BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1427| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 1427 Author: Price (D) Amended: 5/12/10 Vote: 21 SENATE JUDICIARY COMMITTEE : 4-0, 5/4/10 AYES: Corbett, Harman, Hancock, Leno NO VOTE RECORDED: Walters SUBJECT : Foreclosures: property maintenance SOURCE : California Association of Realtors DIGEST : This bill provides that prior to imposing a fine or penalty for failure to maintain a vacant foreclosed property that is subject to a notice of default, or that has been purchased at a foreclosure sale or acquired through foreclosure under a mortgage or deed of trust, a governmental entity shall provide the owner of that property with a notice of violation and an opportunity to correct the violation. This bill provides that an assessment or lien to recover the costs of nuisance abatement measures taken by a governmental entity with regard to a property that is subject to a notice of default, or that has been purchased at a foreclosure sale or acquired through foreclosure under a mortgage or deed of trust, shall not exceed the actual and reasonable costs of nuisance abatement. ANALYSIS : Existing law provides that anything that is CONTINUED SB 1427 Page 2 injurious to health, indecent or offensive to the senses, obstructs the free use of property, or unlawfully obstructs free passage is a nuisance. (Section 3479 of the Civil Code) Existing law requires a legal owner to maintain vacant residential property purchased by that owner at a foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust. A governmental entity may impose a civil fine of up to $1,000 per day for a violation. If a government entity chooses to impose a fine pursuant to this section, it shall give notice of the alleged violation, as specified, and notice of intent to assess a civil fine if action to correct the violation is not commenced within 14 days and completed within 30 days. (Section 2929.3 of the Civil Code) Existing law requires the governmental entity to provide the legal owner with not less than 30 days to remedy the violation prior to imposing a civil fine and requires that the entity provide a hearing and opportunity to contest any fine imposed. The governmental entity may provide less than 30 days' notice to remedy a condition before imposing a civil fine if the entity determines that a specific condition of the property threatens public health or safety, provided that notice of that determination and time for compliance is given. (Section 2929.3 (a)(2) and (c) of the Civil Code) Existing law states that the above provisions shall not preempt any local ordinance, and prohibits a governmental entity from imposing both the fines specified above and a local ordinance. (Section 2929.3(e) and (h) of the Civil Code) This bill provides that prior to imposing a fine or penalty for failure to maintain a vacant property that is subject to a notice of default, that is purchased at a foreclosure sale, or that is acquired through foreclosure under a mortgage or deed of trust, a governmental entity shall provide the owner of that property with a notice of the violation and an opportunity to correct that violation. The above provisions shall not apply if the governmental CONTINUED SB 1427 Page 3 entity determines that a specific condition of the property threatens public health or safety. This bill provides that an assessment or lien to recover the costs of nuisance abatement measures taken by a governmental entity with regard to property that is subject to a notice of default, that is purchased at a foreclosure sale, or that is acquired through foreclosure under a mortgage or deed of trust, shall not exceed the actual and reasonable costs of nuisance abatement. This bill requires a governmental entity to adopt a schedule of costs for nuisance abatement measures prior to collection of those costs. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/17/10) California Association of Realtors (source) California Alliance for Retired People OPPOSITION : (Verified 5/17/10) League of California Cities Mayor Gayle McLaughlin, City of Richmond ARGUMENTS IN SUPPORT : According to the bill's sponsor, the California Association of Realtors: "SB 1427 will require cities to provide an REO owner with notice of violation of an abandoned property maintenance ordinance and as well as an opportunity to correct the violation before fines can [be] assessed for failing to maintain the post-foreclosure property. In addition, the bill specifies that the costs of nuisance abatement measures taken by cities must be actual and reasonable, and requires cities to adopt a schedule of such costs. "These changes to existing law are needed to provide lenders with clear notice of an abandoned property maintenance ordinance violation, the opportunity to correct the violation before fines can be assessed, and a CONTINUED SB 1427 Page 4 clear understanding of exactly how much each nuisance abatement measure taken by the local city will cost should the lender fail to correct the violation themselves. "Realtors are caught between local cities and lenders. With a post-foreclosure property, the asset manager hired by the lender is often a Realtor trying to preserve the property and/or arrange a sale of the REO [Real Estate (lender) Owned]. Due process and clarity in the assessment and collection of nuisance abatement costs provides fairness to everyone, including Realtors. Moreover, fairness in the assessment and notice process increases the likelihood that the property will be maintained. Selling the home to an individual that will maintain the property is the best solution to the blight problem which can devalue homes in a neighborhood." ARGUMENTS IN OPPOSITION : The Mayor of the City of Richmond writes: "I am concerned that the current language in SB 1427 (Price) undermines local municipalities' ability and efforts to implement local solutions to address the serious issues caused by scores of unattended, bank-owned properties. Our ability to combine state law with innovative local solutions has enabled our city to hold 34 banks/lending institutions accountable so far, inducing them to clean up vacant/abandoned foreclosed properties. Efforts like these have shown our residents that the City is responding to their right to safe, stable and healthy neighborhoods that are not brought down in value by the irresponsibility of absentee property owners." RJG:mw 5/18/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED