BILL NUMBER: AB 957 CHAPTERED
BILL TEXT
CHAPTER 264
FILED WITH SECRETARY OF STATE OCTOBER 11, 2009
APPROVED BY GOVERNOR OCTOBER 11, 2009
PASSED THE SENATE SEPTEMBER 1, 2009
PASSED THE ASSEMBLY SEPTEMBER 3, 2009
AMENDED IN SENATE AUGUST 17, 2009
AMENDED IN SENATE JUNE 26, 2009
AMENDED IN SENATE JUNE 16, 2009
AMENDED IN ASSEMBLY MAY 14, 2009
AMENDED IN ASSEMBLY APRIL 22, 2009
INTRODUCED BY Assembly Member Galgiani
FEBRUARY 26, 2009
An act to add and repeal Article 1.8 (commencing with Section
1103.20) of Chapter 2 of Title 4 of Part 4 of Division 2 of, the
Civil Code, relating to real property, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 957, Galgiani. Residential real estate transfers: title
insurance: escrow companies.
Existing law generally regulates the transfer of real property,
and imposes specified obligations on a seller of real property.
Existing law authorizes a mortgagee or beneficiary under a deed of
trust to sell property securing the mortgage or deed of trust at a
foreclosure sale under certain circumstances. Existing federal law
prohibits a seller of property that will be purchased with the
assistance of a federally related mortgage loan from requiring the
buyer to purchase insurance from any particular company.
This bill would enact the Buyer's Choice Act, which would
prohibit, until January 1, 2015, a mortgagee or beneficiary under a
deed of trust who acquired title to residential real property
improved by 4 or fewer dwelling units at a foreclosure sale from,
requiring, directly or indirectly, as a condition of selling the
property, that the buyer purchase title insurance or escrow services
in connection with the sale from a particular title insurer or escrow
agent. This bill would provide that the act does not prohibit a
buyer from agreeing to accept a title insurer or an escrow agent
recommended by the seller if written notice of the right to make an
independent selection is first provided by the seller to the buyer. A
seller who violates these provisions would be liable to the buyer
for an amount equal to 3 times all charges made for the title
insurance or escrow services.
This bill would declare that it is to take effect immediately as
an urgency statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 1.8 (commencing with Section 1103.20) is added
to Chapter 2 of Title 4 of Part 4 of Division 2 of the Civil Code, to
read:
Article 1.8. Buyer's Choice Act
1103.20. This article shall be known, and may be cited, as the
Buyer's Choice Act.
1103.21. (a) The Legislature finds and declares:
(1) Sales of foreclosed properties have become a dominant portion
of homes on the resale real estate market.
(2) The recent troubled real estate market has resulted in a
concentration of the majority of homes available for resale within
the hands of foreclosing lenders and has dramatically changed the
market dynamics affecting ordinary home buyers.
(3) Preserving the fair negotiability of contract terms is an
important policy goal to be preserved in real estate transactions.
(4) The potential for unfairness occasioned by the resale of large
numbers of foreclosed homes on the market requires that protections
against abuses be made effective immediately.
(5) The federal Real Estate Settlement Procedures Act (RESPA)
creates general rules for fair negotiation of settlement services,
prohibits kickbacks and specifically prohibits a seller in a
federally related transaction from requiring a buyer to purchase
title insurance from a particular insurer.
(6) California law does not specifically prohibit a seller from
imposing, as a condition of sale of a foreclosed home, the purchase
of title insurance or escrow services from a particular insurer or
provider.
(7) Therefore it is necessary to add this act to California law to
provide to a home buyer protection that follows the RESPA model and
applies to, and prevents, the conditioning of a sale of a foreclosed
home on the buyer's purchase of title insurance from a particular
insurer or title company and/or the buyer's purchase of escrow
services from a particular provider.
(b) It is the intent of the Legislature that, for the purpose of
this act, the sale of a residential real property is deemed to
include the receipt of an offer to purchase that residential real
property.
1103.22. (a) A seller of residential real property improved by
four or fewer dwelling units shall not require directly or
indirectly, as a condition of selling the property, that title
insurance covering the property or escrow service provided in
connection with the sale of the property be purchased by the buyer
from a particular title insurer or escrow agent. This section does
not prohibit a buyer from agreeing to accept the services of a title
insurer or an escrow agent recommended by the seller if written
notice of the right to make an independent selection of those
services is first provided by the seller to the buyer.
(b) For purposes of this section:
(1) Escrow service" means service provided by a person licensed
pursuant to Division 6 (commencing with Section 17000) of the
Financial Code, or exempt from licensing pursuant to Section 17006 of
the Financial Code.
(2) "Seller" means a mortgagee or beneficiary under a deed of
trust who acquired title to residential real property improved by
four or fewer dwelling units at a foreclosure sale, including a
trustee, agent, officer, or other employee of any such mortgagee or
beneficiary.
(3) "Title insurance" means insurance offered by an insurer
admitted in this state to transact title insurance pursuant to
Chapter 1 (commencing with Section 12340) of Part 6 of the Insurance
Code.
(c) A seller who violates this section shall be liable to a buyer
in an amount equal to three times all charges made for the title
insurance or escrow service. In addition, any person who violates
this section shall be deemed to have violated his or her license law
and shall be subject to discipline by his or her licensing entity.
(d) A transaction subject to this section shall not be invalidated
solely because of the failure of any person to comply with any
provision of this act.
1103.23. This article shall remain in effect only until January
1, 2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
SEC. 2. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to enact provisions designed to ensure that a seller does
not require a residential homebuyer to purchase title insurance or
escrow services from a particular company, as soon as possible, it is
necessary that this act take effect immediately.