gabby has a unique insight into the housing industry. Committed to the redevelopment of Oldsmar’s older neighborhoods, Gabby learned firsthand the challenges of rehabbing a foreclosed property. She also spend her free time developing site proposals in an effort to lure private companies to Oldsmar. She has a keen eye for economic development.

Great American Realtor Days – Rally in Tally
It’s that time of year again. Every spring the Florida Legislature gathers in Tallahassee for 60 days to pass the state budget and any other laws they see fit. Every year there are bills before the legislature that may affect Realtors, consumers, and the housing market. That is why we call on Realtors to come up to Tallahassee en masse and show the Legislature we mean business. This year we are having the Rally in Tally on April 10th. The more the merrier. Our goal is 4000 Realtors advocating for our industry . For more info you can contact me at 727-216-3029 or check out the Florida Realtor website at http://www.floridarealtors.org/NewsAndEvents/2013-Rally-in-Tally.cfm

Update: Mortgage Interest Deduction
This past week Rep. Chris Van Hollen (D-Md.), an influential member of Congress, spoke to a group of Realtors in DC. His message is that comprehensive tax reform is still on the table, and that Mortgage Interest Deduction (MID) is still a topic of discussion. Rep. Van Hollen personally vowed to “oppose any effort” to change or dismantle MID. Check out the NAR article that goes more in depth: http://speakingofrealestate.blogs.realtor.org/2013/01/31/tax-reform-realtor%C2%AE-engagement-to-be-key/?om_rid=AADp7L&om_mid=_BRD-OiB8wnmnlU&om_ntype=RMODaily

Feelin’ Lucky? Save the Date!
The Realtors Political Action Committee, or RPAC for short, is our way of supporting candidates for elected office who support our issues. So far RPAC fundraising is ahead of last year’s pace, but we still have a long way to go. Join us on April 27th for Casino Night at PRO. All proceeds will go towards RPAC. This is a great way to contribute to the strongest voice in Real Estate and have fun with you fellow members. For more information please contact Joe Farrell at jfarrell@tampabayrealtor.com.

Legislative victories for Florida Realtors®

Legislature 2012 Wrap Up

TALLAHASSEE, Fla. — March 9, 2012 — If you’ve been following the 2012 regular session of the Florida Legislature, you know it’s been anything but typical.

In addition to dealing with a $2 billion budget shortfall, legislators had another time-consuming task that happens only once a decade: redraw political boundaries, a process that required the Legislature to convene two months earlier than usual.

Given these circumstances, Florida Realtors® went into the 2012 session with realistic expectations and a modest agenda. “Last year, we took on some big issues — ‘scrapping the cap’ on the Sadowski Housing Trust Funds and passage of a proposed constitutional amendment providing property tax relief for thousands of residential and commercial property owners. That will appear as Amendment 4 on the November ballot,” says John Sebree, senior vice president of public policy for Florida Realtors.

“With the budget shortfall, we knew legislators wouldn’t have an appetite for additional property tax reform, so we focused primarily on initiatives that could strengthen the real estate market and improve the business environment of our members.”

Of the 1,747 general bills filed this session, about 300 passed both chambers. Among these are several of Florida Realtors priority bills dealing with septic tank inspections, local business taxes and Citizens Property Insurance Corp.

Following are highlights of the 2012 legislative session, which adjourned minutes ago:

Real estate sales associates and broker associates exempt from local business taxes. HB 7125, a bill by the House Economic Affairs Committee and Rep. Ken Roberson (R-Port Charlotte) exempts real estate sales associates and broker associates from paying local business taxes (formerly known as occupational license fees) if required in their city or county. Under Florida law, these individuals must affiliate with a real estate broker who already pays local business taxes. Brokers will continue to pay the tax. Repeal of the tax will save real estate licensees $3.8 million annually. Effective date if signed by governor: Oct. 1, 2012.

Mandatory septic tank inspections out, optional inspections in. HB 1263 , an omnibus health care bill by Rep. Matt Hudson (R-Naples), was amended yesterday with Realtor-supported language originally provided in HB 999 by Rep. Chris Dorworth (R-Heathrow) and SB 820 by Sen. Charlie Dean (R-Inverness) to repeal the mandatory septic tank inspection law passed in 2010. It establishes an optional inspection program for the 19 counties with the 33 largest springs. However, other cities and counties may opt into the program as well. Also, septic tank inspections cannot be required as a condition of sale. Effective date if signed by governor: March 9, 2012.

A major step toward creating a competitive property insurance market. HB 1127 by Rep. Ben Albritton (R-Bartow) reduces the amount of money private insurers must give Citizens Property Insurance Corp. if the state insurer goes broke after a catastrophic storm. The first check a private insurer writes after a catastrophic storm should be to their policyholders, not Citizens. However, current law requires insurers to pay Citizens up to 18 percent of their premiums within 30 days of being assessed. They can later recoup these monies from their policyholders. It’s hoped that HB 1127 will attract new insurers to Florida and keep existing insurers here. Effective date if signed by governor: July 1, 2012.

Tax boost for businesses. HJR 1003 by Rep. Eric Eisnaugle (R-Orlando) creates a proposed constitutional amendment to increase the exemption for tangible personal property taxes. Under current law, an exemption applies to the first $25,000 in property taxes such as business equipment. If approved by 60 percent of voters in the November election, the exemption would expand to include the value of tangible personal property between $25,000 and $50,000.

Options for challenging Citizens replacement cost estimates. In January, following discussions with Florida Realtors and policyholders concerned about unreasonably high replacement cost estimates, Citizens Property Insurance Corp. agreed to consider valuation sources other than 360Value software. HB 1101 codifies three options into law, including valuations prepared by real estate appraisers licensed under Chapter 475, F.S. Effective date if signed by governor: July 1, 2012.

Broad range of economic development incentives. HB 7087 is a large omnibus tax bill that’s part of the budget deal agreed to between the House and Senate. Of particular interest to real estate companies is an increase in the corporate income tax exemption from $25,000 to $50,000. Effective date if signed by governor: July 1, 2012.

Reducing condo inventory and protecting an appraiser’s interests.
The Department of Business and Professional Regulation (DBPR) pushed two bills this session that contain items of interest to the real estate industry. You may recall that the 2010 Legislature wanted to encourage investors to purchase blocks of condo units to reduce inventory levels. This was accomplished in part by amending condo laws to protect bulk buyers from some of the liabilities faced by condo developers. These protections were set to expire on July 1, 2012. HB 517 by Rep. James Grant (R-Tampa) extends the “bulk buyer” provision to July 1, 2015. Effective date if signed by governor: July 1, 2012.

The other DBPR bill, HB 887 by Rep. Clay Ingram (R-Pensacola), prohibits Appraisal Management Companies from requiring appraisers to sign hold harmless agreements as a condition of business. Effective date if signed by governor: Oct. 1, 2012.

Budget appropriations. Though the Legislature swept all monies collected for the Sadowski Affordable Housing Trust Fund into general revenue, it appropriated funds for economic development initiatives and tourism that could ultimately benefit the real estate market:

  • $61 million for the State Economic Enhancement and Development (SEED) Fund and other economic development funds. These monies may be used to fund affordable housing programs and projects.
  • $27.5 million for Visit Florida, the state’s marketing agency.
  • $8.6 million for Enterprise Florida, a state economic development agency.

In addition, the Legislature set aside $285,000 to combat unlicensed activity, $30 million for Everglades restoration, $8.4 million for the Florida Forever land acquisition program and $1.5 million to study nitrogen reduction and develop possible new technology for passive septic systems.

INITIATIVES THAT FAILED

  • SJR 314 by Sen. David Simmons (R-Altamonte Springs) would have replaced Amendment 4 on the November ballot — supported by Florida Realtors — with one that created a “super exemption” on homestead properties. Amendment 4, which lawmakers approved in 2011, includes a property tax break for first-time homebuyers and curbs the growth of commercial property assessments.
  • HB 213/SB 1890 Rep. Kathleen Passidomo (R-Naples) and Sen. Jack Latvala (R-St. Petersburg), which sought to speed up Florida’s judicial foreclosure process. The bills also contained language to reduce the amount of time lenders have to request a deficiency decree from five years to one.
  • SJR 838/HJR 55 by Miguel Diaz de la Portilla (R-Miami) and Rep. Jeanette Nunez (R-Miami) sought to freeze property tax rates for low-income seniors.
  • SB 1784/HB 245 by Sen. Alan Hays (R-Umatilla) and Rep. Jim Boyd (R-Bradenton), which would have allowed surplus lines carriers to take policies out of Citizens Property Insurance Corp.

HB 319 by Rep. George Moraitis, Jr. (R-Fort Lauderdale) included language clarifying that a lender is responsible for a specific amount of unpaid fees and assessments for association-controlled foreclosures (condos/HOA/co-op). Safe Harbor provisions already exist in statute and state that a bank’s liability is capped at the lesser of 12 months’ past due assessments or 1 percent of the original mortgage debt. However, this hasn’t stopped collection agencies and attorneys from disrupting closings with dubious financial claims against lenders.

No Deal from Super Committee: What Next?

By Robert Freedman, senior editor, REALTOR® Magazine

The first thing to note about the congressional super committee’s failure to agree to deficit cuts is that MID is spared for the time-being. Among the deals the members of the deficit-cutting committee looked at was a change to itemized deductions, including the mortgage interest deduction. That change was rejected, and in any case no broader deal was worked out. So, MID is off the table for the moment. But it’s worth noting that it was one of the few big-ticket items that got a serious look, which suggests that it will remain a target into the foreseeable future.

What happens next? According to NAR Tax Director Linda Goold, unless Congress passes legislation to change things, some $1.2 trillion in federal programs will be automatically cut in 2013. If that happens, communities in which defense bases and other defense resources play a big role will be hit hard, because defense is slated to take the biggest cut of all. That means bases could be scaled back, and if that happens, the communities in which those bases are housed will see reduced demand for home sales and rentals.

HUD programs will be cut, too. That will mainly hit rental subsidy programs, but it will also hit community development block grants (CDBG) and HOME Investment Partnership grants, which provide grants to communities for affordable housing.

Of course, the broader impact is what all this is doing to our economy. Long-term rates are expected to remain low, if only because the Federal Reserve has said it intends to keep them low. But could the U.S. see another cut in its credit rating? At what point will investors, including foreign investors, start reducing their Treasury purchases?

Plus, there are some wildcards: some estate tax laws are expiring in 2012, as are the tax cuts that were put into place by President George W. Bush in 2001. And in 2013 the deficit ceiling will have to be raised again. What all this means is that we’re looking at another year of deficit-cutting debates in Congress.

NAR Tax Director Linda Goold looks at what we can expect as a result of the super committee’s lack of agreement in the five-minute video above.

Have You Responded to NAR’s Call to Action Requests?

Mortgage Interest Deduction

Individuals are permitted to deduct mortgage interest paid on mortgage debt of up to $1 million. The deduction is available for interest on mortgages for a principal residence and one additional residence. The $1 million limitation represents the combined allowable debt on two residences. Mortgage interest on up to $100,000 of debt on home equity loans or lines of credit also qualifies for the deduction.

As part of its FY 2011 budget, the Administration has proposed limiting the value of the MID for upper income taxpayers by, in effect, converting the deduction to a 28% tax credit for those individuals who are currently in the 33% or 35% tax brackets. Individuals with incomes below $250,000 would generally not be directly affected by this proposal.

I’m a real estate professional. What does this mean to my business? The mortgage interest deduction (MID) is a remarkably effective tool that facilitates homeownership. While only about 30% of all taxpayers in any given year itemize their deductions, more than 3/4 of homeowners with a mortgage utilize the deduction each year.

Please CLICK HERE to contact Congress today let Congress know how this proposed new regulation would impact your market. Take action today. 

 

 

Qualified Residential Mortgages (QRM)

Could your clients afford a 20% down payment? Could you? Can you envision what your prospective client pool will look like if new regulations governing Qualified Residential Mortgages (QRM) take effect this year?

Neither can we. And neither can many elected officials in Congress who did not intend for these regulatory provisions to be so narrowly defined. We must continue our efforts to explain how detrimental the new QRM rules would be to the ongoing housing and lending crisis in America.

Please CLICK HERE to contact Congress today and ask them to please make it clear to the regulators that this was not their legislative intent and to instead implement a more reasonable Qualified Residential Mortgage (QRM) that will keep credit-worthy buyers in the market and able to acquire a loan.

2011 Session: Big real estate victories

TALLAHASSEE, Fla. – May 7, 2011 – When you look at the win column for Florida Realtors’ legislative priorities and other real estate-related issues during the 2011 legislative session, which ended at 3:35 a.m., it’s a long and impressive list, considering the political climate this session.

There were a lot of new elected officials in the state capital – lawmakers and cabinet – who were hearing our issues for the first time.

There was a newfound emphasis on fiscal accountability, thanks in large part to a nearly $4 billion budget deficit.

And unlike the previous two years, there were no federal stimulus funds to reduce the deficit.  

“It was a challenging environment in which to advance our agenda, that’s for sure,” says John Sebree, vice president of public policy for the Florida Realtors. “We worked diligently to engage freshman legislators on our overarching goal, which was to stimulate the housing market, and therefore the Florida economy.

“Realtors deserve a tremendous amount of credit for educating legislators about our issues, local market conditions, and challenges faced by the industry and property owners. We have much to celebrate.”
 
Among the victories was “Scrapping the Cap” on the Sadowski Housing Trust Funds – a goal of Florida Realtors for the past five years – and passage of a joint resolution that will ask voters in 2012 to lower the cap on property tax assessments on non-homestead properties from 10 percent to 5 percent – something the association has worked on since 2008.
 
Following is a recap of the 2011 legislative session. Keep reading Florida Realtors News for more on the 2011 session.

BILLS THAT PASSED

The cap IS scrapped
It took five years and vigilant lobbying on the part of Florida Realtors and members of the Sadowski Housing Coalition, but the Legislature finally voted to remove the $243 million cap on the housing trust funds. This victory shouldn’t be taken lightly. Several times throughout the session, it appeared the trust funds would be eliminated altogether.

“Ensuring that doc stamps will still be directed to affordable housing, their intended purpose, is a huge win for Florida families and for the Florida Realtors organization, which played a big part in the creation of the Sadowski Affordable Trust Fund in 1992,” says Sebree. “We owe a tremendous amount of credit to Rep. Gary Aubuchon (R-Cape Coral) and to Sen. Mike Bennett (R-Bradenton) for sponsoring HB 639 and SB 912, and restoring trust in the housing trust funds.”

This year, the Florida Housing Finance Corporation has $64 million for state and local housing programs.

Tax relief for non-homesteaders and first-time buyers
Since the 2009 legislative session, Florida Realtors has sought to lower the annual assessment cap on non-homestead properties from the current 10 percent approved by voters in Amendment 1. The vehicles this session were two proposed constitutional amendments: HJR 381 by Rep. Chris Dorworth (R-Lake Mary) and SJR 658 by Sen. Mike Fasano (R-New Port Richey).

On Day 58 of the session, HJR 381 by Rep. Chris Dorworth passed after contentious debate on the Senate floor, with opponents saying the measure would perpetuate the inequities inherent in Save Our Homes and negatively impact local coffers.

If approved by voters in November 2012, the proposal would reduce the yearly assessment cap on non-homestead property from 10 percent to 5 percent. It would also give anyone who hasn’t had a homestead exemption in Florida for three years a property tax discount of 50 percent of the home’s assessed value, not to exceed the median home price in that county. This additional first-time homestead owner exemption phases out for the property owner over five years while their Save Our Homes is phasing in.

The measure also allows the Florida Legislature to prohibit assessment increases when property values fall. Currently, the Legislature does not have the power to prevent local governments from “recapturing” the tax revenues that Save Our Homes shields during a rising real estate market.

“We did a lot of heavy lifting on HJR 381,” Sebree notes. “Legislation that provides a tax break is a tough sell in a tight budget year. But at the end of the day, lawmakers agreed that tax incentives for first-time buyers, investors and businesses/employers could speed Florida’s economic recovery. We hope the voters agree, too.”

Property tax relief for wounded veterans
Currently, disabled veterans who were Florida residents when they entered military service qualify for the combat-related disabled veterans’ ad valorem tax discount on homestead property. SJR 592 by Sen. Mike Bennett (R-Bradenton) goes before voters in November 2012 to extend this property tax benefit to any disabled combat veteran residing in Florida, regardless of where they lived when they entered military service.

Tax cut for small business
A $30 million tax cut for small businesses received little opposition, even gaining support from Democrats. HB 7185 by Rep. Steve Precourt (R-Orlando) boosts the exemption to the corporate income tax by increasing the exemption from $5,000 to $25,000. That amounts to a cut of roughly $1,100 per business. More importantly, many small businesses will not have to pay any corporate income taxes. Proponents praised the measure as a way to stimulate growth and create jobs, and as a step toward an even bigger rollback of corporate income taxes sought by the governor.

Easing the financial burden of challenging property tax assessments
So many property owners are challenging their assessments that a number of school boards have been unable to forecast their budgets. As a result, Rep. Ana Rivas Logan (R-Miami) filed HB 281 on behalf of the Miami-Dade School Board. As originally filed, this bill required property owners who appealed their assessment to pay 75 percent of the appraised value. Florida Realtors helped to amend the bill to allow owners to make a good faith payment during the appeal process if it extends beyond April 1 of the next year.

Another attempt to stabilize the insurance market
For nearly 20 years lawmakers have promised – some may say threatened – a significant overhaul of the property insurance system. That was certainly possible this session, as more than 24 bills were filed offering a range of solutions to the current insurance crisis – including a proposal to raise Citizen premiums by up to 25 percent.

In the end, the big insurance bill that passed, SB 408 by Sen. Garrett Richter (R-Naples), seeks to reign in the cost drivers that cause premiums to rise and discourage voluntary market insurers from doing business in Florida. Key provisions include:

  • Insurers must continue to offer sinkhole coverage, but can limit coverage to homes and not other structures on people’s property, including garages and pools. Insurers may also call for an inspection of property before issuing sinkhole coverage.
  • Defines structural damage as it relates to sinkhole loss.
  • Allows insurers to initially pay actual cash value for repairs to dwellings. Florida is one of only a few states that requires insurers to pay replacement claims upfront regardless of whether the insured items are replaced or not.
  • Insurers may require that repairs be made before fully paying a sinkhole claim.
  • Claims for loss from sinkholes must be made within two years; for hurricanes, three years.
  • Limits public adjuster compensation.

While this year’s “Consumer Choice” legislation failed to pass, SB 408 allows insurers to raise rates by up to 15 percent to cover their increases in reinsurance costs. State insurance regulators would still have to approve any increase.  

Deregulation of commercial insurance lines
In an effort to stimulate competition among commercial insurers – and in the process further lower rates that are already at an all-time low – the 2010 Legislature deregulated errors & omissions and other kinds of commercial insurance. HB 99 by Brad Drake (R-DeFuniak Springs) furthers the deregulation process by exempting five additional lines of commercial insurance, including non-residential property insurance, from the rate filing and approval process in current law.

Additionally, the bill allows insurers selling certain types of coverages to make pricing changes on an expedited basis, enabling them to avoid some of the expense incurred in a full rate filing and review process. Realtors should know, however, that current law prevents insurers from making rates excessive or discriminatory.

Protection for title insurance policyholders
HB 1007 by Rep. Mack Bernard (D-West Palm Beach) was introduced on behalf of the Department of Financial Services (DFS) to ensure that property owners continue to have title insurance coverage even if their underwriter is liquidated. When an underwriter is liquidated, as is currently the case, all other underwriters in the state pay an assessment to DFS, and this would be passed on – over a period not to exceed seven years – to new policyholders in the form of a surcharge of up to $25. DFS indicates that the surcharge resulting from the underwriter currently being liquidated would be significantly less than $25.

State oversight of growth management laws curtailed
HB 7129 by Rep. Ritch Workman (R-Melbourne) makes big changes to the state’s role in growth planning and oversight first laid out in the 1985 Growth Management Act. This includes empowering local governments to plan their own growth and development; changing “concurrency” rules so that local governments have more options when working with new projects, rather than forcing developers to plan first for schools, roads, parks and other amenities; and prohibiting local governments from enacting local “Hometown Democracy” growth-by-ballot proposals. Florida Realtors supported permit extensions included in this bill.
 
Additionally, the Legislature passed at least one other developer-friendly bill, HB 993 by Rep. Ken Roberson (R-Port Charlotte), which includes a provision changing the “burden of proof” for challenges to permits.

If signed by the Governor, as is expected, HB 993 will shift the burden of proof from the permit-holder to the person challenging the new development.

Licensure requirements of home inspectors
SB 396 by Sen. Mike Bennett (R-Bradenton) changes the initial requirements for certain persons acting as home inspectors today and removes language enacted last year that allowed Division 1 contractors to perform both the home inspection and make repairs.

You’re S.A.F.E. to move about the transaction
SB 1316 by Sen. Nancy Detert (R-Venice) codifies into the Florida S.A.F.E. Mortgage Licensing Act the same language contained in a federal act that allows Florida real estate licensees to list and sell short sales without having to first obtain additional licensure under Chapter 494.

Controls on state spending
Lawmakers approved a constitutional amendment to limit state government revenue and return excess monies to taxpayers. If approved by voters, CS/SJR 958 would replace the existing state revenue limit – which is based on personal income growth – with a new state revenue limit based on inflation (CPI) and changes in population. Proponents said the so-called Smart Cap curbs the ability of lawmakers to expand government in times of economic prosperity. Opponents challenged the need for the cap, noting that state revenues have never reached the cap established in 1994.

Sales associates catch business tax break
Sales associates who don’t currently pay a business tax (formerly known as occupational licenses taxes) at the local level should be happy with HB 311 by Kenneth Roberson (R-Port Charlotte). Local governments that were not collecting business taxes from sales associates on Oct. 13, 2010, may not do so in the future. Local governments that were collecting business taxes from sales associates on that date are not impacted.

Last year’s condo bill revisited
HB 1195 by George Moraitis, Jr. (R-Fort Lauderdale) seeks to fix aspects of last year’s big condo legislation. Provisions of interest to Realtors and property managers include:

  • Clarifies that condos less than four stories high with exterior corridors are exempt from installing manual fire alarm systems.
  • Clarifies that associations are permitted to install impact glass and other code-compliant windows for hurricane protection.
  • Diminishes certain rights of unit owners who are delinquent in their association fees, such as use of common areas.
  • Clarifies the process by which an association communicates with tenants of unit owners who are delinquent on association fees and dues.

Curbing adverse possession scams
Florida’s adverse possession law dates back more than a century and was created to let people pay taxes on property they don’t own, and eventually own it after seven years. It was meant to encourage people to take over abandoned property, reduce blight and generate tax revenue.

The number of foreclosures around the state has spawned a new kind of scam, however. Unscrupulous persons or companies scout for vacant homes and rent out the home – often without the knowledge of the property owner. Realtors or family members discover the property takeover when they find the home’s locks have been changed. When confronted, these scam artists claim ownership under adverse possession.

SB 1142 by Sen. Paula Dockery (R-Lakeland) establishes a number of requirements for persons and companies claiming adverse possession, as well as the county property appraiser. For instance, the property appraiser must provide notice to the owner of record that an adverse possession claim was made. The bill also gives priority to the title holder who resumes payment of property taxes, even if an adverse possessor already made a payment.

Local government’s ability to ban short-term rentals frozen
HB 883 by Rep. Mike Horner (R-Kissimmee) prohibits local governments from enacting a ban on short-term rentals after June 1, 2011. Local governments with existing rental ban ordinances are not impacted.

BILLS THAT FAILED

• An attempt to delay regulation of Appraisal Management Companies until 2014 – one of Florida Realtors’ key goals of the 2010 session – failed. Consequently, regulation of AMCs will begin July 2011.

•  Reforms to Citizens Property Insurance Corp., including a rate increase of between 15 percent and 25 percent, and limiting Citizens eligibility to homes that have a replacement cost of less than $1 million. Among other things, the House and Senate couldn’t agree on the size of the rate increase. Citizens rate increases will continue to be capped at 10 percent (minus rate increases for sinkhole needs), but all Florida policyholders, except worker’s comp and medical malpractice, could be subjected to additional assessments should a strong hurricane hit Florida.

• Repeal of mandatory septic tank inspections. A casualty of the 2010 session was SB 1698 by Sen. Charlie Dean (R-Inverness), which would have repealed a septic tank inspection program approved by the 2010 Legislature. A number of amendments were filed offering a compromise between environmental groups, local government and the business community. However, the budget passed by the Legislature prohibits the Florida Department of Health from expending funds for the septic tank inspection program unless the plan is approved by the Legislative Budget Commission and ratified by the 2012 Legislature.

• Additional property tax breaks for low-income seniors in the form of assessment caps.

• Enhancements to criminal trespass statutes, which would have assisted law enforcement in removing squatters using principles of adverse possession to occupy vacant and abandoned properties. The Attorney General’s opinion found here provides guidelines for working with law enforcement.

• Legislation to implement Amendment 6, passed by Florida voters in 2008. This is the amendment that allows working waterfront properties to be taxed based on current use, not highest and best use.

• A bill to authorize the non-judicial foreclosure of property.

• A bill to expedite foreclosures proceedings. It’s likely this issue will be revised next year.

© 2011 Florida Realtors®

Great American Realtor® Days

It’s time to get ready for the 41st annual Great American Realtor® Days to be held in Tallahassee on April 12th and 13th.  This is the opportunity for Realtors® to be briefed on the most up-to-date legislative information and to meet with their Legislators.

 

On April 12th, along with Hill visits, there will be two live briefing sessions and one pre-recorded session for you to choose from to fit your schedule.  That evening a street party with great food, drinks and entertainment will take place.  Meetings with Legislators continue on the 13th (for those that couldn’t make a briefing on the 12th, there is one pre-recorded session scheduled at 10 a.m.) and the event wraps up that day with a lunch on the Capitol Courtyard.

 

Schedule, registration, hotel and other information is available on the Florida Realtor® website at  http://www.floridarealtors.org/LegislativeCenter/Great-American-Realtor-Days.cfm

 

 

 

Florida Realtors Prepare for 2011 Legislative Session

In November 2010, Realtors from across the state gathered in Tallahassee to discuss the upcoming legislative session.  The 2011 session will be one of the most watched sessions this decade.  There will be a new Governor and three new cabinet members. Early discussions on redistricting will also be held.  Along with everything else that is happening, Florida’s economists are predicting a $3.5 billion dollar budget deficit.  And, Governor- Rick Scott’s transition team has already proposed some sweeping changes in Florida’s state governmental agencies, including; combining the Department of Juvenile Justice and the Department of Children and Family Services into one agency, as well as combining the Department of Community Affairs and the Department of Environmental Protection with the Florida Department of Transportation.

On the real estate front, Florida Realtors will have several areas of focus this year.  Some of the major areas will be reforming the state’s insurance laws regarding sinkholes and seeking property tax relief for non-homestead properties.  Many of you that work in the northern parts of Pinellas County or in Pasco County have experienced legitimate problems with sinkholes and it’s probably even more likely that you have experienced first- hand or witnessed the problems from fraudulent sinkhole claims and unscrupulous contractors.  Just take a drive down State Road 52 and you will see one billboard after another of companies trying to help get you (and themselves) money from your insurance company.  In 2009, citizens collected $19.6 million dollars in premiums for sinkhole coverage, but paid out an astounding $97 million dollars in sinkhole claims.

The problem with many sinkhole claims is that damage is not from sinkholes, but from the ground settling under a home.  This can lead to cracks in walls and driveways.  There are some public adjusters in the area that go door-to-door doing sinkhole inspections, charging 10% of the insurance claim as their fee.  To make matters worse, some homeowners are taking the money that was intended for repairs and then letting the house go into foreclosure. This will be a major issue in the upcoming session as Governor-Scott looks to cut costs throughout the state. 

Another issue that Realtors face will be property tax relief for non-homestead properties. In 2009, the Florida legislature placed an amendment on the ballot that would give homebuyers who have not owned a primary residency in the previous eight years an additional property tax break. It would also lower the yearly tax appraisal cap for rental property and commercial real estate from 10 percent to 5 percent.

Unfortunately, the Florida Supreme Court said the amendment was misleading and removed it from the ballot.  Florida Realtors, working with Senator Mike Fasano (R-New Port Richey) will be advancing a new proposal in the next several months to address property tax relief for non-homestead properties.               

This is just the tip of the iceberg for issues that will be discussed in 2011.  The public policy staff in Tallahassee will also be dealing with our state’s budget, short sales, foreclosures, septic tanks, affordable housing, water quality and supply issues, as well as homeowners associations.  Stay tuned to PRO-Active and the Florida Realtors for more information.

Urgent Call to Action: Home Ownership Matters. Defend MID.

The Mortgage Interest Deduction (MID) is vital to both home ownership and our economy.

 

We are disappointed that anyone in Congress – or on a Presidential Commission – would even suggest limits to the Mortgage Interest Deduction. Mortgage interest has been deductible for nearly 100 years, and the proposed changes will affect all 75 million home owners in the United States. We must act now to make sure the MID is not changed.

 

Ever since the Deficit Commission announced its conclusions, the news media have been buzzing about the report. And what do they emphasize? Proposals to limit or even eliminate the Mortgage Interest Deduction. We’re concerned because all this does is scare the public – and potential buyers – away from the housing market. The last thing the housing industry needs right now (and for the foreseeable future) is another bucket of ice water to be thrown on the market. People who hear these news reports don’t differentiate between a proposal and a done deal. They just know that a tax provision they actually understand and rely on is under siege. This is just unacceptable.

 

We are asking you to call to your representative’s office today to ask him or her to defend the Mortgage Interest Deduction from any cuts or reduction as outlined in the Deficit Commission Report.

 

This Call for Action requires you to do something a little different. In order to track the calls we are making to Congress, we need you to follow the link and enter your phone number and zip code to be connected to your representative’s office. You can make this call now, or later today at a more convenient time. But we need you to make this call.

 

After you enter the information, you will receive a phone call with instructions before being patched through to Capitol Hill.

 

nav_red_arrow.gif Count me in, I am ready to make my call*.

  

This call is important. We need to be clear and draw a line in the sand. While we all support efforts to reduce the deficit, further undermining the critical housing recovery cannot be the price that is paid. Here are some suggested talking points for you to use when you call:

 

 I am a constituent and a REALTOR®
 I have been on the front lines of the housing crisis. I can assure you that even talk of changing MID harms an already fragile market.
 I am strongly opposed to the Deficit Commission’s proposal to either limit or eliminate the Mortgage Interest Deduction.
 News reports saying that Congress threatens to repeal or limit MID will keep potential buyers on the sidelines and further delay the housing recovery.

 

We must speak loudly and clearly with one voice to ensure the further recovery of our economy and the housing market and educate every legislator about how much Home Ownership Matters. We can’t do that with the few REALTORS® who take action consistently. We need every REALTOR® to respond. Please call NOW and tell your representative to help defend home ownership and the MID*.

 

On behalf of the NAR Leadership team and the PRO leadership team, thank you for your support and time.