BILL ANALYSIS Ó
AB 2314
Page 1
Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 2314 (Carter) - As Amended: April 11, 2012
SUBJECT : Real property: blight
SUMMARY : Removes the sunset on a statute that permits local
governments to fine property owners for failure to maintain
certain property and makes other changes relating to the ability
of a local enforcement agency to abate nuisances and correct
substandard building violations. Specifically, this bill :
1)Removes the sunset on and thereby makes permanent a statute
that requires a legal owner to maintain vacant residential
property purchased or acquired at foreclose.
2)Provides that if a person has purchased, and is in the process
of abating a violation at a residential property that has
been foreclosed upon on or after January 1, 2008, then a local
enforcement agency shall not commence any action or proceeding
until at least 60 days after the person takes title to the
property, unless a shorter period of time is deemed necessary
by the enforcement agency to prevent or remedy an immediate
threat to the health and safety of the public or occupants of
the structure.
3)Requires an entity, that releases a lien securing a deed of
trust or mortgage on a property for which a notice of
pendency of action has been recorded by an enforcement agency,
to notify the enforcement agency within 30 days of releasing
the lien.
4)Provides that where a receiver has been appointed to take
possession of a substandard building, a court may, upon the
request of either the receiver or an enforcement agency, order
the owner of the property to pay all unrecovered costs
associated with the receivership.
EXISTING LAW :
1)Requires, until January 1, 2013, a legal owner to maintain
vacant residential property purchased at a foreclosure sale or
acquired by that owner through foreclosure under a mortgage or
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deed of trust. Authorizes a local governmental entity to
impose civil fines and penalties for failure to maintain that
property of up to $1000 per day for a violation (Civil Code
Section 2929.3(a)(1)).
2)Requires the governmental entity to provide a period of not
less than 30 days for the legal owner to remedy a violation of
the above provision before imposing a civil fine or penalty
and to allow for a hearing and an opportunity to contest any
fine, as specified. However, a governmental entity may
provide less than 30 days' notice, as specified, if a specific
condition of the property threatens public health or safety
(Civil Code Section 2929.3(a)(2) and (c)).
3)Defines "failure to maintain," for purposes of the above, to
mean failure to care for the exterior of the property,
including, but not limited to, permitting excessive foliage
growth that diminishes the value of the surrounding
properties, failing to take action to prevent trespassers or
squatters from remaining on the property, or failing to take
action to prevent mosquito larvae from growing in standing
water or other conditions that create a public nuisance (Civil
Code Section 2929.3(b)).
4)Specifies that fines and penalties collected pursuant to the
above shall be directed to local nuisance abatement programs;
that a governmental entity may not impose fines under both the
above provisions and a local ordinance; that the above
provisions do not preempt any local ordinance; and, that any
rights and remedies provided by the above provisions are
cumulative and in addition to any other rights and remedies
provided by law (Civil Code Section 2929.3(d)-(h)).
5)Provides that if any building is constructed or maintained in
violation of any provision of law or regulation, as specified,
or if a nuisance exists in any building or upon the lot on
which it is situated, an enforcement agency shall, after 30
days' notice to abate the nuisance or violation, institute any
appropriate action or proceeding to prevent, restrain,
correct, or abate the violation or nuisance. Provides that
the enforcement agency shall commence proceedings to abate the
violation by repair, rehabilitation, vacation, or demolition
of the building, as specified. (Health & Safety Code Section
17980(a)-(b))
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6)Provides that if an owner fails to comply within a reasonable
time with the terms of an order or notice to abate a nuisance
or violation, the enforcement agency may seek and a court may
order fines and penalties as specified, including the
appointment of a receiver to take possession of the property
in order to correct the conditions that give rise to the
nuisance or violation. Specifies the power and duties that
shall be granted to the receiver, including but not limited
to, the power to make contracts and employ contractors as
necessary to correct the condition cited in the violation; the
power to collect rents and income from the substandard
building; and the power to borrow funds to pay for necessary
repairs and, with the approval of the court, to secure a lien
on the property to secure that debt. (Health & Safety Code
Section 17980.7)
FISCAL EFFECT : None.
COMMENTS :
This bill is part of a package of bills sponsored by the
California Attorney General in response to the foreclosure
crisis. According to the author, communities throughout the
state are being inundated with foreclosed homes which often fall
into disrepair. Public health and safety are implicated by
vacant foreclosed homes because they attract gangs,
prostitution, drug users, squatters, and unattended property can
create a mosquito abatement problem.
Existing law requires a local enforcement entity to enforce the
State Building Standards Code and any other specified rules and
regulations. If the local enforcement agency identifies a
violation, it must issue and order to abate the nuisance and if
the nuisance is not abated within 30 days or less depending on
the degree of violation, the enforcement agency must take some
action to abate. This bill would give a person who purchases a
property that was foreclosed on or after January 1, 2008, and
who is in the process of abating the violation 60 days to
correct the violation. An enforcement agency can give a shorter
time period to correct a violation if it determines that is
necessary to protect the health and safety of the occupants of
the property or the public.
In 2008, SB 1137 (Perata), Chapter 69, required that the owner
maintain a vacant property or face $1,000 per day fine. It also
gave the owner 30 days to correct a violation once notification
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has been received from the local government. Without an
extension this provision would sunset at the end of this year,
AB 2314 deletes the sunset date and extends this provision
indefinitely.
Local governments have used this provision to various degrees.
Some have developed robust ordinances that produced significant
revenue, the majority has not. One challenge reported by local
enforcement agencies in enforcing local ordinances is
identifying the owner of the property when the owner is a
lender. Lenders are not required to record the deed of trust at
the time of foreclosure and this is the mechanism enforcement
agencies use to recover fines. Another challenge to enforcing
local ordinances is man power. Many cities do not have the
financial resources in the current climate to devote to code
enforcement.
This bill would require a lienholder who releases a lien on any
property on which the enforcement agency has recorded a lis
pendens to notify the enforcement agency within 30 days of
releasing the lien. According to the sponsor, when an
enforcement agency must make a determination as to the
appropriate enforcement action, if any, to take against a
substandard property, it is often helpful for it to know whether
or not any liens have been recorded against the property and if
and when the lien is released. This would create an efficient
means for the enforcement agency to know when a lien has been
released.
This bill would allow for the recovery of certain costs
associated with a health and safety receivership. Such
receiverships are typically used as a last resort. But where a
property owner refuses to take any action, even after receiving
notice and given adequate time to correct a violation, the
enforcement may seek, and the court may appoint, a receiver to
take possession of the property. Existing law sets forth the
conditions for establishing the receivership and lists certain
powers that a court may grant to the receiver. The receiver's
primary function in taking possession of the property is to do
whatever is necessary to correct the conditions that gave rise
to the receivership. For example, the receiver typically hires
contractors to make needed repairs. In order to pay these
contractors, the receiver might be empowered to collect rents on
the property or to obtain loans that are secured by a lien upon
the property. This bill does not change any of the statutory
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requirements for establishing a receivership or affect the
receiver's statutory powers; it would, however, once a
receivership has been established, permit either the receiver or
the enforcement agency to seek a court order requiring the owner
of the property to pay any "unrecovered costs" of the
receivership (i.e. presumably those costs not covered by the
loans, rents, or other revenue sources). This would ensure that
costs associated with rehabilitating the property are borne by
the responsible party: the recalcitrant owner who refuses to
correct conditions even after being placed on notice. Arguably,
existing receivership statutes, which grant courts considerable
discretion, would permit such a requirement in the initial court
order creating the receivership. This bill, however, would
expressly state that the receiver or the enforcement agency
could request such an order if one is not initially provided.
The bill specifies that the court "may" grant such an order;
discretion will ultimately remain, consistent with existing law,
with the court.
Committee Comments:
Giving individuals who are genuinely in the process to cleaning
up a property should be balanced against local enforcement
agencies flexibility to insure that foreclosed properties are
maintained. The committee many wish to consider whether the bill
should give some parameters to what it means to be "in the
process of abating a nuisance".
Committee Amendments:
On page 4, line 26, after "of" insert "diligently"
Double referred :
The bill passed the Committee on Judiciary on April 17, 2012, by
a vote of 10 to 0.
REGISTERED SUPPORT / OPPOSITION :
Support
California Attorney General's Office (sponsor)
American Federation of State, County and Municipal Employees
California Nurses Association
Community Associations Institute
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Opposition
None on file.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085