BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 661 |Hearing |6/17/15 |
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|Author: |Mathis |Tax Levy: |No |
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|Version: |6/10/15 |Fiscal: |No |
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|Consultant|Lewis |
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Counties: recording: real estate instruments
Clarifies an exemption in current law from fees that counties
can place on certain recorded real estate documents to fund real
estate fraud prevention and enforcement.
Background and Existing Law
State law allows counties to impose an additional recording fee
on certain real estate documents and put the money into a county
Real Estate Fraud Prosecution Trust Fund (SB 532, Hughes, 1995).
County officials can use the Fund to deter, investigate, and
prosecute real estate fraud crimes, with an emphasis on fraud
against individuals whose residences are in danger of, or are
in, foreclosure. In 2012, the Legislature increased the fee
counties are permitted to charge for this purpose from $3 to
$10, and created an exemption to the fee for "any deed,
instrument, or writing recorded in connection with a transfer
subject to the imposition of a documentary transfer tax." In
other words, the exemption applies to documents related to the
sale of real property (SB 1342, Emerson, 2012).
The Documentary Transfer Tax Act authorizes counties to impose a
tax at a specified rate on deeds and other recorded instruments
transferring real property. For purposes of documentary transfer
taxes (DTT), the definition of "real estate instruments" is
broad, and includes: deeds of trust, assignments of rents,
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covenants, conditions, and restrictions (CC&Rs), easements, and
mechanics liens, among other documents. By comparison, many
common recorded instruments that do not actually convey an
interest real property on their own-such as gifts, name changes,
and instruments establishing the separate property of a
spouse-are exempt from DTT.
County recorders contend that existing law is unclear as to when
and how a particular document is recorded "in connection with a
transfer subject to the imposition of [DTT]" for purposes of
real estate fraud prevention and enforcement fees, and point out
that county attorneys are directing them to impose real estate
fraud fees in inconsistent ways across the state.
County recorders therefore suggest changing state law to instead
exempt real estate documents from the fee if the documents are
accompanied by a declaration that the instrument is subject to a
documentary transfer tax, recorded concurrently with a document
that is subject to a transfer tax, or presented for recording
the same day and related to a property transfer that is subject
to transfer tax.
Proposed Law
Assembly Bill 661 deletes language stating that, for the
purposes of fees that counties can place on certain recorded
real estate instruments to fund real estate fraud prevention and
enforcement, "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
specified.
AB 661 instead provides that the real estate fraud prevention
and enforcement fees permitted under current law must not apply
to any real estate instrument, paper, or notice accompanied by a
declaration stating that the transfer is:
Subject to a documentary transfer tax;
Recorded concurrently with a transfer subject to a
documentary transfer tax; or
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Presented for recording within the same business day as,
and is related to the recording of, a transfer subject to a
documentary transfer tax.
State Revenue Impact
No estimate.
Comment
1. Purpose of the bill. State law allows counties to impose an
additional $10 recording fee on certain real estate documents to
fund county efforts to deter, investigate, and prosecute real
estate fraud. However, because the state law is ambiguous with
respect to what types of documents are exempted from this fee,
some citizens are paying the fee when not legally required to do
so; others are erroneously claiming their real estate documents
are exempt. Incorrect fees can result not only in delays, but
can also have financial implications for potential homeowners.
By clarifying which documents are exempt from the fee and which
are not, AB 661 would facilitate accurate calculation of
recording fees in advance of home purchases and refinances,
since all fees must be paid at the time a document is submitted
for recording.
Assembly Actions
Assembly Local Government 8-0
Assembly Floor 75-0
Support and
Opposition (6/11/15)
Support : County Recorders' Association of California; Alameda
County District Attorney; Alpine County Assessor/Recorder;
Calaveras County Clerk-Recorder; California District Attorneys
Association; California Escrow Association; California Land
Title Association; California State Association of Counties;
Contra Costa County Clerk-Recorder and Registrar of Voters; Inyo
County Clerk and Recorder; Riverside County Assessor-County
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Clerk-Recorder, Peter Aldana; Rural County Representatives of
California; San Bernardino County Assessor-Recorder-County
Clerk; San Francisco Office of the Assessor-Recorder; Sonoma
County Clerk-Recorder-Assessor.
Opposition : Unknown.
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