BILL ANALYSIS �
AB 2405
Page 1
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 2405 (Ammiano) - As Amended: April 10, 2014
As Proposed to be Amended
SUBJECT : LANDLORD-TENANT: ELLIS ACT: MASKING OF COURT RECORDS
KEY ISSUE : SHOULD A TENANT WHO, THROUGH NO FAULT OF HIS OR HER
OWN, HAS HAD AN ELLIS ACT-EVICTION SUIT FILED AGAINST HIM OR HER
BECAUSE HIS OR HER LANDLORD WISHES TO GET OUT OF THE RENTAL
BUSINESS, BE ENTITLED TO HAVE THE COURT RECORD OF THAT SUIT
PERMANENTLY MASKED SO AS NOT TO UNDESERVEDLY JEOPARDIZE THE
TENANT'S RENTAL HISTORY OR CREDIT REPORT?
SYNOPSIS
This bill addresses an important aspect of the Ellis Act
eviction process in landlord-tenant law. Proposed amendments to
this measure, agreed to by the author in Local Government
Committee (and for timing issues, now to be taken in this
Committee) provide the basis of a significantly narrower, but
still important bill. The remaining issue of this bill is
whether tenants deserve to be protected from possible harm to
their credit reports and rental histories simply by virtue of
having been named as a defendant in an Ellis Act eviction,
reflecting that their landlord wishes to get out of the landlord
business and has started the procedure for recovering the
property. According to the author, the answer to that question
is yes, because existing law still allows for that possibility
in Ellis Act cases. Supporters of the bill, including the
Western Center on Law and Poverty, contend that unless access is
withheld by the court, the fact that an eviction was filed
against the tenant may very well end up reflected in landlord
registry records compiled by specialized credit reporting
agencies whose services are often used by landlords for a fee.
According to these advocates, potential future landlords often
reject tenant applications when a credit or background check
reveals an unlawful detainer was filed against a tenant. The
author contends that the bill is needed to prevent the injustice
of such an outcome against a person who may have been a model
tenant until the day the eviction in an Ellis Act case was
filed, thus jeopardizing what may otherwise be perfect credit
AB 2405
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and rental histories. The author notes that for similar public
policy reasons, the Legislature in 2010 passed SB 1149 (Ch. 641,
Stats. 2010) to authorize permanent masking for many defendants
in foreclosure eviction cases, who were similarly recognized to
be not at fault or responsible for initiation of the eviction.
The bill continues to be opposed by some landlord groups, who
contend the bill enables or encourages tenants in Ellis Act
cases to file frivolous legal challenges when a landlord seeks
to go out of business. As proposed to be amended, the bill
reflects the amendments the author agreed to take when the bill
was in Local Government Committee. With the proposed
amendments, this bill passed Local Government Committee with
bipartisan support and did not receive any "no" votes.
SUMMARY : Requires the court clerk to not allow access to any
civil case records in an Ellis Act eviction case, except to
specified persons, as provided. Specifically, this bill :
1)Provides that in the case of a complaint involving residential
property described in Section 7060.6 of the Government Code
("Ellis Act eviction"), as indicated in the caption of the
complaint, the clerk shall not allow access to any court
records in the action, except to specified persons, as
provided.
2)Finds and declares that to the extent that a civil action is
brought to evict a tenant solely because the property owner
wants to remove the residential unit from the rental market
and the tenant did not engage in acts that would constitute a
breach of the lease, the interest of the tenant in protecting
his or her reputation as a responsible tenant outweighs the
public interest in the outcome of the proceeding to evict the
tenant.
3)Provides that if an owner seeks to displace a tenant or lessee
from accommodations withdrawn from rent or lease pursuant to
this chapter by an unlawful detainer proceeding, the owner
shall state the following in the caption of the complaint:
"CIVIL ACTION DESCRIBED IN SECTION 7060.6 OF THE GOVERNMENT
CODE."
EXISTING LAW :
1)Generally prohibits public entities from adopting any statute,
ordinance, or regulation, or taking any administrative action,
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to compel the owner of residential real property to offer or
to continue to offer residential real property for rent or
lease. (Government Code Section 7060 ("Ellis Act").)
2)Provides that, in unlawful detainer proceedings, the court
clerk shall allow access to case records to the following
persons:
a) A party to the action, including a party's attorney.
b) Any person who provides the clerk with the names of at
least one plaintiff and one defendant and the address of
the premises, including the apartment or unit number, if
any.
c) A resident of the premises who provides the clerk with
the name of one of the parties or the case number and shows
proof of residency.
d) To any person by order of the court on a showing of good
cause, as defined.
e) To any other person 60 days after the complaint has been
filed, unless a defendant prevails in the action within 60
days of the filing of the complaint, in which case the
clerk may not allow access to any courts records in the
action, except to a party to the action or by court order,
as specified. (Code of Civil Procedure Section 1161.2(a),
paragraphs (1) to (5).)
3)Provides that the court clerk, in addition to observing the
above, shall allow access to case records in the case of a
unlawful detainer complaint involving residential property
based on Section 1161a ("foreclosure eviction") as indicated
in the caption of the complaint, to any other person, if 60
days have elapsed since the complaint was filed with the
court, and, as of that date, judgment against all defendants
has been entered for the plaintiff, after a trial. Further
provides that if judgment is not entered under the conditions
described above, the clerk shall not allow access to any court
records in the action, except as provided. (Code of Civil
Procedure Section 1161.2(a), paragraph (6).)
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
COMMENTS : This bill addresses an important aspect of the Ellis
Act eviction process in landlord-tenant law. Proposed
amendments to this measure, agreed to by the author in Local
Government Committee (and for timing issues, now to be taken in
AB 2405
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this Committee) provide the basis of a significantly narrower,
but still important bill. The remaining issue of this bill is
whether tenants deserve to be protected from possible harm to
their credit reports and rental histories simply by virtue of
having been named as a defendant in an Ellis Act eviction,
reflecting that their landlord wishes to get out of the landlord
business and has started the procedure for recovering the
property. According to the author, the answer to that question
is yes, because existing law still allows for that possibility
in Ellis Act cases.
The proposed amendments reported from Local Government Committee
revise the legislative findings in Section 1, leave Section 2
unchanged, capitalize the caption statement in Section 3, and
delete Section 4 of the bill-easily the most controversial piece
of the bill. As a result, the bill moves away from the
controversial topic of whether local officials should have any
authority to compel owners of residential rental property to
continue to remain in the landlord business in possible
contravention of the Ellis Act. Instead, the bill moves the
discussion to a hopefully more noncontroversial issue: whether
tenants deserve to be protected from possible harm to their
credit reports and rental histories by virtue of the fact of
having been named as a defendant in an Ellis Act eviction.
The author believes that such tenants deserve the strongest
possible protection of their credit reports and rental
histories, explaining:
Protecting tenants' credit records, particularly low and
fixed income tenants, when they are being evicted at no
fault of their own, is a very important step to helping
them find alternative housing when they are forced to
move.
As proposed to be amended, AB 2405 allows a court to mask
Ellis Act evictions, which are no-fault of the tenant,
from the tenant's credit report and rental history. It is
a similar procedure to the statute we enacted several
years ago for tenants who were evicted from rental units
that were being bank foreclosed.
Existing law allows court records of Ellis Act evictions to
potentially jeopardize a tenant's credit report or rental
history. A so-called "Ellis Act eviction" despite its name is
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not a distinct type of action and is still governed by regular
unlawful detainer law. Under Code of Civil Procedure Section
1161.2, court unlawful detainer records are withheld from public
access (or "masked") by the court clerk for 60 days from the
date of filing of the complaint. At the end of the 60-day
masking period, unless the tenant has already prevailed in the
eviction at that time, the records become public and are
available to credit agencies, landlord registries, and others.
As a result, tenants in Ellis Act cases, despite the fact that
they have done nothing wrong, may still face damage in their
credit reports or on their rental history simply by virtue of
the fact that their landlord wishes to get out of the landlord
business and has started the procedure for recovering the
property. Unless access is withheld by the court, the fact that
an eviction was filed against the tenant may very well end up
reflected in landlord registry records compiled by specialized
credit reporting agencies whose services are often used by
landlords for a fee. According to tenant advocates, potential
future landlords often reject tenant applications when a credit
or background check reveals an unlawful detainer was filed
against a tenant (a process sometimes referred to as
"blacklisting".) The author contends that the bill is needed to
prevent the injustice of such an outcome against a person who
may have been a model tenant until the day the eviction in an
Ellis Act case was filed, thus jeopardizing what may otherwise
be perfect credit and rental histories.
Legislative history of 60-day masking policy. In 1991, the
Legislature approved and the governor signed SB 892 (Ch. 1007,
Stats. 1991), legislation which restricted public access to
court files in unlawful detainer cases for the first 30 days
after filing of the complaint. The rationale at the time, as
stated in the uncodified findings and declarations of SB 892,
was to address a "crisis due to unscrupulous eviction defense
services which utilize records of court filings . . . to solicit
and defraud tenants." A pilot project was established to
evaluate the effectiveness of this new restrictive access
policy, and in 1993, the Legislature determined that the
available data demonstrated the policy was effective in meeting
predetermined benchmarks for success. The Legislature also
noted that some tenants continued to be solicited and defrauded
however, so it enacted SB 236 (Ch. 1191, Stats. 1993) to extend
the masking period from 30 days to 60 days to further prevent
tenants from being defrauded by eviction defense scams.
AB 2405
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In 2003, the Legislature enacted SB 345 (Kuehl), Ch. 787, Stats.
2003, which for the first time established the rule of permanent
masking of court records for UD actions in which the tenant
prevails within 60 days of the filing of the complaint. The
reason for this new rule, however, was to combat the problem of
blacklisting upon tenants who had had a UD filed against them,
rather than to prevent fraudulent eviction defense scams.
According to the Assembly Judiciary analysis, SB 345 was a
legislative response to a Court of Appeals decision, U.D.
Registry, Inc. v. State of California (1995) 34 Cal. App. 4th
107, which invalidated a previous anti-blacklisting statute that
prohibited credit reporting agencies from including in a credit
report any information relating to a UD unless the landlord
prevailed. In its decision, the court held that the statute
could not single out only credit reporting agencies for its
prohibition of disclosure of court records, but the court also
specifically noted that the state could control the initial
release of such information without distinguishing between users
of the information. Subsequently, the Legislature passed SB 345
in response to establish precisely this type of control of the
information at issue.
Finally, in 2010 the Legislature enacted SB 1149 (Corbett), Ch.
641, Stats. 2010, which provided for a strong masking policy of
court records (often permanently) for many defendants in
foreclosure evictions pursuant to Section 1161a (authorizing
banks to initiate post-foreclosure evictions of former owners
who hold-over after the property has been sold.) As reflected
in this Committee's analysis of SB 1149, what makes those
evictions so inequitable is that tenants are not evicted through
any fault of their own, but only because the property owner has
failed to make payments to his lender.
For similar public policy reasons, this bill seeks to ensure
that a tenant named in an Ellis Act case is entitled to have the
court permanently mask the case files from public record. It is
a simple rule that applies without regard to whether 60 days has
elapsed from the filing of the complaint, or whether the
defendant or plaintiff has ultimately prevailed in the action.
The potential damage to the tenant's record going forward is
created from the moment the unlawful detainer is served against
the tenant by his landlord seeking to go out of business under
the Ellis Act, and the bill appropriately reflects the author's
intent to prevent such damage to the innocent tenant's record.
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ARGUMENTS IN SUPPORT : The Western Center on Law and Poverty and
California Rural Legal Assistance Foundation both support the
bill's proposal to mask evictions in Ellis Act cases, stating
together:
By their very nature, evictions under the "Ellis Act" are in
no way the fault of the tenant. The landlord is simply
seeking to exit the rental business. Often, a new purchaser
of the property never intended to enter the rental business,
but uses the Ellis Act to empty the property and convert the
building to ownership units.
In these situations, it makes no sense to allow Ellis Act
evictions to appear on a tenant's credit report, since they
do not reflect any wrong-doing by the tenant. With the
return of extremely tight rental markets in almost all areas
of the state, landlords are likely not to take the time to
look beyond the mere presence of an eviction on a tenant's
credit report, to see that the tenant was not removed
through any fault of his or her own.
The bill would help this situation by allowing such
evictions to be "masked" from public view, as is currently
done for evictions following a foreclosure, another
situation in which the tenant faces a no-fault eviction
action. AB 2405's solution is fair to both tenants and
landlords.
ARGUMENTS IN OPPOSITION : Several landlord groups, including the
Apartment Association of California, Southern Cities, submitted
a joint letter explaining their continued opposition to the bill
based on the masking issue. They write:
By removing adverse credit reporting in the initial
stages, there will be little consequence, especially for
those represented free of charge by local legal aid
organizations, for employing abusive and frivolous legal
tactics to force landlords to settle. Adding a new
reason to legally challenge a landlord who wants to go
out of business is neither fair nor equitable. A plethora
of tenant protections already exists. Local government
authority to restrict the ability of a landlord to go out
of business is broad and regularly used. There is only
one city where Ellis Act is an issue, and that city has
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taken steps to adopt severe penalties on landlords
choosing to go out of business. Moreover, beyond
technical and/or procedural grounds, there is little to
legally challenge when a landlord chooses to go out of
business. There is no reason to create new avenues for
abusive litigation practices.
We agree that credit reports must not disclose an Ellis
Act "termination" that arises when a tenant voluntarily
vacates, or if judgment is entered in favor of the
tenant. By the same token, we believe tenants should not
be able to bring or be encouraged to file frivolous legal
challenges when a landlord seeks to go out of business.
Several other apartment associations, including the California
Apartment Association, had registered opposition to the bill in
the previous committee, but at the time of this analysis, their
respective positions on the bill as proposed to be amended are
uncertain.
REGISTERED SUPPORT / OPPOSITION :
Support
AIDS Legal Referral Panel
Anti-Eviction Mapping Project
California Alliance for Retired Americans
California Rural Legal Assistance Foundation
Causa Justa: Just Cause
City of West Hollywood
Coalition of Homelessness
Gray Panthers of San Francisco
Housing California
Senior and Disability Action
Tenants Together
Western Regional Advocacy Project
Western Center on Law and Poverty
Opposition (to previous version of the bill)
California Apartment Association
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California Association of REALTORS
California Chamber of Commerce
Civil Justice Association of California
San Diego County Apartment Association
San Francisco Association of REALTORS
Zacks & Freedman
Oppose (As Proposed to be Amended)
Apartment Association of California Southern Cities
Apartment Association of Orange County
East Bay Rental Housing Association
Nor Cal Rental Property Association
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334