BILL ANALYSIS Ó
AB 2610
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2610 (Skinner) - As Amended: April 19, 2012
Policy Committee: JudiciaryVote:7-3
Housing 5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill enhances the notice provided to tenants of foreclosed
properties. Specifically, this bill:
1) Extends, from 60 days to 90 days, the eviction notice
for tenants with a month-to-month lease in a foreclosed
property.
2) Stipulates that a tenant with a lease of a rental
housing unit at the time a property is sold in foreclosure
shall have the right to possession until the end of the
lease term, unless the new owner will occupy the property
as his or her primary residence, or if the lease was
entered into within 15 days prior to the posting of the
notice of sale. In either case, however, the new owner must
give the tenant a 90-day notice to vacate.
3) Requires that a residential lease entered into more than
75 days following a notice of default must contain a notice
that alerts the prospective tenant that the foreclosure
process has started on the property and the property may be
sold at foreclosure in as soon as 20 days, which will
terminate the lease. The notice also informs tenants that
if they rent the property, the new owner may evict them
after a 90-day eviction notice.
4) Revises existing notice sent to tenants when a notice of
sale is posted on the property to ensure that it accurately
reflects the revisions proposed above. The changes in this
notice would not become operative until March 1, 2013 or 60
days following the issuance of amended new translations-in
AB 2610
Page 2
Spanish, Chinese, Tagalog, Vietnamese, and Korean-by the
Department of Consumer Affairs (DCA), whichever occurs
later.
5) Deletes the January 1, 2013 sunset date on the
provisions of existing law being modified in this bill.
FISCAL EFFECT
Minor absorbable costs to DCA for the required translations and
postings on its website.
COMMENTS
1)Background . California leads the nation with one of the
highest rates of foreclosure. According to RealtyTrac, in
California, one in every 303 housing units received a
foreclosure filing in March 2012, and 48,422 houses received a
foreclosure notice in February alone. In January 2011, Tenants
Together released its third annual report entitled "California
Renters in the Foreclosure Crisis." The report estimated that
at least 38% of homes in foreclosures were rentals and more
than 200,000 California renters were directly affected by home
foreclosures just in 2010.
SB 1137 (Perata)/Chapter 69 of 2008 required purchasers of
foreclosed homes at a foreclosure sale to give at least 60
days notice before evicting tenants in those homes.
Subsequently, President Obama signed the "Protecting Tenants
at Foreclosure Act of 2009" (PTFA). The PTFA generally
requires the purchaser of a home at a foreclosure sale to
honor a bona fide tenant's lease unless the purchaser intends
to occupy the home as their primary residence. If there is no
lease, if the lease is terminable at will (a month-to-month
tenancy), or if the purchaser will occupy the home as their
primary residence, the tenant must be provided with a 90-day
notice to vacate (unless a longer period is required by state
or local law). As a result, current federal law generally
provides greater protection to tenants than state law by
providing additional time (90 vs. 60 days) and imposes a
requirement that the lease be honored under certain
circumstances.
2)Purpose . AB 2610 makes the state law similar to the federal
law by providing that a new owner of a foreclosed property
AB 2610
Page 3
must honor a tenant's lease. Under the bill, this provision
would not apply if the new owner will occupy the property as
his or her primary residence or if the lease was entered into
within 15 days prior to the posting of the notice of sale. In
either of those instances the new owner must give the tenant a
90-day notice to vacate. In addition, while the PTFA
provisions sunset on December 31, 2014, this bill deletes the
January 1, 2013 sunset date on the state's 60 days' notice
requirement and related provisions.
3)Support if amended . Trade groups representing lenders, credit
unions, and others state that they would support conformity
efforts in the bill if they were aligned with federal law,
specifically by including a cross reference within the Code of
Civil Procedure Section 1161b in conforming to the federal
definition of a bona fide lease or tenancy. The apartment
associations of Greater Los Angeles, San Diego County, and
Santa Barbara are opposed unless the bill is likewise amended.
Tenant advocates raise concerns that, despite the protections
envisioned by Congress under the PTFA, landlords have taken
advantage of the ambiguity of the "bona fide" definition and
have taken eviction action against tenants despite the fact
that they arguably are entitled to additional time in the
property. In lieu of this federal definition, AB 2610
attempts to provides objective guidance for all parties, so
that banks and investors will not be required to honor the
remaining lease term when the lease was entered into within 15
days prior to the posting of the notice of sale.
4)Related Legislation . AB 1473 (Hancock), which is almost
identical to this bill, is pending in Senate Appropriations.
SB 708 (Corbett), awaiting referral in the Assembly, extends
the sunset date on the 60 days' notice to January 1, 2018.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081