BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 2618 (Nestande)
As Amended March 25, 2010
Hearing Date: June 10, 2010
Fiscal: No
Urgency: No
BCP:jd
SUBJECT
Local Government: County Recorder
DESCRIPTION
This bill would authorize the board of supervisors of any county
to adopt a resolution authorizing the county recorder to notify
a party of the execution of an instrument affecting their
interest in real property, within 30 days of the resolution, as
specified.
BACKGROUND
Real estate fraud has impacted struggling homeowners throughout
the state for many years. In response to several scams taking
place in the early 1990s, the Legislature approved SB 1842
(Watson, Chapter 815, Statutes of 1992), which permitted the Los
Angeles County Recorder to notify property owners within 30 days
after the recording of a deed. That notification sought to
respond to scams where homeowners were tricked into signing a
quitclaim deed for their property (thus, transferring the home),
and where "foreclosure sharks" forge an owner's signature and
take out a loan on the property without their knowledge or
consent. While that bill sunset on January 1, 1996, SB 1631
(Watson, Chapter 177, Statutes of 1996) permanently continued
its provisions the following year. Specifically, that bill
permitted the Los Angeles County Board of Supervisors to adopt a
resolution authorizing the county recorder to notify the parties
executing specified documents affecting their interest in real
property.
As a result of concerns about fraud in Riverside County, SB 1287
(more)
AB 2618 (Nestande)
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(Hollingsworth, Chapter 117, Statutes of 2008) enacted similar
provisions with regards to that county. The extension was
supported by two cases where several undeveloped properties were
sold without the owners' knowledge. Given the remote nature of
the properties, the owners did not know that their property had
been sold and in one case, the owner only discovered the scam
when he drove past the property and discovered a "for sale"
sign.
This bill would further extend the above program to any county,
thus permitting any board of supervisors to implement the
notification requirements in any county.
CHANGES TO EXISTING LAW
Existing law authorizes the Los Angeles County Board of
Supervisors and the Riverside County Board of Supervisors to
adopt a resolution authorizing the county recorder to notify the
parties or parties executing a deed, quitclaim deed, or deed of
trust. (Gov. Code Secs. 27297.6, 27297.7.)
Existing law permits the Los Angeles County recorder to collect
a fee from the party filing a deed, quitclaim deed, or deed of
trust. That fee, capped at $7, may not exceed the mailing cost
of the above notice. (Gov. Code Sec. 27387.1.)
This bill would expand the above authorization statewide by
permitting a board of supervisors of any county to adopt a
resolution authorizing the county recorder to notify the parties
executing a deed, quitclaim deed, or deed of trust. This bill
would not extend the fee authority statewide.
COMMENT
1. Stated need for the bill
According to the author:
Assembly Bill 2618 is designed to equip counties with a tool
that will enable individuals to fight real estate fraud.
There are horror stories of people having had their home
unknowingly sold. Citizens are better able to protect
themselves and seek help once they gain knowledge of
recordations affecting their property. AB 2618 would allow
a county a mechanism to accomplish this protection.
AB 2618 (Nestande)
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2. Notification program extended statewide
By removing county specific language currently in Government
Code Section 27297.7, this bill would permit any board of
supervisors to pass a resolution authorizing the county recorder
to, within 30 days of recordation, notify the parties executing
certain documents that affect their interest in real property.
Those documents, a deed, quitclaim deed, or deed of trust, all
act to transfer the individual's property interest to another
party. Once a property has been fraudulently transferred, the
perpetrator may then attempt to take out a loan secured by the
newly transferred property or even turn around and sell the
property. Although that notification would not prevent a
fraudulent transfer, it would alert the property owner that such
a transfer has occurred - that individual can then notify
authorities and take the necessary steps to clear the title to
their property.
Regarding the actual process being used to "steal" a person's
home, the AARP's Scam Alert: Home, Stolen Home, contends that:
[a]rmed with property records, crooks can . . . purchase $10
property transfer forms at any office supply store. The
signatures of "sellers" are forged, and paperwork is filed
with the city or county recorder's office. In many states,
deed recorders and those who oversee property closings are
not required to authenticate the identities of buyers or
sellers. Some crooks simply create fake IDs, stealing the
real homeowner's identity.
With a newly issued deed, stolen homes are sometimes sold .
. . for a fraction of their worth to cash-paying buyers (who
are also scammed). But more often, hijacked homes are used
as collateral to get new loans. Lenders are more likely to
issue new loans to homeowners with no existing mortgage.
"The elderly are most often targeted because they usually
don't have a mortgage," says Molly Butters of the Indiana
Attorney General's Office.
Provided that an individual promptly responds to a notification
that their property has been transferred without their consent,
that individual may be able to reduce the repercussions of that
fraudulent transfer.
3. No fee authority
AB 2618 (Nestande)
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Under existing law, the Los Angeles County recorder may collect
a fee of up to $7 from the party filing a deed, quitclaim deed,
or deed of trust to cover the cost of mailing the notices sent
to homeowners. In extending the program to Riverside County, SB
1287 (Hollingsworth, 2008) did not authorize Riverside County to
charge a fee to cover costs associated with the program. This
bill would similarly expand the program, but not grant fee
authority to additional counties who do want to notify
homeowners of the filing of these documents. As this is a
voluntary program, counties would likely authorize the program
only where there were sufficient funds to support the sending of
these notices.
Support : California District Attorneys Association
Opposition : None Known
HISTORY
Source : County Recorders Association of California (CRAC)
Related Pending Legislation : SB 878 (Liu), would expand the
scope of existing law to allow Los Angeles County to notify
affected parties, including occupants of the property, when a
notice of default or notice of sale has been recorded. The bill
would also allow for the Los Angeles County Recorder to collect
a fee of up to $7 in order to cover the costs of notifying the
parties and providing information about housing assistance and
counseling.
Prior Legislation :
SB 1842 (Watson, Chapter 815, Statutes of 1992) (See
Background.)
SB 1631 (Watson, Chapter 177, Statutes of 1996) (See
Background.)
SB 1287 (Hollingsworth, Chapter 117, Statutes of 2008) (See
Background.)
Prior Vote :
Assembly Local Government Committee (Ayes 8, Noes 0)
Assembly Floor (Ayes 74, Noes 0)
AB 2618 (Nestande)
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