BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1698
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          ASSEMBLY THIRD READING
          AB 1698 (Wagner)
          As Introduced  February 13, 2014
          Majority vote 

           PUBLIC SAFETY       4-0                                         
           
           -------------------------------- 
          |Ayes:|Ammiano, Jones-Sawyer,    |
          |     |Quirk, Stone              |
          |     |                          |
           -------------------------------- 
           SUMMARY  :  Requires the court to issue an order voiding a false  
          or forged instrument at its inception, when a defendant is  
          convicted of filing, registering, or recording such an  
          instrument.  Specifically,  this bill  :

          1)Requires a court to issue a written order declaring a false or  
            forged instrument to be judged void at its inception when:

             a)   A defendant is convicted of offering a false or forged  
               instrument for filing; or,

             b)   A defendant enters a plea in which a charge of offering  
               a false or forged instrument is dismissed, but he or she  
               agrees to let the court consider the dismissed charge for  
               purposes of sentencing.

          2)Requires the order to state whether the instrument is false,  
            forged, or both, and to describe the nature of the falsity or  
            forgery.

          3)Requires a copy of the false or forged instrument be attached  
            to the court order.

          4)Requires a certified copy of the court order to be filed,  
            registered, or recorded.

           EXISTING LAW  : 

          1)Makes it a felony to knowingly procure, or offer any false or  
            forged document to be filed, registered, or recorded in any  
            public office within this state, which instrument, if genuine  
            might be filed, registered or recorded under any law of this  








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            state or of the United States.

          2)States that each instrument offered to be filed, registered,  
            or recorded is a separate violation.

          3)Provides that a person who, with intent to defraud, signs the  
            name of another person or of a fictitious person to specified  
            items, knowing that he or she has no authority to do so, is  
            guilty of forgery.

          4)Defines grand theft generally as when the value of the money,  
            labor or real or personal property taken is more than $950.

          5)Makes participation in a fraudulent conveyance a misdemeanor.

          6)Defines mortgage fraud for the purpose of criminal  
            prosecution.

          7)Permits a party to file a civil action, commonly known as a  
            "quiet title action," to establish title against adverse  
            claims to real or personal property or any interest therein.

           FISCAL EFFECT  :  Unknown. This bill is keyed non-fiscal by the  
          Legislative Counsel.

           COMMENTS  :  

           1)Author's statement  :  According to the author, "Penal Code (PC)  
            Section 115 makes filing a false or forged real estate deed or  
            other instruments a felony.  But criminal courts can currently  
            only void forged deeds, not false ones.  AB 1698 will amend PC  
            115 to specifically allow courts to void false and forged  
            deeds.

          "A forged deed is where someone signs someone else's name  
            without permission.  A false deed is where no forgery occurs,  
            but the deed is nonetheless false or untrue.  In California, a  
            forged deed has long been held to be void under the law.  But  
            there is no law that allows a judge to void a false deed.   
            This requires a homeowner or business who has been victimized  
            by false deeds to go to civil court for a 'quiet title action'  
            at their own expense, even after the bad guys are convicted in  
            criminal court.









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          "False deeds cost homeowners, business, and realtors unnecessary  
            time and money.  False deeds create vacant homes in  
            neighborhoods, which leads to diminished property values,  
            blight, and potential for increased crime.  The perpetrators  
            of these schemes tend to prey on vulnerable populations in the  
            poorest neighborhoods that have been hit hard by foreclosures.

          "AB 1698 is an opportunity to help those victims without  
            creating a new crime, enhancing sentences, increasing the  
            prison population, or putting additional strain on the state  
            budget."

           2)Distinction between forged and false documents  :  The purpose  
            of Penal Code section 115 is to preserve the integrity of  
            public documents.  (People v. Denman (2013) 218 Cal.App.4th  
            800, 808-809.)  The statute differentiates between false and  
            forged documents, but clearly proscribes either kind of  
            instrument. (Generes v. Justice Court (1980) 106 Cal.App.3d  
            678, 682.)

          A forgery is a "writing which falsely purports to be the writing  
            of another..." made with the "intent to defraud."  (Wutzke v.  
            Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36,  
            41-42.)

          A false instrument is one "that has the effect of defrauding one  
            who acts on the instrument as genuine."  (Generes v. Justice  
            Court, supra, 106 Cal.App.3d at p. 682.)  In the context of a  
            deed, the court explained in more detail the notion of a false  
            deed:   "Here the lack of an ownership interest in the land  
            goes to the deception itself.  If Generes did not own the  
            interest she purported to convey, the instrument she filed was  
            clearly false.  Having no right to grant or convey an  
            easement, her recording of a deed transferring an easement  
            would establish a cloud on the title of those persons who  
            lawfully owned interests in the land. A title searcher  
            encountering the spurious document who acted upon it as  
            genuine would of course be materially deceived."  (Ibid.)

           3)Distinction between void and voidable instruments  :  "A deed is  
            void if the grantor's signature is forged or if the grantor is  
            unaware of the nature of what he or she is signing." (Schiavon  
            v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 378.)  Such a  
            deed is void ab initio; it constitutes a nullity, and cannot  








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            be made the foundation of a good title, even by a bona fide  
            encumbrancer. (Erickson v. Bohme (1955) 130 Cal.App.2d 553,  
            557; Wutzke v. Bill Reid Painting Service, Inc., supra, 151  
            Cal.App.3d at p. 43.)

          "A voidable deed, on the other hand, is one where the grantor is  
            aware of what he or she is executing, but has been induced to  
            do so through fraudulent misrepresentations." (Schiavon v.  
            Arnaudo Brothers, supra, 84 Cal.App.4th at p. 378.)   
            Ordinarily, a bona fide purchaser or encumbrancer may rely on  
            and enforce voidable instruments.  (See Fallon v. Triangle  
            Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106;  
            accord, Schiavon, supra, 84 Cal.App.4th at p. 378; see also  
            Wutzke, supra, 151 Cal.App.3d at pp. 42-43 [innocent  
            encumbrancer entitled to same protections as innocent  
            purchaser].)

          Please see the policy committee analysis for a full discussion  
          of this bill.
           

          Analysis Prepared by  :    Sandy Uribe / PUB. S. / (916) 319-3744 


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