BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1342|
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THIRD READING
Bill No: SB 1342
Author: Emmerson (R)
Amended: 5/8/12
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 5/2/12
AYES: Wolk, DeSaulnier, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller
NO VOTE RECORDED: Hancock, La Malfa
SUBJECT : Counties: recording: real estate instruments
SOURCE : California District Attorneys Association
DIGEST : This bill increases, from $3 to $10, the maximum
fee that a county can place on specified recorded documents
to fund real estate fraud deterrence, investigations, and
prosecutions.
ANALYSIS : Counties can impose an additional $3 recording
fee on real estate documents and put the money into a
county Real Estate Fraud Prosecution Trust Fund (SB 537
ÝHughes], Chapter 942, Statues of 1995). County officials
can use the Fund to deter, investigate, and prosecute real
estate fraud crimes. They must focus, to the extent
possible, on fraud against individuals whose residences are
in danger of, or are in, foreclosure. Administrative costs
are capped at 10 percent of revenues (SB 762 ÝHughes],
Chapter 765, Statutes of 2000).
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State law assigns 60 percent of the Fund to the district
attorney's office and 40 percent to eligible law
enforcement agencies. To be eligible, a law enforcement
agency must either have a unit or division devoted to real
estate investigation or prosecution, or have been actively
involved in such cases for the prior three years. A Real
Estate Fraud Prosecution Trust Fund Committee allocates the
40 percent by reviewing and approving applications from law
enforcement agencies. The Committee has four members: the
county's chief administrative officer, the district
attorney, the chief officer responsible for consumer
protection, and the chief officer of one law enforcement
agency that receives monies from the Fund. If a county has
no eligible law enforcement agencies, the entire Fund goes
to the district attorney.
District attorneys in counties that impose the additional
fee must provide an annual report to the county board of
supervisors and the Legislative Analyst's Office (LAO) on
past-year expenditures, the number of filed complaints of
real estate fraud, and program outcomes. The LAO must
annually compile the information submitted by participating
counties and report to the Legislature (AB 901
ÝRidley-Thomas], Chapter 531, Statutes of 2005).
In 2008, legislators increased the maximum amount of the
additional recording fee that counties may impose on real
estate documents from $2 to $3 (SB 1396 ÝCox], Chapter 405,
Statute of 2008).
This bill increases, from $3 to $10, the maximum additional
recording fee that counties can impose on real estate
instruments for payment into the Real Estate Fraud
Protection Trust Fund.
This bill adds the following documents to the list of real
estate instruments that are subject to an additional fee:
an amended deed of trust, an abstract of judgment, an
affidavit, an assignment of rents, an assignment of a
lease, a construction trust deed, covenants conditions and
restrictions, a declaration of homestead, an easement, a
lease, a lien, a lot line adjustment, a mechanics lien, a
modification for deed of trust, a notice of completion, a
quitclaim deed, a subordination agreement, a release, a
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trustee's deed upon sale, and any Uniform Commercial Code
amendment, assignment, continuation, statement and
termination.
This bill specifies that "real estate instrument" does not
include any deed, instrument, or writing recorded in
connection with a transfer subject to the imposition of a
documentary transfer tax as defined in state law.
This bill allows a portion of the funds in the Real Estate
Fraud Prosecution Trust Fund to be directly allocated to
the county recorder to support county recorder fraud
prevention programs.
This bill requires a county auditor-controller to verify,
before a county makes expenditures from a Real Estate Fraud
Prosecution Trust Fund, that the district attorney has
complied with the existing September 1 reporting deadline.
This bill eliminates the requirements that counties must
submit annual reports to the LAO and that the LAO must
submit this information to the legislature.
Comments
According to the Senate Governance and Finance Committee's
analysis, real estate fraud is a rapidly growing crime that
can result in foreclosures, credit problems, and other
devastating consequences for its victims. FBI statistics
indicate that, in 2010, mortgage fraud activity remained
elevated throughout the country. The FBI ranked California
among the top states for mortgage fraud activity in 2010.
Investigating and prosecuting real estate fraud and related
crimes are costly. Prosecutors and investigators handling
real estate fraud crimes require substantial training and
expertise. Real estate fraud schemes typically involve
multiple jurisdictions, complicating prosecution efforts.
Nearly all law enforcement and prosecution agencies lack
sufficient resources to address this growing problem. Many
counties report that their real estate fraud enforcement
costs far exceed the revenues that they receive through the
Real Estate Fraud Prosecution Trust Fund program. By
increasing the maximum additional fee that counties can
impose and expanding the types of real estate instruments
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that are subject to an additional fee, this bill ensures
that counties will have the fiscal resources they need to
combat the growing problem of real estate fraud.
Related Legislation
SB 1220 (DeSaulnier, 2012) imposes a $75 fee on recorded
real estate documents, excluding any document recorded in
connection with a transfer subject to a documentary
transfer tax.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/8/12)
California District Attorneys Association (source)
California Attorney General Kamala Harris
California Association of Realtors
County Recorders Association of California
OPPOSITION : (Verified 5/8/12)
Howard Jarvis Taxpayers Association
AGB:dom 5/9/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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