BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1149
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           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                                         
               
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          |Ayes:|Feuer, Brownley, Evans,   |     |                          |
          |     |Huffman, Jones, Monning,  |     |                          |
          |     |Saldana                   |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Tran, Knight              |     |                          |
          |     |                          |     |                          |
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           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:








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             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  








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            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  








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          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  








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          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 


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