BILL ANALYSIS
AB 864
Page 1
ASSEMBLY THIRD READING
AB 864 (Davis)
As Amended June 5, 2007
Majority vote
HOUSING 6-1 APPROPRIATIONS 12-5
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|Ayes:|Saldana, Garcia, Laird, |Ayes:|Leno, Caballero, Davis, |
| |Hancock, Mullin, Swanson | |DeSaulnier, Huffman, |
| | | |Karnette, Krekorian, |
| | | |Lieu, Ma, Nava, Solorio, |
| | | |Feuer |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Sharon Runner |Nays:|Walters, Emmerson, La |
| | | |Malfa, Nakanishi, Sharon |
| | | |Runner |
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SUMMARY : Requires a person or entity who acquires a property
that is uninhabitable or otherwise found to be in substandard
condition to provide the building code enforcement agency
(enforcement agency) with specified information. Specifically,
This bill :
1)Requires, upon a sale or exchange of real property, a person
or entity who acquires such real property that has a notice of
substandard condition, notice of substandard building, or
uninhabitability to provide specified information to the
enforcement agency, including the following:
a) Filing with the enforcement agency a notarized document
containing:
i) The name, true mailing address, telephone, fax and
e-mail of all owners;
ii) The address of the subject property;
iii) Date of transfer;
iv) The plan (including timeline, costs, available
financial resources, and if applicable relocation of
tenants) for correction of substandard conditions; and,
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v) Proof, if any, of liability insurance.
b) Providing the enforcement agency with personal
identification issued by the federal, California, another
state, local government, or another country; and,
c) Posting of information contained in #2) a) i-iii) above
at the subject property if 16 units or more and any portion
of the property is occupied within 15 days after the date
of sale or transfer of the property.
2)Enumerates the persons to be identified if an entity is a
corporation, limited liability company, partnership, limited
partnership, trust, or real estate investment trust.
3)Requires an owner who resides outside California, to identify
a natural person who resides in state and who manages the
property.
4)Allows the enforcement agency to disclose to the tenants, upon
request, the name and address of the person or entity that
acquires the property.
5)Prohibits the enforcement agency from disclosing to a member
of the public the telephone number, fax number, e-mail address
or the document used to establish the owner's identity unless
ordered by a court.
6)Allows local governments to adopt and enforce laws consistent
with this bill.
7)Establishes a misdemeanor for failure to comply with these
provisions or otherwise provide false information to an
enforcement agency.
8)Provides that a person or entity that does not comply with
this bill may not raise or collect rent or issue a three day
notice to pay or quit.
9)Exempts any real property owned by a governmental entity, or
real property acquired by a financial institution that has a
deed of trust recorded on the real property securing a loan.
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10)Repeals a cross reference to existing law that expired in
2005.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential, probably minor, reimbursable costs for
cities and counties to receive and file information provided by
property owners. These costs could be more than offset by
savings to local building code enforcement agencies by having
information about owners of substandard buildings readily
available. Potential nonreimbursable costs to local government
for enforcement and incarceration, offset to some extent by fine
revenues.
COMMENTS : Vacant and run-down homes, apartments, and commercial
buildings can often pose on-going health and public safety
problems for neighborhoods. Existing law allows local building
officials to abate nuisances and building code violations after
giving a 30-day notice. After inspecting a property, the local
building official requires the property owner to repair or
demolish the building. If the property owner does not make
timely repairs, the local building official can make the repairs
or demolish the building and seek to recover costs from the
owner. As the affordable housing shortage continues it is
critical that housing stock not be lost when repairs could have
been made early on to prevent condemnation.
Under the State Housing Law, all residential dwellings are
subject to building standards as adopted by the California
Building Standards Commission in the California Building
Standards Code (Title 24 of the California Code of Regulations).
Building codes are generally enforced by local building
officials, often as local ordinances. When violations are
discovered or a nuisance conditions exists, a building official
sends the owner a letter notifying him or her of the deficiency.
Owners are then generally given at least 30 days to correct the
violation. If violations remain uncorrected after 30 days, code
officials may institute any appropriate action or proceeding to
correct building code violations or abate nuisances.
AB 1112 (Goldberg), Chapter 487, Statutes of 2001, establishes a
similar real property registration requirement as provided under
AB 864 to apply as a pilot program in Los Angeles County. AB
1112 creates a residential rental property registry which
allowed local code enforcement to locate the owner of the
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property in the event of an emergency, or code violation.
The rationale behind AB 1112 articulated the same concerns as
those expressed by the author of AB 864, which is that in some
cases it is difficult to locate the legal owner of property.
According to the author of AB 1112, "in efforts to hide true
legal ownership, such owners have been know to create limited
liability partnerships, out-of-state or offshore corporations,
family trusts and/or sham operations."
AB 1034 (Mullin), Chapter 474, Statutes of 2003, applies the
registration requirement statewide.
In transfer of ownership, new owners are given notice of a
condition and given an opportunity for correction. Code
enforcement and/or criminal prosecution are suspended during
this period.
According to the author, it is common place for unscrupulous
owners of substandard properties to transfer ownership to escape
responsibility for fixing or maintaining rental properties.
There is nothing in the law that requires a buyer to record
anything accepting the deed, so that even if the new "owner" is
located, he or she is easily able to disclaim ownership stating
that the grant deed was never accepted. Without the new buyer
acknowledging ownership and providing a plan for correction, the
repair of substandard properties may be indefinitely delayed or
never accomplished
Supporters argue that this bill is vital in order to determine
responsibility for compliance with code enforcement actions.
Too often, properties with building code violations are
"flipped" to other owners, often shells within shells, making it
difficult if not impossible to enforce code compliance.
Analysis Prepared by : Hubert Bower / H. & C.D. / (916)
319-2085
FN: 0001449