BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING
          AB 1953 (Ammiano)
          As Amended May 9, 2012
          Majority vote 

           JUDICIARY           7-0                                         
           
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          |Ayes:|Feuer, Atkins, Dickinson, |     |                          |
          |     |Huber, Monning,           |     |                          |
          |     |Wieckowski, Chesbro       |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           SUMMARY  :  Establishes a conditional defense from eviction for 
          nonpayment of rent in cases where the tenant has not been 
          notified who or where to pay rent.  Specifically,  this bill  :  

          1)Prohibits a successor owner or manager from serving a notice 
            pursuant to Code of Civil Procedure Section 1161(2) or 
            otherwise evicting a tenant for nonpayment of rent that 
            accrued during any period where the successor owner or manager 
            failed to comply with the existing obligation to disclose the 
            name and address of the person to whom rent shall be paid.

          2)Clarifies that the above restriction shall in no case relieve 
            the tenant of any liability for unpaid rent.

           EXISTING LAW  :    

          1)Requires an owner of residential rental property or a party 
            signing a rental agreement or lease on behalf of the owner to 
            disclose in the rental agreement or lease all of the 
            following:

             a)   The name, telephone number, and usual street address at 
               which personal service may be effected of each person who 
               is authorized to manage the premises or act for and on 
               behalf of the owner for the purpose of service of process 
               and for the purpose of receiving and receipting for all 
               notices and demands;

             b)   The name, telephone number, and address of the person or 
               entity to whom rent payments shall be made;








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             c)   If rent payments may be made personally, the usual days 
               and hours that the person will be available to receive the 
               payments;

             d)   At the owner's option, either the number of an account 
               in a financial institution into which rent payments may be 
               made, and the name and street address of the institution, 
               provided that the institution is located within five miles 
               of the rental property, or the information necessary to 
               establish an electronic funds transfer procedure to pay the 
               rent; and,

             e)   The form or forms in which rent payments are to be made. 
                

          2)Provides that the above information required to be disclosed 
            shall be kept current and this obligation shall extend to and 
            be enforceable against any successor owner or manager, who 
            shall comply with this section within 15 days of succeeding 
            the previous owner or manager.  

          3)Requires an owner of residential rental property or a party 
            signing a rental agreement or lease on behalf of the owner to 
            provide a copy of the rental agreement or lease to the tenant 
            within 15 days of its execution by the tenant.  
           
          FISCAL EFFECT  :  None
           
          COMMENTS  :  Existing law requires property owners to notify the 
          tenant of the name, telephone number, and address of the person 
          or entity to whom rent payments shall be made, and requires a 
          successor owner or manager to make this disclosure within 15 
          days of succeeding the previous owner.  However, the law is 
          silent with respect to the rights of the parties when the 
          successor owner fails to comply with this notice requirement.  
          According to the author, this gap in the law unfairly allows a 
          successor owner to potentially take advantage of his own 
          noncompliance and initiate eviction against a tenant for 
          nonpayment of rent that could have otherwise been paid and 
          received if the owner had simply provided the required notice.  

          This bill seeks to prohibit a successor owner or manager from 
          initiating eviction against a tenant for nonpayment of rent that 








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          accrued during any period where a successor owner or manager 
          failed to comply with the existing notice requirement under 
          Civil Code Section 1962.  The bill also establishes that this 
          provision shall in no case relieve the tenant of any liability 
          for unpaid rent.

          The author explains the need for the bill as follows:

               Purchasers of rental properties, especially foreclosed 
               homes, are increasingly allowing months to go by 
               without notifying tenants where to pay rent.  When a 
               new owner fails to timely inform the tenant to whom 
               rent should be paid, but then months later serve a 
               three-day notice demanding all of the accumulated rent, 
               many low-income tenants no longer have the money to pay 
               and keep their homes. Good tenants end up losing their 
               housing because their landlord failed to comply with 
               the law, unnecessarily creating nonpayment situations. 
               This bill will help prevent unnecessary evictions after 
               ownership changes.

          According to Tenants Together, the sponsor of the bill, some 
          tenants have received three day pay-or-quit notices from their 
          landlord for failure to pay rent when such failure occurred only 
          because the tenant had not been properly notified by the new 
          owner of the property where to send the rent payment.  With 
          accounts of rental scams increasingly in the news (see e.g., 
          "Foreclosure rattles upscale San Jose neighborhood and tenants." 
           San Jose Mercury News, 3/14/12), supporters contend that it is 
          reasonable for tenants to refrain from sending rent to the 
          person they know to be the former owner, or other unknown 
          persons, unless they have received proper notice from the new 
          owner where to send rent, as required by law.  As acknowledged 
          by the California Apartment Association, "It is logical to 
          assume that if a new owner doesn't provide notice to a tenant 
          about change in ownership, the new owner cannot expect to 
          receive the rent timely."

          This bill seeks to prohibit a successor owner or manager from 
          initiating eviction against a tenant for nonpayment of rent that 
          accrued during any period where the successor owner or manager 
          failed to comply with the existing notice requirement under 
          Civil Code Section 1962.  New owners of property presumably have 
          sufficient incentive to comply with the 15-day notice 








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          requirement -they cannot receive rent until they do so.  
          Moreover, compliance with this modest notice requirement makes 
          defense from eviction moot in such cases.  This bill, however, 
          protects tenants from the unfair consequences of facing eviction 
          for nonpayment from a successor owner who perhaps may be trying 
          to game the system by manufacturing cause to remove the tenant 
          that would not otherwise exist.  

          This bill also expressly provides that nothing in this bill 
          shall relieve the tenant of any liability for unpaid rent.  
          Under this approach, the tenant would remain liable for back 
          rent, but the rent that accrued when a landlord was out of 
          compliance could not be the basis for a nonpayment eviction.  
          This approach is similar to that already provided for by Code of 
          Civil Procedure Section 1161(2), which in certain cases prevents 
          a landlord from evicting for non-payment of rent that is over a 
          year old, yet does not waive the rent obligation itself.  A 
          landlord could enforce the rent obligation by filing a small 
          claims action, or by deducting from the security deposit where 
          feasible.  If an eviction action is nonetheless filed, this bill 
          would provide the tenant with clear defense from eviction, and 
          the court may be in the best position to fashion a solution for 
          the payment of unpaid rent suited to the unique circumstances of 
          each case.  For example, where the tenant can demonstrate he or 
          she was faithfully paying the rent to the former owner during 
          that time, the new owner would have a cause of action to obtain 
          the rent money from the former owner who wrongfully kept 
          receiving the rent. 
           

          Analysis Prepared by  :    Anthony Lew / JUD. / (916) 319-2334 


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