BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1974| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1974 Author: Gallagher (R) Amended: 8/19/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/15/16 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach, Pavley SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 79-0, 5/5/16 (Consent) - See last page for vote SUBJECT: County recorder: recordation of documents SOURCE: County Recorders Association of California DIGEST: This bill specifies procedures for the re-recording of recorded documents. Senate Floor Amendments of 8/19/16 narrow the cases in which a document may be re-recorded and makes other related and technical changes. ANALYSIS: Existing law: AB 1974 Page 2 1)Establishes a recorder in each county that is responsible for examining and recording all documents that deal with establishing ownership of land in counties, such as title documents. 2)Prescribes procedures for the recording of documents, specifically: a) A document must be submitted to a county recorder along with the necessary recordation fees. b) If the document meets the requirements in statute or local ordinance that apply to that type of document, the recorder must record it. c) The recording statutes specify in minute detail the form and requirements that documents must meet. 3)Requires some recorded documents to be acknowledged-affirmed by the parties to the transaction as their action-and allows the recording of other documents to be done without acknowledgement. This bill: 1)Requires a document that is presented to a county recorder for re-recording to be executed and acknowledged or verified as a new document, unless any of the following apply: a) The document is exempt from acknowledgement and execution under current law, b) The document is presented solely to correct a recording AB 1974 Page 3 sequence, or c) The document is presented solely to make a minor correction 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. 2)Defines minor corrections to include changes to: a) An incorrect or missing address if the rerecorded document will be returned to the party whose information is being corrected, b) An incorrect or missing amount of tax due upon the recording of the document, and c) A clarification of illegible text. 3)Requires the re-recorded document to include a cover sheet that states the reason for re-recording. 4)Clarifies that changing the sequential numbers assigned to a document do not require the document to be executed as a new document. 5)Provides that, when correcting a recording sequence, the intent of the parties regarding the priority of recorded documents shall be controlling regardless of the sequence of recording, and state that this provision is declaratory of existing law. Background AB 1974 Page 4 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. 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. AB 1974 Page 5 2)Balancing act. The streamlined process in AB 1974 reduces 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 some incorrect addresses. 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes SUPPORT: (Verified8/22/16) County Recorders Association of California (source) California Land Surveyors Association OPPOSITION: (Verified8/22/16) None received ASSEMBLY FLOOR: 79-0, 5/5/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, AB 1974 Page 6 Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Beth Gaines Prepared by:Anton Favorini-Csorba / GOV. & F. / (916) 651-4119 8/22/16 22:41:11 **** END ****