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)



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            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  
                                                                      



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               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.

                                                                      



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                                        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  
                                                                      



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            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  
                                                                      



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            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:
                                                                      



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             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.

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