The Real News

April, 2018
Open House Security Tips
Open Houses are a part of day-to-day business for many real estate agents. Open Houses allow agents to meet several potential clients, potentially sell the house being shown and develop opportunities for future business. However, an Open House is also an invitation for bad guys to prey on unsuspecting, and sometimes vulnerable, agents.

A 55-year-old real estate agent was hosting an open house on March 10, 2018 in the Bayview Heights neighborhood of San Francisco. She was in the kitchen when she heard the front door open. She assumed it was potential buyers. Instead, she was confronted by three suspects, one of them armed with a firearm. They took her cash and were rummaging through her purse when the doorbell sounded. Startled, they fled the home.

This agent was lucky, as she was only out some cash and nothing worse. An Omaha-based realtor last year was nearly sexually assaulted. She had trained in self-defense and was able to use those skills to get to a phone and call 911. Here are four tips to help any agent be safer while conducting an open house.

1. Check the space thoroughly. Check all rooms and closets ahead of the open house. Speak with someone on the cell phone while you are conducting the checks.


2.  Keep your cell phone on your person. Once the Open House begins and people start to show up, have your cell phone in your hand at all times.


3.  Find a buddy. If you can't find anyone to attend the Open House with you, make it appear like you have someone with you. Place a jacket or sweater on two different chairs, one for you and one for your pretend buddy. Place out two partially drank bottles of water, again to give the illusion someone is with you.


4.  Get rid of hazards. Remove any kitchen knife blocks from the open counters. Keep your wits about you. Please consider using additional signage stating the Open House is under surveillance. Also consider requiring IDs for entry to the Open House.


These are just a few tips to increase safety. The National Association of Realtors (NAR) publishes a yearly safety report. The report, along with safety tips, presentations, and training courses can be found on their website: NAR Website . As the old saying goes, "An ounce of prevention is worth a pound of cure".
Case of the Month
J. Arthur Properties, II, LLC et al, Plaintiffs and Appellants v. City of San Jose et al, Defendants and Respondents

Plaintiff SV Care operated a marijuana collective in a building owned by Plaintiff J. Arthur Properties, II, LLC. The building was in a commercial zoning district in the city of San Jose, California. The city determined the marijuana collective was not operating in a properly zoned area of the city and ordered it to cease operations. The operators of the collective as well as the owners of the building sued the city and lost. They then appealed the decision.

Plaintiffs' collective opened in 2010. At that time, the Municipal Code for the City of San Jose did not list any medical marijuana collectives or any other marijuana-specific uses in their table of permitted uses. The Municipal code contained a list of permitted businesses and stated that any "uses not listed on [the applicable table] are not Permitted." The table did include "medical offices" as a permitted use in the Commercial Office zone, so that's what the Plaintiffs put on their application.

After the collective opened, voters passed a local measure adding a marijuana business tax to the Municipal Code. The tax applies to anyone "engaging in marijuana business" within the city. The Municipal Code also stated the tax was "enacted solely to raise revenue for municipal purposes and [was] not intended for regulation." When the collective paid their business tax, they were clearly instructed that the payment of the tax does not mean they can legally operate a marijuana collective at that facility and there may be zoning laws prohibiting them from doing so. The Plaintiffs continued on with their operation anyway.

The Municipal Code was amended in 2014 specifically to regulate medical marijuana. Under the amendments, "medical marijuana collective" is not listed as a permissible use in the Commercial Office district. It is listed as a restricted use in certain industrial zoning areas. In 2014, the Plaintiffs received a compliance order that they are not allowed in the CO Zoning District and that they are in violation of the City's Municipal Code. The Plaintiffs argued that they were a medical office during the trial but lost the argument.

Upon appeal, the "medical office" argument was addressed again. The Municipal Code defines medical office as "offices of doctors, dentists, chiropractors, physical therapists, acupuncturists, optometrists, and other similar health related occupations, where patients visit on a daily basis." The Plaintiffs argue that their collective is a medical office because it is a health-related occupation. Included in their argument is the term "medical" generally means something curative or related to healing. They even cited the Health and Safety Code section 11362.5 subdivision (b)(1)(A), which states that one purpose of the Compassionate Use Act of 1996 is to "ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use ... has been recommended by a physician who has determined that the person's health would benefit from the use of marijuana in the treatment" of various ailments. They argue that since they provide a medical and health-related service that they should be considered as a medical office under the Municipal Code. The City countered the argument by stating a medical office has physicians or similar professions and patients. A marijuana collective, on the other hand, does not have physicians and patients. On the contrary, the collective is made up of patients that were prescribed marijuana. The appellate court agreed with the city. Not only did the collective have zero physicians or similar professions, none of the approved listed professions provides a good or service that is illegal under federal law.

The Plaintiffs second argument was that the City should be stopped from enforcing the Municipal Code because it unreasonably delayed issuing a compliance order and it also induced detrimental reliance by collecting marijuana business taxes from the plaintiffs. The Plaintiffs had no way to prove the city delayed issuing the compliance order. The City consistently enforced the rules to all collectives. The Plaintiffs were also informed when they applied for the business license that they were most likely not in the correct zoning. The taxes collected were clearly stated that they were not for any enforcement or approval of a license, but for revenue collection only.

The Appellate Court also noted that the Plaintiffs acknowledge that applying equitable estoppel against a public entity requires a showing that "the avoidance of injustice in the particular case justifies any adverse impact on the public interest." However, the Plaintiffs were unable to provide any evidence of an injustice in this matter. The space can be rented to another tenant. The collective can move to a location that is permitted. It would cost both parties some funds, but it is not a major injustice to the public. Therefore, the appellate upholds the ruling of the trial court and the City is entitled to its costs on appeal.

Indiana Joins Four Other States with Online Notary Legislation

On February 27, 2018, Indiana's General Assembly passed a bill by a vote of 95-0 that will allow remote online notarizations (RON). This follows after Indiana's House voted 46-1 to pass the legislation. The law is scheduled to go into effect on July 1, 2019. Four other states already passed similar legislation: Montana, Nevada, Texas, and Virginia.

RON involves the use of audio visual technology and electronic methods in order to conduct a notarization. Indiana's new law modifies Indiana's current regulations related to notarial acts to include the use of electronic documentation as well as technology for electronic notarial acts. In layman's terms, electronic notarizations via use of a webcam will be permissible.

The legislation does include requirements for remote notarial acts such as:
  • Registration of a remote notary public;
  • Certification of and record keeping related to remote notarial acts;
  • Use of audio visual communication and recording;
  • Verification of credentials; and
  • Maintenance of records.
The sponsor of the bill stated that Hoosier notaries will gain the ability to serve their clients online, creating a more safe, secure, and efficient experience for everyone. "We're continuing to modernize how the Indiana government serves its constituents," he added. "Countless government forms require notarized documents. This bill enables Hoosiers to more efficiently complete these and numerous other legal documents."

The American Land Title Association (ALTA) and the Mortgage Bankers Association (MBA) have collaborated to prepare model legislation that provides the framework for states looking to adopt RON. ALTA has stated that it does not endorse online notarization, however, since more states are moving in that direction, ALTA wants to ensure any legislation that is passed is safe for consumers and that the transaction can be insurable and is technology neutral. The ALTA model legislation is based largely on the statue enacted by Texas in 2017 and was emulated in Nevada. There are currently 18 other states with active RON bills in process. If adopted, the model legislation would create legal certainty across the country from a uniform and consistent framework that is based on a common set of core principles.

FinCEN Update - GTO Renewed

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes. As detailed previously in our newsletter, FinCEN currently has in place Geographic Targeting Orders ("Orders") which require title companies to report certain real estate transactions. The Orders were set to expire on March 20, 2018. However, they have now been renewed until September 16, 2018. If you have questions, you can check the frequently asked questions section of FinCEN website at: FINCEN Website or visit our website at RELAW FINCEN PAGE to see our previous article on this topic.

Upcoming Speaking Engagements

April 14 - Escrow Training Institute:  
ETI Class Schedule Link

April 19 - Los Angeles Escrow Association:

April 27 - Chino Valley Real Estate Professionals Chino Valley Real Estate Facebook Link

May 19 - Escrow Institute Conference:
EIC 2018 Conference Page



Jennifer Felten, Esq., Principal & Editor
(805) 265-1031 
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