BILL ANALYSIS SENATE JUDICIARY COMMITTEE Senator Ellen M. Corbett, Chair 2009-2010 Regular Session AB 1373 (Lieu) As Amended June 2, 2010 Hearing Date: June 22, 2010 Fiscal: Yes Urgency: No BCP:jd SUBJECT Advertising: Grant Deed Copy Services DESCRIPTION This bill would restrict the activities of grant deed copy services by: prohibiting misleading representations about the necessity of obtaining a copy of a grant deed and that the copy service is a governmental entity or affiliated with such an entity; and requiring specific disclosures that would inform homeowners that they may obtain a copy of their grant deed directly from the county recorder. BACKGROUND When purchasing a home, individuals generally receive a copy of their "grant deed" at the close of escrow. That deed acts to transfer the title of property from one individual to another, is recorded in the county clerk's office, and must be filled out in the presence of a notary. Concerns have recently arisen about third party "grant deed copy services" that encourage a homeowner to pay a significant sum for a copy of their grant deed - those same deeds can be purchased directly from the county recorder for a smaller fee. Regarding the current problem, the Sacramento Bee's June 10, 2010 article entitled "Officials: Beware of companies charging large fees for public records" reported that: Sacramento County officials advise people to beware of private companies charging fees to provide copies of public (more) AB 1373 (Lieu) Page 2 of ? records that can be obtained for much less directly from the county offices. A Southern California-based company is sending notices that offer its services for fees of $87 to $122 or more for copies of public records, when copies of those records may be purchased from the county for an average cost of $15, according to a county news release. In response to the above scams targeting homeowners, this bill seeks to restrict the activities of grant deed copy services by prohibiting certain misleading representations and requiring specific disclosures. CHANGES TO EXISTING LAW Existing law provides that certain advertising-related practices are unlawful and makes a violation of those provisions a crime. (Bus. & Prof. Code Sec. 17530 et seq.) Existing law states that it is unlawful for any person to make any untrue or misleading statements in any manner in connection with the offering or performance of any assessment reduction filing service, as defined. (Bus. & Prof. Code Sec. 17537.9.) This bill would state that is unlawful for any person, firm, corporation, association, or any other business entity to make any untrue or misleading statements in any manner in connection with the offering or performance of a grant deed copy service. This bill would provide that an "untrue or misleading statement" includes, but is not limited to, any representation with regards to property identified by its address or assessor's parcel number that any of the following is true: that due to property foreclosures and loan modifications in the county where the property is located, the property owner should obtain a copy of his or her grant deed or other record of title; that a governmental entity, or any other entity that includes in its name words that could lead a person to reasonably believe that the entity is affiliated with the government, has recommended that a property owner should have a copy of his or her grant deed or other record of title; or that the offeror of the grant deed copy service is, or is affiliated with, any governmental entity. A violation of this prohibition includes, but is not limited to, the AB 1373 (Lieu) Page 3 of ? following: o The misleading use of a governmental seal, emblem, or other similar symbol. o The use of a business name including the words "title" or "grant deed" or "public record" and the word "agency," "bureau," "department," "division," "federal," "state," "county," "city," or "municipal," or the name of any city, county, city and county, or any governmental entity. o The use of an envelope that simulates an envelope containing a government check, tax bill, or government notice or an envelope that otherwise has the capacity to be confused with, or mistaken for, an envelope sent by a government entity. o The use of an envelope or outside cover or wrapper in which a solicitation is mailed that does not bear on its face in capital letters and in conspicuous and legible type the following notice: "THIS IS NOT A GOVERNMENT APPROVED OR AUTHORIZED DOCUMENT." o That there is a fee payment deadline to obtain a copy of a property owner's grant deed or other record of title. This bill would provide that it is unlawful to offer to perform a grant deed copy service without providing a specified disclosure, in all caps, that the service is not associated with any governmental entity, that the individual can obtain a copy of their grant deed from the county recorder, and the fee for the copy of the grant deed in that county. This bill would require the above disclosure to be placed at the top of each page of every advertisement or promotional material disseminated by an offeror of a grant deed copy service and printed in 14-point boldface type enclosed in a box formed by a heavy line. That disclosure must also be recited at the beginning of every oral solicitation or broadcast advertisement, and delivered in printed form before any person who responds is obligated to pay for the service. This bill would define "grant deed copy service" as any service performed or offered to be performed for compensation in connection with obtaining a copy from the county recorder of a property owner's grant deed or other record of title and includes a public records copy service. AB 1373 (Lieu) Page 4 of ? COMMENT 1. Stated need for the bill According to the author: AB 1373 ends [a] despicable practice by making it illegal for any person, association, or other business entity to make any untrue or misleading statements in any manner that connects with the offering or performing of a Grant Deed copy service. This is defined as any service performed, or offered to be performed, for compensation in connection with obtaining a copy from the county recorder of a property owner's Grant Deed or other record title. This bill would also make it illegal to [] send the mailing without making important disclosures, including clearly disclosing that they are not affiliated with any government agency. Under AB 1373, all future solicitations must print in boldface type, "THIS IS NOT A GOVERNMENT APPROVED OR AUTHORIZED DOCUMENT." Furthermore, under this bill, these solicitations would also have to declare that consumers have the right to obtain their grant deeds from their county recorder for a nominal charge. 2. Proposed restrictions on grant deed copy services This bill seeks to restrict the ability for grant deed copy services to mislead homeowners into requesting a document, the "grant deed," which can be requested directly from their county recorder's office for between $10 and $15. The author further asserts that one company is charging the owner $167 for a copy of these documents, that Riverside County alone has received 459 requests already this year, and that "[a]t $167.00 per homeowner, the so-called Title Compliance Office has already collected $76,653.00 in fees from homeowners to date." The consumer protections implemented by AB 1373 come in the form of specific prohibitions and required disclosures. a. Prohibitions This bill would make it unlawful for a business entity to make any untrue or misleading statements in connection with offering, or performing, a grant deed copy service. This bill would codify three specific activities as non-exclusive examples of those statements: (1) that due to foreclosures and AB 1373 (Lieu) Page 5 of ? loan modifications, the owner should obtain a copy of their deed; (2) that a government entity has recommended that a property owner should have a copy of their deed; and (3) that the offeror is, or is affiliated with, any government entity. For purposes of affiliation with a government entity, the bill provides that it is a violation to misleadingly use a governmental symbol, use a business name containing specified words, use an envelope that may be confused with that of a governmental entity, or use an envelope that does not state: "THIS IS NOT A GOVERNMENT APPROVED OR AUTHORIZED NOTICE." All of those prohibitions appear to directly address the scam facing Riverside, Sacramento, and other counties. As an example of the problem facing homeowners, the author's office provided the Committee with an actual solicitation letter - that letter informs the resident that the company, whose name sounds like an official federal entity, recommends that owners should have an official or certified copy of their grant deed, and that the deed will demonstrate that they have an ownership interest in the property. The fee charged for that service is $167, and includes a fee payment deadline. Although the letter does state that the company will obtain an official certified copy of the grant deed from the County Recorder's office, and that the company is a private non-governmental entity, it does not inform consumers that they have the ability themselves to request a copy of their deed for a fraction of the cost. It should also be noted that these homeowners should already have a copy of their grant deed, and that actually requesting another copy of their deed appears to be unnecessary in most circumstances. If a homeowner does desire a copy of their deed - this bill would not prohibit them from purchasing one from these companies, but it would just ensure that they are informed of their ability to directly request a copy from the county recorder (for a significantly lower price). Homeowners who do go directly to the county recorder would pay around $15, as opposed to $167, for a copy of a document that they already received when they closed escrow. b. Disclosure requirements To help ensure that homeowners understand that they can, on their own, request a copy of a grant deed from the county recorder for around $15, the bill includes several disclosures AB 1373 (Lieu) Page 6 of ? that must be provided to the homeowner, be placed in advertisements, and be recited at the beginning of every oral solicitation. That disclosure language would state: THIS SERVICE TO OBTAIN A COPY OF YOUR GRANT DEED OR OTHER RECORD OF TITLE IS NOT ASSOCIATED WITH ANY GOVERNMENTAL AGENCY. YOU CAN OBTAIN A COPY OF YOUR GRANT DEED OR OTHER RECORD OF TITLE FROM THE COUNTY RECORDER IN THE COUNTY WHERE YOUR PROPERTY IS LOCATED FOR [AMOUNT OF FEE FOR THE COPY OF A GRANT DEED OR OTHER RECORD OF TITLE IN THAT COUNTY]. While this bill would not prohibit grant deed copy services from operating in California, the above clear disclosure, combined with the prohibitions discussed in Comment 2(a) would act to address the arguably misleading statements currently being provided to homeowners. If those individuals are fully informed, including having knowledge of the actual cost for them to go to the county recorder and request the deed, those individuals can make a decision about whether or not to pay for that service. As a practical matter, a homeowner would be unlikely to respond to a solicitation from a company offering to provide a copy of their grant deed for $167 when the actual disclosed cost of that deed is significantly less. 3. Entities covered by AB 1373 The prohibitions contained within this bill would apply to a "grant deed copy service," which is defined as "any service performed or offered to be performed for compensation in connection with obtaining a copy from the county recorder of a property owner's grant deed or other record of title and includes a public records copy service." The grant deeds and other records of title at issue in this bill may be copied by different types of companies (including the above mentioned scammers) - those parties could include title companies and escrow companies that may copy grant deeds through their normal course of business. The California Land Title Association, in opposition, expresses concern that AB 1373 "could have the inadvertent effect of arguably prohibiting title companies from providing grant deeds and other documents to consumers, lenders, appraisers, Realtors, local government, etc." To ensure that the bill targets the scams at-issue while not impacting legitimate title copy services, the author offers the following narrowing amendment: AB 1373 (Lieu) Page 7 of ? Author's amendment: On page 4, strike out likes 18 through 22, and insert: (c) For purposes of this section, "grant deed copy service" means any person or entity that mails a solicitation to a property owner that includes an offer to obtain, for compensation, a copy of the property owner's grant deed, or other record of title. Support : County Recorders' Association of California Opposition : California Land Title Association HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : AB 992 (Lieu, Chapter 496, Statutes of 2009), recasted provisions relating to a property assessment appeal filing service to instead make them applicable to an assessment reduction filing service, as defined, and placed additional restrictions on the activities of an assessment reduction filing service. Prior Vote : Not Applicable, bill was a gut-and-amend on June 2, 2010. **************