The number of new laws enacted by the California Legislature in 2005 was down significantly from prior years, perhaps due to distractions caused by the November special election. In a typical year, the legislature passes somewhere between 1200-1400 bills, of which the governor signs approximately 1000. For 2005, just under 1000 bills were passed; Governor Schwarzenegger signed 729 and vetoed the remainder. Good news for those who favor smaller government!

For the year, UTA identified nearly four dozen bills of potential interest to trustees. Easily the most controversial was SB 137, dealing with assessment lien foreclosures in common interest subdivisions. While the enactment of this bill was unfortunate, there was also good news with the passage and signing of UTA-sponsored AB 885, which enacted major changes relating to postponements.

The following paragraphs summarize the changes made by 12 bills passed during 2005. As always, these summaries merely highlight the contents of the bills; the actual chaptered version of the bills should be consulted for details. Versions of all bills of interest to trustees may be obtained through the UTA website.

Unless otherwise noted, all bills are effective on January 1, 2006.

DISCLOSURES
Contaminated Property—Methamphetamine

This bill enacts an entire new Chapter 6.9.1 to the California Health and Safety Code, commencing with Section 25400.10, relating to property contaminated through methamphetamine production. The chapter contains comprehensive provisions covering the identification and remediation of contaminated sites. Local health officers are assigned the responsibility to post and inspect suspect properties, and record liens, with the force, effect, and priority of judgment liens, when contamination is discovered. The health officer must also execute and serve all those with an interest in the property with an order containing specified information, including prohibitions on the use of the property and a description of measures the owner is required to take to remediate the contamination. The owner must disclose the existence of the order to any prospective buyer. The bill provides for recovery of clean-up costs provided by local governments, and for the release of liens following remediation. Please note that the bill is extremely detailed, so it is essential to consult the full text of the bill in appropriate cases.

Reference: Chapter 570, Statutes of 2005 (Assembly Bill 1078-Keene).

Supplemental Property Taxes

This bill adds new Section 1102.6c to the Civil Code, relating to supplemental property taxes. The new section obligates transferors of residential property already subject to the Transfer Disclosure Statement requirement to provide prospective purchasers with a disclosure concerning supplemental property tax bills. It is important to note that these sections of the Civil Code exempt foreclosure sales, and sales following foreclosure, from the disclosure requirements, so this new obligation should not apply to trustees.

Reference: Chapter 392, Statutes of 2005 (Assembly Bill 459-Oropeza).

ELDER ABUSE
Mandated Reporters

Existing law requires certain specified occupational groups to report suspected cases of physical elder abuse to law enforcement or adult protective services. These occupational groups are known as “mandated reporters”. This bill expands the mandated reporting law, from July 1, 2007 until January 1, 2013, to cover suspected incidents of financial elder abuse. New Section 15630.1 of the Welfare and Institutions Code will apply the reporting obligation to all officers and employees of depository institutions and institution-affiliated parties, as defined in federal law, and to officers and employees of state and federal credit unions. Reporting is mandated for incidents reasonably appearing to constitute elder abuse, observed or within the direct knowledge of the employees, which relate to the provision of financial services.

Reference: Chapter 140, Statutes of 2005 (Senate Bill 1018-Simitian).

FORECLOSURES
Common Interest Developments

This bill was the result of intense negotiations over foreclosures in common interest developments. Although many sections of the Civil Code and Code of Civil Procedure are affected, particular attention is drawn to Sections 1367.4 and 1367.5 of the Civil Code. From UTA’s perspective, the most important change in the bill is that nonjudicial foreclosure will be available as a remedy for the collection of delinquent assessments only when the delinquency equals or exceeds $1800, or when the assessments are more than 12 months delinquent. For delinquencies less than $1800 or 12 months, the association may proceed either in small claims court or record a lien, which again may not be foreclosed upon until the $1800 or 12 month standard is met. Also of critical interest to UTA members, the bill provides property owners with a 90-day redemption right following nonjudicial foreclosures of assessment liens.

The bill contains a variety of important but less fundamental changes to the assessment lien law which will be of great interest to UTA members, including the obligation to personally serve notices of default for assessment lien foreclosures, and other changes. Obviously, UTA members providing services in this area are advised to become intimately familiar with the new law, which applies to debts arising after January 1, 2006.

Reference: Chapter 152, Statutes of 2005 (Senate Bill 137-Ducheny).

Last Known Addresses-Postponements

Two changes in foreclosure law are made in this UTA-sponsored measure for 2006. First, Civil Code Section 2924b is amended to clarify the meaning of the term “last known address” for purposes of mailing notices to trustors or mortgagors. The bill specifies that last known address means a physical address, actually known to the trustee pursuant to the original deed of trust or written notification from the trustor, and not including any e-mail or other electronic form of address.

Second, the bill contains major changes to the law of postponements contained in Civil Code Section 2924g. In place of prior law permitting a maximum of three postponements before re-noticing the foreclosure sale, the bill permits any number of postponements for any period of time not exceeding 365 days from the date set forth in the notice of sale. If the sale is postponed for a period exceeding 365 days, the sale must be re-noticed in the manner specified in Section 2924f. New fees for the new notice of sale may not exceed the amounts specified in Sections 2924c and 2924d, nor exceed reasonable amounts necessary to comply with the law.

Reference: Chapter 224, Statutes of 2005 (Assembly Bill 885-Keene).

LOANS
Military Service—Deferral of Obligations—Iraq and Afghanistan

This bill enacts a new Chapter 3 to the Military and Veterans Code, commencing with Section 800. The bill permits, to the extent permitted by federal law, members of the United States Military Reserve and National Guard who are called to active duty in the Iraq or Afghanistan conflicts to defer payments on a wide variety of financial obligations, including mortgages. The deferral period may be for the period of active duty, plus 60 calendar days, or 180 total days, whichever is less. Mortgage payments may be deferred only on residential properties serving as the reservist’s primary residence when called into active duty. There are other limitations on the deferral right not summarized here. The bill expressly prohibits foreclosure of property on which payment has been deferred during the deferral period.

Reference: Chapter 291, Statutes of 2005 (Assembly Bill 306-Baca).

National Guard—Deferral of Interest

This bill adds new Section 409.13 to the Military and Veterans Code. The bill permits, to the extent permitted by federal law and the California Constitution, surviving beneficiaries of California National Guard members killed in the line of duty to the state or federal government, to defer principal and interest on financial obligations. Obligations must be deferred upon written request of the survivor for a period of six months following the death of the obligor, without penalty or accrual of additional interest. The obligation must have been created before the members entry into service.

Reference: Chapter 261, Statutes of 2005 (Senate Bill 513-Soto).

NOTARIES
Crimes—Revocation of Commissions

This bill creates a new misdemeanor for a notary public to willfully fail to perform any required duty of a notary under Section 8206 of the Government Code, or to fail to keep the seal under the direct and exclusive control of the notary, or to surrender the seal to any unauthorized person. The bill further requires a court to order the revocation of the commission for a notary convicted of any misdemeanor violation of the notary laws, or of any felony.

Reference: Chapter 295, Statutes of 2005 (Assembly Bill 361-Runner).

RECORDINGS
Electronic Recording—Computer Security Auditors

This bill modifies portions of the Electronic Recording Delivery Act of 2004, relating to computer security auditors hired to perform independent audits of electronic recording delivery systems. While prior law required persons with secure access to the delivery systems to submit fingerprints for purposes of criminal background checks, this bill clarifies that criminal history includes federal convictions and arrests, and requires the fingerprints to be forwarded from the state Department of Justice to the F.B.I.

Reference: Chapter 520, Statutes of 2005 (Assembly Bill 1738-Committee on Local Government).

Liens—Solid Waste Services

While existing law permits counties to record and enforce liens for unpaid charges relating to solid waste handling services, this bill additionally permits the recordation and enforcement of liens by counties for solid waste services provided by franchise or contract service providers. All provisions relating to priority and enforcement of the liens are identical to those provided for county-performed services.

Reference: Chapter 564, Statutes of 2005 (Assembly Bill 259-Hancock).

Powers of Attorney—Social Security Numbers

This bill amends Section 4401 of the Probate Code, to make two changes to the Uniform Statutory Form Power of Attorney. First, the line on the form providing for the social security number of the person designating the power of attorney is deleted. Second, the form is revised to include a statement that a third party may seek identification.

Reference: Chapter 251, Statutes of 2005 (Senate Bill 158-Machado).

Unlawful Restrictive Covenants

Existing law provides a procedure for property owners to identify and re-record conditions, covenants and restrictions which contain racial or other unlawful elements. While prior law required property owners to seek a determination that the restriction was unlawful, and pay a fee to re-record the instrument, this bill revises the procedure to instead require the county recorder, on request, to obtain a determination from the Department of Fair Employment and Housing that the element is unlawful. If the department concludes that the restriction is unlawful, the property owner may then request recordation of a modification document with the unlawful language stricken, and the county recorder is authorized to waive the fee for this recording.

Reference: Chapter 297, Statutes of 2005 (Assembly Bill 394-Niello).

For previous articles by Michael Belote, click here.