BILL ANALYSIS
AB 898
Page 1
ASSEMBLY THIRD READING
AB 898 (Lieu)
As Introduced February 26, 2009
Majority vote
BUSINESS & PROFESSIONS 6-4
-----------------------------------------------------------------
|Ayes:|Hayashi, Hernandez, Nava, | | |
| |John A. Perez, Price, | | |
| |Ruskin | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Emmerson, Conway, Niello, | | |
| |Smyth | | |
-----------------------------------------------------------------
SUMMARY : Provides the Secretary of State (SOS) 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 SOS'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
AB 898
Page 2
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)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 as it relates
to the recording of transfers.
2)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.
3)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.
4)Prescribes the maximum fees a notary public may charge for
specified services.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS : According to information provided by the author,
bogus documents are often notarized and submitted to the SOS for
processing. When a notarized document is presented to the SOS
for authentication, the SOS is only permitted to determine the
authenticity of the notary public's signature and seal, not the
authenticity of the underlying document. Once the SOS'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
SOS's certificate as proof that the underlying documents are
valid, rather than simply an authentication of the notary
public's signature and seal.
AB 898
Page 3
The author states, "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."
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.
AB 898
Page 4
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.
Analysis Prepared by : Rebecca May / B. & P. / (916) 319-3301
FN: 0000560