BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2016|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
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|327-4478 | |
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THIRD READING
Bill No: AB 2016
Author: Torres (D)
Amended: 6/22/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/15/10
AYES: Corbett, Harman, Hancock, Leno, Walters
ASSEMBLY FLOOR : 75-0, 5/03/10 - See last page for vote
(Consent)
SUBJECT : Common interest developments: requests for
notices of
default
SOURCE : Community Association Institute
DIGEST : This bill seeks to allow a homeowners
association in a common interest development to record a
single a copy of a trustee's deed upon the sale of any
separate interest within the association at foreclosure.
ANALYSIS : Existing law, the Davis-Stirling Common
Interest Development Act, defines and regulates common
interest developments (CIDs), including the ability of the
association to levy regular and special assessments
sufficient to perform its obligations. (Civ. Code Sec.
1350 et seq.)
Existing law regulates the non-judicial foreclosure of
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AB 2016
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properties pursuant to the power of sale contained within a
mortgage contract. To commence the process, existing law
requires the trustee, mortgagee, or beneficiary to record a
Notice of Default and requires three months to lapse before
setting a date for sale of the property. (Civ. Code Secs.
2924, 2924f.) Existing law allows a person to record a
request to be notified upon the filing of a notice of
default or notice of sale and requires the trustee to mail
notice to those persons. (Civ. Code Secs. 2924b(a),
2924b(b)(1).)
Existing law permits an association to record a request
that the mortgagee, trustee, or other person authorized to
record a notice of default mail the association a copy of
the trustee's deed upon sale of a separate interest within
the association at foreclosure. The request must include a
legal description or the assessor's parcel number of the
separate interests, the name and address of the
association, and a statement that it is a homeowners'
association. (Civ. Code Sec. 2924b(f).)
Existing law requires the above request to be recorded
before the filing of a notice of default, and requires the
mortgagee, trustee, or other authorized person to mail the
requested information to the association within 15 business
days following the date the trustee's deed is recorded.
(Civ. Code Sec. 2924b(f).)
Existing law requires specified information to be included
in any document that effects or evidences a transfer or
encumbrance of an interest in real property or that
releases or terminates any interest, right, or encumbrance.
(Gov. Code Sec. 27288.1.)
This bill states that a request filed by an association
pursuant to the above provisions does not, for purposes of
Government Code Section 27288.1, constitute a document that
either effects or evidences a transfer or encumbrance of an
interest in real property or that releases or terminates
any interest, right, or encumbrance of an interest in real
property.
Background
AB 2016
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California, as well as the nation, is facing an
unprecedented threat to the economy and housing market due
to increasing numbers of foreclosures caused by mortgage
payment defaults. When a foreclosure occurs in a common
interest development (CID), and a struggling homeowner
stops paying their association dues, the association must
continue to function despite that loss of funds. If that
property is sold in a foreclosure sale, it is in the best
interest of the association to begin collecting dues from
the new owner of that home as soon as possible.
Under the Davis-Stirling Common Interest Development Act,
CIDs are to be managed by a homeowners association that is
authorized to levy regular and special assessments to cover
operating expenses and to fulfill their obligations to
members of the association. After sale or transfer of
ownership, the subsequent owner is responsible for paying
assessments from the time they become the legal owner of
the property.
In order to assist associations in collecting assessments
from subsequent purchasers of foreclosed properties, SB
1511 (Ducheny, Chapter 527, Statutes of 2008) allowed an
association to request that the person authorized to record
the notice of default (usually a trustee) mail the
association the trustee's deed upon sale. The deed both
informs the association that the property was sold, and
includes information about the new owner of the property so
that the association may begin collection of dues.
To address issues encountered by associations using the
provisions of SB 1511, this bill seeks to clarify that a
homeowners association may record a single request for a
copy of notices of a trustee's deed with regards to all
separate interests within the association.
Prior Legislation
SB 1511 (Ducheny), Chapter 527, Statutes of 2008, which
passed the Senate on consent on 8/19/01 (35-0).
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
AB 2016
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SUPPORT : (Verified 6/22/10)
Community Association Institute (source)
Executive Council of Homeowners
ARGUMENTS IN SUPPORT : According to the author's office:
AB 2016 clarifies the process established by SB 1511,
by allowing HOAs to record one notice against all the
properties in their HOA as a group. The county
assessors have interpreted SB 1511 to require that an
association record a document on each individual home,
versus on the entire association in one action. This
is expensive and time consuming for an HOA. AB 2016
corrects this misunderstanding.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Tom Berryhill, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Conway, Cook, Coto,
Davis, De La Torre, De Leon, DeVore, Emmerson, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, Norby, V.
Manuel Perez, Portantino, Ruskin, Salas, Saldana,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada
NO VOTE RECORDED: Furutani, Hall, Silva, John A. Perez
RJG:nl 6/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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