BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 1472
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: pavley
VERSION: 4/11/12
Analysis by: Mark Stivers FISCAL: no
Hearing date: April 17, 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 day 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
SB 1472 (PAVLEY) 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 threatens
public health or safety, a governmental entity may impose a fine
of up to $1000 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
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:
SB 1472 (PAVLEY) Page 3
1.Purpose of the bill . According to the author, blight remains
a significant problem in communities throughout California as
a result of the foreclosure crisis. A number of foreclosed
properties are left vacant with stagnant swimming pools that
spawn mosquitoes. Empty rooms lure squatters. Vandals, brown
lawns, and overgrown vegetation are creating eyesores and fire
hazards.
Neglected, foreclosed properties subject the neighborhood and
municipality to drug crimes, prostitution, vagrants living in
the foreclosed properties, vandalism, and a host of other
social ills. As foreclosed properties fall deeper into
disrepair, the values of the surrounding homes and businesses
also deteriorate alarmingly, further adding to the
"foreclosure blight" and destruction of whole neighborhoods.
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.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? The League of California Cities is currently
conducting a survey of its members seeking answers to some of
these questions. Given this lack of data, the committee may
wish to consider extending rather than eliminating the law's
2013 sunset date.
3.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
SB 1472 (PAVLEY) Page 4
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.
4.Suggested amendments :
On page 4, line 5 after "programs" insert ", including
but not limited to, legal abatement proceedings"
On page 4, line 32 after "of" insert "diligently"
On page 4, line 37 after "agency" insert "in its sole
discretion"
On page 4, line 38 after the second "the" insert
"neighboring community,"
On page 4, line 38 after "public" insert a comma.
On page 5, line 7 after "agency" insert "in writing"
On page 10, line 8 after "receiver" insert "or an
enforcement agency"
1.Double referral . The Rules Committee has referred this bill
to both this committee and the Judiciary Committee.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 11,
2012 )
SUPPORT: Attorney General Kamala Harris (sponsor)
California Professional Firefighters
OPPOSED: None received.