BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 1974 |Hearing |6/15/16 |
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|Author: |Gallagher |Tax Levy: |No |
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|Version: |6/8/16 |Fiscal: |Yes |
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|Consultant|Favorini-Csorba |
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County recorder: recordation of documents
Specifies procedures for the re-recording of recorded documents.
Background
State law establishes a recorder in each county. County
recorders are responsible generally for examining and recording
all documents that deal with establishing ownership of land in
counties. This includes the recording of title documents,
notes, and home loan payoffs by homeowners, title companies,
mortgage companies and government agencies involved in real
estate transactions. Recording a document provides public
notice of ownership and a verifiable chain of possession for
property.
State law prescribes procedures for the recording of documents.
In order to be recorded, a document is submitted to a county
recorder along with the necessary recordation fees. If the
document meets the requirements in statute or local ordinance
that apply to that type of document, the recorder must record
it. The recording statutes specify in minute detail the form
and requirements that documents must meet.
Many documents must be acknowledged-affirmed by the parties to
the transaction as their action-and executed by following
specific procedures. For example, a deed conveying a property
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to a government agency must be accompanied by a specific form
that affirms the consent of the individual transferring the
property. However, some documents, such as patents, leases for
oil or minerals, and some court judgments, are exempt from the
acknowledgement requirement. After following any required
procedures, the document is then recorded and kept in the books
of the county recorder's office.
Recorded documents sometimes need to be re-recorded in order to
correct an error in a previously recorded document or to change
a name or other details. The County Recorders Association
estimates that annually about 3,500 documents in California are
re-recorded. There is no formal procedure to re-record
documents in statute, leading county recorders to establish
their own procedures for doing so that can vary across counties.
Some counties have allowed minor corrections to recorded
documents without requiring acknowledgement and execution of a
new document, while others require the document to be recorded
as if it were a new document. Entities such as mortgage
brokers, lenders, and escrow officers may do business in
multiple counties, so the County Recorders Association wants to
standardize this process across all counties.
Proposed Law
Assembly Bill 1974 specifies a procedure for re-recording
documents. Specifically, AB 1974 requires a document that is
presented to a county recorder for re-recording to be executed
and acknowledged or verified as a new document. This
requirement does not apply if any of the following apply:
The document is exempt from acknowledgement and
execution under current law,
The document is presented solely to correct a recording
sequence, or
The document is presented solely to make a minor
correction.
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AB 1974 defines a separate process for making a minor
correction. Specifically, a document may be re-recorded without
acknowledgement or execution if the document is presented along
with a corrective affidavit that sets out the information
corrected, is certified by the party submitting the affidavit
under penalty of perjury, and is acknowledged by the person
presenting it. AB 1974 defines minor corrections to include
certain changes to incorrect or missing names, an incorrect or
missing amount of tax due upon the recording of the document, or
a clarification of illegible text. The re-recorded document
must include a cover sheet that states the reason for
re-recording.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Recorded documents are used to inform
determinations of property rights and other legal matters. But
errors in recorded documents occasionally occur, and state law
does not specify a process for re-recording documents in order
to correct those errors. This lack of a defined process leads
to potential uncertainty over the accuracy or veracity of the
re-recorded documents. In addition, lenders and other entities
that frequently record documents in multiple counties face a
lack of consistency across counties when trying to correct
errors in recorded documents. AB 1974 establishes a
standardized process for county recorders to follow when
re-recording documents and provides a streamlined process for
correcting minor errors, such as an incorrect name. This
streamlined process avoids the need to track down all parties to
a recorded document for a new acknowledgement and execution,
saving time and money. At the same time, AB 1974 includes a
strong safeguard to ensure that this process is not abused by
requiring certification under penalty of perjury that the
information is true. AB 1974 is a commonsense fix to provide a
guarantee of accuracy by codifying practices that many county
recorders are already following.
2. Balancing act . The streamlined process in AB 1974 reduces
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the time and money needed to make minor corrections, relative to
requiring the document to be re-recorded as new. But that
process only applies to a narrow set of circumstances, such as
an incorrect name. There are other corrections that this bill
does not authorize to be changed through the streamlined
process, such as corrections to parcel numbers, that are seen as
uncontroversial by some. In their view, completing an entirely
new recording for these changes could have significant costs and
could delay the ability of assessors to promptly and correctly
assess property. Others see the potential for significant
consequences if those changes are fraudulently made.
Historically, county recorders and county counsels have followed
the processes that they feel are necessary to insure the
integrity of recorded documents. It is unclear whether this
bill strikes the right balance between guarding against fraud
and expediting uncontroversial changes.
3. Funding the mandate . The California Constitution generally
requires the state to reimburse local agencies for their costs
when the state imposes new programs or additional duties on
them. AB 1974 requires the corrective affidavit to be certified
under penalty of perjury. By creating a new crime, AB 1974 also
creates a new state-mandated program. But the bill partially
disclaims the state's responsibility for reimbursing local
governments for enforcing these new crimes. That's consistent
with the California Constitution, which says that the state does
not have to reimburse local governments for the costs of new
crimes (Article XIIIB, 6[a][2]). AB 1974 also provides that if
the Commission on State Mandates determines there to be a
reimbursable mandate for other portions of the bill, local
agencies must be reimbursed pursuant to an existing statutory
process. But county recorders charge fees for their services,
and the state doesn't have to reimburse local governments if
they can charge fees to support the increased responsibility.
The Committee may wish to consider amending AB 1974 to disclaim
the state's responsibility for reimbursing local governments
because of their ability to charge fees for recorded documents.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee: 19-0
Assembly Floor: 79-0
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Support and
Opposition (6/9/16)
Support : County Recorders Association of California (sponsor).
Opposition : Unknown.
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