Michael Belote, Esq.

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

The California Legislature works in two-year sessions, and Sacramento is approaching the end of the 2019 legislative year. Following the fall recess which commences on Friday, September 13, the legislature will return to Sacramento on the first Monday in January, 2020. With the holidays intervening, the fall recess will race by and 2020 will be here before anyone in Sacramento is ready.

This year, UTA is the sponsor of SB 306 (Morrell), designed to create a statutory procedure for trustees to “resign” from a foreclosure. UTA members routinely recount examples of files where the trustee simply is not comfortable proceeding, and while the law is clear that a trustee may not be forced to act, there is no clear process for withdrawing.

This may sound simple, but nothing worth doing in Sacramento is ever simple.  SB 306 is on its fourth version, surviving two policy committee hearings in the legislature, one fiscal committee hearing, and suggested amendments from the title industry and committee consultants along the way. The simple truth is that bills in the foreclosure area always receive particularly close scrutiny: even the California Department of Finance, the Governor’s office in charge of budgeting, inquired about the policy justifications for the bill!

SB 306 will travel down to Governor Newsom’s office in the coming weeks, along with an absolute crush of other bills. In a typical year, California governors receive some 1,200-1,400 bills passed by the legislature, with only one month after the beginning of the fall recess to sign or veto all of the bills. So we will have an answer on SB 306 by mid-October, well in advance of the November UTA conference in Las Vegas.

Important planning is occurring already for the 2020 legislative year. The UTA Legislative Committee has been meeting and discussing publication costs with representatives of the California News Publishers Association. While the talks have been collaborative in spirit, they have not resulted in any appreciable reduction in publications costs, which can vary by 1,000% for the identical publication. UTA has been clear that absent movement on these costs, we will be sponsoring legislation in 2020 to address the disparities, and seek competition in mandated publications.

A second issue planned for 2020 relates to “declarations of non-monetary defaults” in the Civil Code. Many years ago UTA enacted this very helpful process, by which trustees named in civil actions merely because of their status as trustee, can file a document with the court. The document indicates that the trustee does not intend to appear and defend the action, but will be bound by any orders from the court. In other words, “we think we were named in the action just because we are the trustee, not because we did anything wrong, so we will not be appearing in the action.”

The issue is the lack of uniformity among California courts concerning these declarations of non-monetary default. Some courts are charging a “first paper filing fee”, which is typically $435 for an answer in an unlimited civil action, even though the trustee is not actually “answering”. Others do not charge the first paper fee. We do not believe that the first paper fee is appropriate for merely indicating that the trustee does not intend to participate in an action.

Other issues pending in Sacramento this year have commanded UTA attention, including SB 187 (Wieckowski), relating to the Rosenthal Fair Debt Collection Practices Act. The bill clarifies that mortgage debt is “debt” for purposes of the Rosenthal Act, and that lawyers are not exempt from the Act. The question which arises is, what happens when a lawyer has an obligation under the Code of Civil Procedure which conflicts with obligations under the Rosenthal Act? UTA is engaging in discussions with the author’s office about this issue, and if SB 187 is signed by Governor Newsom, some further clarification on this issue may be necessary next year.

Meanwhile, California businesses continue to prepare for the implementation of the California Consumer Privacy Act (CCPA) in January. Despite rumors to the contrary, there is nothing happening in Sacramento to delay implementation of the law. So, just as the legislature will return in January to introduce another 2,000-2,500 bills, CCPA will kick in. It never stops!