BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 827|
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THIRD READING
Bill No: SB 827
Author: Liu (D)
Amended: 4/8/14
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 3/19/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Vidak
SENATE JUDICIARY COMMITTEE : 5-2, 4/1/14
AYES: Jackson, Corbett, Lara, Leno, Monning
NOES: Anderson, Vidak
SUBJECT : Local government: Los Angeles County: notice of
recordation
SOURCE : Los Angeles County
DIGEST : This bill extends, from January 1, 2015, to January
1, 2020, the authority of the Los Angeles County Recorder to
notify affected parties, including occupants of the property,
when a notice of default or notice of sale has been recorded on
a property. The Los Angeles County Recorder may collect a fee
of up to $7 in order to cover the cost of notifying the parties
and providing information about housing assistance and
counseling.
ANALYSIS : Existing law permits the Los Angeles County
Recorder (Recorder), upon the adoption of an authorizing
resolution by the Los Angeles Board of Supervisors (Board), to
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mail a notice to the party or parties executing a deed,
quitclaim deed, or deed of trust, within 30 days of recordation.
(Government Code [GOV] Section 27297.6.)
Existing law provides that failure to provide the above notice
shall not result in any liability against the Recorder and the
county, and requires the Recorder to use a competitive bid
process if it contracts for the processing or mailing of the
notice. (GOV Section 27297.6.)
Existing law permits the Recorder to collect an additional fee
from the party filing a deed, quitclaim deed, or deed of trust,
to implement the above provision. That fee shall not exceed the
mailing cost of the above notice, but in no case be greater than
$7. (GOV Section 27387.1.)
Existing law requires the trustee, or authorized agent, that
represents the foreclosing financial institution to post and
mail a notice informing the residents of a property about a
pending foreclosure sale. That notice informs residents that
the property may be sold at a foreclosure sale, the requirements
of an eviction notice, and that they may wish to contact a
lawyer or a local legal aid or housing counseling agency to
discuss any rights they may have. (Civil Code Section 2924.8.)
Existing law additionally permits the Recorder, upon adoption of
an authorizing resolution by the Board, to notify the party or
parties subject to a notice of default or notice of sale,
including the occupants of that property. The Recorder must
notify those individuals by mail within five days, but in any
event no more than 20 days, of the recording of those documents.
(GOV Section 27297.6.)
Existing law additionally authorizes the Recorder to collect an
additional fee from a party filing a notice of default or notice
of sale. That fee, not to exceed seven dollars, shall not
exceed the mailing cost of the notice and the actual cost, if
any, to provide information, counseling, or assistance to a
person who receives the notice. That fee may include specified
administrative costs to carry out the notification program, but
such administrative costs shall not exceed 10% of the total fee
collected. (GOV Section 27387.1.)
Existing law provides that the authority of the Recorder to
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notify parties of the recording of a notice of default or a
notice of sale, and to collect an additional fee from the party
recording the notice, shall remain in effect only until January
1, 2015, and as of that date shall be repealed, unless a later
enacted statute, that is enacted before January 1, 2015, deletes
or extends that date. (GOV Section 27297.6.)
Existing law requires the Board to submit a report to the Senate
Judiciary Committee and the Assembly Local Government Committee
that includes, but is not limited to, a copy of the type of
notices mailed, the number of recorded notices of default and
sale for which a fee was collected, the amount of fees
collected, and the amount of fees spent to provide housing
information, counseling, and assistance. The report must be
submitted on or before January 1, 2014. (GOV Section 27297.6.)
This bill extends the authority of the Recorder to notify
parties of the recording of a notice of default or a notice of
sale, and to collect an additional fee from the party recording
the notice, to January 1, 2020. The Recorder must notify the
party or parties subject to a notice of default or notice of
sale, including the occupants of that property by mail within
five days, but in any event no more than 14 days, of the
recording of those documents.
This bill extends, until January 1, 2019, the date by which the
Board must submit a report to the Legislature containing the
following additional information:
Documented examples showing how the county's homeowner
notification program led to successful investigations of real
estate fraud activity, referrals to prosecuting agencies,
avoided foreclosures, or helped property owners and residents
avoid falling victim to real estate fraud;
An evaluation of whether the county's homeowner notification
program, in comparison to other available policy tools in Los
Angeles County, is a cost-effective approach to combating real
estate fraud and reducing foreclosures;
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An evaluation of whether the county's homeowner notification
program is an effective way to inform tenants of an impending
foreclosure and to combat abusive post-foreclosure practices
by property owners; and
An assessment of how the county's homeowner notification
program compares to real estate fraud and foreclosure
prevention programs being implemented in at least three other
large, urban California counties.
Background
Los Angeles County has, since 1992, operated a county-specific
"Homeowner Notification Program" that is designed to help combat
real estate fraud in Los Angeles County. Under existing law,
the Recorder is authorized to collect a distinct fee from
parties that record certain documents evidencing the transfer of
title, specifically deeds, quitclaim deeds, and deeds of trust.
That fee is used to mail a notice of recordation to the party
that purportedly executed the document, and to fund a help line
at the Los Angeles County Department of Consumer Affairs (DCA)
that property owners who receive these notices can call to
receive information and assistance. This notification program,
enacted in 1992 and renewed in 1996, seeks to address problems
related to forged real estate documents by notifying property
owners that their real estate is subject to a recently filed
document that could affect their property interests. By
informing property owners about recently filed title transfer
documents, the notice allows these owners to contact law
enforcement if they suspect that the documents are fraudulent.
The Homeowner Notification Program was expanded in 2012 to allow
the Recorder to also notify owners of a property (and occupants
of the home) when a notice of default or notice of sale is
recorded against the property. Those documents signify either
the beginning of the non-judicial foreclosure process (notice of
default), or the announcement of the sale date (notice of sale),
which means that the home could be very close to being sold at
auction. Although existing law mandates mailing or posting
several other statutory notices to both property owners and
tenants impacted by a non-judicial foreclosure, this additional
notice allows Los Angeles County to send region-specific
information to help affected individuals both become aware of
available resources, and aware of potential scams that may
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target owners of distressed properties. As with the recording
of deeds, quitclaim deeds, and deeds of trust, the expanded
Homeowner Notification Program authorizes the Recorder to
collect a distinct fee from parties that record notices of
default and notices of sale in order to fund the program. These
fees are used to cover the cost of mailing the notices as well
as to provide foreclosure avoidance assistance and housing
counseling via the DCA help line. Authorization for this
expanded component of the Homeowner Notification Program is set
to expire on January 1, 2015.
Comments
The author writes:
The home foreclosure crisis has created opportunities for
more fraudulent transactions, as well as displacing renters
who had no idea that the home they occupy was in the process
of foreclosure. A Los Angeles County Real Estate
Fraud/Predatory Lending Task Force in 2009 made a series of
recommendations, including adding notices about default and
sale to the existing state law for the County.
The County has established the initial framework to
implement the SB 62 notice program, but the original bill
expires on January 1, 2015. The County needs more time to
implement the notice program, given the size of Los Angeles
County and the large number of foreclosures.
This bill will help prevent property sale fraud and protect
homeowners and renters in Los Angeles County. When the
County records a notice of default or notice of sale for a
home, the occupants will receive a notice in the mail.
Residents will know that a home is being sold, foreclosed
on, or is possibly involved in a fraudulent transaction.
This bill extends for five years the reporting requirements
and fraud-alert program authorized by SB 62, which Sen. Liu
authored in 2011.
Prior Legislation
SB 62 (Liu, Chapter 141, Statutes of 2011) authorized the
Recorder to notify affected parties, including occupants of the
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property, when a notice of default or notice of sale has been
recorded on a property. This bill permits the Recorder to
collect a fee of up to $7 in order to cover the costs of
notifying the parties and providing information about housing
assistance and counseling.
SB 878 (Liu, 2010) would have authorized a notification program
identical to that in SB 62 (Liu, Chapter 141, Statutes of 2011),
but was vetoed by Governor Schwarzenegger out of concern that
the proposed notices would be redundant.
SB 1631 (Watson, Chapter 177, Statutes of 1996) reauthorized Los
Angeles County to notify property owners whenever a deed,
quitclaim deed, or deed of trust is recorded on their title.
This bill permitted the Recorder to collect a fee not to exceed
$7 from a party recording such deeds in order to fund the
notification program.
SB 1842 (Watson, Chapter 815, Statutes of 1992) permitted the
Recorder, within 30 days of recordation of a deed, quitclaim
deed, or deed of trust, to notify by mail the party executing
the document. This bill permitted the Recorder to collect a fee
not to exceed $10 from a party recording such deeds in order to
fund the notification program, and included a repeal provision
to sunset the bill on January 1, 1996.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 4/8/14)
Los Angeles County (source)
California State Council of the Service Employees International
Union
Consumer Federation of California
Los Angeles County District Attorney's Office
Los Angeles County Sheriff's Department
Western Center on Law and Poverty
AB:d 4/8/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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