BILL ANALYSIS Ó
SB 1473
Page 1
SENATE THIRD READING
SB 1473 (Hancock and Corbett)
As Amended July 5, 2012
Majority vote
SENATE VOTE :25-13
HOUSING 6-1 JUDICIARY 7-3
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|Ayes:|Torres, Atkins, Bradford, |Ayes:|Feuer, Atkins, Dickinson, |
| |Cedillo, Hueso, Jeffries | |Huber, Monning, |
| | | |Wieckowski, |
| | | |Bonnie Lowenthal |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines |Nays:|Wagner, Gorell, Jones |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Hall, Hill, Lara, | | |
| |Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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SUMMARY : Protects residential tenants when their landlord's
property is foreclosed upon. Specifically, this bill :
1)Revises the existing state requirement of 60-days' notice to
instead provide, in the case of a month-to-month lease, for
90-days' notice for these tenants, consistent with federal
law.
2)Specifies that a tenant holding possession under a fixed-term
lease of a rental housing unit at the time the property is
sold in foreclosure shall have the right to possession until
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the end of the lease term. This provision would not apply in
the following instances, although the new owner must give the
tenant a 90-day notice to vacate:
a) The purchaser or successor in interest will occupy the
housing unit as a primary residence;
b) The lessee is the mortgagor or the child, spouse, or
parent of the mortgagor;
c) The lease was not the result of an arms' length
transaction; and,
d) The lease requires the receipt of rent that is
substantially less than fair market rent for the property,
except when rent is reduced or subsidized due to a federal,
state, or local subsidy or law.
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 to 2019.
5)Clarifies that Code of Civil Procedure Section 415.46 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor absorbable costs to DCA for the required
translations and postings on its Web site.
COMMENTS : In support of the measure, the author states: "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
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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. Under existing California law, a tenant in
possession of rental housing that has been sold through
foreclosure is generally entitled to a 60-day written eviction
notice. In contrast, current federal law requires the successor
to a foreclosed property to provide tenants with at least a
90-day eviction notice. Federal law also sets out certain
factors to determine whether a preexisting lease on a foreclosed
property can be maintained for the remainder of its term.
Current state law provides no similar protections."
This bill seeks to ensure that tenants who are living in
foreclosed homes be given sufficient notice of their rights and
responsibilities under these state and federal laws by extending
the sunset dates on the state law provisions described above.
This bill also ensures that state law is consistent with federal
law by requiring that tenants of foreclosed properties receive
either 90-days written notice before they may be evicted or the
remainder of their lease term, except as specified.
Lastly, the bill addresses a related problem that has arisen
regarding rental property foreclosures. Under existing law, a
former owner of a foreclosed property who holds over and remains
in the property after it has been sold through foreclosure may
be removed after a three-day notice to quit has been served.
These holdover provisions are used against former owners when
banks or servicers obtain the property through a foreclosure.
In that instance, the entity that now owns the property serves a
three-day notice to quit and an unlawful detainer eviction
action naming the borrower and Doe defendants. The entity may
also use a prejudgment claim of right to possession which is
designed to evict non-tenant occupants of a rental property. If
the prejudgment claim form is served on the defaulting owner, a
tenant who is not named in the complaint must file a prejudgment
claim of right form in court within 10 days or risk being
evicted without further hearing. In many foreclosed property
cases, eviction papers directed to the holdover former owner do
not name and are not addressed to the tenants. As a result,
tenants typically do not receive notice of the eviction. The
foreclosed owner is often no longer in possession of the
premises and generally does not contest the eviction, resulting
in a default judgment that binds the tenants as well. At this
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point, it is too late for the tenants to contest their eviction
because existing law provides that service of a prejudgment
claim of right to possession bars the filing of a postjudgment
claim of right to possession to object to enforcement of the
judgment for possession. As a result, innocent tenants who live
in foreclosed properties are being prematurely removed from
their homes without the required notice and before the 90-day
period guaranteed by federal law has expired.
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 postjudgment 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: 0004772