BILL ANALYSIS Ó
AB 2610
Page 1
ASSEMBLY THIRD READING
AB 2610 (Skinner)
As Amended May 30, 2012
Majority vote
JUDICIARY 7-3 HOUSING 5-2
-----------------------------------------------------------------
|Ayes:|Feuer, Atkins, Dickinson, |Ayes:|Torres, Atkins, Bradford, |
| |Huber, Monning, | |Fong, Hueso |
| |Wieckowski, Alejo | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Gorell, Jones |Nays:|Beth Gaines, Jeffries |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 11-5
-----------------------------------------------------------------
|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Solorio, Wagner | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Improves notice to tenants in foreclosed properties.
Specifically, this bill :
1)Revises the requirement of existing law providing 60 days'
notice to instead provide, in the case of a month-to-month
lease or periodic tenancy, for 90 days' notice for tenants in
a foreclosed property.
2)Specifies that a tenant holding possession under a residential
lease of a rental housing unit at the time the property is
sold in foreclosure shall have the right to possession until
the end of the lease term. This provision would not apply if
the new owner will occupy the property as his or her primary
residence, the lessee is the borrower or the child, spouse or
AB 2610
Page 2
parent of the borrower, the lease was not the result of an
arm's-length transaction or the rent is substantially less
than the fair market rent for the property, unless reduced or
subsidized by federal, state or local law. In either case,
however, the new owner must give the tenant a 90-day notice to
vacate.
3)Revises existing law's notice that is sent to tenants when a
notice of sale is posted on the property to ensure that it
accurately reflects the revisions proposed above. This bill
would provide that the changes in this notice would not become
operative until March 1, 2013, or 60 days following the
issuance of an amended new translation by the Department of
Consumer Affairs (DCA), whichever occurs later.
4)Extends the January 1, 2013 sunset date that would otherwise
apply to these sections and the related provisions of existing
law for six years.
5)Specifies that Code of Civil Procedure Section 415.46 does not
limit the right of any tenant or subtenant of the property to
file a prejudgment claim of right of possession pursuant to
Code of Civil Procedure Section 1174.25 (a) at any time before
judgment, or to object to enforcement of a judgment for
possession as prescribed in Code of Civil Procedure Section
1174.3 in an action for unlawful detainer resulting from a
foreclosure sale of a rental housing unit pursuant to Code of
Civil Procedure Section 1161a , whether or not the tenant or
subtenant was served with a prejudgment claim of right to
possession.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor absorbable costs to DCA for the required
translations and postings on its Web site.
COMMENTS : The author explains the reason for the bill as
follows: "As more and more homes are sold through foreclosure,
tenants increasingly face the specter of sudden dislocation of
themselves, their families and their belongings. Renters are
usually the last to know of foreclosure, and many renters,
including families with children, are ending up homeless due to
foreclosure evictions. Due to inconsistency in state and
federal law, tenants are often confused or misled about their
legal protections, and how long they have to move when served
with a notice to vacate after a foreclosure sale. AB 2610 would
AB 2610
Page 3
help alleviate the debilitating, sudden upheaval of Californians
who reside in foreclosed properties by eliminating the
inconsistency, confusion and abuse of existing laws intended to
protect them. AB 2610 would: Require purchasers of foreclosed
homes to give tenants at least 90 days before commencing
eviction proceedings; allow tenants in foreclosed homes under a
residential lease to stay until the end of the lease term,
except in cases where the new owner plans to use the property as
their primary residence; and eliminate the existing sunset
dates."
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. Tenants living in those homes have been
significantly affected. A November 18, 2007, New York Times
article, "As Owners Feel Mortgage Pain, So Do Renters," noted ".
. . thousands of American families are losing their homes
without ever missing a payment. They are renters in houses
whose owners default on their mortgages - a large but little
noticed class of casualties."
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 in 2010 alone. Tenants
Together further estimated that these numbers, based on data
from Foreclosure Radar, likely undercount the number of
foreclosed homes that are in fact rentals. The report indicated
that the counties with the highest foreclosed rental units
(5,000 or more) were: Los Angeles, Riverside, Sacramento, and
San Bernardino. In those counties, 45,860 renters were affected
in Los Angeles; 18,823 in Riverside; 17,033 in Sacramento; and,
17,356 in San Bernardino. In San Francisco, 61% of foreclosed
units were renter occupied. The report listed other counties
with comparatively high percentages of renter-occupied
foreclosed units including: Alameda (40%); Fresno (42%);
Humboldt (42%); Mono (41%); Napa (40%); and, San Mateo (41%).
(See "California Renters in the Foreclosure Crisis, Third Annual
Report," January 2011, Tenants Together, available at
http://tenantstogether.org/.)
California enacted important protections in SB 1137 (Perata,
AB 2610
Page 4
Corbett, and Machado), Chapter 69, Statutes of 2008, requiring
purchasers of foreclosed homes at a foreclosure sale to give at
least 60 days' notice before evicting tenants in those homes.
To ensure that the extended time period cannot be exploited by a
former owner who rents the property to another person but
remains in the foreclosed home, SB 1137 provided that the
extended time period does not apply if any party to the mortgage
note remains in the property as a tenant, subtenant, or
occupant. After the enactment of SB 1137, President Obama
signed S. 896, P.L. 111-22, which included the "Protecting
Tenants at Foreclosure Act of 2009" (PTFA). The PTFA, which is
currently scheduled to sunset on December 31, 2014, 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, currently 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.
This bill would make the state law provisions described above
comparable to federal law by providing that a new owner of a
foreclosed property must honor a tenant's lease.
This bill would make changes to the notice that must be sent to
tenants in foreclosed properties when the property is noticed
for a foreclosure sale. The changes ensure that the notice is
accurate and reflective of state and federal law. For example,
the existing notice states that the new property owner may
provide the tenant with a 60 days' eviction notice, however the
bill would revise this provision to require that a tenant's
lease be honored, except in certain cases, and tenants in
month-to-month leases be provided with 90 days' notice. As a
result, the bill would then revise the notice accordingly so
that tenants are accurately advised of state law. In order to
address concerns raised by the business trade associations, the
bill would delay the operation of this section until March 1,
2013, or 60 days following the issuance of a form by the
Department of Consumer Affairs, whichever is later.
AB 2610
Page 5
This bill would specify that existing law which permits an owner
to use a prejudgment claim of right of possession against a
holdover former owner when the property has been sold at
foreclosure does not limit the right of a tenant to file a
prejudgment claim of right of possession at any time before
judgment or to object to enforcement of a judgment for
possession whether or not the tenant was served with the claim
of right to possession. This change would permit a tenant in a
foreclosed property to file a post-judgment claim of right to
possession or a claim of right to possession pursuant to Code of
Civil Procedure Section 1174.3.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0004018