NAR has received information that the Environmental Protection Agency may be stepping up its enforcement of lead paint disclosure laws. It is important for all real estate professionals to understand this law and how to comply with it.
Congress passed the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as Title X, to protect families from exposure to lead from paint, dust, and soil. Section 1018 of this law directed HUD and EPA to require the disclosure of known information on lead-based paint and lead-based paint hazards before the sale or lease of most housing built before 1978.
Enforcement of this law is conducted under Toxic Substances Control Act (TSCA), which gives the EPA authority to inspect, subpoena documents, require testimony from real estate professionals, and bring civil administrative actions and fines against.
NAR, the EPA and HUD all have resources to help members comply with this law:
Join GNIAR on May 3rd from 11:30am - 1pm for our next Lunch and Learn training featuring Reserve Corporal, Harry M. Preste. He will be training REALTORS® on safety practices and awareness.
Location: GNIAR Office
Cost: Free Member Benefit
Lunch is included!
Interested in serving on a NAR committee? Take this opportunity to contribute your voice to help steer the direction of the National Association of Realtors (NAR). The 2020 committee application website is now open through May 1. Make your voice heard!
Visit www.CommitteeApp.realtor for more information.
HB 1625 HOUSING IMPACT STUDY
The Indiana Association of REALTORS® asks you to PLEASE VOTE “YES” on HB 1625.
Workforce development is a critical issue for Indiana. Along with creating and maintaining jobs, it is crucial that Indiana be prepared to house the workforce of the future. The demand for workforce housing is very high and current supply is not meeting that consumer demand.
One of the single greatest contributors to the cost of housing is the cost of regulation. HB 1625 does not pre-empt state or local officials from adopting rules and regulations that impact the cost of housing, it merely asks that such policies be analyzed and the housing impact be disclosed.
HB 1625 authored by Rep. Ed Clere is a top priority for REALTORS® for 2019. Low inventory of workforce housing is a challenge for communities across the state. IAR and other housing advocates have heard from employers, local officials and homebuyers seeking solutions for the low inventory.
This bill would require a review of proposed state and local regulations to identify the possible impact on housing, such as impact fees, that might add cost. It is intended to shed daylight on state and local regulations and inform officials that their policy decisions may impact the cost and availability of housing in their communities.
--state rules would be reviewed
--IHCDA would perform a comprehensive study for the state
--local ordinances would be reviewed for cost impact
--provides “an out” for communities if cost to housing is indeterminate
AAAAAND, THEY’RE OFF!
The 2019 Session of the Indiana General Assembly is underway in full force, having just wrapped up itssecond week of work in the statehouse. Did you know that the legislature only has ONE Constitutionalduty? --the crafting of the state’s biennial budget. Sounds like an easy job, right? Wrong. The budget is justone bill, but by the end of last week’s filing deadline, more than 1200 bills had been filed on topics likestate and local taxes, property rights, school funding and teacher pay, public safety and welfare, waterquality, transportation, local government duties, elections, and health care, just to name a few. Your IARGovernment Affairs staff has been busy crafting legislation, wading through those 1200 bills, attendinghearings, meeting with other interest groups, and lobbying state legislators on legislative issues thatcould impact the REALTOR® bottom line. With 23 new members in the House and Senate, we are alsobusy forging new relationships with the next generation of REALTOR® Champions who will be craftingstate policy in the years to come.
In our spare time, we are also finalizing our preparations for the upcoming IAR Legislative Conference onJanuary 28th and 29th. Our REALTOR® grass roots are second to none and one of the most effective toolsin our advocacy tool box. This year we’ll be focusing our efforts on bills pertaining to workforce housing,landlord/tenant policy, property rights, professional licensing, and private property rights. More to comeon those topics at our Legislative Briefing Luncheon on Monday, January 28th at the Indianapolis Hilton.
Here is an initial list of some of the 2019 bills of interest to the Indiana real estate industry. The listhighlights bills that could potentially have the greatest impact on members and property owners.
Mandatory Well and Septic Inspections
House Bill (“HB”) 1261 (Authored by Rep. Mike Alysworth): Requires that a property with a septicsystem and a water well must be inspected by a qualified inspector before an interest in the propertymay be conveyed. This means in order to close a deal on a home with a septic system, your seller willhave to have the septic system inspected. In Indiana, it is estimated that 800,000 septic systems arecurrently in use. Septic system inspections can be costly, add time to the transaction due to lab testing,and be reliant upon the availability of a small number of qualified inspectors. The bill includes all septicsystems, even a new septic system that has never experienced any issues. There are 15,000 requestsfor new permits every year. Though we acknowledge that water quality issues are common in the statein some areas, a mandate may not be the answer to that issue. It is our hope that this topic will bestudied as part of a larger discussion on water quality.
Standardized Land Contracts
HB (Bill number has not been released)(Authored by Rep. Ed Clere): Rep. Clere, who is also a practicingREALTOR® is targeting what he believes are unfair real estate transactions to provide more protectionto buyers who buy property on contract. This bill would require the Indiana Real Estate Commission,in consultation with the Indiana Department of Financial Institutions, to create a standardized landcontract form with accompanying disclosure forms to be used in every land contract deal. ThoughREALTORS® recognize land contracts are an important tool for some transactions, they are notpermitted to execute land contracts and parties are typically referred to an attorney. As drafted, thebill gives greater weight to buyers over sellers.
Delinquent Utility Bills at Rental PropertiesHB 1347 (Authored by Rep. Woody Burton): This bill clarifies that the tenant of a rental property isthe responsible party for charges rendered by a municipally owned utility to a property if the propertyis not occupied by the owner. In other words, if a tenant becomes delinquent on utility bills at theproperty, the landlord will not be answerable for those charges. Rep. Burton became interested in thisissue after a number of local municipalities in his district adopted ordinances which would allow theirutilities to collect from landlords. Local landlords were surprised by this change in the law and soughta solution legislatively. REALTORS® who own rental property, as well as property managers, havebrought this issue to IAR’s attention. We have been actively engaged on this bill and look forward toworking with Rep. Burton as the bill progresses.
Professional Homeowner Association Managers Must be Licensed
HB 1338 (Authored by Rep. Mike Speedy): A few years ago, the Indiana Attorney General’s officereceived a number of complaints, alleging property managers were practicing without a broker’slicense. As a result, it was brought to the attention of IAR staff that some property managers wereunaware that they needed to be licensed. Outreach was initiated, and many uninformed propertymanagers obtained their broker’s license. Rep. Speedy’s bill seeks to make clear in statute that thosepersons who either professionally manage homeowners or condo associations, or serve as part of aself-managed homeowners association board of directors (only one member is required to belicensed) must be licensed. Although the definition of “broker” in license law has always included“managing real estate” as an act that may not be performed without a license, this bill dispels anyprevious misunderstandings.
Mandatory Rental Registries
HB 1372 (Authored by Rep. Chris Campbell): Currently, Indiana state law allows local municipalitiesto initiate rental registries in their cities and towns along with limitations in which municipalities mustadhere. Some of these limitations include: caps on registration fees, registry expiration without achange of ownership, and inspection requirements. This bill would require a municipality to create arental registry. It proposes a more exhaustive list of habitability standards in the inspection process.It also provides that a tenant may break his or her lease with the property owner if a violation foundduring the inspection process is not cured or if the property owner fails to register the property withthe rental registry or request an inspection. It finally removes the exemptions provided in the statutefor rental registries that were established before July 1, 1984.
Tenant Bill of Rights
SB 524 (Authored by Sen. Eddie Melton): This bill re-writes the landlord-tenant statute to afford morerights and protections to tenants. It contains numerous provisions including the ability to withholdrent for repairs, limit the amount of security deposit a landlord can require, and provide longer noticebefore eviction proceedings can begin.
Private Property Rights
Landmark Indiana Supreme Court Decision Inspires Legislation
SB 553 (Authored by Sen. Karen Tallian): Who owns the beach in front of Lake Michigan beachfrontproperty and what access should the public have to that property?
Recently, the Indiana Supreme Court handed down a decision that is arguably one of the mostsignificant property rights cases to come out of Indiana. In this case, the Court was seeking to solvewhether the state or local property owners had property rights to lakefront property on LakeMichigan. The court determined that soil and vegetation marked where property owners’ right beganand the beachfront below that was property of the state. It was a landmark case because other GreatLakes states held that the public had the right to use the lakefront property, but property owners stilltechnically owned the property. The Indiana Supreme Court went a step further and held that Indiana now owns that disputed lakefront property. The decision has been appealed to the United StatesSupreme Court and they have not decided if they will take up that case. Meanwhile, Sen. Karen Tallianis attempting to clarify this question by codifying language into Indiana Code which would establishthe state’s rights to this property. Her bill provides that DNR has jurisdiction over the Lake Michiganshore, that it has the duty to protect the public's exercise of vested public rights in the Lake Michiganshore, and Indiana has a vested right to use the shore for certain recreational activities. It is importantto emphasize that this case and legislation only affect property is directly upon Lake Michigan, notother lakefront property across Indiana.
Ending Involuntary Annexation
SB 94 (Authored by Sen. Phil Boots): Indiana is one of only a few states in which involuntaryannexation by a local unit is permitted. Sen. Boots seeks to change that. Most states only allowvoluntary annexation of property by willing property owners who want access to services, like fireprotection, water, etc. that municipalities provide. In 2014, Sen. Boots authored similar legislationwhich sought to restore annexation to only allow property owners to voluntarily submit to annexation,instead of involuntarily being subjected to annexation from municipalities. Unfortunately, thatlegislation was diluted by legislators in the Indiana House. This year, Sen. Boots seeks to again restoreannexation in Indiana to a voluntary process by which owners can join a community if they choose,not against their will. This bill was debated in the Senate Local Government Committee and will befurther discussed by this committee in the coming weeks.
Allowing Property Owners to Connect to Sewer and Water through Public Right-of-Ways
SB 193 (Authored by Sen. Mike Bohacek): This bill attempts to remove the requirement that a propertyowner must obtain the permission of a local municipality before using a public right-of-way to connectto adjacent sewer or water facilities. Sen. Mike Bohacek explained in committee that this bill isn’tchanging any other local regulations. It isn’t a guarantee that sewer or water companies will allow theproperty owner to “hook” on. They will still be allowed to permit or deny. However, it alleviates thehurdle of gaining permission from the local government to use a public right-of-way.
Limiting Property Owners’ Liability
SB 220 (Authored by Sen. Eric Koch): This bill is a limit on the liability of a property owner when aperson departs a trail or greenway and enters private property. Last year, Sen. Koch introduced asimilar bill which addressed the problem of trespassers on private property who had wandered ontoprivate property while exploring trails or newly created greenways. That bill codified theunderstanding that any trespasser on private property near a trail or greenway had no assurance thatthe property was safe. Thus, limiting the ability of trespasser to sue the property owner for any injuriessustained. This bill seeks to make a technical change which would add “departing from” a trail to thisstatute. This omission is being corrected in Sen. Koch’s present bill.
Election Signage on Non-Public Property
HB 1122 (Authored by Rep. Mike Karickoff): This bill would require owners of private, non-publicproperty that is used as a polling place to permit candidates to place signs on the property 29 daysahead of election day. These owners may also remove signs two days after election day. Current lawdoes not require property owners to permit any signs on their property if it is not public property.
Stopping Corruption in Building Permit Process
SB 142 (Authored by Sen. Mike Bohacek): This bill prevents any building commissioner, building codeofficial, or inspector for a local unit of government from issuing a building permit when they have afinancial interest in the issuance of the permit. It also requires local government to establish aprocedure via ordinance to deal with these types of situations. In committee, Sen. Bohacek stated thathe has seen many situations, particularly in small towns, where the building commissioner or buildinginspector is also a builder. So, essentially, he or she is issuing permits to himself or herself andinspecting his or her own work. Sen. Bohacek believes there should be a conflict of interest plan inplace when such situation occurs.
Limiting Locals Ability to Regulate Outside their Boundaries
SB 535 (Authored by Sen. Phil Boots): This bill repeals the authority of a city or town to exercisevarious powers outside their boundaries. Current law allows municipalities to regulate conduct orproperty use that endangers the public welfare, the capturing of animals and regulation of animalshelters, and operation of parks or using eminent domain to acquire land for parks. Most importantlyfor REALTORS®, this bill removes the ability of a municipal plan commission to exercise planning andzoning jurisdiction outside of their boundaries. We will monitor this bill in the coming months as thelegislative session progresses.
Workforce Housing Development
HB 1263 (Authored by Rep. Jim Pressel): This bill would establish the workforce housing developmentrevolving loan fund to provide funding for loans to counties, cities, or towns for workforce housingdevelopment projects. It also appropriates $1,000,000 to the fund for the 2019-2020 state fiscal yearthat the Indiana Housing and Community Development Authority will administer. It also permitsredevelopment commissions in counties other than Marion County to establish a program forworkforce housing development and a tax increment funding allocation area for that program.
Recently a member reported a potential scam where a local agent recieved a call from New York. The person stated their credit card had been compromised with charges amounting to $400. All in which were products bought online with the delivery address to a listed vacant house in LaPorte. This is the second vacant house in LaPorte this has happened to within the past week. The member speculates it could have been a lure, to get the agent to the vacant house.
Please always practice caution and listen to your instincts!
By Brian Faler
01/18/2019 04:17 PM EDT
Updated 01/18/2019 06:29 PM EDT
The Treasury Department today released final regulations detailing how a new deduction for millions of so-called pass-through businesses will work.
The eagerly awaited rule came after the agency said it received more than 300 comments on the previous draft of the plan, from everyone from Major League Baseball to television writers.
The agency said it made a number of changes in response to the feedback, including adding provisions intended to fix a glitch in the law dealing with people who own real estate investment trusts (REITs) through mutual funds.
Treasury officials said they also eased rules regarding when companies may aggregate multiple lines of businesses for tax purposes and pared back some of the proposed anti-abuse rules. The administration simultaneously offered a new proposed rule intended to allow people with real estate rentals to claim the break, a priority for the real-estate industry.
Some businesses, though, will likely be disappointed.
The administration rejected a bid by Major League Baseball team owners to take the break.
It also turned aside demands to loosen restrictions on companies with combinations of businesses, some of which qualify for the break and some of which do not.
The release comes less than two weeks before the start of this year's tax-filing season, and amid a partial government shutdown that has hampered the agency's work.
"It's a substantial package," a senior Treasury official said. "We think it should answer most questions that need to be answered in order for people to file their returns this year."
The partial shutdown slowed the agency's regulatory effort "a bit," the official said.
"It's a little bit off from what we had originally targeted but we're close."
At issue is a new 20 percent deduction for unincorporated businesses such as partnerships and sole proprietorships that was created as part of the Tax Cuts and Jobs Act, H.R. 1 (115).
The break, created as a companion to Republicans' signature cut in the corporate tax rate, reduces the top effective tax rate on pass-throughs to 29 percent from 37 percent. For those in the 24 percent bracket, it can shave their rate to 19.2 percent.
The provision is controversial though because it only goes to certain types of businesses, with people in some occupations like accounting, health, law and athletics banned from taking the break. Also, experts say they see room for potential abuse and gaming of the break.
Congress left it to Treasury to fill in many of the details of the plan, and the agency began coloring in the specifics in August when it issued its first draft of the proposed regulations. That version detailed things like which occupations were on the blacklist, and it included rules designed to prevent people from gaming the rules.
Since then the agency has been picking through a flood of comments on the proposal.
Treasury officials said the new rules are designed to address a snafu in the law where if someone owned a REIT directly, they could qualify for the deduction, but not if they owned the REIT through a mutual fund. That's good news for mutual fund companies now preparing tax forms for clients for the upcoming filing season that were unsure of how to treat the break.
At the same time, the administration rejected arguments by baseball team owners that they ought to qualify for the break, despite the law's ban on people in athletics.
The owners argued that they themselves were not athletes, and that neither their ticket sales nor their sales of the broadcast rights to their games ought to fall under the category of "athletics."
The administration rejected those arguments.
"The fact that you're not playing baseball doesn't mean your income is OK," the official said. "The owners' income gets characterized by the nature of the business they own."
"Otherwise the owners of accounting firms would be eligible" even though accountants themselves are not.
The guidance elaborates further on which occupations are not eligible for the break.
Treasury rejected complaints that its so-called "de minimis" rules — stipulating when companies with different lines of businesses, some of which are on the blacklist and others that aren't — are too strict, leaving them unchanged.
Those rules prevent businesses with less than $25 million in revenue that are straddling the blacklist from claiming the deduction if the income from their work in barred fields amounts to more than 10 percent of their total gross receipts. For those with more than $25 million in receipts, that limit falls to 5 percent.
Some businesses wanted those thresholds lifted.
"This was a missed opportunity to simplify and broaden the relief," said Chris Smith, head of the Parity for Main Street Employers coalition. The break "should be amended to be broader" in order "to maximize tax reform's impact."
The administration also tried to "simplify" rules designed to prevent businesses from breaking up in order to qualify for the break. And it dropped a separate anti-abuse rule known as the "incidental rule."
"We felt that the rest of the statute, and what we had done in the final regulations, dealt with any abuses that could occur there," the Treasury official said.
Joseph M. Ventrone
Vice President, Federal Policy and Industry Relations | Advocacy Group
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