BILL ANALYSIS
AB 331
Page 1
ASSEMBLY THIRD READING
AB 331 (Hall)
As Amended May 19, 2009
Majority vote
JUDICIARY 10-0
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|Ayes:|Feuer, Tran, Brownley, | | |
| |Evans, Jones, Knight, | | |
| |Krekorian, Lieu, Monning, | | |
| |Nielsen | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires a landlord, at the time of executing a rental
agreement for a single-family dwelling, or a multifamily
dwelling of four units or less, to disclose to a prospective
tenant if the property is subject to any outstanding liens or
pending suits. Specifically, this bill :
1)Provides that, if at the time of execution of a rental
agreement of a single family dwelling, or a multifamily
dwelling of four units or less, the premises are subject to
any of the circumstances listed below, and the landlord has
received written notice regarding the existence of any of
those circumstances, then the landlord shall disclose those
facts to the tenant in writing before the execution of the
agreement:
a) Any outstanding notice of default under a trust deed,
mortgage, contract of sale, or notice of trustee's sale
under a trust deed;
b) Any pending suit to foreclose a mortgage, trust deed, or
vendor's lien under a contract of sale;
c) Any pending declaration of forfeiture or suit for
specific performance of a contract of sale; and,
d) Any pending proceeding to foreclose a tax lien.
1)Provides that if the tenancy terminates as a result of a
circumstance that the landlord failed to disclose as required,
then the tenant may recover from the landlord twice the actual
damages or twice the monthly rent, whichever is greater, and
all pre-paid rent, in addition to any other remedy at law.
AB 331
Page 2
2)Specifies that this bill does not apply to premises managed by
a court appointed receiver.
EXISTING LAW provides, generally, that a landlord must provide
various notices to a tenant relating to any physical defects or
hidden dangers in the property, but is silent on required
disclosure of legal defects.
FISCAL EFFECT : None
COMMENTS : This bill would give a tenant, who is seeking to rent
a single-family dwelling, or a multifamily dwelling of four
units or less, timely information about any liens or pending
suits against the property, including any that may result in a
foreclosure. In particular, the author and sponsor (the
California Apartment Association) are concerned about tenants
who rent a home and then, shortly thereafter, learn that the
tenancy will be terminated because the home is being foreclosed
upon. Supporters claim that in light of the ongoing foreclosure
crisis, this is happening with greater frequency, subjecting
tenants to the hardships of eviction and displacement through no
fault of their own. If a tenant had known this information at
the time of executing the agreement, he or she could have
weighed the risks and possibly taken other options.
Specifically, if a landlord has received written notice that the
property is subject to a lien or other encumbrance, then this
bill would require the landlord to disclose this fact to the
tenant in writing. If the landlord fails to disclose this
information, and the tenancy were to terminate because of a lien
or encumbrance known to the landlord, then the tenant would be
entitled to recover twice the actual damages or twice the
monthly rent, whichever is greater, plus any pre-paid rent. The
bill would not, however, apply to any premises under the
management of a court appointed receiver.
According to the sponsor, the California Apartment Association
(CAA), this is a "fair and reasonable" measure that will help
potential tenants "make an informed decision about whether to
rent the property." CAA claims that, as a result of the
foreclosure crisis, some tenants have entered into rental
agreements "only to discover shortly thereafter that the house
may soon be foreclosed upon. The owners of these properties,"
AB 331
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CAA claims, "provided no warning about the pending foreclosure."
The San Francisco Assessor-Recorders Office, the Consumer
Attorneys of California, and the Non-Profit Housing Association
of Northern California support this measure for substantially
similar reasons.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0000832