BILL ANALYSIS
AB 898
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Date of Hearing: May 5, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 898 (Lieu) - As Introduced: February 26, 2009
SUBJECT : Notaries public.
SUMMARY : Provides the Secretary of State (Secretary) with the
discretion to refuse to perform a service or filing that is
unlawful, prohibits the use of a subscribing witness when
establishing a power of attorney, and eliminates the requirement
for notaries public, other than those who work for financial
institutions, to perform protests. Specifically, this bill :
1)Authorizes the Secretary's office to refuse to perform a
service or refuse a filing based on a reasonable belief that
the service or filing is being requested for any of a number
of specified improper purposes.
2)Adds a power of attorney to the types of instruments for which
a proof of the execution by subscribing witness is prohibited
and would further prohibit a proof of the execution for any
instrument requiring a notary public to obtain a thumbprint
from the party signing the document in the notary public's
journal.
3)Narrows the definition of a protest with respect to notaries
public to those employed with a financial institution.
4)Limits the duties to demand acceptance and payment of foreign
and inland bills of exchange, or promissory notes, to protest
them for nonacceptance or nonpayment, and to exercise any
other powers and duties regarding nonacceptance or nonpayment
of bills or notes that by law may be performed by notaries, to
notaries public employed by financial institutions.
5)Deletes the prescribed maximum fees for a protest for the
nonacceptance or nonpayment of a bill or note.
6)Makes other conforming amendments.
EXISTING LAW :
1)Sets forth the fees the Secretary is authorized to charge for
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the provision of specified business services.
2)Relating to the recording of transfers prohibits a proof of
the execution of any of several types of specified
instruments, including a grant deed, mortgage, deed of trust,
quitclaim deed, or security agreement.
3)Provides that a protest is a certificate of dishonor made by a
United States consul or vice consul, or a notary public or
other person authorized to administer oaths by the law of the
place where dishonor occurs.
4) Prescribes the duties of a notary public, including the duty
to demand acceptance and payment of foreign and inland bills
of exchange, or promissory notes, to protest them for
nonacceptance or nonpayment, and to exercise any other powers
and duties that by law may be performed by notaries.
5)Prescribes the maximum fees a notary public may charge for
specified services.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Purpose of the bill . According to the author's office, "As the
economy worsens and home values continue to drop dramatically,
blatant and costly scams have arisen to defraud hardworking
Californians of their well deserved money. Many of these scams
and fraudulent documents have become much more sophisticated and
appear to an average Californian as being legitimate. These
scams are pushing many Californians into deeper debt and must be
alleviated. AB 898 addresses many of these activities by
preventing document fraud.
"AB 898 will help reduce the potential for document fraud and
real estate fraud in three key areas: First, provides the
Secretary of State with the authority to refuse to process
documents that are clearly intended for fraudulent purposes;
Second, limits a person's ability to obtain power of attorney
documents; and Third, eliminates the mandate that all notaries
public process antiquated documents (i.e. protests) that are
frequently used for fraudulent purposes."
Background . According to information provided by the author,
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bogus documents are often notarized and submitted to the
Secretary of state for processing. When a notarized document is
presented to the Secretary for authentication, the Secretary is
only permitted to determine the authenticity of the notary
public's signature and seal, not the authenticity of the
underlying document. Once the Secretary's certificate is
attached to a document, even if the underlying document is not
authentic, it can be used to harass people with false financial
claims and to obtain fraudulent identification indicating
diplomatic immunity. Other entities may view the Secretary's
certificate as proof that the underlying documents are valid,
rather than simply an authentication of the notary public's
signature and seal.
A "subscribing witness" is a person who witnesses the signing of
a document and appears before a notary public on behalf of the
principal signer to attest that the principal signer has signed
the document. Although current law prevents the use of a
subscribing witness as proof of signing on specific real
property documents, a subscribing witness can currently be used
when notarizing a power of attorney document that could be later
used to fraudulently sign multiple real property deeds or other
estate documents.
A "protest" is a written statement by a notary public, or other
official authorized to administer oaths, identifying a
negotiable instrument, and certifying that it was presented for
payment or the reason why the instrument was not presented for
payment, and that the negotiable instrument was not accepted or
paid. Examples of negotiable instruments include a check or
promissory note. The failure to pay after presentment is called
a "dishonor." The purpose of the protest is to serve as a
formal statement of dishonor and to initiate the formal process
required to begin civil proceedings to secure payment for the
negotiable instrument that has been dishonored.
Notaries public are currently required to perform "protests" and
issue certificates of dishonor related to nonpayment of
negotiable instruments, such as a check or promissory note. The
protest can then be used to begin civil legal proceedings.
According to information provided by the author, this protest
procedure is archaic and is seldom performed for legitimate
purposes. Bogus protests have been used in tax evasion schemes,
as well as to harass people and entities by asserting invalid
liens.
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REGISTERED SUPPORT / OPPOSITION :
Support
Secretary of State Debra Bowen (sponsor)
City of Riverside
Opposition
None on file.
Analysis Prepared by : Whitney Clark / B. & P. / (916)
319-3301