BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 2521 (Blumenfield)
          As Amended May 8, 2012
          Hearing Date: July 3, 2012
          Fiscal: No
          Urgency: No
          BCP
                    

                                        SUBJECT
                                           
                       Landlord and Tenant: Personal Property

                                     DESCRIPTION  

          This bill would increase to $700, from $300, the threshold 
          amount of determining whether the landlord must dispose of the 
          departed tenant's unclaimed property via a public sale, with the 
          proceeds of the sale (less storage and sale costs) held for the 
          tenant, or whether the landlord may dispose of the property in 
          any manner or retain it for his or her own use.  This bill 
          would, among other things:
           require a landlord to release the personal property to the 
            former tenant without paying the cost of storage, if, the 
            property remained in the dwelling and the former tenant or 
            other person reasonably believed by the landlord to be its 
            owner reclaims the property within two days of vacating the 
            dwelling; and
           require a landlord to inform the tenant of his or her general 
            right to recover abandoned property in the notice to terminate 
            a tenancy, or in the notice to request an initial inspection 
            of the property prior to termination.

                                      BACKGROUND  

          Current law specifies a procedure for when a tenant who, whether 
          voluntarily vacated or forcibly evicted from the proceedings, 
          has left behind personal property upon the termination of that 
          person's tenancy.  If the property remains unclaimed after the 
          statutory 15-or 18-day notice period, the disposition of the 
          property depends upon whether the landlord reasonably believes 
          the total resale value of the unclaimed property is less than 
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          $300.  If reasonably believed to be worth less the $300, the 
          landlord may retain the tenant's unclaimed property for his or 
          her own use or dispose of it in any manner, including selling it 
          and retaining the proceeds.  If the total value of the unclaimed 
          property is reasonably believed to be $300 or more, then the 
          landlord must dispose of the property through an advertised 
          public sale open to competitive bidding.  After deducting the 
          costs of storage, advertising, and sale, any balance of the sale 
          proceeds is held for the tenant for 30 days.  If not thereupon 
          claimed, the proceeds are turned over to the county treasury for 
          claim by the tenant within one year from the date of payment to 
          the county.
           
          In 2007, AB 410 (Adams, 2007) would have increased to $650 the 
          total value of a terminated tenant's unclaimed property from 
          that the landlord may retain for his or her own use, or to 
          dispose of in any manner, instead of having to sell the property 
          at a public sale and to hold any excess sales proceeds for the 
          tenant.  That bill failed twice in this committee by a vote of 
          2-2, and 2-3, respectively.  

          This bill similarly would similarly increase the amount of 
          unclaimed property a landlord may retain for his or her own use, 
          or dispose of, to $700.  This bill would require a landlord to 
          return the property to the tenant within two days of the tenant 
          vacating the dwelling (if the property remained in the 
          dwelling), and revise various notices to inform tenants about 
          their rights.

                                CHANGES TO EXISTING LAW
           
           Existing law  requires a landlord to provide written notice to a 
          former tenant of the tenant's right to reclaim personal property 
          left behind when the tenancy was terminated.  The notice must 
          inform the tenant whether the landlord intends to hold a public 
          sale for the property, or to keep, sell, or destroy the property 
          without further notice because the landlord believes the 
          property to be worth less than $300.  (Civ. Code Secs. 1984 and 
          1988.)
           
           Existing law  provides the tenant at least 15 days to claim the 
          property if the notice is personally delivered, and at least 18 
          days if the notice is mailed.  If mailed, the notice must be 
          sent by first-class mail to the tenant at his or her last known 
          address and, if that mailing address is reasonably believed to 
          be deficient, to another address known by the landlord where the 
                                                                      



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          tenant may reasonably be expected to receive the notice. (Civ. 
          Code Sec. 1983.) 
           
           Existing law  authorizes a landlord to retain or dispose of 
          personal property left on the premises and unclaimed by the 
          former tenant if the landlord reasonably believes that the 
          property has a total resale value of less than $300. (Civ. Code 
          Sec. 1988.)  
           
           Existing law  requires the landlord to hold a public sale with 
          competitive bidding for unclaimed personal property left by a 
          former tenant if the value of the property is believed to be 
          worth $300 or more.  (Civ. Code Sec. 1988.)
           
           Existing law  generally defines "reasonable belief" as the actual 
          knowledge or belief a prudent person would have without making 
          an investigation.  (Civ. Code Sec. 1980(d).) 
           
           This bill  would increase the above monetary threshold value from 
          $300 to $700, thereby allowing a landlord to keep, sell, or 
          destroy a tenant's unclaimed personal property if the total 
          resale value of the property is reasonably believed to be less 
          than $700.
           This bill  would require a landlord to release the personal 
          property to the former tenant without paying the cost of 
          storage, if the property remained in the dwelling and the former 
          tenant or other person reasonably believed by the landlord to be 
          its owner reclaims the property within two days of vacating the 
          dwelling.

           This bill  would revise the notice of the tenant's right to 
          reclaim personal property so as to include language informing 
          the tenant that if he or she claims the property by a specified 
          date (not less than 2 days after the tenant vacated the 
          premises), the tenant may minimize the costs of storage.  

           This bill  would also require the landlord to inform the tenant 
          of his or her general right to recover abandoned property in the 
          notice to terminate a tenancy, or in the notice to request an 
          initial inspection of the property prior to termination.

           This bill  would further allow the landlord to provide to the 
          former tenant by email, in addition to personal delivery or 
          first class mail, written notice describing personal property 
          left behind by the former tenant and how to reclaim such 
          property, but only if the former tenant had provided the 
                                                                      



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          landlord with his or her email address.
          
                                        COMMENT
           
          1.   Stated need for the bill  

          According to the author:

            AB 2521 would provide a one-time inflation adjustment in the 
            threshold for the handling of abandoned tenant property by 
            landlords to $700.  The bill also requires a change in the 
            notice to tenants consistent with the threshold adjustment 
            so tenants will be informed that "Żb]ecause this property is 
            believed to be worth less than $700, it may be kept, sold, 
            or destroyed without further notice if you fail to reclaim 
            it within the time indicated above."

            AB 2521 would provide a reasonable adjustment in the dollar 
            value of abandoned tenant property that triggers a public 
            sale, which has not been increased since 1983.  Using the 
            Consumer Price Index as a measure for inflation, the 
            proposed adjustment would raise the threshold to $700. 

            This legislation reflects the compromise we worked out with 
            the apartment owners and Western Center on Law and Poverty 
            to ensure that this bill not only benefits landlords but 
            tenants as well.  It would, for the first time, allow 
            tenants who act promptly to reclaim abandoned personal 
            property without charge.

            Additionally, AB 2521 propels the process into the 21st 
            Century by allowing landlords to contact tenants by e-mail 
            about abandoned property found - in addition to the current 
            mailed notification process.  AB 2521 would also give 
            tenants earlier notice of their rights to reclaim abandoned 
            property. 

            The bill does not change requirements that a landlord act 
            reasonably in removing and storing the tenant's abandoned 
            property.  The bill does not change requirements that a 
            landlord act reasonably in removing and storing the tenant's 
            abandoned property. The landlord still must take specified 
            steps to notify a former tenant who abandoned property at 
            the rental unit and store the property at the tenant's 
            expense if the property is reclaimed.  The current costs of 
            advertising, storage and sale paid by a landlord may far 
                                                                      



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            exceed the value of the abandoned property.  According to 
            the Apartment Association of Greater Los Angeles, tenants 
            often do not reclaim abandoned property valued at under 
            $300. Los Angeles County reports receiving $26,149 as of 
            January 31, 2012 from the public auction of abandoned tenant 
            property with few claims filed for proceeds from the sale of 
            their property.  AB 2521 would provide a much-needed update 
            that reflects today's economic realities.

          2.   Additional tenant protections justify proposed increase  

          This bill seeks to increase the amount of unclaimed property 
          that a landlord may keep, sell, or destroy from $300 to $700.  
          As noted above, while that increase is $50 greater than the 
          increased proposed by AB 410 (Adams, 2007), this bill also 
          contains tenant protections that arguably help reunite tenants 
          with their property.  Proponents of the increase, the Apartment 
          Association, California Southern Cities, East Bay Rental Housing 
          Association, NORCAL Rental Property Association, and the 
          Apartment Association of Orange County assert:

            The current law was established in 1983.  Updating the law 
            to allow for property worth less than $700 to be dealt with 
            expeditiously makes sense.  Under the outdated current law, 
            landlords have been required to sell all property worth $300 
            or more at public auction, pay for a legal advertisement to 
            notice the sale, and pay for all costs of moving, storage, 
            and junking unclaimed property.  These expenses make it 
            impossibly expensive for the tenant to reclaim the property, 
            and often end up costing the landlord much more than the 
            value of the property.

          Although the proposed increase arguably reflects inflation, as 
          this Committee noted with respect to AB 410, any increase must 
          also be evaluated from a policy perspective, taking into account 
          the potential impact on tenants.  Regarding those policy 
          implications, this Committee's analysis of AB 410 observed:

            However, inflation does not in itself justify an increase in 
            a monetary threshold amount, even one that has not been 
            adjusted since 1982. . . . Thus, other public policy 
            considerations, not just inflation, factor into determining 
            whether to adjust a monetary threshold figure for inflation. 
             In this case, one primary consideration is the hardship on 
            the terminated tenant losing his or her ability to reclaim 
            his or her property or the value of it.  Unlike the examples 
                                                                      



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            presented . . ., many tenants will not have designer jeans 
            and trendy running shoes that will readily bust the $300 
            threshold.  Rather, because some of them will have been 
            forcibly evicted and will not have found replacement 
            housing, those affected tenants need a fair and reasonable 
            law that will allow them to continue with what they have as 
            opposed to rebuilding from scratch.  

          Proponents of this bill assert that the proposed tenant 
          protections discussed below make this bill a different and 
          much-improved bill over AB 410.  The author's office further 
          observes that the actual cost of conducting a sale of property 
          is likely to exceed the $300 threshold (largely due to the cost 
          of publication), thus, even if a sale were required, the former 
          tenant would not receive any proceeds.

            a.    Two-day right to recover  

            This bill would specifically require a landlord to release a 
            former tenant's personal property, and to not require the 
            tenant to pay the costs of storage, if: (1) the property 
            remained in the dwelling; and (2) the former tenant or person 
            reasonably believed by the landlord to be its owner reclaims 
            the property within two days of vacating the dwelling.  While 
            that provision would give a former tenant the right to recover 
            property free of charge, it is unclear how many tenants will 
            take advantage of that right after mistakenly leaving items 
            behind when quickly moving out.  

            First, the provision would apply only if the property remained 
            in the dwelling.  In cases where the property must be turned 
            around within 24 to 48 hours to accommodate an incoming tenant 
            (a not-uncommon scenario for apartments), it is unclear if the 
            property could remain in the apartment for the full two-day 
            period.  As a result, this provision would most likely apply 
            in a circumstance where the items left behind are heavy, 
            awkward, or otherwise of a nature where the landlord does not 
            wish to take the time or expense of removing them from the 
            unit.   

            Second, while the bill provides a two-day period in which the 
            tenant may recover his or her property without being required 
            to pay storage costs, it is unclear how many tenants quickly 
            discover that their property was left behind.  It should be 
            noted that while the bill would also augment the statutory 
            "Notice of Right to Reclaim Abandoned Property" to inform 
                                                                      



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            tenants that they can minimize the costs of storage if they 
            claim their property by a specified date, that notice would 
            likely not reach the tenant within two days of vacating the 
            property.  Despite those limitations, the two-day window could 
            be helpful to those tenants who quickly discover that an 
            important, valuable item was left behind (or who just are not 
            able to move everything out by the move-out date).

            It should be noted that this bill would allow a landlord to 
            additionally email the "Notice of Right to Reclaim Abandoned 
            Property," if the former tenant provided the landlord with the 
            tenant's email address.  While that email could provide a 
            quick way of delivering the notice, emailing of the notice is 
            not required, and it is unclear whether the average tenant 
            would have access to his or her email when moving from 
            apartment to apartment due to delays in setting up Internet 
            service or the simple lack of a computer.

            b.   Additional notices  

            In addition to augmenting the "Notice of Right to Reclaim 
            Abandoned Property." discussed above, this bill would also 
            require the notice to terminate a tenancy and the notice to 
            request an inspection of the property to include the following 
            statutory notice:

               State law permits former tenants to reclaim abandoned 
               personal property left at the former address of the 
               tenant, subject to certain conditions. You may or may not 
               be able to reclaim property without incurring additional 
               costs, depending on the cost of storing the property and 
               the length of time before it is reclaimed. In general, 
               these costs will be lower the sooner you contact your 
               former landlord after being notified that property 
               belonging to you was left behind after you moved out.

            Although this notice seeks to inform tenants of their ability 
            to retrieve forgotten property while they are still living in 
            the dwelling, that information is only useful if the tenant 
            actually realizes that property was left behind.  

          3.   Practical impact of the threshold increase for unclaimed 
          property  

          The proposed threshold increase would allow a landlord to keep 
          or dispose of up to $700 worth of a tenant's property, but the 
                                                                      



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          effect of that increase depends on how landlords value the 
          abandoned property. Staff notes that the value of the property 
          left by a tenant is determined by the landlord's reasonable 
          belief as to the total resale value.  That standard makes is 
          somewhat difficult to evaluate the actual impact of the proposed 
          change.  

          For example, if a tie is left behind in good condition that has 
          a retail value of $50, should a landlord reasonably value that 
          tie at the retail price ($50), e-bay price ($20), thrift store 
          price ($5), or garage sale price ($1)?  Absent concrete 
          valuation standards it is unclear how the proposed increase from 
          $300 to $700 would actually play out in an actual situation - in 
          other words, would a $700 threshold be met by 14 ties ($50 
          valuation) or 700 ties ($1 valuation).  In response to an 
          inquiry by Committee staff, the author provided the following 
          examples of the impact of the threshold:

            Joe the Tenant asks his friends to help him move, and after 
            a long day of moving, Joe and his friends decide to abandon 
            an adjustable metal bed frame, an old, heavy sofa bed couch, 
            a desk with chipped paint and a working 1992 Toshiba 
            television. These items together exceed the $300 value 
            threshold
            Żand]

            Sarah the Tenant is moving and leaves: a wicker bed frame; 
            an old, heavy sofa bed couch; a desk with chipped paint; a 
            refrigerator; crusty, unwashed pots and pans; a dusty 
            vacuum; a washer that doesn't drain and a weak dryer; and a 
            working 1992 Toshiba television. These items together exceed 
            the $700 value threshold proposed in AB 2521.

          It should be noted that AB 2521 has no opposition and reflects a 
          compromise with tenant groups.  Furthermore, according to the 
          supporters, it appears as though the vast majority of the 
          abandoned items left behind when a tenant moves out are never 
          actually recovered by the former tenant, thus, either implying 
          that they are not aware of the property left behind, or, that 
          they actually did not want those abandoned items.


           Support  :  Apartment Association, California Southern Cities; 
          Apartment Association of Greater Los Angeles; Apartment 
          Association of Orange County; East Bay Rental Housing 
          Association; NORCAL Rental Property Association; San Diego 
                                                                      



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          County Apartment Association; Santa Barbara Rental Property 
          Association

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  : None Known

           Prior Legislation  : AB 410 (Adams, 2007) See Background and 
          Comment 2. 

           Prior Vote  :

          Assembly Judiciary Committee (Ayes 10, Noes 0)
          Assembly Floor (Ayes 76, Noes 0)

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