BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
985 (De La Torre)
Hearing Date: 08/27/2009 Amended: 07/09/2009
Consultant: Jacqueline Wong-HernandezPolicy Vote: Judiciary 5-0
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BILL SUMMARY: AB 985 makes several changes to facilitate the
removal of unlawfully restrictive covenants in deeds of real
property. This bill would:
1) Allow a title insurance company, escrow company, real estate
broker, real estate agent, or any other person to record a
Restrictive Covenant Modification (RCM), and require the county
recorder to notify the owner of the property of the request;
2) Require county recorders to make RCM forms, and instructions
for their completion, available to the public;
3) Require county counsel to make a determination about the
lawfulness of a covenant within a reasonable amount of time, not
to exceed three months;
4) Require county recorders to create a dual records system made
up of "official records" which contain the unlawful restriction
but are exempt from disclosure under the Public Records Act
(except pursuant to a subpoena or court order) and "public
records" which are an exact copy of the official record, but
with the unlawful restriction redacted.
5) Allow county recorders to charge up to $3 per recorded
document, as specified.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
New State Mandates on $0 Fee authority,
non-reimbursable General
County Recorders
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill requires new duties for county recorders, mandated by
the state. This bill contains multiple conflicting provisions
with regard to a county's ability to charge a fee to cover its
expenses and, thus, may create mandate on counties that the
state will have to reimburse.
Under existing law, any provision in any deed of real property
in California that purports to restrict the right of any persons
to sell, lease, rent, use, or occupy the property to persons
having any characteristic protected by the Fair Employment and
Housing Act is void. A property owner can record a Restrictive
Covenant Modification (RCM) form in order to remove any void or
unenforceable covenant, condition, or restriction on his or her
property. The most common of these are racially restrictive
covenants, which were ruled unconstitutional in 1948 and are
against federal and state law to enforce. Most counties do not
charge a specific fee to property owners who request this
service, and it is rarely used.
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AB 985 (De La Torre)
This bill allows any person to file an RCM for any property deed
that person believes to contain a prohibited restrictive
covenant, and requires that the county recorder notify the owner
or owners of the property. This bill requires county counsel to
make a determination as to whether there is an unlawful
restrictive covenant, within 90 days, and return the documents
to the recorder. This bill would also direct county recorders to
establish an unlawfully restrictive covenant redaction program
that creates a dual system of "public records" and "official
records."
The duties and requirements that this bill places on county
recorders constitute a state mandate. In addition to specified
new duties, this bill may substantially increase the number of
RCM requests because it expands eligibility to file such a
request from only an owner of the property in question, to any
person. Furthermore, by requiring a dual system of public
records to ensure the "public record" version of these documents
reflects the RCM, and that those new public records be
electronic, any county whose records are entirely electronic
(including documents before 1948) would be forced to create new
versions of the records from hard copy or microfiche/microfilm
versions.
The implementation process could occur in this fashion: A
concerned citizen discovers the illegal and offensive language
in "Document A" when searching through microfilm in the
recorder's office. The concerned citizen files an RCM form and,
as required, identifies the illegal language. The county
recorder forwards RCM and the identified language to county
counsel. County counsel makes a decision as to what language
should be redacted. Upon deciding it should be, the county
recorder re-records "Document A" (in its original form) so that
it is in an electronic format. This re-recorded "Document A" is
now "Document B." After "Document B" has the illegal (and county
counsel approved) language redacted, it becomes "Document C."
"Document C" is the electronic redacted version of "Document A"
and it is the Public Record. "Document B" is the Official Record
and has the disclosure restrictions associated. The re-recording
process would occur in 56 counties - Ventura and Contra Costa
counties' documents are all electronic.
State-mandated local programs are not reimbursable if the local
entity can charge a fee to recover the costs of implementation.
This bill contains potentially conflicting fee provisions, with
regard to determining whether the state might reasonably be
required to reimburse his new mandate. This bill allows counties
to charge a fee of up to $3 on every document recorded in a
county in order to pay for this program. In one provision of the
bill, it states that upon implementing the maximum fee, if a
county recorder finds it insufficient to cover the costs of the
program, the recorder does not have to perform the specified
duties. A subsequent provision states that if the maximum fee is
not implemented, the county recorder is still expected to
perform the duties to the extent it would have had the fee been
implemented. These provisions may conflict because, in another
part of the bill, counties are required to determine what level
of fee (up to $3) is reasonable, and only charge that amount. In
the event that what was thought to be reasonable was less than
$3, and in was later shown insufficient, county recorders are
still expected to adhere to the new duties and requirements.
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AB 985 (De La Torre)
Because counties vary in size, in number of properties, in
number of RCMs filed currently, in number of documents recorded
that would be subject to a fee, and in county recorder document
procedures, it cannot be determined if the fee set forth in this
bill will cover the costs to each county. The cost of county
counsel and recorder staff also vary by county, and the number
of RCMs that will be filed under these provisions will vary.
Filing an RCM concerning one's own property is not common, but
allowing anyone to file an RCM as a third party could
dramatically increase the numbers. Counties would have to
anticipate staffing needs, create new procedures, and find out
for themselves if the fee provided for is sufficient. If it is
not sufficient for any one of the 58 counties, the state may be
forced to reimburse the counties activities.
AS PROPOSED TO BE AMENDED: The author will specify fee authority
sufficient to covert he costs of administering the program.
Conflicting provisions will be removed.