BILL ANALYSIS
AB 1333
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1333 (Hancock)
As Amended July 2, 2008
Majority vote
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|ASSEMBLY: | |(May 17, 2007) |SENATE: |22-15|(July 7, 2008) |
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(vote not relevant)
Original Committee Reference: HIGHER ED.
SUMMARY : Provides that the legal owner of real property must
pay the utilities provided to a property or its tenants
following a foreclosure under specified circumstances. Allows a
municipal utility district to place a lien on a property for
delinquent fees or charges for the furnishing of water or sewer
service to residential property, as specified.
The Senate amendments delete the Assembly version of the bill,
and instead:
1)Provide that a legal owner of real property shall pay the
utility service provider for the utility service provided to a
property or its tenants following a foreclosure if all of the
following are true:
a) The legal owner acquires the real property by judicial
or nonjudicial foreclosure or purchases the real property
at a foreclosure sale;
b) The property is residential rental property; and,
c) The tenant or tenants pay the landlord for a utility
service and are not direct customers of the utility service
provider.
2)Provide that a mortgagee or beneficiary that collects utility
charges from a tenant for utility service while foreclosure
proceedings are pending, pursuant to an assignment of rents
provision in a mortgage agreement, shall pay the utility
service provider for the utility services for which charges
were collected from the tenant.
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3)Delete the exemption in existing law that prohibits a
municipal utility district from filing a lien against real
property for delinquent fees or charges for the furnishing of
water or sewer service to residential property.
4)Provide that any municipal utility district that places a lien
on a property for water or sewer service pursuant to this
section shall submit to the Assembly and Senate Judiciary
Committees, on or before January 1, 2013, a report containing
all of the following information:
a) The total number of liens created under this section for
water or sewer service and the total dollar amount of those
liens; and,
b) The overall effectiveness of the liens and any problems
associated with the use of those liens.
5)The above provision relating to liens shall remain in effect
only until January 1, 2014.
EXISTING LAW :
1)Regulates the nonjudicial foreclosure of properties pursuant
to the power of sale contained within a mortgage contract. To
commence the process, existing state law requires the trustee,
mortgagee, or beneficiary to record a Notice of Default and
allow three months to lapse before setting a date for sale of
the property.
2)Regulates the judicial foreclosure process and permits a court
to direct the sale of real property with proceeds going to pay
court costs, expenses of levy and sale, and the amount due to
the plaintiff.
3)Authorizes a municipal utility district to require the owner
of record of real property within the district to pay the
charges for services rendered to a lessee or tenant, and
provides that those charges that have become delinquent are a
lien on the property when a certificate is filed with the
county recorder, as specified, and the lien has the force,
effect, and priority of a judgment lien. Existing law
provides that the above provision does not apply to delinquent
fees or charges for the furnishing of water or sewer service
to residential property or electrical service.
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AS PASSED BY THE ASSEMBLY , this bill requested the Regents of
the University of California to complete and provide independent
actuarial studies for public review at least 120 days prior to a
change in employer and employee contribution rates affecting the
University of California Retirement System.
FISCAL EFFECT : None
COMMENTS : According to the author, "When the foreclosure of a
tenant-occupied residential property occurs, there is no clear,
unambiguous legal obligation upon the property owner and
foreclosing entity to continue paying the utility provider for
the water services that are delivered to the residence, while
the property is occupied. This result can occur even though the
tenant is continuing to pay the landlord for utility service as
part of the monthly rental obligation. If a water bill becomes
overdue at a tenant occupied property, a municipal utility
district carries out specific procedures to provide notice to
the customer of record (the owner/landlord) and to the tenant
that the water bill must be paid or else the water service will
be interrupted for non-payment. If the tenants are unable to
persuade the owner/landlord to pay the water bill or all of the
tenants are unable to reach agreement on assuming responsibility
for paying the water bills, EBMUD has only two options:
terminate service to the property or continue service to the
property while delinquent charges accrue. Terminating service
to the property unfairly punishes tenants who have paid for and
are continuing to pay for utility services as part of their
rent. Tenants have no control over whether the property owner
pays for utility bills for services provided."
For tenants of foreclosed properties, existing law generally
requires those tenants to receive a 30-day notice after the
foreclosed home is sold before the tenants may be evicted
(although some jurisdictions require evictions to be for just
cause). During the time frame where the tenant is looking for
new housing, some tenants have complained about the subsequent
owner shutting off necessary utilities in order to encourage the
tenant to prematurely leave the home. On March 12, 2008, the
Los Angeles Times' article entitled Renters Tell of Harassment
in Foreclosure
Proceedings reported:
They shut off the water at Ida Hancox's duplex just
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before Christmas, when she was doing her holiday
cooking. The utility man who did the job brusquely
told her to pay her bills. But Hancox and her fellow
building tenant had done so. Utilities were included
in their rent, which was up to date. Such costs had
been the responsibility of the landlord, who had
skipped town after the lender foreclosed on his loan.
Hancox and her neighbor Kim Isaac-Ray, a mother of
eight, told a Bay Area utility committee Tuesday that
they believe that the lender stopped paying the
utility bill knowing the water would be turned off -
as a way of trying to push them out of the building
despite local laws preventing their eviction.
Area activists agree, and say low-income renters who
have the right to remain in their homes are
increasingly being harassed in foreclosure proceedings
by lenders eager to be rid of them . . . On Tuesday,
officials of the East Bay Municipal Utility District,
which includes Oakland, took the first step toward
ending such tactics. The board's finance committee
agreed to a moratorium on such water shut-offs while
the agency explores ways to hold property owners and
lenders accountable for utility bills during
foreclosure proceedings.
To respond to the problem of utility shutoffs, this bill would
require that when a mortgagee, trustee, or beneficiary acquires
a residential property by foreclosure where the tenants pay the
landlord for utilities, that party must pay for the utility
service following the foreclosure. The bill would, while
foreclosure proceedings are pending, require those parties to
pay the utility service provider for the utility services for
which charges were collected from the tenants, as specified.
This bill would also delete a provision under existing law that
prevents a municipal utility district from placing a lien on a
property for the delinquent fees or charges for the furnishing
of water or sewer service to residential property or electrical
service. That prohibition was enacted in 1986 with respect to
water and electrical service, SB 2166 (Costa), Chapter 739,
Statutes of 1998, added sewer service to that prohibition.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
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