BILL ANALYSIS Ó
SB 1473
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1473 (Hancock) - As Amended: July 5, 2012
Policy Committee: Housing and
Community Development Vote: 7-3
Judiciary 6-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill changes required notice to tenants in foreclosed
properties. Specifically, this bill:
1)Lengthens the requirement of existing law providing 60 days
notice to provide, in the case of a month-to-month lease or
periodic tenancy, 90 days notice for tenants in a foreclosed
property.
2)Specifies that a tenant holding possession under a residential
lease when the property is sold in foreclosure shall have the
right to remain 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 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)Specifies a notice to be used to inform the tenant of these
requirements upon posting a notice of sale for a foreclosed
property. Requires the Department of Consumer Affairs (DCA)
to make available translations of the new notice requirements.
Provides that the new notice requirements would not become
operative until March 1, 2013, or 60 days following the
issuance of an amended new translation by the DCA, whichever
occurs later.
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4)Extends the January 1, 2013 sunset date that would otherwise
apply to these sections and the related provisions of existing
law by 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 or to object
to enforcement of a judgment for possession, as specified.
FISCAL EFFECT
Minor absorbable costs to DCA for the required translations and
postings on its website.
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COMMENTS
1)Purpose . According to the author, SB 1473 addresses the
increasing hardship and confusion faced by tenants during one
of the worst foreclosure crises in decades. Too often, tenants
are the unwitting victims when a home they are renting is
foreclosed on. Tenants, usually the last to know of
foreclosure, often face the specter of sudden dislocation of
their homes, their families and their belongings. In
particular, the inconsistency between state and federal law
has left tenants confused and, at times, misled about their
legal protections.
2)Support . The sponsor, Attorney General Kamala Harris, notes
as more and more homes are sold through foreclosure, tenants
increasingly face the specter of sudden dislocation. Many
renters, including families with children, end up homeless due
to foreclosure evictions. The Attorney General argues that as
a result of inconsistencies in state and federal law, tenants
are often confused or misled about their legal protections and
about how much time they have to move when served with a
notice to vacate after a foreclosure sale. This bill is part
of a package of bills sponsored by the Attorney General in
response to the mortgage foreclosure crisis.
3)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.
4)Federal law . On May 20, 2009, President Obama signed the
Protecting Tenants at Foreclosure Act which requires a
successor in interest to a foreclosed property to provide
tenants with at least a 90-day eviction notice and with some
exceptions to honor the tenants existing lease for the
remainder of its term. If there is no lease, if the lease is
month-to-month, or if the purchaser will occupy the home as
their primary residence, the tenant must be provided with at
least 90 days notice to vacate. Purchasers are required to
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honor a residential lease if it is bona fide. This Act will
sunset on December 31, 2014.
5)Related Legislation . AB 2610 (Skinner) is identical to this
bill. It passed out of Assembly Appropriations on May 15,
2012 and is currently pending in the Senate Appropriations
Committee.
6)There is no registered opposition to this bill.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081