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1998 State Legislative Report - California

Contact: Lawrence E. Green

I CIVIL ACTIONS
Estates and Probates
AB 2069 (Kaloogian) Estates and Trusts. Community Property Disposition; Trust Administration. This act provides that a husband and wife may agree in writing to divide community or quasi-community property on the basis of a non pro rata division of the aggregate value of the property on the basis of a division of each individual item or asset of the property, or partly on each basis. This act excludes from the phrase "terms of the trust" documents intended to affect administration or disposition of the trust only while the trust was revocable. It would also require the trustee to provide, upon reasonable request, the beneficiary with the terms of the trust. This act also revises various trustee notification requirements. This act provides that the trust property subject to the claims of creditors pursuant to the above-described provision of existing law shall be entitled to certain exemptions.

Courts
AB 976 (Papan) Title Companies: Production of Records. This act revises the confidentiality provisions of the Financial Privacy Act and the law relating to evidence to support an indictment in grand jury proceedings. The act establishes procedures for the issuance to a peace officer of an order for the production of escrow or title records upon a written ex parte application to a judge. This act also provides that no title company, title insurer, or escrow company, or any officer, employee, or agent thereof, shall be liable to any person for disclosing information in response to an order or for complying with an order not to disclose to the customer the issuance of the order or the dissemination of information pursuant to the order.

II ENVIRONMENTAL ISSUES
Hazardous Waste
B. SB 1521 (Alpert) Lenders: Fiduciary Liability. This act for purposes of civil immunity provisions, expands the term "lender" to include title companies.

Hazardous Waste
AB 871 (Wayne) List of Properties with Land Use Restrictions. This act requires that the Department maintain a list of all recorded land use restrictions, including deed restrictions. The list must, at a minimum, provide for each property, the street address or, if a street address is not available, an equivalent description of location for a rural location or the latitude and longitude. The Department must also update the list as new deed restrictions are recorded. The list is available to the public, upon request, on the Department's Internet website.

III. ESCROWS
Disclosures
AB 1195 (Torlakson) Natural Hazard Disclosures. This act requires an additional disclosure by the seller or the seller's agent, to the prospective buyer with respect to real property located in an area subject to flooding or fire hazards to be made either by the issuance of a natural hazard disclosure statement or other similar disclosure statements. The act also provides that the disclosure described above, with respect to earthquake fault zones and seismic hazards, need be given only if certain conditions are met, and may be made in a natural hazard disclosure statement, rather than by the real estate contract and receipt for deposit. The act requires the counties to post a notice identifying the location of maps or lists containing information regarding areas of potential flooding and fire hazard severity.

IV. INSURANCE / BUSINESS ISSUES
Agents/Abstractor Licensing
SB 1418 (Rosenthal) Legal Document Assistants: Exemption for Title and Escrow Services. This act creates comprehensive statutory requirements regulating legal document assistants, which includes, among other things, unlawful detainer assistants. These statutory requirements deal with such things as certification, registration and disclosures to consumers. This act also specifically exempts persons providing "services relative to the preparation of security instruments or conveyance documents as an integral part of the provision of title or escrow service" from being subject to this act.

Agents/Abstractor Licensing
SB 1683 (Rosenthal) Title Insurance: Department of Insurance Brochure on Title Insurance. This act requires the Commissioner of Insurance to develop and provide a brochure for consumers who are buying title insurance and to provide the brochure on the Internet. The brochure would explain title insurance, and the types of policies and consumer discounts that are available, and urge consumers to shop for the best price and service. In addition, the brochure would urge consumers to contact the Department of Insurance or the Department of Real Estate if they suspect illegal rebates are being paid.

AB 2492 (Pringle) Title Insurance: Rebates; Statistical Plan Reporting. This act provides that the Uniform Statistical Plan shall be used by title insurers in reporting data required by the plan so that experience of all title insurers is available to the Commissioner on an annual basis in the same format. It requires the Commissioner, through regulations, to prescribe the form and detail of the financial data to be submitted and the time period the data shall cover, and requires every licensed title insurer in the state to report data directly to the Commissioner. This act authorizes the Commissioner to use analytical input from an industry advisory organization to generate statistical information for use in reviewing and evaluating individual rate filings by title insurers. This act provides that the minimum fine imposed by the Commissioner for a violation of the anti-rebate provisions of laws shall be $5,000. It also authorizes the Commissioner, in addition to or in lieu of other applicable penalties, to suspend an individual license by county operation rather than restricting or suspending a company's license statewide

V. STATUTORY LIENS
Mechanics' Liens
AB 2627 (Brown) Works of Improvement: Stop Work Orders After Non-Payment. This act provides that if an original contractor is not paid all moneys owed pursuant to a written contract for a work of improvement within 35 days from the date payment is due pursuant to the contract, and there is no dispute as to the satisfactory performance of the contractor, the contractor has the right to serve a 10-day stop work order that states that unless all amounts then due are paid within 10 days of notice the contractor will stop work on the project. The act also requires the owner to notify the construction lender upon receipt of notice from the original contractor. The act provides that the contractor or his or her surety or a subcontractor or his or her surety shall not be liable for any delays or damages that the owner may suffer as a result of the contractor's serving the stop work order and subsequently stopping work for nonpayment, and sets forth the contractor's or subcontractor's liability to a subcontractor or material supplier. This act further authorizes an expedited proceeding in the Superior Court in the county in which the project is located regarding liability for the amount not paid for work performed.

Judgement Liens
SB 2166 (Costa) Liens: Municipal Utility District Liens for Sewer Service. Existing law provides that accounts of a municipal utility district that are delinquent become liens on the properties to which services were rendered, with the force, effect, and priority of a judgment lien, when a certificate to this effect is filed for recordation with the county recorder, but exempts from that provision delinquent fees or charges for the furnishing of water service to residential property. This act also exempts delinquent fees or charges for the furnishing of water, sewer, or electrical service to residential property from these lien provisions.

VI. TAXES
Transfer Taxes
SB 1493 (Rosenthal) Corporate Mergers. Existing provisions of the General Corporation Law provide that upon a merger of two or more corporations the separate existence of the disappearing corporations ceases and the surviving corporation succeeds, without other transfer, to all the rights and property of each of the disappearing corporations and is subject to all the debts and liabilities of each in the same manner as if the surviving corporation had incurred them. This act additionally provides for those purposes that the surviving corporation may succeed without the payment of any local agency transfer fee to all licenses, permits, registrations, and other privileges granted by any local agency, provided the merger does not result in a change of ownership.

VII. PUBLIC ENTITIES

VIII. REAL PROPERTY INTERESTS
Easements
AB 2355 (Olberg) Real Property: Denial of Access. This act prohibits the willful and knowing obstruction of access to property where the entering party possesses a legal right to so enter based on a duly-recorded real property interest. The act does not apply to persons who are engaged in lawful labor union activities or activities that are otherwise constitutionally protected. This act would punish violations as infractions punishable by a fine.

Covenants
AB 707 (Ackerman) Real Property: Covenants, Conditions and Restrictions. This act defines a "restriction" to mean a limitation on, or provision affecting, the use of real property in a deed, declaration, or other instrument, whether in the form of a covenant, equitable servitude, condition subsequent, negative easement, or other form of restriction. This act provides that an action for violation of a restriction shall be commenced within 5 years. However, the act provides that a failure to commence an action for violation of a restriction within the period prescribed in this subdivision does not waive the right to commence an action for any other violation of the restriction and does not, in itself, create an implication that the restriction is abandoned, obsolete, or otherwise unenforceable.

Broker Regulations
SB 1554 (Kopp) Loans: Disclosures Regarding Title Insurance to Prospective Lenders and Purchasers; Escrow Licensing Exemption for Lawyers. This act requires that the disclosure statement include the estimated fair market value of the securing property as determined by an appraisal and requires the real estate broker to provide a copy of that appraisal to the lender or purchaser. This act, however, authorizes lenders or purchasers to waive this requirement, in which case the real estate broker would be required to provide the broker's written estimated fair market value of the securing property, including the objective data upon which the broker's estimate is based. This act also requires the broker to provide to the prospective lender or purchaser the option to apply to purchase a title insurance policy or an endorsement to an existing title insurance policy covering the real property, and to provide a copy of a written loan application and a credit report, as applicable.

IX. DEEDS AND SECURITY INTERESTS
Assignments
AB 1703 (Leach) Partnerships and Limited Liability Companies: Assignment of Partnership Interests - Dissolution. This act permits an assignee of a partnership interest to become a limited partner if all general partners and a majority in interest of the limited partners consent. This act provides that, unless otherwise provided in the partnership agreement, a limited partnership is dissolved when a general partner ceases to be a general partner under certain revised circumstances, and makes related changes. This act permits, rather than requires, the articles of organization of a limited liability company to provide for the time at which the limited liability company is to dissolve. It also eliminates certain other circumstances in which a limited liability company is required to dissolve and wind up its affairs.

Foreclosure
AB 2307 (McClintock) Community Facilities Districts: Effect of Foreclosure on Easements. This act provides that the judgment of foreclosure and sale of a lot or parcel pursuant to those procedures shall not terminate or otherwise affect the rights of the holder of an easement in that lot or parcel. The act further provides that it shall not be interpreted as limiting existing contractual rights.s

Deeds of Trust
AB 1203 (Kuykendall) Loans: Deeds of Trust; Table Funding. This act provides that a trust deed may be recorded in the name of the real estate broker negotiating the loan if the lenders or purchasers are governmental or financial institutions or other specified persons, the trust deed is recorded, and the real property securing the loan is not a one to four dwelling unit or unimproved real property.

X. RECORDING
Secretary of State
SB 489 (Alpert) Public Records: Confidential Information. Existing law relating to public records also provides for the confidentiality of certain voter registration information and certain information relating to the victims of crime. This act establishes a program until January 1, 2005, under which an adult person, or a guardian on behalf of a minor or an incapacitated person, states that he or she is a victim of domestic violence and fears for his or her safety, and designates the Secretary of State as the agent for service of process and receipt of mail. When the Secretary of State certifies the person as a program participant, his or her actual address is confidential.

Recording Requirements
SB 2154 (Schiff) & SB 1759 (Ayala) Harassment of Public Officials. Both acts prohibit a person from filing or recording a lawsuit, lien, or other encumbrance against a public officer or employee, knowing it is false, with the intent to harass the officer or employee or to influence or hinder the public officer or employee in discharging his or her official duties. This provision applies only to lawsuits, liens, or other encumbrances pertaining to actions that arise in the course and scope of the public officer's or employee's duties. The act additionally provides that a person who violates these provisions would be liable to the person subject to the lawsuit, or the owner of the property bound by the lien or other encumbrance for a civil penalty not to exceed $5,000. The act also prohibits a consumer credit reporting agency from reporting a document which acts as a lien or other encumbrance but which has together with it a court order striking or releasing the lien or other encumbrance on the basis that it is an above-described lien or encumbrance.

Recording Requirements
D. AB 1094 (Committee on Judiciary) Proceeds of Trustees Sales; Production of Personal Records. This act requires the proceeds of a trustee's sale of real property to be paid within 30 days after the conclusion of the period for notice to creditors if there is no dispute as to the priority of written claims submitted to the trustee. It also specifies the action required of a trustee if he or she fails to determine the priority of written claims within 90 days following the 30-day notice period.

Recording Requirements
SB 143 (Kopp) Public Records. This act revises the definitions of local agency and "writing" and defines "public agency," which includes recorders. The act also provides for public inspection of public records and copying in all forms. The act further requires public agencies to ensure that systems used to collect and hold public records be designed to ensure ease of public access. Furthermore, this act limits the cost of documents provided to the public to the direct costs of duplication or other fees as set forth by statute: …each state or local agency, upon a request for a copy of records that reasonably describes an identifiable record or records, shall make the records promptly available to any person, upon payment of fees covering direct costs of duplication, or a statutory fee, if applicable.

Automation
AB 1906 (Brewer) Electronic Recording of Documents. This act was sponsored by the California Land Title Association This act: (1) Extends the electronic recordation programs in Orange County and San Bernardino County indefinitely; and (2) Creates a voluntary Electronic Recordation Task Force, in which members of the Task Force are to be appointed by the Attorney General, to develop recommendations to the Legislature and Governor by July 1, 1999 regarding: (a) which persons and entities shall be allowed to record documents electronically after January 1, 2000, in order to limit real property fraud and consumer risks associated with electronic recordation; (b) potential standardization of both software and hardware used by counties; and (c) appropriate recording fees and other assessments to cover increased costs associated with electronic recording. The act also authorizes the transmission, filing, recording, and indexing of notices of federal tax liens by electronic or magnetic means, using computerized data processing, telecommunications, and other similar information technologies available to the filing offices.

Automation
AB 972 (Torlakson) Storage of Records. Under existing law, for archiving purposes, a county recorder may utilize any of various techniques that do not permit additions, deletions, or changes to an original document as a photographic reproduction process to record some or all documents required by law or permitted to be recorded or filed. All reproductions are required to be made in compliance with the minimum standards or guidelines recommended by the American National Standards Institute or the Association for Information and Image Management. This act deletes various references to these minimum standards and guidelines and requests that the California County Information Services Directors Association and the County Recorders Association of California develop standards for electronic media for approval and adoption by the Secretary of State as regulations.


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