BILL ANALYSIS SB 1149 Page 1 REPLACE - 08/23/10 Changes per consultant. SENATE THIRD READING SB 1149 (Corbett) As Amended August 20, 2010 Majority vote SENATE VOTE :21-9 JUDICIARY 7-2 ----------------------------------------------------------------- |Ayes:|Feuer, Brownley, Evans, | | | | |Huffman, Jones, Monning, | | | | |Saldana | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Tran, Knight | | | | | | | | ----------------------------------------------------------------- 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: SB 1149 Page 2 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; or, 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. 6)Provides that in certain unlawful detainer actions the statutory basis of the action shall be indicated in the caption of the complaint, as specified. 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. 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. 3)Provides that, in unlawful detainer proceedings, the court SB 1149 Page 3 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; or, 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. FISCAL EFFECT : None 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 SB 1149 Page 4 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 cover sheet would be required for any notice that is served up to one year after the foreclosure sale. The cover sheet provisions of the bill would sunset as of January 1, 2013. This bill also seeks to protect victims of foreclosure evictions from 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. The masking provisions would not be subject to the sunset, which applies only to the cover sheet provision. 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 SB 1149 Page 5 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. Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334 FN: 0006622