Michael Belote, Esq.

By Michael Belote, Esq., California Advocates, UTA California Lobbyist

For better or worse, the California legislature is back in action to begin the 2015-2016 two-year session, and some of the issues relating to UTA may carry a sense of, well, familiarity.  Both on issues supported and opposed by trustees, at least four of the most important bills identified of interest to UTA have been considered in prior legislative sessions.  Actually, this is not hugely unusual: sometimes bills are introduced several times before they are finally enacted.

Friday, February 27 was the last day to introduce new bills for the 2015 legislative year.  By the time the deadline had passed, just under 2300 new bills were introduced.  Of those, nearly 1000 were introduced on the final day alone.  Each has now been read and evaluated for potential impact on trustees, and 40 have been entered into the UTA electronic folder.  These bills can all be viewed through the UTA website.

Although it is very early in the year, the following issues appear to be key for UTA in the California legislature this year:

• AB 244: Rights of Survivors for Decedents in Default: This issue was raised at the end of the legislative year in 2014.  Informally referred to as relating to “widows and orphans”, the bill deals with obligations of servicers to survivors under HOBAR and other foreclosure mitigation and prevention laws when decedents were in default.  The contention is that survivors are not receiving communications from servicers after receiving notice that obligors have died, and have not been afforded foreclosure prevention alternatives under HOBAR.  A coalition of organizations including UTA have expressed preliminary opposition to the measure, pointing out the legal and practical problem of treating potentially multiple survivors as borrowers for purposes of HOBAR, and the additional possibility that this issue will be address by new rulemaking by CFPB.
• AB 1335: Recording Surcharges: Carried by Speaker of the Assembly Toni Atkins, AB 1335 proposes a $75 surcharge on the recordation of real estate documents, in order to fund affordable housing.  This issue was also proposed in the California legislature last year, but the bill died in the Assembly Appropriations Committee.  Speaker Toni Atkins is very committed to the issue of affordable housing, so AB 1335 should be taken very seriously this year.  It appears that the bill will require a 2/3 vote in order to be enacted, because of legal constraints.  But Democrats do not possess 2/3 supermajorities in either house of the legislature, and it is unclear whether any Republicans will support the bill, as they often oppose new fees and taxes.  As opposed to last year’s bill, AB 1335 does cap the recording surcharge for any single transaction at $225, the equivalent of the surcharge on three documents.
• SB 290: Assessment Liens: Sponsored by UTA, this issue also follows up on legislation introduced by the same author last year.  The problem is simple, but the solution has proved elusive: provisions of the Davis-Stirling Common Interest Development Act require personal service on individual unit owners of decisions by boards to initiative assessment lien foreclosures and of notices of default, but the law contains no provisions for cases where personal service cannot be effected. Discussions will occur with the Attorney General’s office and other stakeholders, and the goal, obviously, is to enact a reasonable solution to this continuing problem this year.
• SB 474: Auctions and Credit Bids:  Last year legislation was enacted to apply provisions of existing law on auctions to real estate auctions, which were previously exempt.  Out of an abundance of caution, the bill last year expressly excluded credit bids for any application under the auction law.  Now there is concern that “credit bid” needs to be defined!  The good news is that the focus of last year’s auction bill never was on nonjudicial foreclosure in any way.

Finally, it is worth noting that the California legislature continues to remain heavily interested in the subject of privacy, in many forms.  Whether it relates to children, students, medical patients, shoppers, borrowers, investors, drones, hackers, or more, privacy will be a major area of legislative consideration this year.  In fact, the Assembly has formed a new Committee on Privacy and Consumer Protection to address these myriad issues.  Fortunately the chair of the new committee is thoughtful Assembly Member Mike Gatto of Los Angeles.  In an area as big and complex as privacy, much of the effort for UTA and similar organizations will be to avoid unintended consequences in any legislation ultimately enacted.