BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 27, 2010

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                  Mike Feuer, Chair
                 AB 2016 (Torres) - As Introduced:  February 17, 2010

                                  PROPOSED CONSENT
           
          SUBJECT  :  Common Interest Developments: requests for notices

           KEY ISSUE  :  Should a homeowners association be allowed to record  
          a single request for a copy of notices of a trustee's deed,  
          instead of having to file multiple requests for each separate  
          interest within the association?

           FISCAL EFFECT  :  As currently in print this bill is keyed  
          non-fiscal.

                                      SYNOPSIS

          This non-controversial measure seeks to clarify the intent of SB  
          1511 (Chapter 527, Stats. of 2008), which permitted a homeowners  
          association (HOA) to record a request, in the event of a  
          foreclosure on a separate interest within the HOA, that the  
          mortgagee or trustee mail to the HOA a copy of the trustee's  
          deed upon sale.  The purpose of the 2008 measure was fairly  
          straightforward: existing law makes all owners of separate  
          interests within the association members of the association, and  
          as members they must pay association fees.  However, when a  
          separate interest in the HOA is foreclosed upon and the property  
          is subsequently sold, the HOA does not always know the name or  
          address of the successor in interest until months after the  
          sale.  Although the purpose of SB 1511 was apparently to permit  
          an HOA to record a single request for all of its separate  
          interests, a handful of county recorders have rejected HOA  
          filings on the grounds that other provisions of existing law  
          appear to require a separate request for each separate property  
          and the name of each separate owner and mortgagee or trustee.   
          This bill seeks to clarify that an association's single recorded  
          request applies to  all  of the separate interests within the  
          association, and the request when filed only needs to include  
          the name of the association,  notwithstanding provisions  
          elsewhere that appear to require separate requests naming each  
          owner and mortgagee.  This bill passed out of the Assembly  
          Banking & Finance Committee on a 12-0 vote.  There is no known  








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          opposition to the bill.  

           SUMMARY  :  Allows a homeowners association (HOA) in a common  
          interest development to record a  single  request for a copy of a  
          trustees deed upon sale of a separate interest within the HOA,  
          and clarifies that such a request does not constitute a request  
          for a document that transfers an interest in real property or  
          terminates a right to title in real property.  Specifically  this  
          bill  : 

          1)Specifies that an HOA's recorded request for a copy of  
            trustee's deed upon sale of separate interest within the HOA,  
            does not, for the limited purposes specified, constitute a  
            request for a document that either effects or evidences a  
            transfer of an interest in real property or terminates any  
            interest, right, or encumbrance of an interest in real  
            property. 

          2)Specifies that an HOA's recorded request for a copy of a  
            trustee's deed upon sale of any separate interest within the  
            HOA shall provide a legal description or assessor's parcel  
            number of  all  of the separate interests within the HOA,  
            notwithstanding the existing law requiring that requests for  
            copies of notices of default and sale under deed of trust or  
            mortgage can only be recorded if they contain the names of the  
            mortgagor/trustor and mortgagee/mortgagor. 

           EXISTING LAW  : 

          1)Provides, generally, that any person desiring a copy of a  
            notice of default and of sale under deed of trust or mortgage  
            may record, at any time subsequent to the recordation of the  
            deed of trust or mortgage and prior to a recordation of notice  
            of default, a request for a copy of the notice of default and  
            of sale.  Specifies that the request must be recorded in the  
            office of the county recorder in which the property is  
            situated and must contain specified information identifying  
            the particular deed of trust or mortgage, and the names of the  
            trustor/mortgagor and trustee/mortgagee.  (Civil Code Section  
            2924b (a).) 

          2)Provides, with respect to a separate interest in a homeowners  
            association, that the association may record a request for a  
            copy of a trustee's deed upon sale of a separate interest  
            within the association. Specifies that the request shall  








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            include a legal description or the assessor's parcel number of  
            the separate interests.  Specifies that a request recorded  
            pursuant to this provision must identify the association and  
            must be recorded before the filing of the notice of default.  
            Requires the trustee, mortgagee, or other person to mail the  
            requested information to the association within 15 business  
            days after the trustee's deed is recorded.  (Civil Code  
            Section 2924b (f).) 

          3)Specifies that no request made pursuant to 1) or 2) above, nor  
            any statement made therein, shall affect the title to real  
            property or be deemed notice to any person that the person  
            requesting the copies of notice has or claims any right,  
            title, or interest in the subject property.  (Civil Code  
            Section 2924 (g).) 

          4)Requires that any document recorded with a county recorder  
            that effects or evidences a transfer of an interest in real  
            property or that terminates an interest or right in real  
            property must contain certain information, including the name  
            or names of persons having title or interest in the property.   
            (Government Code Section 27288.1.) 

           COMMENTS  :  According to the sponsor, the Community Association  
          Institute (CAI), this bill will clarify existing law by  
          expressly allowing a homeowners association (HOA) in a community  
          interest development to file a  single  request for a copy of a  
          trustee's deed in the event of a foreclosure and subsequent sale  
          of a separate interest within the HOA.  The author and sponsor  
          contend that the purpose of this bill is merely to clarify the  
          intent of prior CAI-sponsored legislation, SB 1511 (Chapter 527,  
          Stats. of 2008). 

          Prior to the enactment of SB 1511, then existing law permitted  
          any person desiring a copy of any notice of default or notice of  
          sale under deed to record a document with the county recorder  
          requesting that the mortgagee or trustee send to the requester a  
          copy of the notice of default or sale.  However, then existing  
          law required that the request contain certain information,  
          including the name of the owner of record and the name of  
          mortgagee or trustee.  (Civil Code Section 2924b (a).)  SB 1511  
          added a new subdivision to that statute so that, with respect to  
          an HOA, the association could file a single request for all the  
          separate interests within the HOA, and the recorded request  
          would only need to contain the name and address of the  








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          association and a legal description or assessor's parcel numbers  
          of the separate interests. 

          An HOA's interest in obtaining a copy of the trustee's deed upon  
          sale is straightforward enough: under existing law, every owner  
          of a separate interest in the HOA is also a member of the HOA  
          and must pay association fees.  However, when a separate  
          interest is foreclosed upon and the mortgagee or trustee sells  
          the property to another party, the HOA does not always have the  
          name and address of the successor in interest and, accordingly,  
          has difficulty collecting fee assessments.  SB 1511's sponsor,  
          who is also the sponsor of this bill, stated in 2008 that  
          "Learning the name and address of the successor in interest and  
          the date of the foreclosure sale within a timely manner would be  
          of tremendous help to the financial stability of homeowners  
          associations.   Today, this information is provided many months  
          after the date of sale and as a consequence, associations  
          experience financial hardship."  (As quoted in Senate Third  
          Reading Analysis of SB 1511, As Amended August 4, 2008.) 

          However, according to the sponsor, after SB 1511 went into  
          effect a few county recorders did not permit HOAs to record the  
          requests because those requests did not meet the requirements of  
          Government Code Section 27288.1.  That statute specifies that  
          any document that is presented for recordation that "effects or  
          evidences a transfer or encumbrance of an interest in real  
          property" or that "releases or terminates any interest, right,  
          or encumbrance" in real property must contain specified  
          information, including the name or names of the owners or other  
          parties with a title or interest in the property.  Of course,  
          the author and sponsor of SB 1511 had sought to eliminate this  
          very requirement in cases where an HOA was only attempting to  
          obtain a copy of the document for the limited purpose of  
          identifying the successor in interest - and not for the purpose  
          of evidencing a transfer of title or termination of a property  
          right or interest.  

          Therefore, in order to clarify the intent of SB 1511 and allow  
          an HOA to record a single notice for all association properties,  
          this bill makes two minor and technical changes to existing law.  
           First, this bill specifies that the provision permitting an HOA  
          to record a single request for all separate interests within the  
          association applies  notwithstanding  the general provision in the  
          same statute that requires specified information for each  
          individual property.  Second, the bill clarifies that for  








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          purposes of Government Code Section 27288.1 - the statute that  
          requires specified content for documents involving a transfer of  
          title or termination of a property right or interest - that a  
          request by an HOA for a trustee's deed does  not  constitute a  
          request for a document that effects or evidences a transfer of  
          title or a termination of a property right or interest.  

           ARGUMENTS IN SUPPORT  :  According to CAI, the sponsor, an HOA  
          must have timely notice when a separate interest within the  
          association is foreclosed upon and sold to a new purchaser, so  
          that the HOA may "begin to receive monthly assessment payments  
          from the new owner in a timely manner, instead of waiting up to  
          8 months following the foreclosure sale."  CAI claims that the  
          few county recorders that refuse to record the "blanket"  
          requests that apply to all separate interests in the association  
          are frustrating the purpose of the recently enacted SB 1511.   
          CAI notes that such "blanket recordation" is common in other  
          contexts, such as when amendments are made to an association's  
          Covenants, Conditions, and Restrictions (CC&R).  This bill, the  
          CAI believes, will make it absolutely clear that an HOA may  
          record a single document for all separate interests, so long as  
          the request names the association and includes a legal  
          description or assessor's parcel numbers. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Community Association Institute (sponsor) 

           Opposition 
           
          None on file
           
          Analysis Prepared by  :   Thomas Clark / JUD. / (916) 319-2334