BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 2314
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Carter
VERSION: 4/26/12
Analysis by: Mark Stivers FISCAL: no
Hearing date: June 12, 2012
SUBJECT:
Maintenance of foreclosed properties
DESCRIPTION:
This bill provides certain purchasers of foreclosed residential
properties 60 days to remedy code violations before being
subject to enforcement actions and eliminates the sunset on
existing provisions requiring an owner of a foreclosed, vacant,
residential property to maintain the property.
ANALYSIS:
Under Section 17980 of the Health and Safety Code, a local
government enforcement agency may issue a notice of violation to
the owner of a residential property for the failure to comply
with building codes or for the existence of a nuisance on the
property. After giving the owner 30 days notice to abate the
violation or nuisance, or a shorter period of time if deemed
necessary to prevent or remedy an immediate threat to the health
and safety of the public or occupants of the structure, the
enforcement agency may institute any appropriate action or
proceeding to prevent, restrain, correct, or abate the violation
or nuisance.
These actions or proceedings may include civil fines,
prosecution of the owner for a misdemeanor, and in the case of a
property that meets the definition of a substandard building,
court appointment of a receiver. If a court appoints a
receiver, the receiver takes full and complete control of the
property, collects rents, and pays all operating expenses. The
receiver also hires contractors to remedy the code violations.
For his or her services, the receiver is entitled to the same
fees, commissions, and necessary expenses as receivers in
actions to foreclose mortgages. If the rents and other income
from the property are insufficient to cover the costs of repair,
the receiver may borrow funds and, with court approval, secure
AB 2314 (CARTER) Page 2
that debt and any unrecovered costs and fees of the receiver
with a lien against the property.
A different section of law in the Civil Code, until January 1,
2013, requires the owner of a foreclosed, vacant, residential
property to maintain the property. In this context, maintaining
the property means caring for the exterior of the property,
including, but not limited to, preventing excessive foliage
growth that diminishes the value of surrounding properties,
preventing trespassers or squatters from remaining on the
property, preventing mosquito larvae from growing in standing
water, and preventing other conditions that create a public
nuisance. After giving the owner at least 30 days to remedy the
violations, or less if conditions on the property threaten
public health or safety, a governmental entity may impose a fine
of up to $1,000 per day for a violation of these requirements.
The governmental agency must allow for a hearing and the
opportunity to contest any fine imposed. Current law directs
these fine revenues to local nuisance abatement programs.
This bill :
With respect to code enforcement actions under Section 17980
of the Health and Safety Code and except in the case of an
immediate threat to the health and safety of the public or
occupants, requires an enforcement agency to give a property
owner 60 days, as opposed to the normal 30 days, to remedy a
violation before commencing any action or proceeding if the
property was foreclosed upon after January 1, 2008, the owner
has purchased the property, and the owner is in the process of
diligently abating the violation.
Requires any entity releasing a lien securing a deed of trust
or mortgage on a property for which a code enforcement agency
has recorded a notice of pending action to notify the
enforcement agency within 30 days of releasing the lien.
Allows a receiver for substandard residential property to seek
a court order ordering the property owner to pay all
unrecovered costs associated with a receivership.
Deletes the sunset on the Civil Code provisions requiring an
owner of a foreclosed, vacant, residential property to
maintain the property.
COMMENTS:
AB 2314 (CARTER) Page 3
1.Purpose of the bill . This bill is part of a package of bills
sponsored by the California Attorney General in response to
the foreclosure crisis. According to the author, communities
throughout the state are being inundated with foreclosed homes
which often fall into disrepair. Vacant, foreclosed homes
negatively impact public health and safety because they
attract gangs, prostitution, drug users, and squatters, and
because unattended property can create a mosquito abatement
problem.
This bill seeks to address blight associated with foreclosures
by providing an incentive to potential homebuyers, investors,
or developers to purchase blighted properties by preventing
code enforcement actions against the new purchaser for 60
days, provided repairs are being made to the property, and by
making permanent the Civil Code tools that allow local
agencies to combat blight with fines of up to $1,000 per
violation per day.
2.Purpose of the lien release section . This bill requires any
entity releasing a lien securing a deed of trust or mortgage
on a property for which a code enforcement agency has recorded
a notice of pending action to notify the enforcement agency
within 30 days of releasing the lien. This provision reflects
a piece of the National Mortgage Settlement Agreement, which
requires loan servicers, when making a determination not to
pursue foreclosure action on a property with respect to a
first lien mortgage loan, to notify local authorities, such as
tax authorities, courts, or code enforcement departments. The
intent of this provision is to expedite enforcement or
condemnation of a nuisance property.
3.No data on the use of the Civil Code section . The current
provisions of the Civil Code that allow a governmental entity
to fine the owner of a foreclosed, vacant, residential
property for failure to maintain the property have been in
effect since July 8, 2008. This bill would eliminate the 2013
sunset date on these provisions. It is not clear what impact,
if any, these provisions have had to date. Has the deterrent
effect encouraged property owners to maintain foreclosed
properties? How many, if any, local governments have issued
citations under this law? Have they been able to collect
fines imposed? Given this lack of data, the committee may
wish to consider extending rather than eliminating the law's
2013 sunset date.
AB 2314 (CARTER) Page 4
4.Suggested amendments :
On page 4, line 4 after "programs" insert ", including
but not limited to, legal abatement proceedings"
On page 4, line 33 after "agency" insert "in its sole
discretion"
On page 4, line 34 after the second "the" insert
"neighboring community,"
On page 4, line 34 after "public" insert a comma.
On page 5, line 2 after "notify" insert "in writing"
On page 6, strike lines 20-24 and insert "incurred in
the taxable year."
1.Conflicts . This bill, SB 708 (Corbett), and SB 1472 (Pavley)
all extend the provisions of the Civil Code that allow a
governmental entity to fine the owner of a foreclosed, vacant,
residential property for failure to maintain the property. SB
708 extends the provisions for five years. The other two
bills permanently extend the provisions. In order to avoid
chaptering conflicts, the authors of all three bills should
agree on a single approach.
2.Double referral . The Rules Committee has referred this bill
to both this committee and the Judiciary Committee.
Assembly Votes:
Floor: 71-0
H&CD: 7-0
Judic: 10-0
RELATED LEGISLATION
SB 708 (Corbett) extends until 2018, rather than permanently,
the provisions of the Civil Code that allow a governmental
entity to fine the owner of a foreclosed, vacant, residential
property for failure to maintain the property. This bill is in
the Assembly pending referral to committee.
SB 1472 (Pavley) is identical to this bill. The committee
approved this bill 9-0 on April 17, and the bill is currently in
the Assembly pending referral to committee.
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 6,
2012)
AB 2314 (CARTER) Page 5
SUPPORT: Attorney General Kamala Harris (sponsor)
American Federation of State, County and
Municipal Employees
California Bankers Association
California Credit Union League
California Financial Services Association
California Independent Bankers
California Mortgage Association
California Mortgage Bankers Association
California Nurses Association
California Professional Firefighters
California State Association of Counties
Community Associations Institute
Los Angeles County Democratic Party
National Asian American Coalition
Public Counsel
United Trustees Association
OPPOSED: None received.