BILL ANALYSIS �
AB 2314
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ASSEMBLY THIRD READING
AB 2314 (Carter)
As Amended April 26, 2012
Majority vote
JUDICIARY 10-0 HOUSING 7-0
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|Ayes:|Feuer, Wagner, Atkins, |Ayes:|Torres, Atkins, Bradford, |
| |Dickinson, Gorell, Huber, | |Fong, |
| |Jones, Monning, | |Beth Gaines, Hueso, |
| |Wieckowski, Alejo | |Jeffries |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Removes the sunset on a statute that permits local
governments to fine property owners for failure to maintain
certain property and makes other changes relating to the ability
of a local enforcement agency to abate nuisances and correct
substandard building violations. Specifically, this bill :
1)Removes the sunset on and thereby makes permanent a statute
that requires a legal owner to maintain vacant residential
property purchased or acquired at foreclose.
2)Provides that if a person has purchased, and is in the process
of diligently abating a violation at, a residential property
that has been foreclosed upon on or after January 1, 2008,
then a local enforcement agency shall not commence any action
or proceeding until at least 60 days after the person takes
title to the property, unless a shorter period of time is
deemed necessary by the enforcement agency to prevent or
remedy an immediate threat to the health and safety of the
public or occupants of the structure.
3)Requires an entity, that releases a lien securing a deed of
trust or mortgage on a property for which a notice of pendency
of action has been recorded by an enforcement agency, to
notify the enforcement agency within 30 days of releasing the
lien.
4)Provides that where a receiver has been appointed to take
possession of a substandard building, a court may, upon the
request of either the receiver or an enforcement agency, order
AB 2314
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the owner of the property to pay all unrecovered costs
associated with the receivership.
FISCAL EFFECT : None
COMMENTS : This bill is part of a package of foreclosure-related
bills that is sponsored by the California Attorney General's
Office and known collectively as the California Homeowner Bill
of Rights. One consequence of the foreclosure crisis, according
to the author and sponsor, is that foreclosed properties often
remain empty, fall into disrepair, and become a source of blight
in many California communities. This bill, therefore, seeks to
give local jurisdictions more tools to fight blight. It does so
first by removing the sunset on an existing law that requires
the legal owner of vacant foreclosed property to maintain that
property or potentially face a fine of up to $1,000 per day per
violation. In addition, this bill seeks to facilitate the
existing authority of local enforcement agencies to take various
actions against owners of substandard buildings.
In 2008 the Legislature enacted and the Governor signed SB 1137
(Perata, et al.), Chapter 69, Statutes of 2008, in an effort to
address an array of problems created by the foreclosure crisis.
Although most of the bill's provisions sought to reduce the
number of foreclosures (e.g., requiring lenders and servicers to
take certain steps before filing a notice of default), one
provision of the bill required the legal owners of vacant
foreclosed residential properties to maintain their property and
it authorized local governmental entities to fine owners who
failed to maintain their property up to $1,000 per day per
violation. The law defined "failure to maintain" to include
failure to care for the exterior of the property, including
failure to clear excessive foliage; failure to take action to
prevent trespassers and squatters from remaining on the
property; failure to take action to prevent mosquito larvae from
growing in standing water; or, failure to take action to prevent
any other conditions that create a public nuisance. Existing
law requires the governmental entity to give the legal owner at
least 30 days to remedy the violation prior to imposing the
fine, and the owner is also entitled to a hearing and an
opportunity to contest the fine. Currently these provisions are
due to sunset on January 1, 2013. By removing this sunset date,
this bill will permit local jurisdictions to continue using this
remedy.
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In addition to extending the sunset on SB 1137's "failure to
maintain" provisions, this bill would make three modest but
important changes to the manner by which local code enforcement
agencies address the problem of foreclosure-related blight.
First, this bill would give the new owner of a previously cited
property additional time to correct substandard building
conditions on blighted property. Existing law permits a local
enforcement agency to inspect buildings and issue notices to
owners whose buildings create a public nuisance or violate
certain state or local building codes. If after the 30 days'
notice the owner fails to abate the nuisance or correct the
violation - or after a shorter period if the conditions create
an immediate public threat - the enforcement agency must
institute an appropriate action or proceeding to prevent,
restrain, correct, or abate the violation or nuisance. This
bill would amend this law by providing that where the owner has
purchased a recently foreclosed property and is in the process
of abating the nuisance or correcting the violation, then the
enforcement agency shall not commence an enforcement action
until at least 60 days after the person takes title to the
property unless the severity of the conditions warrant a shorter
period. The aim of this provision is to encourage the transfer
of blighted residential property into the hands of persons who
will fix-up the property and make it habitable. According to
the sponsor, persons who might otherwise purchase and
rehabilitate residential property are reluctant to do so if the
property has been cited for a violation that must be corrected
within 30 days. This would give an owner who genuinely seeks to
either occupy the building or restore it to the residential
market a reasonable amount of time to do so.
Second, this bill would require a lienholder who releases a lien
on any property on which the enforcement agency has recorded a
lis pendens to notify the enforcement agency within 30 days of
releasing the lien. According to the sponsor, when an
enforcement agency must make a determination as to the
appropriate enforcement action, if any, to take against a
substandard property, it is often helpful for it to know whether
or not any liens have been recorded against the property and if
and when the lien is released. This would create an efficient
means for the enforcement agency to know when a lien has been
released.
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Third, this bill would allow for the recovery of certain costs
associated with a health and safety receivership. Such
receiverships are typically used as a last resort. But where a
property owner refuses to take any action, even after receiving
notice and given adequate time to correct a violation, the
enforcement may seek, and the court may appoint, a receiver to
take possession of the property. Existing law sets forth the
conditions for establishing the receivership and lists certain
powers that a court may grant to the receiver. The receiver's
primary function in taking possession of the property is to do
whatever is necessary to correct the conditions that gave rise
to the receivership. For example, the receiver typically hires
contractors to make needed repairs. In order to pay these
contractors, the receiver might be empowered to collect rents on
the property or to obtain loans that are secured by a lien upon
the property. This bill does not change any of the statutory
requirements for establishing a receivership or affect the
receiver's statutory powers; it would, however, once a
receivership has been established, permit either the receiver or
the enforcement agency to seek a court order requiring the owner
of the property to pay any "unrecovered costs" of the
receivership (i.e., presumably those costs not covered by the
loans, rents, or other revenue sources). This would ensure that
costs associated with rehabilitating the property are borne by
the responsible party: the recalcitrant owner who refuses to
correct conditions even after being placed on notice. Arguably,
existing receivership statutes, which grant courts considerable
discretion, would permit such a requirement in the initial court
order creating the receivership. This bill, however, would
expressly state that the receiver or the enforcement agency
could request such an order if one is not initially provided.
The bill specifies that the court "may" grant such an order;
discretion will ultimately remain, consistent with existing law,
with the court.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0003428
AB 2314
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