BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1427|
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THIRD READING
Bill No: SB 1427
Author: Price (D)
Amended: 5/12/10
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-0, 5/4/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
SUBJECT : Foreclosures: property maintenance
SOURCE : California Association of Realtors
DIGEST : This bill provides that prior to imposing a fine
or penalty for failure to maintain a vacant foreclosed
property that is subject to a notice of default, or that
has been purchased at a foreclosure sale or acquired
through foreclosure under a mortgage or deed of trust, a
governmental entity shall provide the owner of that
property with a notice of violation and an opportunity to
correct the violation. This bill provides that an
assessment or lien to recover the costs of nuisance
abatement measures taken by a governmental entity with
regard to a property that is subject to a notice of
default, or that has been purchased at a foreclosure sale
or acquired through foreclosure under a mortgage or deed of
trust, shall not exceed the actual and reasonable costs of
nuisance abatement.
ANALYSIS : Existing law provides that anything that is
CONTINUED
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injurious to health, indecent or offensive to the senses,
obstructs the free use of property, or unlawfully obstructs
free passage is a nuisance. (Section 3479 of the Civil
Code)
Existing law requires a legal owner to maintain vacant
residential property purchased by that owner at a
foreclosure sale, or acquired by that owner through
foreclosure under a mortgage or deed of trust. A
governmental entity may impose a civil fine of up to $1,000
per day for a violation. If a government entity chooses to
impose a fine pursuant to this section, it shall give
notice of the alleged violation, as specified, and notice
of intent to assess a civil fine if action to correct the
violation is not commenced within 14 days and completed
within 30 days. (Section 2929.3 of the Civil Code)
Existing law requires the governmental entity to provide
the legal owner with not less than 30 days to remedy the
violation prior to imposing a civil fine and requires that
the entity provide a hearing and opportunity to contest any
fine imposed. The governmental entity may provide less
than 30 days' notice to remedy a condition before imposing
a civil fine if the entity determines that a specific
condition of the property threatens public health or
safety, provided that notice of that determination and time
for compliance is given. (Section 2929.3 (a)(2) and (c) of
the Civil Code)
Existing law states that the above provisions shall not
preempt any local ordinance, and prohibits a governmental
entity from imposing both the fines specified above and a
local ordinance. (Section 2929.3(e) and (h) of the Civil
Code)
This bill provides that prior to imposing a fine or penalty
for failure to maintain a vacant property that is subject
to a notice of default, that is purchased at a foreclosure
sale, or that is acquired through foreclosure under a
mortgage or deed of trust, a governmental entity shall
provide the owner of that property with a notice of the
violation and an opportunity to correct that violation.
The above provisions shall not apply if the governmental
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entity determines that a specific condition of the property
threatens public health or safety.
This bill provides that an assessment or lien to recover
the costs of nuisance abatement measures taken by a
governmental entity with regard to property that is subject
to a notice of default, that is purchased at a foreclosure
sale, or that is acquired through foreclosure under a
mortgage or deed of trust, shall not exceed the actual and
reasonable costs of nuisance abatement.
This bill requires a governmental entity to adopt a
schedule of costs for nuisance abatement measures prior to
collection of those costs.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/12/10)
California Association of Realtors (source)
OPPOSITION : (Verified 5/12/10)
Alliance of Californians for Community Empowerment
Center for Responsible Lending
League of California Cities
Mayor Gayle McLaughlin, City of Richmond
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
the California Association of Realtors:
"SB 1427 will require cities to provide an REO owner with
notice of violation of an abandoned property maintenance
ordinance and as well as an opportunity to correct the
violation before fines can [be] assessed for failing to
maintain the post-foreclosure property. In addition, the
bill specifies that the costs of nuisance abatement
measures taken by cities must be actual and reasonable,
and requires cities to adopt a schedule of such costs.
"These changes to existing law are needed to provide
lenders with clear notice of an abandoned property
maintenance ordinance violation, the opportunity to
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correct the violation before fines can be assessed, and a
clear understanding of exactly how much each nuisance
abatement measure taken by the local city will cost
should the lender fail to correct the violation
themselves.
"Realtors are caught between local cities and lenders.
With a post-foreclosure property, the asset manager hired
by the lender is often a Realtor trying to preserve the
property and/or arrange a sale of the REO [Real Estate
(lender) Owned]. Due process and clarity in the
assessment and collection of nuisance abatement costs
provides fairness to everyone, including Realtors.
Moreover, fairness in the assessment and notice process
increases the likelihood that the property will be
maintained. Selling the home to an individual that will
maintain the property is the best solution to the blight
problem which can devalue homes in a neighborhood."
ARGUMENTS IN OPPOSITION : The Mayor of the City of
Richmond writes: "I am concerned that the current language
in SB 1427 (Price) undermines local municipalities' ability
and efforts to implement local solutions to address the
serious issues caused by scores of unattended, bank-owned
properties. Our ability to combine state law with
innovative local solutions has enabled our city to hold 34
banks/lending institutions accountable so far, inducing
them to clean up vacant/abandoned foreclosed properties.
Efforts like these have shown our residents that the City
is responding to their right to safe, stable and healthy
neighborhoods that are not brought down in value by the
irresponsibility of absentee property owners."
RJG:mw 5/12/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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