BILL ANALYSIS
AB 985
Page 1
GOVERNOR'S VETO
AB 985 (De La Torre)
As Amended September 10, 2009
2/3 vote
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|ASSEMBLY: |71-0 |(May 14, 2009) |SENATE: |24-8 |(September 11, |
| | | | | |2009) |
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|ASSEMBLY: |50-27|(September 12, | | | |
| | |2009) | | | |
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Original Committee Reference: JUD.
SUMMARY : Requires a county recorder, title insurance company or
other entity transferring of a deed or other written instrument
relating to title in real property to provide the recipient with
a document that will allow the recipient to remove the unlawful
restrictive covenants and to create a public record which does
not contain the restrictive covenant. Specifically, this bill :
1)Requires a county recorder, title insurance company, escrow
company, real estate broker, real estate agent, or association
that provides a copy of a deed or other written instrument
related to real property to a buyer or person who holds an
interest in the real property to also provide a Restrictive
Covenant Modification (RCM) form so that the recipient may
record the form and thereby effectively remove any unlawful
restrictive covenant. Specifically, the RCM form would remove
any language that purports to restrict the right of any owner
to transfer title to persons having specified characteristics,
including, but not limited to, race, color, religion, sex,
marital status, national origin, or sexual orientation.
Further authorizes other entities to record RCMs as specified,
and requires country recorders to make RCM forms available to
the public, as specified. Requires county counsel to make
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determination of whether the language identified by a person
requesting the modification contains an unlawful restriction
within a reasonable time frame, as specified.
2)Requires county recorders to create a public version of each
official record for which a RCM is recorded on or after
January 1, 2010, so that the public record with the
restrictive covenant redacted is available to the public in
electronic form, while the official record would still contain
traces of the original covenant. Permits a county recorder to
charge an initial fee of not more than $2, as specified.
3)Specifies that an electronic version of the unredacted record,
for which an RCM is recorded, would become the official record
for the purposes of this bill's provisions.
4)Specifies that with respect to provisions relating to familial
status, nothing in this bill shall be construed to apply to
housing for older persons or senior citizens, as defined.
The Senate amendments :
1)Delete a provision of the bill that would have required title
insurance companies involved in the transfer of property deeds
or other related written documents to strike from the deed or
other written documents any provisions that purport to forbid,
restrict, or condition the right of any person to sell, buy,
lease, or rent the property to any other person on the basis
of certain characteristics of that person, including, but not
limited to, race, color, religion, sex, marital status,
national origin, disability, or sexual orientation.
2)Add a provision requiring a county recorder, title insurance
company, escrow company, real estate broker, real estate
agent, or associations that provides a copy of a deed or other
written instrument related to real property to a buyer or
person who holds an interest in the real property to also
provide a Restrictive Covenant Modification (RCM) form and
relevant procedural information so that the recipient may
record the document and effectively remove any restrictive
covenant that purports to restrict the right of any owner to
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transfer title to persons having specified characteristics,
including, but not limited to, race, color, religion, sex,
marital status, national origin, or sexual orientation.
3)Add a provision requiring the county recorder to create an
electronic public record version whenever an RCM is recorded,
as specified.
AS PASSED BY THE ASSEMBLY , this bill that would have required
title insurance companies involved in the transfer of property
deeds or other related written documents to strike from the deed
or other written documents any provisions that purport to
forbid, restrict, or condition the right of any person to sell,
buy, lease, or rent the property to any other person on the
basis of certain characteristics of that person, including, but
not limited to, race, color, religion, sex, marital status,
national origin, disability, or sexual orientation.
FISCAL EFFECT : According to the Senate Appropriations analysis,
the bill will specify fee authority sufficient to cover the
costs of administering the program.
COMMENTS : In the 1948 companion decisions of Shelley v. Kramer
334 U.S. 1 and Hurd v. Hodge 334 U.S. 24, the United States
Supreme Court held that state court enforcement of racially
restrictive property covenants violated the due process and
equal protection clauses of the 14th Amendment of the U.S.
Constitution. While the Supreme Court ruling made such
covenants unenforceable, subsequent state legislation makes
racial discrimination in housing accommodations in any manner,
including the use of exclusionary covenants, unlawful. Although
originally targeting racial discrimination, these laws have
subsequently been amended to include discrimination on other
grounds, such as gender, religion, or sexual orientation, among
others. However, despite their unlawfulness and
unenforceability, these offensive exclusionary restrictions -
especially those based upon race - can still appear in existing
covenants, conditions and restrictions (CC&Rs) that are
transferred to the buyer, unless the restrictions have been
previously stricken, modified, or recorded over.
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Existing law permits a buyer or homeowner to file a "Restrictive
Covenant Modification" (RCM) document with the county recorder
that allows the homeowner to effectively "record over" the
restrictive covenant, so that the language of the covenant is
not generated in any subsequent documents produced for transfer
to a prospective buyer. Also, title insurers and any others who
transfer documents that contain a restrictive covenant must
attach a cover sheet notifying the buyer that the documents may
contain restrictive covenants, that these covenants are not
enforceable, and that the buyer may file an RCM to remove the
covenant. Once an RCM has been filed, the county recorder must
have county counsel review the covenant to ensure that the
covenant is indeed invalid before striking. While the
invalidity of some restrictions may be obvious, it is necessary
to have some form of review in order to ensure that an owner
does not attempt to unilaterally remove a valid covenant or
restriction.
This bill would require a county recorder, title insurer, escrow
company, or anything other person or entity that transfers
documents that may contain an unlawful restrictive covenant to
provide an RCM form so that the recipient buyer or property
owner may more easily record the document and effectively remove
the offensive and unlawful language from the property documents.
In addition, the bill as most recently amended will require
county recorders to create an electronic "public record"
whenever an RCM is recorded. This will ensure that all public
records that will circulate to subsequent buyers or owners will
not contain the offensive language, while retaining historical
evidence of the restrictive covenant in the "official record"
that is retained by the county recorder.
According to the author, this bill "Addresses one of the most
disgraceful discriminatory practices in California's history."
Although racially restrictive covenants may no longer be
enforceable, the author argues, the deeply offensive language is
still often imbedded in documents sent to the prospective buyer.
This measure, the author believes, will put into place a system
that will systematically eliminate these offensive provisions
from the public, circulating documents before they are received
by buyers.
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GOVERNOR'S VETO MESSAGE :
While the goal of this measure is a worthy one, the
practical legal effect is negligible. The restrictive
covenants this bill would redact from certain recorded
documents are already illegal and void under existing
law. Existing law already allows an owner of a
property with restrictive covenants to record a
"Restrictive Covenant Modification" (RCM) form in
order to remove any void or unenforceable covenant,
condition, or restriction and permits the county
recorder to waive any fees for filing the RCM.
Secondly, it is unknown if the $2 recording fee
attached to this bill to fund the redacting of
restrictive covenants has any nexus to the actual cost
of doing so. To make matters worse, the bill allows
local municipalities to raise the recording fee,
ostensibly to a "reasonably sufficient to recover the
costs for performing activities related to the
redaction of an unlawfully restrictive covenant".
However, without a hard cap or sunset of the fee, the
fee may be raised and excess amounts used to fund
services or projects only remotely related to the
redaction of objectionable covenants.
For these reasons, I am unable to sign this bill.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0003295