BILL ANALYSIS
AB 2016
Page 1
Date of Hearing: April 27, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 2016 (Torres) - As Introduced: February 17, 2010
PROPOSED CONSENT
SUBJECT : Common Interest Developments: requests for notices
KEY ISSUE : Should a homeowners association be allowed to record
a single request for a copy of notices of a trustee's deed,
instead of having to file multiple requests for each separate
interest within the association?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial measure seeks to clarify the intent of SB
1511 (Chapter 527, Stats. of 2008), which permitted a homeowners
association (HOA) to record a request, in the event of a
foreclosure on a separate interest within the HOA, that the
mortgagee or trustee mail to the HOA a copy of the trustee's
deed upon sale. The purpose of the 2008 measure was fairly
straightforward: existing law makes all owners of separate
interests within the association members of the association, and
as members they must pay association fees. However, when a
separate interest in the HOA is foreclosed upon and the property
is subsequently sold, the HOA does not always know the name or
address of the successor in interest until months after the
sale. Although the purpose of SB 1511 was apparently to permit
an HOA to record a single request for all of its separate
interests, a handful of county recorders have rejected HOA
filings on the grounds that other provisions of existing law
appear to require a separate request for each separate property
and the name of each separate owner and mortgagee or trustee.
This bill seeks to clarify that an association's single recorded
request applies to all of the separate interests within the
association, and the request when filed only needs to include
the name of the association, notwithstanding provisions
elsewhere that appear to require separate requests naming each
owner and mortgagee. This bill passed out of the Assembly
Banking & Finance Committee on a 12-0 vote. There is no known
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opposition to the bill.
SUMMARY : Allows a homeowners association (HOA) in a common
interest development to record a single request for a copy of a
trustees deed upon sale of a separate interest within the HOA,
and clarifies that such a request does not constitute a request
for a document that transfers an interest in real property or
terminates a right to title in real property. Specifically this
bill :
1)Specifies that an HOA's recorded request for a copy of
trustee's deed upon sale of separate interest within the HOA,
does not, for the limited purposes specified, constitute a
request for a document that either effects or evidences a
transfer of an interest in real property or terminates any
interest, right, or encumbrance of an interest in real
property.
2)Specifies that an HOA's recorded request for a copy of a
trustee's deed upon sale of any separate interest within the
HOA shall provide a legal description or assessor's parcel
number of all of the separate interests within the HOA,
notwithstanding the existing law requiring that requests for
copies of notices of default and sale under deed of trust or
mortgage can only be recorded if they contain the names of the
mortgagor/trustor and mortgagee/mortgagor.
EXISTING LAW :
1)Provides, generally, that any person desiring a copy of a
notice of default and of sale under deed of trust or mortgage
may record, at any time subsequent to the recordation of the
deed of trust or mortgage and prior to a recordation of notice
of default, a request for a copy of the notice of default and
of sale. Specifies that the request must be recorded in the
office of the county recorder in which the property is
situated and must contain specified information identifying
the particular deed of trust or mortgage, and the names of the
trustor/mortgagor and trustee/mortgagee. (Civil Code Section
2924b (a).)
2)Provides, with respect to a separate interest in a homeowners
association, that the association may record a request for a
copy of a trustee's deed upon sale of a separate interest
within the association. Specifies that the request shall
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include a legal description or the assessor's parcel number of
the separate interests. Specifies that a request recorded
pursuant to this provision must identify the association and
must be recorded before the filing of the notice of default.
Requires the trustee, mortgagee, or other person to mail the
requested information to the association within 15 business
days after the trustee's deed is recorded. (Civil Code
Section 2924b (f).)
3)Specifies that no request made pursuant to 1) or 2) above, nor
any statement made therein, shall affect the title to real
property or be deemed notice to any person that the person
requesting the copies of notice has or claims any right,
title, or interest in the subject property. (Civil Code
Section 2924 (g).)
4)Requires that any document recorded with a county recorder
that effects or evidences a transfer of an interest in real
property or that terminates an interest or right in real
property must contain certain information, including the name
or names of persons having title or interest in the property.
(Government Code Section 27288.1.)
COMMENTS : According to the sponsor, the Community Association
Institute (CAI), this bill will clarify existing law by
expressly allowing a homeowners association (HOA) in a community
interest development to file a single request for a copy of a
trustee's deed in the event of a foreclosure and subsequent sale
of a separate interest within the HOA. The author and sponsor
contend that the purpose of this bill is merely to clarify the
intent of prior CAI-sponsored legislation, SB 1511 (Chapter 527,
Stats. of 2008).
Prior to the enactment of SB 1511, then existing law permitted
any person desiring a copy of any notice of default or notice of
sale under deed to record a document with the county recorder
requesting that the mortgagee or trustee send to the requester a
copy of the notice of default or sale. However, then existing
law required that the request contain certain information,
including the name of the owner of record and the name of
mortgagee or trustee. (Civil Code Section 2924b (a).) SB 1511
added a new subdivision to that statute so that, with respect to
an HOA, the association could file a single request for all the
separate interests within the HOA, and the recorded request
would only need to contain the name and address of the
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association and a legal description or assessor's parcel numbers
of the separate interests.
An HOA's interest in obtaining a copy of the trustee's deed upon
sale is straightforward enough: under existing law, every owner
of a separate interest in the HOA is also a member of the HOA
and must pay association fees. However, when a separate
interest is foreclosed upon and the mortgagee or trustee sells
the property to another party, the HOA does not always have the
name and address of the successor in interest and, accordingly,
has difficulty collecting fee assessments. SB 1511's sponsor,
who is also the sponsor of this bill, stated in 2008 that
"Learning the name and address of the successor in interest and
the date of the foreclosure sale within a timely manner would be
of tremendous help to the financial stability of homeowners
associations. Today, this information is provided many months
after the date of sale and as a consequence, associations
experience financial hardship." (As quoted in Senate Third
Reading Analysis of SB 1511, As Amended August 4, 2008.)
However, according to the sponsor, after SB 1511 went into
effect a few county recorders did not permit HOAs to record the
requests because those requests did not meet the requirements of
Government Code Section 27288.1. That statute specifies that
any document that is presented for recordation that "effects or
evidences a transfer or encumbrance of an interest in real
property" or that "releases or terminates any interest, right,
or encumbrance" in real property must contain specified
information, including the name or names of the owners or other
parties with a title or interest in the property. Of course,
the author and sponsor of SB 1511 had sought to eliminate this
very requirement in cases where an HOA was only attempting to
obtain a copy of the document for the limited purpose of
identifying the successor in interest - and not for the purpose
of evidencing a transfer of title or termination of a property
right or interest.
Therefore, in order to clarify the intent of SB 1511 and allow
an HOA to record a single notice for all association properties,
this bill makes two minor and technical changes to existing law.
First, this bill specifies that the provision permitting an HOA
to record a single request for all separate interests within the
association applies notwithstanding the general provision in the
same statute that requires specified information for each
individual property. Second, the bill clarifies that for
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purposes of Government Code Section 27288.1 - the statute that
requires specified content for documents involving a transfer of
title or termination of a property right or interest - that a
request by an HOA for a trustee's deed does not constitute a
request for a document that effects or evidences a transfer of
title or a termination of a property right or interest.
ARGUMENTS IN SUPPORT : According to CAI, the sponsor, an HOA
must have timely notice when a separate interest within the
association is foreclosed upon and sold to a new purchaser, so
that the HOA may "begin to receive monthly assessment payments
from the new owner in a timely manner, instead of waiting up to
8 months following the foreclosure sale." CAI claims that the
few county recorders that refuse to record the "blanket"
requests that apply to all separate interests in the association
are frustrating the purpose of the recently enacted SB 1511.
CAI notes that such "blanket recordation" is common in other
contexts, such as when amendments are made to an association's
Covenants, Conditions, and Restrictions (CC&R). This bill, the
CAI believes, will make it absolutely clear that an HOA may
record a single document for all separate interests, so long as
the request names the association and includes a legal
description or assessor's parcel numbers.
REGISTERED SUPPORT / OPPOSITION :
Support
Community Association Institute (sponsor)
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334