BILL ANALYSIS Ó
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair A
2013-2014 Regular Session B
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AB 1698 (Wagner) 8
As Amended June 18, 2014
Hearing date: June 24, 2014
Penal Code
MK:sl
FALSIFIED PUBLIC RECORDS
HISTORY
Source: California District Attorneys Association
Prior Legislation: None
Support: Judicial Council; Taxpayers for Improving Public Safety
Opposition:None known
Assembly Floor Vote: Ayes 74 - Noes 2
KEY ISSUE
SHOULD THE LAW ALLOW A JUDGE TO DECLARE A FORGED OR FALSE INSTRUMENT
VOID?
PURPOSE
The purpose of this bill is to provide a process to allow a
judge to declare an instrument void when there is a criminal
action finding that instrument forged or false.
Existing law provides that a person who, with intent to defraud,
signs the name of another person or of a fictitious person to
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specified items, knowing that he or she has no authority to do
so, is guilty of forgery. (Penal Code, § 470.)
Existing law defines grand theft generally as when the value of
the money, labor or real or personal property takes is more than
$950. (Penal Code, § 487.)
Existing law makes participation in a fraudulent conveyance a
misdemeanor. (Penal Code, §§ 531 & 531a.)
Existing law defines mortgage fraud for the purpose of criminal
prosecution. (Penal Code, § 532f.)
Existing law 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. (Code Civ. Proc., § 760.020 (a).)
Existing law 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 state or of the United States. (Pen. Code,
§ 115 (a).)
Existing law states that each instrument offered to be filed,
registered, or recorded is a separate violation. (Penal Code, §
115 (b).)
This bill provides that after a person is convicted of filing a
forged instrument, upon written motion of the prosecuting
agency, the court after a hearing shall issue a written order
that the false or forged instrument be adjudged void ab initio
if the court determines that an order is appropriate.
This bill provides that the order shall state whether the
instrument is false, forged or both and a copy of the instrument
shall be attached to the order at the time it is issued by the
court and a certified copy of the order shall be filed at the
appropriate public office by the prosecuting agency.
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This bill provided if the false or forged instrument has been
recorded with a county recorder the order shall be recorded in
the county where the real property is located.
This bill sets forth procedures that the prosecuting agency
shall use in filing a motion.
This bill provides that the order shall be considered a judgment
and subject to appeal under the Code of Civil Procedure.
RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation
relating to conditions of confinement. On May 23, 2011, the
United States Supreme Court ordered California to reduce its
prison population to 137.5 percent of design capacity within two
years from the date of its ruling, subject to the right of the
state to seek modifications in appropriate circumstances.
Beginning in early 2007, Senate leadership initiated a policy to
hold legislative proposals which could further aggravate the
prison overcrowding crisis through new or expanded felony
prosecutions. Under the resulting policy, known as "ROCA"
(which stands for "Receivership/ Overcrowding Crisis
Aggravation"), the Committee held measures that created a new
felony, expanded the scope or penalty of an existing felony, or
otherwise increased the application of a felony in a manner
which could exacerbate the prison overcrowding crisis. Under
these principles, ROCA was applied as a content-neutral,
provisional measure necessary to ensure that the Legislature did
not erode progress towards reducing prison overcrowding by
passing legislation, which would increase the prison population.
In January of 2013, just over a year after the enactment of the
historic Public Safety Realignment Act of 2011, the State of
California filed court documents seeking to vacate or modify the
federal court order requiring the state to reduce its prison
population to 137.5 percent of design capacity. The State
submitted that the, ". . . population in the State's 33 prisons
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has been reduced by over 24,000 inmates since October 2011 when
public safety realignment went into effect, by more than 36,000
inmates compared to the 2008 population . . . , and by nearly
42,000 inmates since 2006 . . . ." Plaintiffs opposed the
state's motion, arguing that, "California prisons, which
currently average 150% of capacity, and reach as high as 185% of
capacity at one prison, continue to deliver health care that is
constitutionally deficient." In an order dated January 29,
2013, the federal court granted the state a six-month extension
to achieve the 137.5 % inmate population cap by December 31,
2013.
The Three-Judge Court then ordered, on April 11, 2013, the state
of California to "immediately take all steps necessary to comply
with this Court's . . . Order . . . requiring defendants to
reduce overall prison population to 137.5% design capacity by
December 31, 2013." On September 16, 2013, the State asked the
Court to extend that deadline to December 31, 2016. In
response, the Court extended the deadline first to January 27,
2014 and then February 24, 2014, and ordered the parties to
enter into a meet-and-confer process to "explore how defendants
can comply with this Court's June 20, 2013 Order, including
means and dates by which such compliance can be expedited or
accomplished and how this Court can ensure a durable solution to
the prison crowding problem."
The parties were not able to reach an agreement during the
meet-and-confer process. As a result, the Court ordered
briefing on the State's requested extension and, on February 10,
2014, issued an order extending the deadline to reduce the
in-state adult institution population to 137.5% design capacity
to February 28, 2016. The order requires the state to meet the
following interim and final population reduction benchmarks:
143% of design bed capacity by June 30, 2014;
141.5% of design bed capacity by February 28, 2015; and,
137.5% of design bed capacity by February 28, 2016.
If a benchmark is missed the Compliance Officer (a position
created by the February 10, 2016 order) can order the release of
inmates to bring the State into compliance with that benchmark.
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In a status report to the Court dated May 15, 2014, the state
reported that as of May 14, 2014, 116,428 inmates were housed in
the State's 34 adult institutions, which amounts to 140.8% of
design bed capacity, and 8,650 inmates were housed in
out-of-state facilities.
The ongoing prison overcrowding litigation indicates that prison
capacity and related issues concerning conditions of confinement
remain unresolved. While real gains in reducing the prison
population have been made, even greater reductions may be
required to meet the orders of the federal court. Therefore,
the Committee's consideration of ROCA bills -bills that may
impact the prison population - will be informed by the following
questions:
Whether a measure erodes realignment and impacts the
prison population;
Whether a measure addresses a crime which is directly
dangerous to the physical safety of others for which there
is no other reasonably appropriate sanction;
Whether a bill corrects a constitutional infirmity or
legislative drafting error;
Whether a measure proposes penalties which are
proportionate, and cannot be achieved through any other
reasonably appropriate remedy; and,
Whether a bill addresses a major area of public safety
or criminal activity for which there is no other
reasonable, appropriate remedy.
COMMENTS
1. Need for The Bill
According to the author:
California case law allows for a forged deed to be
declared void ab initio. See Rixford v. Zeigler (1907)
150 Cal. 435, 437; Erickson v. Bohme (1955) 130
Cal.Ap.2d 553, 557. However, where there is not an
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actual forgery of a victim's signature on a deed,
prosecutors have had mixed success in getting a court
to adjudge as void a false or forged document.
With the proliferation of real estate fraud crimes over
the past 10 years, the need for prosecutors to help
victims of real estate fraud clear title to their
property is greater than ever. There are many cases
throughout California where prosecutors successfully
convict defendants of filing false or fraudulent deeds,
liens, conveyances, etc. to real property, but a
criminal court declines to adjudge the false or
fraudulent deed void for lack of clear law on the
subject.
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.
As real estate prosecutions have increased thanks to
more aggressive investigation and enforcement, con
artists (particularly those associated with the
sovereign citizen movement) have become increasingly
sophisticated in their schemes to defraud homeowners.
The following are a representative sample of cases
involving false documents which are not necessarily
forged:
Alameda County: Defendants involved in a foreclosure
rescue scam collected $1,200 a month from homeowners
and deeded title to the properties to non-existent
companies on the promise of saving the home from
foreclosure. Because the defendants signed their own
names on behalf of the non-existent companies, the
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documents were "false" but not necessarily forged.
Shasta County: Defendant attempted to take title to
property by forging a grant deed conveying title to
himself. The defendant had no right to execute the
deed, making the document "false" but not necessarily
forged.
Santa Clara County: Sovereign citizen defendant
attempting to take possession of vacant homes for the
purpose of renting them for profit executes deeds in
the name of his sovereign nation, and signs the
document with his true name. The deed clouds title
making the property impossible for the legitimate
homeowner to sell it. The deed executed by the
defendant is "false" but not necessarily forged.
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The only remedy for victims in these cases is through a
civil quiet title action. This is often
time-consuming, economically and mentally taxing for
the victim, and sometimes unsuccessful. The victim
must fight on their own to clear title to property that
was clouded by a defendant who has suffered a criminal
conviction, thereby adding another level of injury.
This result flies in the face of justice.
Penal Code 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.
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.
Amendments taken in the Assembly were the result of
extensive work between stakeholders and addressed
concerns from the real estate and financial services
industries regarding notice requirements and due
process.
2. Fraudulent or Forged Documents Void
Under existing law, even if a court finds a person guilty of the
crime of offering a false or forged instrument to be filed,
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registered or recorded in a public office, the criminal court
has not been consistent in finding voiding those false and
forged documents and it is not clear whether they have the power
to do so.
This bill provides that upon motion of the prosecutor and after
a hearing the court shall issue an order voiding the forged
document, when it is appropriate to do so. The order shall then
be filed with the appropriate agency.
The prosecutors motion shall be filed within 10 days of filing a
criminal complaint or indictment alleging and instrument is
false or forged and shall send written notice by certified mail
to all those who may have an interest in the property. The
notice shall inform the parties of their right to be heard when
the motion is brought and give a description of the property.
The prosecutor shall also file a notice in the county where the
real property is located. Within 10 days of the case being
adjudicated or dismissed the prosecution shall withdraw the
notice to the county. Failure to provide notice does not
prevent the prosecuting action from seeking the motion but is
grounds for the court to grant more time to interested parties.
At the hearing the prosecutor, defendant and interested parties
all have a right to be heard. If the court determines that in
the interest of justice the matter should be more appropriately
settled in a civil proceeding, the court may decline to make a
determination on the motion. The court may also consider any
quiet title action filed prior to the hearing as an additional
but not dispositive factor in making its determination.
3. Support
Judicial Council supports this bill stating:
The council supports AB 1698 because it increases the
efficiency of the courts by avoiding costly quiet title
actions. Under case law, forged real estate instruments
are void ab initio (see Schiavo v Armando Brothers
(2000) 85 Cal. App. 4th 374, 375); that case law,
however, does not extend to false real estate
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instruments. Moreover, under existing law it is not
clear that a court may declare a forged or false
instrument void in the context of a criminal proceeding
relating to that instrument. Thus, even though a
defendant may be convicted of a real estate fraud for
creating a false deed, that false deed still appears as
a cloud on the victim's title to the real estate. The
victim's only remedy under current law is to file a
quite title action to remove the cloud, a costly and
time-consuming process. By requiring a court to declare
a forged or false real estate instrument void in the
context of a criminal proceeding, AB 1698 will
eliminate the additional burden of a quite title action
on the victim and the court. As a result, we believe
that AB 1698 increases the efficiency of courts.
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