BILL ANALYSIS
SB 1149
Page 1
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1149 (Corbett) - As Amended: June 23, 2010
SENATE VOTE : 21-9
SUBJECT : Residential Tenancies: Foreclosures
KEY ISSUES :
1)Should tenants who are evicted through no fault of their own,
as a result of a foreclosure, be provided with notice of their
rights and responsibilities under existing law?
2)Should court records relating to the eviction of a tenant from
a foreclosed residential property be masked, unless, within 60
days, the plaintiff landlord prevails in the action?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill would protect tenants displaced by foreclosure by
requiring that a notice to terminate a tenancy be accompanied
with a cover sheet that informs the tenant that the property was
recently sold in foreclosure and spells out the tenant's rights
and responsibilities, including the tenant's right to stay in a
foreclosed rental unit for up to 90-days. In addition, the
cover sheet would advise tenants to talk to a lawyer and
stresses the importance of responding to notices in a timely
manner. In addition, this bill would modify the rules regarding
access to court records pertaining to an eviction in the case of
a foreclosed property. Because any evidence of unlawful
detainer records can become a damaging part of a credit report
or a tenant's rental history, existing law provides that a
county clerk can "mask" records (or withhold from public access)
where the tenant-defendant has "prevailed" in the unlawful
detainer action within 60 days of receiving notice. Otherwise,
even though the tenant prevailed, the record of the unlawful
detainer can become a negative mark on the tenant's record.
According to the sponsors, this rule often does not serve its
purpose in the foreclosure context, because of bank delays or
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other factors that prevent the case from going to trial. So the
defendant-tenant never "prevails" in the unlawful detainer
because the action was dropped; but this means that records can
be released since the defendant-tenant did not "prevail." This
bill would modify the existing "masking" provisions by providing
that the records can be released only if the plaintiff-landlord
prevails. Although the cover sheet provisions of this bill were
originally opposed by the California Apartment Association
(CAA), the author's office, sponsors, and CAA have worked
diligently to remove the latter's opposition. The bill is
co-sponsored and supported by a coalition of housing advocates,
among others.
SUMMARY : Prohibits the release of court records in a
foreclosure-related eviction unless the plaintiff landlord
prevails, as specified, and requires that a prescribed cover
sheet, notifying a tenant of his or her rights and
responsibilities, be attached to any eviction notice that is
served within one year after a foreclosure. Specifically, this
bill :
1)Prohibits a court clerk from releasing records in an eviction
action involving a residential property that has been sold in
foreclosure unless, after 60 days have elapsed since the
complaint was filed, a judgment against all defendants has
been entered for the plaintiff, after a trial. Provides that
if judgment is not entered for the plaintiff the clerk could
only allow access to court records to parties to the action or
by order of a court, as specified.
2)Provides that in the case of any foreclosure of a residential
property, the immediate successor in interest in the property
shall attach a cover sheet, as prescribed, to any notice of
termination of tenancy served on a tenant of that property
within one year after the foreclosure sale.
3)Provides that the above cover sheet shall not be required if
any of the following apply:
a) The tenancy is terminated due to a tenant's violation of
the terms of the tenancy pursuant to Code of Civil
Procedure Section 1161.
b) The successor in interest and the tenant have executed a
written rental agreement or lease or written
acknowledgement of a preexisting rental agreement or lease.
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c) The tenant receiving the notice was not a tenant at the
time of the foreclosure.
4)Specifies that the required cover sheet, in at least 12-point
type, shall advise the tenant of his or her rights and
responsibilities, including information on how to obtain legal
assistance and notification that the tenant may have the right
to stay in the unit for 90 days.
5)Provides that the cover sheet requirements in this bill shall
sunset on January 1, 2013, unless a later enacted statute
deletes or extends that date.
EXISTING LAW :
1)Provides, until January 1, 2013, that a tenant or subtenant in
possession of rental housing at the time the property is sold
in foreclosure shall be given 60 days' written notice to quit
before the tenant or subtenant may be removed from the
property. (Code of Civil Procedure Section 1161b.)
2)Provides, under federal law, that a successor in interest in a
property subject to foreclosure shall provide any tenants
residing in the property with a 90-day notice to vacate, and
requires the successor in interest to honor the tenant's lease
until the end of the lease term unless the property is sold to
a person who intends to occupy it as his or her primary
residence. Specifies that these provision shall sunset on
December 31, 2012. (Protecting Tenants at Foreclosure Act of
2009, Public Law 111-22.)
3)Provides that, in unlawful detainer proceedings, the court
clerk shall only allow access to case records to the
following:
a) A party to the action, including a party's attorney.
b) Any person who provides the clerk with the names of at
least one plaintiff and one defendant and the address of
the premises, including the apartment or unit number, if
any.
c) A resident of the premises who provides the clerk with
the name of one of the parties or the case number and shows
proof of residency.
d) To any person by order of the court on a showing of good
cause, as defined.
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e) To any other person 60 days after the complaint has been
filed, unless a defendant prevails in the action within 60
days of the filing of the complaint, in which case the
clerk may not allow access to any courts records in the
action, except to a party to the action or by court order,
as specified.
COMMENTS : One of the lesser known aspects of the foreclosure
crisis in California and the nation is the impact on tenants,
who often face eviction when their rental property is foreclosed
upon by an acquiring bank or a new owner. What makes these
evictions so inequitable is that tenants are not evicted through
any fault of their own, but only because the property owner has
failed to make payments. According to a March 2009 report by
Tenants Together entitled, "Hidden Impact: California Renters in
the Foreclosure Crisis," as many as one-third of foreclosures in
2008 involved rental units.
The impact of the foreclosure crisis - both in general and
regarding tenants in particular - has been the subject of both
state and federal legislation. Most notably, SB 1137 (Chapter
69, Stats. of 2008) required, among other things, that tenants
receive at least 60-days notice if the property in which they
were living was subject to foreclosure. Less than a year after
SB 1137 went into effect, President Obama signed the "Protecting
Tenants at Foreclosure Act of 2009." Among other things, this
Act required the successor in interest to a foreclosed property
to provide tenants with at least 90-days notice to vacate and to
generally honor the tenant's existing lease for the remaining
term of the lease.
This bill simply seeks to ensure that tenants are aware of their
rights under both state and federal law. Specifically, this
bill would require that, in regard to any rental property
subject to foreclosure, a notice to terminate tenancy must be
accompanied with a cover sheet that informs the tenant that the
property was recently sold in foreclosure and spells out the
tenant's rights and responsibilities, including the tenant's
right to stay in a foreclosed rental unit for up to 90-days. In
addition, the cover sheet would advise tenants to talk to a
lawyer and stresses the importance of responding to notices in a
timely manner. The notice would be required for any notice that
is served up to one year after the foreclosure sale. The notice
provisions of the bill would sunset as of January 1, 2013. This
bill also seeks to protect victims of foreclosure evictions from
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suffering permanent harm to their credit reports and rental
histories by only permitting the release of court records
relating to a foreclosure eviction if the landlord actually
prevails in the action. These masking provisions would not be
subject to the sunset.
ARGUMENTS IN SUPPORT : Despite enactment of state and federal
laws designed to protect tenants who are evicted as a result of
a foreclosure, the author contends that "many innocent tenants
have received notices to vacate that are unclear and contain
different timeframes in which the tenant must vacate the
property." In other instances, the author states, notices to
vacate have been addressed to the home owner, but not to the
tenant. Moreover, the author believes that too many tenants who
receive a three-day notice to quit take this at face value, not
realizing that in the case of eviction due to foreclosure, they
may have 90 days after receipt of the notice to vacate. The
author believes that "SB 1149 will help to protect tenants and
ensure that they receive the full benefits of the important
protections that have been enacted over the last few years."
The co-sponsors of this legislation - the Western Center on Law
& Poverty, California Rural Legal Assistance Foundation, and the
California Reinvestment Coalition - stress that this measure is
designed primarily to "protect tenants caught up in a
foreclosure through no fault of their own." Western Center adds
that even when tenants know their rights, some are reluctant to
contest an eviction notice because they do not want to put a
negative mark on their rental history. For this reason, the
co-sponsors especially stress the importance of the masking
provisions of this bill. Although existing law allows the
masking of unlawful detainer records when the tenant prevails,
the co-sponsors contend that in the foreclosure context, where
the unlawful detainer may be dropped due to a variety of factors
beyond the tenant's control, the tenant never technically
"prevails" and thus the records can be released.
The Center for Responsible Lending (CRL) stress that "tenants
had nothing to do with the bad loans" that brought on the
foreclosure crisis, yet they are often the ones who have to
move. CRL claims that despite the new state and federal
protections, owners of foreclosed properties are flaunting these
new laws, "essentially daring tenants to assert their rights."
Tenants in turn, the CRL claims, "are intimidated into moving
quickly, even though federal law gives them 90 days to do so.
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SB 1149 would ensure that tenants are better informed of their
rights and ensure that they can adequately assert those rights."
The AARP, the California Coalition for Rural Housing, and the
Non-Profit Housing Association of Northern California support
this bill for substantially the same reasons as those discussed
above.
REGISTERED SUPPORT / OPPOSITION :
Support
California Reinvestment Coalition (co-sponsor)
California Rural Legal Assistance Foundation (co-sponsor)
Western Center on Law & Poverty (co-sponsor)
AARP
California Coalition for Rural Housing
Center for Responsible Lending
Non-Profit Housing Association of Northern California
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334