BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
2204 (De La Torre)
Hearing Date: 8/7/08 Amended: 7/2/08
Consultant: Mark McKenzie Policy Vote: Jud. 3-2
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BILL SUMMARY: AB 2204 would place the following requirements
on county officials when recording a deed or other instrument
transferring title to residential property constructed prior to
1964:
Require the county recorder to submit a copy of all written
covenants, conditions, or restrictions (CCRs) provided by the
person requesting recordation to county counsel.
Require the county counsel to determine whether a CCR document
contains an unlawful restriction based on race, color,
religion, sex, sexual orientation, familial or marital status,
disability, national origin, source of income, or ancestry.
Require county counsel to strike any unlawful restrictions
from the original CCR documents, complete a Restrictive
Covenant Modification (RCM) form, and return the form and CCR
documents to the county recorder with information regarding
counsel's determination.
Require the county recorder to record any modification
document and inform the legal owner of the property of the
filing of any RCM.
Specify that the only restrictions on the property are those
recorded in the RCM, and deem the effective date of the RCM to
be the effective date of the original document.
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Fiscal Impact (in thousands)
Major Provisions 2008-09 2009-10 2010-11 Fund
CCR review and redaction unknown reimbursable mandate costs,
General
likely tens of millions annually
--------(see staff
comments)--------
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Racially restrictive covenants were declared unconstitutional by
the Supreme Court in 1948, and restrictive covenants that
discriminate against other protected groups are also unlawful
under state and federal law. Existing law authorizes a property
owner who believes there is an unlawful document attached to his
or her property to file an RCM form with the county recorder
that would effectively "record over" the existing document and
remove the offensive covenant from any documents sent to future
buyers. The county recorder is required to submit the original
CCR document and modification document to the county counsel for
a determination of whether the CCR document contains unlawful
restrictions. Existing law authorizes the county recorder to
waive any fees for filing an RCM. Although certain restrictive
covenants are clearly unlawful and unenforceable, some of the
documents that contain the offensive language remain simply
because no action has been taken to delete the language. AB
2204 would mirror the permissive process established in existing
law, but would require county officials to review and remove
unlawful covenants included in all CCR documents attached to
pre-1964 properties that change ownership.
Page 2
AB 2204 (De La Torre)
This bill would establish a reimbursable state-mandated local
program by imposing new duties on county officials. Los Angeles
County indicates that it processes approximately 17,000 pre-1964
property transactions per month, based upon volumes over the
past four years. If each transaction requires 15 minutes of
county counsel review time, this bill would require an
additional 27 attorneys, plus supervising attorneys and support
staff. In total, Los Angeles County estimates that AB 2204
would result in reimbursement claims of approximately $6.7
million, which includes staff costs, equipment, office space,
and other operational expenses. This bill would also result in
increased costs related to county recorder and assessor duties.
Staff notes that state reimbursable costs would depend upon
determinations by the Commission on State Mandates, as
identified in the parameters and guidelines following a
successful test claim filing. Statewide reimbursable costs are
unknown, but likely in to be tens of millions of dollars
annually. These costs would decrease over time as the CCR
documents associated with pre-1964 properties would be
permanently redacted.
This bill would also increase delays in the recordation process
and result in increased costs associated with property
transactions. For example, this bill would require CCR
documents to be recorded with the deed. The Los Angeles County
Recorder charges a recording fee of $12 for the first page and
$3 for each additional page. CCR documents may be a single page
or a document of over 100 pages.
Proposed amendments would: (1) authorize a county recorder to
charge a $10 fee for any service rendered pursuant to the bill;
(2) clarify that a deed would not be reviewed a second time if
it had previously been reviewed; and (3) specify that the
requirements of this bill would not authorize any delay in the
recording process.