BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 661


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          661 (Mathis)


          As Amended  June 10, 2015


          Majority vote


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          |ASSEMBLY:  | 75-0 | (May 22,      |SENATE: | 37-0 | (June 22, 2015) |
          |           |      |2015)          |        |      |                 |
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          Original Committee Reference:  L. GOV.




          SUMMARY:  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.  




          The Senate amendments delete the Assembly version of this bill,  
          and instead, clarify that the fee counties can place on recorded  
          real estate documents to fund real estate fraud prevention and  
          enforcement shall not apply to any real estate instrument,  
          paper, or notice if any of the following apply:












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          1)The real estate instrument, paper, or notice is accompanied by  
            a declaration stating that the transfer is subject to a  
            documentary transfer tax, as specified;


          2)The real estate instrument, paper, or notice is recorded  
            concurrently with a document subject to a documentary transfer  
            tax, as specified; or,


          3)The real estate instrument, paper, or notice is presented for  
            recording within the same business day as, and is related to  
            the recording of, a document subject to a documentary transfer  
            tax, as specified.  A document that is exempt under this  
            provision must be accompanied by a statement that includes  
            both of the following:


             a)   A statement that the real estate instrument, paper, or  
               notice is exempt from the fee imposed under existing law  
               allowing counties to charge a fee on recorded real estate  
               documents to fund real estate fraud prevention and  
               enforcement; and,


             b)   A statement of the recording date and the recorder  
               identification number or book and page of the previously  
               recorded document.


          EXISTING LAW:  


          1)Authorizes any county board of supervisors to adopt, by  
            resolution, a fee of up to $10 for each recording of a real  
            estate instrument, paper, or notice required or permitted by  
            law to be recorded, except as specified, to be placed in a  
            Real Estate Fraud Prosecution Trust Fund (Fund).
          2)Requires money in the Fund to be expended to support programs  
            that enhance the capacity of local police and prosecutors to  
            deter, investigate, and prosecute real estate fraud crimes.









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          3)Defines the term "real estate instrument" to mean a deed of  
            trust, an assignment of deed of trust, an amended deed of  
            trust, an abstract of judgment, an affidavit, an assignment of  
            rents, an assignment of a lease, a construction trust deed,  
            covenants, conditions, and restrictions (CC and Rs), a  
            declaration of homestead, an easement, a lease, a lien, a lot  
            line adjustment, a mechanics lien, a modification for deed of  
            trust, a notice of completion, a quitclaim deed, a  
            subordination agreement, a release, a reconveyance, a request  
            for notice, a notice of default, a substitution of trustee, a  
            notice of trustee sale, a trustee's deed upon sale, or a  
            notice of rescission of declaration of default, or any Uniform  
            Commercial Code amendment, assignment, continuation,  
            statement, or termination.


          4)Provides that "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 defined in Revenue and Taxation Code Section 11911.




          AS PASSED BY THE ASSEMBLY, this bill:  


          1)Deleted 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.


          2)Provided, instead, that the fee shall not apply to any real  
            estate instrument, paper, or notice related to, and recorded  
            concurrently with, a transfer subject to a documentary  
            transfer tax, as specified.










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          FISCAL EFFECT:  None


          COMMENTS:  


          1)Bill Summary.  This bill 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.  This bill revises the definition of what is  
            exempt by deleting language stating that "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.   
            Instead, this bill provides that the real estate fraud  
            prevention and enforcement fee allowed under current law shall  
            not apply to any real estate instrument, paper, or notice if  
            any of the following apply:


             a)   The real estate instrument, paper, or notice is  
               accompanied by a declaration stating that the transfer is  
               subject to a documentary transfer tax;


             b)   The real estate instrument, paper, or notice is recorded  
               concurrently with a document subject to a documentary  
               transfer tax; or,


             c)   The real estate instrument, paper, or notice is  
               presented for recording within the same business day as,  
               and is related to the recording of, a document subject to a  
               documentary transfer tax.  These documents must be  
               accompanied by a statement that includes both of the  
               following:


               i)     A statement that the real estate instrument, paper,  
                 or notice is exempt from the fee imposed under existing  
                 law allowing counties to charge a fee on recorded real  
                 estate documents to fund real estate fraud prevention and  








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                 enforcement; and,


               ii)    A statement of the recording date and the recorder  
                 identification number or book and page of the previously  
                 recorded document.


            This bill is sponsored by the County Recorders Association of  
            California.


          2)Author's Statement.  According to the author, "Clean-up  
            language relating to SB 1342 [(Emmerson), Chapter 104,  
            Statutes of 2012] is necessary to clarify the legislative  
            intent of the phrase 'in connection with' pursuant to  
            Government Code Section 27388, when determining if a fee for  
            the Real Estate Fraud Prosecution Trust Fund is due on a  
            recorded document.


            "The indistinct phrase used in the code, 'in connection with'  
            does not clearly define which documents should or should not  
            have the Real Estate Fraud Prosecution Trust Fund fee,  
            resulting in inconsistent application throughout California  
            counties.  Clearly defining which documents are exempt from  
            payment of [the fee] will promote uniformity in the  
            application of this [law] throughout the state."


          3)Background.  Under existing law, counties can impose a $10  
            recording fee on certain real estate documents for the  
            purposes of deterring, investigating, and prosecuting real  
            estate fraud crimes, with an emphasis on fraud against  
            individuals whose residences are in danger of, or are in,  
            foreclosure.  Administrative costs are capped at 10% of  
            revenues.  


            State law assigns 60% of the Fund proceeds to the county  
            district attorney's office and 40% to eligible law enforcement  
            agencies.  In order to be eligible, a law enforcement agency  








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            must either have a unit or division devoted to real estate  
            investigation or prosecution, or have been actively involved  
            in such cases for the prior three years.  


            The law specifies which documents are subject to this fee, and  
            provides an exemption from the fee for "any deed, instrument,  
            or writing recorded in connection with a transfer subject to  
            the imposition of a documentary transfer tax" (the sale of  
            real property).  This language was added by SB 1342.  The  
            sponsor contends that the phrase "in connection with" is  
            unclear, such that county counsels are directing county  
            recorders to impose the fee in different ways.


          4)Previous Legislation.  SB 1342, among other provisions,  
            clarified an exemption from the fee for "any deed, instrument,  
            or writing recorded in connection with a transfer subject to  
            the imposition of a documentary transfer tax."


          5)Arguments in Support.  Contra Costa County Clerk-Recorder and  
            Registrar of Voters Joseph E. Canciamilla, in support, writes,  
            "As it presently stands, some citizens may pay the fee when  
            not legally required to do so while others may erroneously  
            claim exemption simply because the current legal language is  
            not clear.  Clarification of the existing language will  
            facilitate accurate advance calculation of recording fees,  
            which is essential when purchasing or refinancing a home since  
            all fees must be paid at the time a document is submitted for  
            recording.  Incorrect fees can result not only in delays but  
            possibly financial implications to potential homeowners.


            "Assembly Bill 661 will clarify the current language and  
            enable uniform application of the fee throughout 58 counties.   
            Moreover, accurately calculated fees will reduce delays in  
            recording documents related to homeownership."


          6)Arguments in Opposition.  None on file.









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          Analysis Prepared by:                                             
                          Angela Mapp / L. GOV. / (916) 319-3958  FN:  
          0001062