BILL ANALYSIS Ó
SB 62
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Date of Hearing: June 15, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 62 (Liu) - As Amended: May 26, 2011
SENATE VOTE : 28-11
SUBJECT : Local government: Los Angeles County: notice of
recordation.
SUMMARY : Authorizes the County of Los Angeles Recorder
(Recorder) to notify by mail the party or parties subject to a
notice of default or notice of sale, including the occupants of
that property, within five days, but in any event no more than
20 days, of recordation. Specifically, this bill :
1)Authorizes the Recorder, or a designee, following the adoption
of an authorizing resolution by the Los Angeles County Board
of Supervisors (Board), to notify by mail the party or parties
subject to a notice of default or notice of sale, including
the occupants of that property, within five days, but in any
event no more than 20 days, of recordation.
2)Authorizes the Recorder to collect a fee from the party filing
a notice of default or notice of sale, unless that party is a
government entity.
3)Prohibits the fee from exceeding the mailing cost of the
notice and the actual cost, if any, to provide information,
counseling, or assistance to a person who receives the notice,
not to exceed $7. The actual costs comprising the fee are
authorized to include administrative costs incurred by the
Recorder in executing these provisions, but cannot exceed 10%
of the total fee collected.
4)Requires on or before January 1, 2014, if the Board adopts an
authorizing resolution to notify the parties subject to a
notice of default or notice of sale, the County of Los Angeles
to submit a report to the Senate Committee on Judiciary and
the Assembly Committee on Local Government.
5)Requires the report to contain the following:
a) A copy of each type of notice mailed;
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b) The number of filed notices of default and notices of
sale for which a fee was collected;
c) The amount of fees collected for the filing of notices
of default and notices of sale; and,
d) The amount of fees spent to provide housing information,
counseling, and assistance.
6)Repeals these provisions on January 1, 2015.
EXISTING LAW :
1)Allows the boards of supervisors of the Counties of Los
Angeles and Riverside to adopt a resolution authorizing the
county recorder to notify a party of the execution of an
instrument affecting their interest in real property, when the
deed does not involve a governmental entity, within 30 days of
the resolution and in a form, as specified.
2)Allows the Recorder to collect a fee, not to exceed the cost
of mailing the notice, or $7, from the party filing a deed,
quitclaim deed, or deed of trust, other than a governmental
entity.
FISCAL EFFECT : None
COMMENTS :
1)In the early 1990s, the Los Angeles County District Attorney
reported that approximately 1,151 County residents - most of
whom were elderly, poor, and uneducated people - were cheated
out of an estimated $131 million due to real estate fraud. In
response, an anti-fraud pilot program was established in the
County. Under that program, the County sent a postcard notice
to signatories of deeds to real property as an alert to
property owners when an instrument affecting their interest
had been recorded. Due to the success of the program, the
Legislature passed SB 1631 (Watson), Chapter 177, Statutes of
1996, which authorized the Board to adopt a resolution
permitting the Recorder to notify a party of the execution of
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an instrument affecting their interest in real property and
allowed the Recorder to charge a fee to cover mailing costs
not to exceed $7.
2)According to the author, the purpose of SB 62 is to give the
County authority to notify and assist homeowners and occupants
of possible foreclosure and to charge a fee, not to exceed $7
to provide the notification and consumer assistance. The
author says notices of default and notices of sale are public
documents, and criminals, acting as foreclosure consultants
and loan modification specialists, contact homeowners in
foreclosure. They promise homeowners, the author says, that
they will stop the foreclosure or obtain a loan modification,
but charge homeowners thousands of dollars and never stop the
foreclosure, obtain the promised loan modification, or provide
any other service of value. The author says SB 62 would
address this problem by allowing Los Angeles County to mail a
written notification to homeowners and occupants who are
subject to a notice of default or notice of sale, with the
notification warning homeowners about the unscrupulous
foreclosure and loan modification consultants who contact
them.
3)SB 62 would authorize the county recorder to collect a fee
from the party filing the notice of default or notice of sale,
not to exceed $7, to cover the cost of mailing the notice and
the actual cost, if any, to provide information, counseling,
or assistance to recipients of the notice. By allowing those
fees also to fund counseling or assistance programs, the fee
would provide financial assistance to Los Angeles housing
assistance programs that are losing funds due to budget
constraints. Recipients of the notice would likely be given
the contact information for those programs and would therefore
benefit from the collection of a fee to assist in their
funding.
Although, as written, that fee would essentially take effect
following the adoption of an authorizing resolution by the Los
Angeles County Board of Supervisors, Proposition 26 may
complicate the imposition of the fee by potentially requiring
the $7 fee be approved by a vote of the people. That vote may
be required because Proposition 26 defined tax as "any levy,
charge or exaction of any kind imposed by a local government
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..." (Emphasis added.) Of the seven exceptions to the
definition of tax included in Proposition 26, the first two
would appear to be the ones that could be applicable:
"(1) A charge imposed for a specific benefit conferred or
privilege granted directly to the payor that is not provided
to those not charged, and which does not exceed the reasonable
costs to the local government of conferring the benefit or
granting the privilege.
"(2) A charge imposed for a specific government service or
product provided directly to the payor that is not provided to
those not charged, and which does not exceed the reasonable
costs to the local government of providing the service or
product." (Cal. Const. art. XIII C, sec. 1(e).)
To avoid placing the additional $7 fee on the ballot, the County
would have to assert that both the mailing and counseling
services would only be provided to those who had paid a fee
not exceeding the reasonable costs. If those services are
provided to a person not charged, or if the fee exceeds the
reasonable costs, the new fee would arguably fall under the
definition of a tax. Because Proposition 26 also defined
special tax as meaning "any tax imposed for specific purposes,
including a tax imposed for specific purposes, which is placed
into a general fund," and special taxes require a two-thirds
vote of the public, the County also could face the hurdle of a
super majority vote to assess the fee, which arguably is for
the specific purpose of providing information to homeowners
and tenants in foreclosure.
4)SB 878 (Liu, 2010) contained similar provisions. SB 878
passed out of this committee on a 7-2 vote, but was vetoed by
the Governor with the following message:
"While the goals of SB 878 are laudable, the bill is
unnecessary as foreclosure statutes require that notices of
default and notices of sale be mailed to the owner of the
property. Moreover, notices of sale, in addition to being
mailed to the property owner, must also be posted on the
property, providing notice to both the occupant and owner of a
pending foreclosure action, effectively making SB 878
redundant."
5)Support arguments: Supporters, Western Center on Law &
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Poverty, say tenants are often left in the dark when ownership
of a property changes, with tenants not knowing if they should
be paying their rent to the person who claims to be the new
owner or not. Giving tenants notice on these changes will
help alleviate these problems and reduce fraud.
Opposition arguments: Opposition might say district attorneys
already have the authority to combat consumer and real estate
fraud and this extra layer of bureaucracy is unnecessary and
duplicative. Opposition could also argue that this
information is already public record and can be obtained at
any time by a member of the public.
6)This bill is double-referred to the Committee on Judiciary.
REGISTERED SUPPORT / OPPOSITION :
Support
County of Los Angeles ÝSPONSOR]
California District Attorneys Association
Consumer Federation of America
Consumer Federation of California
Consumers Union
Los Angeles County District Attorney's Office
Los Angeles County Sheriff's Department
Western Center on Law & Poverty
Opposition
None on file
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958