Page 24 - Sonoma County Gazette MARCH 2020

Demystifying AB5 California’s New Independent Contractor Law
There are many low down mortgage programs available. If you are a veteran or active military then there are VA loans with NO MONEY DOWN. We happen to be an affiliate of Homes for Heroes and we give a break on fees to the veterans and so do the real estate agents.
By Mary K. Piasta, Esq. of Haeuser, Valluzzo & Piasta LLP
With more than 30 new laws on the books affecting business in California,
There is a USDA loan which is designed to help folks in rural areas get into homes in rural America and this program requires NO MONEY DOWN as well. You need to make below a certain income level and you have to buy in a rural area. Around here, that means anywhere in west county, many parts of east county, Windsor and all parts north.
many businesses are now facing increased regulation and mounting expenses. The implementation of AB 5 by the State of California labor code will
no doubt cause confusion. It states as follows...a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that ALL of the following conditions are satisfied: (This is being referred to as the ‘ABC Test’ or ‘Three-part test.’)
FHA will allow you to put just 3.5% down and you can get great rates and your credit does not need to be perfect and it will allow for a little higher debt ratios. This program is designed for first time homebuyers but you do not need to be a First timer in order to buy and there are no income or geographic limitations. You can also add down payment assistance programs and closing cost assistance programs so that you can get in for very little down.
(A) The person is free from the control & direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
Conventional loans are available for as little as 3% down also. If you need a high balance or a Jumbo loan, you need only put 5% down to get into one of these loans.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Most loan programs will allow for you to get a gift of funds from a family member to help with the down payment and you can ask in your contract for the seller to help with closing costs. If you need help qualifying then we can utilize a co-borrower for that as well. My lovely 23 year old daughter Anna bought a house in Portland and her wonderful parents co-signed for her and she has roommates to help cover the mortgage. She is 26 now and building equity in a home of her own.
AB 5 is an amendment to a decision that was made two years ago. It codifies the decision of the California Supreme Court in Dynamex Operations West, Inc. versus Superior Court of Los Angeles of 2018.
Much has been said in the media that AB-5 is a response to the labor issues of Uber and Lyft unlicensed taxi service companies – utilizing mobile App technology. Yet, much of AB 5 seeks to deal with many situations of labor, when an independent contract arrangement is made.
The Homes for Heroes program described above for veterans is also available to Police, Firefighters, Educators and Health Professionals. You can’t get the ZERO Down VA loan but you can get help with closing costs from a participating mortgage and real estate professional.
As noted by the California State Legislature in more than nine Assembly Floor Analyses ...“Worker misclassification is not a new concept. In fact, a 2000 study commissioned by the United States Department of Labor found that nationally between 10 percent and 30 percent of audited employers misclassified workers.”
If you can’t qualify for something on your own, maybe you can buy a home with a granny unit or a duplex and we can use the rental income to offset the mortgage payments and make your own monthly payments more affordable.
With that said, it is clear the State of California is concerned that the ever- expanding growth of what is now called ‘the gig-economy’ new opportunities for misclassification have emerged. It seems that this is the underlying reason and push for the implementation of AB 5.
Basically, what I am saying is that you should work with a mortgage advisor to see what you can qualify for and what is available to you. Do not decide that you can’t make this happen before you find out.
Our local businesses rely on independent contractors. Many local residents enjoy and want to continue being independent contractors touting increased pay, flexibility as well as varied business opportunities. What can our communities do? As the voices of businesses demonstrate, they now question whether it is worth it to even continue to operate here.
But all hope is not lost as there are numerous exceptions to AB 5. In addition, now is the time for advocacy. Write your local elected if you have a particular opinion. Have your voice be heard.
Haeuser, Valluzzo & Piasta LLP www.hvplawoffices.com, 707-996-2131
Henry Ford once said “Whether you think you can or think you can’t, Either way, you are right.”
And if you prefer a sports quote, Wayne Gretzky said “You miss 100% of the shots you don’t take” and Hans Bruhner says “It’s your turn.”
Need to know more? Please send me your real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article. Hans Bruhner (NMLS 243484) is a Mortgage Advisor for Finance of America Mortgage (NMLS 1071). Both are licensed by the Department of Business Oversight under the CRMLA. If you have a question, please contact Hans at (707) 887-1275 or hans@hansblog.com
Don’t have 20% down payment? That’s OK.
I talk to at least one person a week who tells me that they just don’t have the 20% down payment saved to get into a home right now.
My answer is always the same..... GREAT! How much do you have?
24 - www.sonomacountygazette.com - 3/20