BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1472|
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THIRD READING
Bill No: SB 1472
Author: Pavley (D), et al.
Amended: 4/11/12
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-0, 4/17/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal,
Pavley, Rubio, Simitian, Wyland
SENATE JUDICIARY COMMITTEE : 5-0, 4/24/12
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SUBJECT : Maintenance of foreclosed properties
SOURCE : Attorney General Kamala Harris
DIGEST : 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
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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/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 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:
1.With respect to code enforcement actions under Section
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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.
2.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.
3.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.
4.Deletes the sunset on the Civil Code provisions requiring
an owner of a foreclosed, vacant, residential property to
maintain the property.
Background
California leads the nation with one of the highest rates
of foreclosures. According to RealtyTrac, in California,
one in every 303 housing units received a foreclosure
filing in March 2012, and 48,422 houses received a
foreclosure notice in February alone. The San Diego
CityBeat newspaper recently described the impact of
blighted foreclosed properties on neighborhoods, noting:
. . . foreclosed, abandoned and neglected properties-
largely clustered in San Diego's low-income
neighborhoods-continue to be magnets for squatters, drug
dealers, prostitutes and stray animals, reducing
property values and potentially becoming public-health
hazards. . . . �CityBeat's Kelly Davis'] piece led
with the tale of Gabriela Castellanos, who had to close
her home daycare business in Mountain View because
parents were too concerned about the conditions and
unseemly characters around nearby abandoned homes.
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Davis reported that a study by CPI �Center for Policy
Initiatives] and ACCE �Alliance of Californians for
Community Empowerment] found that an estimated 57,000
foreclosures in San Diego between 2008 and 2012 would
cost the city upwards of $134 million in police, fire
and code-enforcement services and result in more than
$19 billion in lost property value. (San Diego
CityBeat, "Fixing San Diego's foreclosure blight," April
11, 2012.)
Over the past few years, the California Legislature has
passed legislation in an effort to respond to the ongoing
foreclosure crisis. In 2008, the Legislature passed and
the Governor signed SB 1137 (Perata, Corbett, Machado),
Chapter 69, Statutes of 2008, an urgency measure intended
to, among other things, encourage loan modifications in
order to prevent avoidable foreclosures. SB 1137 also
included provisions to empower local governments to protect
residents from blight caused by foreclosed properties.
Those provisions, which sunset January 1, 2013, require a
legal owner to maintain vacant residential property, as
specified, and allow for the imposition of fines for the
failure to maintain that property.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/24/12)
Attorney General Kamala Harris (source)
California Bankers Association
California Chamber of Commerce
California Credit Union League
California Financial Services Association
California Independent Bankers
California Mortgage Association
California Mortgage Bankers Association
California Nurses Association
California Professional Firefighters
Public Counsel
United Trustees Association
ARGUMENTS IN SUPPORT : According to the author's office,
blight remains a significant problem in communities
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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, and 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.
JJA:do 4/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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