BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 120|
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THIRD READING
Bill No: SB 120
Author: Lowenthal (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-2, 3/31/09
AYES: Corbett, Florez, Leno
NOES: Harman, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Residential tenancies
SOURCE : Western Center on Law and Poverty
DIGEST : This bill extends certain tenant protections to
apply after a foreclosure sale. For example, existing law
prohibits a landlord, with the intent to terminate the
tenancy, from interrupting or terminating a tenant's
utility service, changing the locks, or removing a tenant's
personal property from the premises. This bill includes a
successor in interest who acquired the property through
foreclosure in the definition of "landlord" subject to
these prohibitions. This bill provides that provisions of
existing law regarding the collection and return of
security deposits apply whether the termination of the
landlord's interest was voluntary or involuntary and in the
case of a trustee's sale. This bill extends current law's
protections requiring utilities, public utilities, and
districts to notify tenants of multifamily dwellings of an
CONTINUED
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impending shut-off of utility service to also include
tenants living in single-family homes. This bill also
strengthens current law by requiring that the notice be
mailed (existing law requires only posting) and that the
notice be provided in English, Spanish, Chinese, Tagalog,
Vietnamese, and Korean.
ANALYSIS : Existing law prohibits a landlord, with intent
to terminate the tenancy, from willfully causing the
interruption or termination of any utility service provided
to a tenant, whether or not the service is under the
control of the landlord.
Existing law prohibits a landlord from willfully engaging
in the following acts with intent to terminate a tenancy:
1.Preventing a tenant from gaining reasonable access to the
property by changing the locks;
2.Removing outside doors or windows; or
3.Removing from the premises the tenant's personal
property, furnishings, or any other items without the
prior written consent of the tenant, except as specified.
Existing law provides that a landlord who violates the
above-described provisions shall be liable to the tenant
for actual damages and other damages, as specified.
This bill defines "landlord" and "tenant" for purposes of
these provisions to mean the following:
1."Landlord" would include a fee simple owner or owners of
the property and any successor or successor in interest
to the landlord's interest in the property, including
interests acquired through foreclosure; and
2."Tenant" would include a tenant occupying the property
pursuant to a fixed-term tenancy, periodic tenancy,
tenancy at will, and a tenancy at sufferance. The term
would also include a subtenant, a lawful occupant, and
any of the above persons who occupied the property
immediately prior to the owner's acquisition of the
property.
Existing law governs the collection and return of security
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deposits including that upon termination of a landlord's
interest in the premises, whether by sale, assignment,
death, appointment of a receiver or otherwise, the landlord
shall either transfer the remaining portion of the tenant's
security deposit, after lawful deductions are made, to the
landlord's successor in interest or return the remaining
portion, after lawful deductions, to the tenant along with
an accounting.
This bill revises these provisions to specify that they
apply: (a) whether the termination of the landlord's
interest was voluntary or involuntary; and (b) in the case
of a trustee's sale. This bill also provides that
"successor in interest" for purposes of existing law
regarding the collection and return of security deposits
includes a fee simple owner or owners of the property and
any successor or successor in interest to the landlord's
interest in the property, including interests acquired
through foreclosure. If a successor in interest has
acquired the property through foreclosure, this bill
creates a rebuttable presumption that the amount of the
deposit is equal to one month's rent.
Existing law requires an owner of a dwelling structure to
give notice in a rental agreement of specified information,
including the name, phone number, and address of the
property manager and the owner and the contact information
for the person to whom rent payments are to be made.
Existing law provides that these provisions may be extended
to, and are enforceable against, any successor owner.
This bill provides that, for purposes of these provisions,
"successor owner" includes all successor owners, including
a fee simple owner or owners of the property and any
successor or successor in interest to the landlord's
interest in the property, including interests acquired
through foreclosure. This bill would provide that a
successor owner whose interest was acquired through
foreclosure does not need to comply with these provisions
if the owner serves a notice to quit, as specified, within
15 days of acquiring the property.
Existing law provides that whenever an electrical, gas,
heat, or water corporation provides residential service to
occupants through a master meter in a multiunit residential
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structure where the owner, manager, or operator is listed
as the customer of record, the corporation must make every
good faith effort to inform the occupants, by means of a
written notice posted on the door of each residential unit
at least 15 days prior to termination, when the account is
in arrears, that service will be terminated on a date
specified in the notice. Existing law provides that if it
is not reasonable or practicable to post the notice on the
door of each residential unit, the corporation must post
two copies of the notice in each accessible common area and
at each point of access.
Existing law specifies procedures and the right of tenants
in multifamily units to begin utility service and permits
them to deduct payments from the rent in these cases.
Existing law provides similar provisions for public
utilities and districts.
This bill extends existing law which allows tenants in
multifamily units to deduct utility payments from their
rent to also include tenants in single-family dwellings
when they have made a payment to a utility or district
pursuant to existing law described above.
This bill extends these provisions to tenants living in
single-family homes and condominiums. This bill would
revise these provisions to also require the corporation,
utility, or district to mail the notice to all affected
service addresses known to it or available through
reasonable and practical methods, unless the service
address is the same as the billing address. This bill
requires that the notice be in English, Spanish, Chinese,
Tagalog, Vietnamese, and Korean (English plus the five
languages described in Civil Code Section 1632), and that
the outside of the envelope of the mailed notice state
"Utility service to this address may be cut off soon" in
those six languages.
Existing law provides that whenever an electrical, gas,
heat, or water corporation provides individually metered
residential service to occupants in a multiunit residential
structure where the owner, manager, or operator is listed
as the customer of record, the corporation must make every
good faith effort to inform the occupants, by means of a
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notice, when the account is in arrears, that service will
be terminated at least 10 days prior to termination.
Existing law provides similar provisions for public
utilities and districts.
This bill repeals these provisions.
Prior Legislation
AB 2586 (Torrico, 2008), would have enacted a substantially
similar set of tenant protections. This bill was vetoed.
AB 1333 (Hancock, 2008), would have provided that the legal
owner of real property must pay the utilities provided to a
property or its tenants following a foreclosure under
specified circumstances. This bill was vetoed.
SB 1137 (Perata, Corbett, Machado), Chapter 69, Statutes of
2008, provided, among other things, that tenants of
foreclosed properties receive notice that their home is in
foreclosure, and receive a 60-day notice to quit, as
specified.
Veto of AB 2586
The Governor's veto message for AB 2586 (Torrico, 2008),
identical to this bill, stated:
I believe this bill is inequitable and fundamentally
changes existing provisions in law because it would
sign liability to the successor in interest for money
never received and for actions not under its control.
New owners who acquire property through foreclosure,
who never signed an agreement with the tenant, should
not be required to take over the legal obligations of
the previous owner, including an obligation to return
security deposits. As a result, this bill may
increase costs and discourage purchases of foreclosed
properties, and thus delay economic recovery in
California.
Additionally this year, I have signed several other
measures to strengthen tenant notifications and rights
during foreclosure proceedings, including SB 1137,
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which, among other things, doubled the amount of time
that tenants have to find a new home before they must
vacate foreclosed property.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 4/14/09)
Western Center on Law and Poverty (source)
Asian Americans for Civil Rights & Equality
California Alliance for Retired Americans
California Rural Legal Assistance Foundation
FamiliesFirst
StoneSoup
Tenants Together
OPPOSITION : (Verified 4/14/09)
California Bankers Association
California Financial Services Association
ARGUMENTS IN SUPPORT : According to the author's office,
"SB 120 addresses an often overlooked aspect of the current
mortgage crisis: an increase in the number of innocent
renters who face eviction or other adverse effects as a
result of foreclosure on a rented property."
Western Center on Law and Poverty asserts that sometimes
landlords of distressed properties are unable to pay
utility bills and shut-offs may occur. Existing law
requires utilities, public utilities, and districts to
notify residents of multifamily dwellings of an impending
shut-off when the owner's account is in arrears and service
is scheduled to be terminated. Current law also allows
these tenants to begin service in their own names and
deduct payments from the rent. This bill extends these
protections to tenants living in single-family homes and
condominiums, and would enhance the notice so that it is
also mailed (existing law requires only posting) and is
provided in English, Spanish, Chinese, Tagalog, Vietnamese,
and Korean. The sponsor contends that those "modest
requirements are calculated to give the greatest number of
tenants actual notice [and are] appropriate given the
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drastic deleterious effect of a utility termination of a
family's health and safety."
ARGUMENTS IN OPPOSITION : The California Bankers
Association and California Financial Services Association
contend that the former landlord would be unlikely to
transfer the remaining security deposit to the successor in
interest, thus "requir[ing] the successor in interest to
return the security deposit even if they have not received
those funds from the landlord thereby exposing the new
successor in interest to new financial and legal burdens."
They express further concern that "existing law would then
expose the successor in interest to joint and several
liability with the landlord for non-compliance in the
repayment of the security deposit."
RJG:nl 4/14/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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