Not to wax too philosophical, but there are just certain things you can count on in life. Death, taxes, celebrities going into rehab, and yes, an increase in foreclosures when real estate markets cool, are examples. Another is the certainty that the California Legislature will continue to propose thousands of ideas to affect every area of our collective lives. Part of this is an unfortunate “nanny” mentality on the part of certain legislators. Less editorially, another reason is that California is simply a very “codified” state, with lots of laws that require, like Civil Code Section 2924 et. seq, lots of correction. Maybe the principal reason is even more simple: the “product” of legislators is bills, basically like any other manufacturing concern. Legislators view their jobs as identifying problems, and proposing solutions. I guess we have a great many problems.

Every year the California Legislature proposes between 2500 and 3000 pieces of new legislation, and 2007 is no exception. When the deadline for introducing new bills arrived on February 23, nearly 2900 potential solutions to problems had been proposed. The good news is that, at least so far, no “stop the presses” bills relating to trustees have been introduced, in spite of all the publicity over foreclosure increases. No foreclosure moratoria, no proposal to extend the condo redemption right to all real estate loans, or other examples of “to the mattresses” bills. Like most years, however, there are dozens of bills potentially affecting trustee practice, which Ron Roup and the rest of his Legislative Committee must analyze before the bills start being heard in the Legislature in April.

Then there are amendments to bills. The problem is this: each of those 2900 new bills will probably be amended 4 or 5 times on average before it is passed or killed by the Legislature. And each time a bill is amended, it could potentially introduce trustee issues where none existed before. So the activity is not reading 2900 bills, but rather more like 12,000-15,000. This is the reason that UTA and similar organizations devote significant time and resources to the activities of the California Legislature, and potentially other states as well.

Thus far for 2007, we have identified bills in the following areas. This is far from a complete list, and these are just snapshot summaries of what the bills do. Future issues of UTA Quarterly will expand on a number of these proposals.

• AB 250 (DeVore): Transfers Upon Death: Permits property to transfer upon death through the use of a revocable transfer on death deed. Addresses issues such as creditor claims against the owner and the beneficiary of the deed and limits on the liability of the beneficiary.
• AB 349 (Salas): Translation Certificates. Permits county recorders to accept for recordation instruments executed in a language other than English, if the instrument contains a Declaration and Certification of Certified/Registered Court Interpreter, verifying that the translation was performed by a qualified person.
• AB 703 (Ruskin): Social Security Numbers. Requires that records containing a social security number be discarded or destroyed in a specified manner, and requires the encryption of locked storage of records containing social security numbers.
• AB 1020 (Runner): Changes in Ownership. Contains a number of features clarifying issues relating to changes in ownership. For UTA, contains language clarifying that the Certificate of Sale recorded after HOA assessment lien foreclosures, recorded before the redemption right has run, does not constitute a change in ownership.
• AB 1356 (Houston): Equity Purchasers. Relates to acquisition of residences in foreclosure by certain persons. Requires proof of possession of an unrestricted real estate license, with proof of either professional liability coverage or a bond.
• SB 270 (McClintock): Unclaimed Property. Where current law requires assets to escheat to the state after accounts are inactive for three years, this bill extends that period of inactivity to seven years before escheat occurs.
• SB 433 (Harman): Homestead Exemptions. Clarifies rules for homestead exemptions for judgment debtors who are not living in the homestead while separated, or where a former spouse resides in or exercises control of the homestead.
• SB 670 (Correa): Transfer Fees. Provides that any covenant, restriction or condition contained in an instrument requiring that the transferee pay a fee upon the transfer of the real property is a condition restraining alienation and is void.

In addition to the above, there continue to be rumors of bills addressing “predatory lending”, which could impact trustees and foreclosure. We will know more in the coming months.

For previous articles by Michael Belote, click here.