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SB 1079 Clean-Up On Horizon

Mike Belote

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

To call 2021 an unusual year in the Sacramento Capitol is like calling World War II the recent unpleasantness in Europe.  As this column is written, only a week remains before voting closes in the Gavin Newsom recall election.  That means by the time this piece appears the results of the election are likely to be known.  A month ago, polls indicated that the recall was a dead heat; now the momentum clearly has swung back in favor of the Governor. Ironically, the view in Sacramento is that the entry of Larry Elder in the race was actually good for Mr. Newsom, as it allowed him to portray the race as him against Elder, rather than him against the field.

The recall clearly has been a distraction in a year full of them. Between the pandemic, wildfires and drought, the only thing missing seems to be locusts. These mega-issues are very likely going to reduce legislative output for a second consecutive year. In a typical year, the legislature enacts and the Governor signs roughly 1,000 new laws. Last year the pandemic operated to reduce this number to fewer than 400.  This year is likely to be higher than the last, but still less than a normal year.

The fact that this column must be written some time before publication makes predictions difficult, but it appears that the California Legislature will take no action this year on mortgages and foreclosures. Because California law requires bills to be “in print” for 72 hours prior to final passage, a bill affecting foreclosures would have to be proposed the very day this column is written in order to be enacted prior to the commencement of the fall recess on Friday September 10. Thus far discussions in the Capitol have focused far more on evictions, though foreclosures could be on the agenda when the Legislature returns on Monday, January 3, depending upon how things go in the fall.

Another issue which will not be acted upon this year, at least in California, is remote online notarization (RON). Even as more states codify the availability of RON, California is taking a slower approach. Part of that has to do with the fact that our state got both a new Attorney General and a new Secretary of State this year; both positions are critical to the RON discussion, and neither Attorney General Rob Bonta nor Secretary of State Shirley Weber had any particular familiarity with the issue.  A large group of stakeholders advocating for the enactment of RON continues to press the issue in Sacramento, however, and action is possible next year, the second year of the current two-year legislative session in Sacramento.

One issue that is likely to be addressed this year is clean up to SB 1079 (Skinner) from last year.  As UTA members are virtually certain to know, SB 1079 permits certain entitled parties to bid an equal or higher amount than the last and highest bid at a trustees’ sale, thereby obtaining the property. The objective of the bill was to discourage large institutional investors utilizing the nonjudicial foreclosure process to convert owner-occupied neighborhoods into rental neighborhoods, but the details of SB 1079 were quite complicated and a number of questions and ambiguities have been identified. As noted in a previous column, UTA lawyers Michelle Mierzwa and Andrew Boylan worked very hard to draft refinements to the law which may be properly characterized as clarifications which make the law better without derogating from the fundamental mission of SB 1079.

As the legislative year enters its final week, clean-up language has been inserted in AB 175 and SB 175, which both have been denominated as budget trailer bills.  Without wallowing in legislative minutiae, budget trailer bills take effect immediately upon the Governor’s signature; assuming passage this week, Governor Newsom will have until October 10 to sign or veto all of the bills which reach his desk. And given the timing of the recall, Governor Newsom will be acting on all bills enacted by the legislature this year, even if he loses the recall election closing on September 14.

Space does not permit a description of all of the items included in the SB 1079 clean-up, but the refinements include increasing the amount of time to record the trustees’ deed after the 15- and 45-day deadlines, clarification of the affidavit or declaration used by post-sale bidders, clarification of information which must be provided by trustees, and more. Come to the UTA Conference in Reno and learn the outcome of AB 175 and SB 175, and the exact changes included!


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