Foreclosure Legislation


Hundreds of bills were acted on by the Legislature before it adjourned for a month-long summer break. Some of the most notable actions included: approving a budget for the 2012-2013 fiscal year that trimmed billions of dollars, authorizing $5.8 billion to start construction on high speed rail, and sending a package of bills to the Governor relating to foreclosure.

Foreclosure Legislation

The list of bills on foreclosure has been labeled by the State Attorney General as the Homeowner Bill of Rights. The bill package has been described as one of the most comprehensive in the state's history.

AB 2610 (Skinner) and SB 1473 (Hancock) were recently approved by the Judiciary Committees. They propose to provide additional protections to tenants living in foreclosed homes. Under existing federal law, new purchasers of foreclosed homes must honor the leases unless the purchaser will occupy the home as his or her primary residence and in that case, the tenant is to be given a 90-day notice to vacate (unless local law requires a longer period of time). These bills would revise the notice that is to be given to the tenant if the new owner intends to terminate the tenancy. The new requirements would sunset on December 31, 2019, and the bills would define a bona fide tenancy, and finally the tenant in a foreclosed property would be permitted to file a post-judgment claim of right to possession.

The one foreclosure bill that affects the landlord and tenant relationship that is not part of the Attorney General's package is SB 1191 (Simitian), a measure that is pending on the Assembly floor for vote and is opposed by AACSC. Simitian's mea sure would require landlords of single-family one-to-four properties that receive a notice of foreclosure to give a specific notice to every prospective tenant that the property is in foreclosure. If that person became a tenant and was not given a notice, the tenant could be empowered to claim two months rent or twice the actual damages (moving costs) to be paid if the tenant voided the lease. If the tenant remained in possession, he or she could demand to be paid twice the rent. Tenants at anytime and without limitation could claim these remedies even if the tenant was never harmed by the failure to provide the notice and even if the landlord cured the default.

Ellis Actions (Right of a landlord to lawfully go out of business) came close to becoming far more expensive.

A few weeks ago, Assembly Member Skinner decided to make another run at authoring a mea sure this session that on one hand proposed to reduce parking requirements for new residential and commercial developments and adversely affect all landlords that chose to go out of business or where their property was destroyed for any reason. The bill, AB 904, would have limited local government's ability to impose parking requirements for certain developments such as commercial developments of less than 20,000 square feet and make up for the loss in parking spaces on landlords that went out of business and then applied to redevelop the property. AACSC, the San Francisco Association of REALTORS®, and the East Bay Rental Housing Association were the only real estate related organizations to oppose the bill. The League of Cities opposed the bill, but for different reasons. The bill died in the Senate Governance and Finance Committee.

SB 1229 (Pavley) Landlord and Tenant: Dogs and Cats

Senator Pavley's bill is expected to be sent to the Governor very soon. Without opposition, most expect the bill to be signed into law. The bill proposes to prohibit residential landlords and managers from imposing conditions on occupancy that might cause an animal that is allowed on the property to be "devocalized" or "declawed." Landlords and managers would be prohibited from advertising or placing as a condition of tenancy that a prospective tenant's animal must be devocalized or declawed. Further, landlords and managers could not refuse to negotiate or require the occupancy or otherwise not rent to a prospective tenant because of that person's refusal to devocalize or declaw any animal. Rental decisions governing pets are expected to change to some degree should SB 1229 be signed into law.

The Legislature has one more month to go.

If recent history plays out, we can expect the unexpected during the last days of the 2012 session. For example, last year the Legislature gutted 21 bills during the last two weeks of session; nineteen of those were signed into law. Thankfully, none of those bills affected us.

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