BILL ANALYSIS
SB 878
Page 1
SENATE THIRD READING
SB 878 (Liu)
As Amended June 10, 2010
Majority vote
SENATE VOTE :25-7
LOCAL GOVERNMENT 7-2
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|Ayes:|Smyth, Caballero, | | |
| |Arambula, Bradford, | | |
| |Davis, Solorio, Swanson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Logue | | |
| | | | |
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SUMMARY : Authorizes the Los Angeles County Recorder (Recorder)
to notify, by mail, the party or parties subject to a notice of
default or notice of sale, including the occupants of that
property, within five days, but in any event no more than 20
days, of recordation. Specifically, this bill :
1)Authorizes the Recorder or a designee, following adoption of
an authorizing resolution by the Los Angeles County Board of
Supervisors (Board), to notify, by mail, the party or parties
subject to a notice of default or notice of sale, including
the occupants of that property, within five days, but in any
event no more than 20 days, of recordation.
2)Authorizes the Recorder to collect a fee from the party filing
a notice of default or notice of sale, unless that party is a
government entity.
3)Provides that the fee shall not exceed the mailing cost of the
notice and the actual cost, if any, to provide information,
counseling, or assistance to a person who receives the notice,
not to exceed $7.
4)Requires on or before January 1, 2014, if the Board adopts an
authorizing resolution to notify the parties subject to a
notice of default or notice of sale, the County of Los Angeles
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to submit a report to the Senate Committee on Judiciary and
the Assembly Committee on Local Government.
5)Requires that the report contains the following information:
a) A copy of each type of notice mailed;
b) The number of filed notices of default and notices of
sale for which a fee was collected;
c) The amount of fees collected for the filing of notices
of default and notices of sale; and,
d) The amount of fees spent to provide the housing
information, counseling, and assistance.
6)Contains a sunset date of January 1, 2015.
EXISTING LAW :
1)Allows the board of supervisors of the Counties of Los Angeles
and Riverside to adopt a resolution authorizing the county
recorder to notify a party of the execution of an instrument
affecting their interest in real property, when the deed does
not involve a governmental entity, within 30 days of the
resolution and in a form, as specified.
2)Allows the recorder of the County of Los Angeles to collect a
fee, not to exceed the cost
of mailing the notice or $7, from the party filing a deed,
quitclaim deed, or deed of trust, other than a governmental
entity.
FISCAL EFFECT : None
COMMENTS : In the early 1990's the Los Angeles District Attorney
reported that approximately 1,151 Los Angeles County (County)
residents (mostly elderly, poor, and uneducated people) were
cheated out of an estimated $131 million due to real estate
fraud. In response, an anti-fraud pilot program was established
in the County of Los Angeles. Under that program, the County
sent a postcard notice to signatories of deeds to real property
as an alert to property owners when an instrument affecting
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their interest had been recorded. Due to the success of the
program, the Legislature passed SB 1631 (Watson), Chapter 177,
Statutes of 1996, which authorized the Board to adopt a
resolution permitting the county recorder to notify a party of
the execution of an instrument affecting their interest in real
property and allowed the Recorder to charge a fee to cover
mailing costs not to exceed $7.
According to the author, the home foreclosure crisis has created
opportunities for more fraudulent transactions, as well as
displacing renters who had no idea that the home they occupy was
in foreclosure. The County Real Estate Fraud/Predatory Lending
Task Force in 2009 made a series of recommendations, including
adding notices about default and sale to the existing state law
for the County. Default notices filed with the County increased
from 21,316 in 2003 to 106,113 in 2009. This bill extends the
current recording fee to also cover notices of defaults and
notices of sale. In doing so, property occupants will then
receive a notice in the mail about the recording of sale or
default, so they can be aware of any proposed changes in
ownership.
Similar legislation: AB 2618 (Nestande), pending on the
Governor's desk, would allow the board of supervisors of every
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, when the deed does not involve a
governmental entity, within 30 days of the resolution and in a
form as specified. This measure is currently on the consent
calendar on the Senate Floor. SB 1287 (Hollingsworth), Chapter
117, Statutes of 2008, gives the board of supervisors of the
County of Riverside authority identical to that provided to the
County of Los Angeles without the authorization to charge a fee
to cover mailing costs.
Support arguments: According to the Western Center on Law and
Poverty tenants are often left in the dark when ownership of a
property changes. Tenants have no way to verify these changes
and therefore do not know if they should be paying their rent to
the person who claims to be the new owner or not. Giving
tenants notice on these changes will help alleviate these
problems and reduce fraud.
Opposition arguments: Opposition might say district attorneys
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offices have the authority to combat consumer and real estate
fraud already and this extra layer of bureaucracy is unnecessary
and duplicative. Opposition could also argue that this
information is already public record and can be obtained at any
time by a member of the public.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
FN: 0004898