BILL ANALYSIS Ó
SB 62
Page 1
SENATE THIRD READING
SB 62 (Liu)
As Amended June 16, 2011
Majority vote
SENATE VOTE :28-11
LOCAL GOVERNMENT 8-1 JUDICIARY 7-3
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|Ayes:|Smyth, Alejo, Bradford, |Ayes:|Feuer, Atkins, Dickinson, |
| |Campos, Davis, Gordon, | |Huber, Huffman, Monning, |
| |Hueso, Norby | |Wieckowski |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight |Nays:|Wagner, Beth Gaines, |
| | | |Jones |
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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 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.
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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
(County) to submit a report to the Senate Judiciary Committee
and the Assembly Local Government Committee.
5)Requires the report to contain the following:
a) A copy of each type of notice mailed;
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 : 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
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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 an
instrument affecting their interest in real property and allowed
the Recorder to charge a fee to cover mailing costs not to
exceed $7.
According to the author, the purpose of this bill 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 that this bill
would address this problem by allowing the 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.
This bill 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
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be required because Proposition 26 defined tax as "any levy,
charge or exaction of any kind imposed by a local government
..." (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." (California Constitution Article XIII C,
Section 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.
SB 878 (Liu) of 2010 contained similar provisions. SB 878
passed out of the Assembly Local Government 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."
Support arguments: Supporters, Western Center on Law & Poverty,
say tenants are often left in the dark when ownership of a
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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.
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958
FN: 0001347