Bulletin: CA2023007

Dear Associates:

The California Legislature passed a number of bills in 2022 impacting the title industry. Click here to access the California legislative information. Below are summaries of the applicable legislation:

AB 1837 (Chapter 642) Residential Real Property: Foreclosure

The current law grants eligible tenant buyers and other eligible bidders certain rights to make bids on the property after the initial trustee sale, and potentially to purchase it as the last and highest bidder. This act revises the definition of an eligible tenant buyer to also describe natural people who are occupying property under a rental or lease agreement with a mortgagor’s or trustor’s predecessor in interest. The act also revises the definitions of an eligible nonprofit corporation and limited liability company for purposes of making them eligible bidders. The act adds information that must be contained in the affidavit of an eligible bidder for submission to the trustee. This act authorizes the trustee to deduct up to a specific amount for providing services from the proceeds of the sale if an eligible tenant buyer or eligible bidder submits to the trustee either a bid or a nonbinding written notice of intent to place a bid and revise the dates when a trustee is to receive specified documents to account for weekends and holidays along with specifying how the bid is to be received. This act requires specified successful eligible bidders at foreclosure sales subject to the process to maintain properties as affordable housing for lower income households for a minimum of 30 years and addresses the treatment of tenants following purchases. This act requires a trustee to send specified information to the Attorney General if the winning bidder at a trustee sale to which this process applies is an eligible bidder. The sunset date of January 1, 2026, is now extended to January 1, 2031.

AB 2170 (Chapter 865) Residential Real Property: Foreclosure Sale Requirements

Existing law grants eligible tenant buyers and other eligible bidders certain rights to make bids on the property after the initial trustee sale, and potentially to purchase it as the last and highest bidder. This act adds similar requirements when an institution lists a one to four residential dwelling unit for sale that it has acquired at a foreclosure sale. The act requires the institution, within the first 30 days of the listing, to only accept purchase offers from eligible bidders and to respond, in writing, to all offers received from eligible bidders before considering other offers.

The act defines an eligible bidder as any of the following:

• A prospective owner-occupant, which the act further defines as a natural person that submits an affidavit or declaration stating that the person will maintain occupancy for at least one year, among other requirements.
• A nonprofit corporation that meets specified requirements.
• A community land trust based in California, as defined under (ii) of subparagraph (C) of paragraph (11) of the subdivision (a) of Section 402.1 of the Revenue and Taxation Code.
• A limited equity housing cooperative, as defined in Section 817, that is based in California.
• The state, the Regents of the University of California, a county, city, district, public authority, or public agency, and any other political subdivision or public corporation in the state.

The eligible bidder must submit an affidavit or declaration with the offer to an institution. For further note, under the act, the institution is prohibited from conducting a bundled sale, as defined therein.

SB 1242 (Chapter 424) Insurance: Title Marketing Representative Licensing Process

This act makes various changes to existing law related to insurance. Specifically with respect to title companies, this act makes changes to existing law related to the title marketing representative application. Existing law grants certain authority to the Department of Justice (“DOJ”) to gather criminal information while restricting its dissemination to an unauthorized person and requires an individual to apply with the Insurance Commissioner for a specified license using a form prescribed by the commissioner. This act requires the commissioner to submit fingerprint images and related information regarding specified applicants, including, among others, title marketing representative, to the DOJ, and requires the DOJ to provide state or federal criminal history information for each applicant to the commissioner.

SB 1040 (Chapter 540) Insurance: Enforcement of Restitution Orders/Judgments

This act authorizes the Commissioner to seek a judgment to enforce an order for restitution. If certain requirements are met, the act authorizes the Commissioner to order a respondent to provide restitution for a loss arising from the respondent’s conduct. With a restitution order, and if the facts permit, the act authorizes the Commissioner to issue an order of rescission enforceable on any person subject to the Commissioner’s jurisdiction. The act requires the rescission or restitution order to be subject to judicial review.

SB 1200 (Chapter 883) Judgments: Enforcement/Renewal and Interest

The current law provides that a judgment is enforceable upon entry and a creditor may generally bring an action on a judgment within 10 years of its entry and allows a judgment debtor to make a motion to vacate or modify the renewal within 30 days of service of a notice of renewal of the judgment; This act increases the 30 days to 60 days.

A judgment creditor under this act may renew the period of enforceability, only once and for a period of five years from the date the application is filed, of a money judgment under $200,000 that remains unsatisfied for a claim relating to medical expenses and for a money judgment of under $50,000 that remains unsatisfied for a claim related to personal debt. The act prohibits a judgment creditor from bringing an action on those types of money judgments. The act prohibits applications for renewal of a judgment from being filed if the judgment was renewed on or before December 32, 2022.

Under this act, judgments entered on or after January 1, 2023, or where an application for renewal of judgment is filed on or after January 1, 2023, creates the exception that interest accrues at the rate of 5%, instead of 10%, per annum for a money judgment of under $200,000 that remains unsatisfied for a claim related to medical expenses and for a money judgment of under $50,000 that remains unsatisfied for claim related to personal debt.

SB 989 (Chapter 712) Property Taxation: Taxable Value Transfers/Disclosure and Deferment

The CA Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property based on the assessor’s valuation of real property as shown on the 1975-1976 tax bill, and thereafter, the appraised value of the property when purchased, newly constructed or a change in ownership occurs after the 1975 assessment, subject to an annual inflation adjustment not to exceed 2%. Existing property tax law authorizes, pursuant to constitutional authorization, on and after April 1, 2021, any person who is over 55 years of age, any severely and permanently disabled person, or a victim of wildfire or natural disaster who resides in property that is eligible for the homeowner’s exemption or the disabled veteran’s exemption to transfer the taxable value of that property to a replacement dwelling that is purchased or newly constructed as a principal residence within 2 years of the sale of the original property.

The current law further provides for the payment of taxes on the secured roll in two installments, one due and payable on November 1 and the other due and payable on February 1. Unpaid property taxes become delinquent and subject to penalties of 10%. After the second installment becomes delinquent, existing property tax law requires the tax collector to collect a cost of $10 for preparing the delinquent tax records and giving notice along with preparing a delinquent roll. All assessments, penalties, and costs in certain property that are not paid are declared to be in default at 12:01 am on July 1.

This act requires, except as provided, payment of property taxes for a property to be deferred without penalty or interest if the property owner has claimed the property tax relief, as previously described, but the county assessor has not completed its determination of the property’s eligibility for that relief and the person requests deferment with the county assessor within one calendar year but before January 1, 2024, of receiving the first tax bill for the property. The act defers those property taxes until the county assessor has reassessed the property and a corrected tax bill has been prepared and sent to the property owner or the county assessor has determined that the property is not eligible for the property tax relief. The law then sets forth procedures for making payments following the correction or determination of ineligibility.

In addition, the act requires a disclosure to be printed on each tax bill for properties that have been purchased, newly constructed, or changed in ownership in the year preceding the tax bill. These disclosures shall include information regarding the property tax relief and deferment procedures.

As to compliance, this act requires counties with a population of over 4 million as determined by the 2020 federal census, to comply with the law. All other counties to comply with the law if the county’s board of supervisors, after consultation with the county assessor, county auditor, county treasurer, and county tax collector, adopts a resolution to implement the requirements.

The act took effect immediately as an urgency measure on September 28, 2022. The act is effective until January 1, 2026.

AB 2625 (Chapter 212) Subdivision Map Act: Exemptions/Electrical Energy Storage Systems

The act excludes various types of projects from its provisions, including the leasing of, or the granting of, an easement to, a parcel of land, or any portion of the land, in conjunction with the financing, erection, and sale or lease of a solar electrical generation device on the land, if the project is subject to review under other local agency ordinances regulating design and improvement or if the project is subject to discretionary action by the advisory agency or legislative body. Additionally, the act exempts from the requirements of the Subdivision Map Act the leasing of, or the granting of an easement to, a parcel of land, or any portion of the land, in conjunction with the financing, erection, and sale or lease of an electrical energy storage system on the land, if the project is subject to discretionary action by the advisory agency or legislative body.

AB 1716 (Chapter 29) Trust and Estates: Disposition of Estates

The act recasts and revises various provisions relating to the transfer of property from a decedent’s estate, as described, including generally identifying a person who takes property under the above circumstances as a “transferee” and defining other related terms. The act, among other things, requires a transferee to make restitution to a person with a superior right to the property, but with respect to the decedent’s debt, the act makes the transferee personally liable to the estate for a share of the decedent’s debt. A transferee under the act may voluntarily return property to the estate for administration.

The act revises the treatment of property returned by the transferee to the state that has produced income while in the transferee’s possession, by requiring the value of such income be returned to the estate if the income would have accrued to the estate had the property not been transferred to the transferee.

SB 897 (Chapter 644) Accessory Dwelling Units: Junior Accessary Units

This act requires that the standards imposed on accessory dwelling units be objective. The act defines “objective standard” as a standard involving no personal or subjective judgment by a public official and is uniformly verifiable, as specified. The act also prohibits a local agency from denying an application for a permit to create an accessory dwelling unit due to the correction of nonconforming zoning conditions, building code violations, or unpermitted structures that do not present a threat to public health and safety, and are not affected by the construction of the accessory dwelling unit.

This act also changes the height and limitation applicable to an accessory dwelling unit subject to ministerial approval to 18 feet if an accessory dwelling unit is within a half-mile walking distance of a major transit stop or a high-quality transit corridor, or if the unit is detached and on a lot that has an existing multifamily or multistory dwelling. The act increases the maximum height limitation that may be imposed by a local agency on an accessory dwelling unit to 25 feet if the accessory dwelling unit is attached to a primary dwelling, except as specified.

This act prohibits a local agency from imposing any parking standards on an accessory dwelling unit that is included in an application to create a new single-family dwelling unit or a new multifamily dwelling on the same lot, provided that the accessory dwelling unit meets other specified requirements.

SB 1202 (Chapter 617) Business Entities: Secretary of State Filings

This act amends and revises existing law relating to Secretary of State filings for various business entities. A brief summary of the amendments and revisions are as follows:

• Requires within 6 months from submission of application in California, certificates of good standing, certificates of existence, and certificates related to name change to be issued. Prohibits the name of a limited partnership from containing the words “insurer” or “insurance company” or any words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
• Authorizes the SOS to cancel filings within 90 days of written notification that the item presented for payment has not been honored for payment. These provisions apply to certificates effecting conversion and applies to partnerships.
• Deletes the requirement for a foreign limited partnership and foreign limited liability company to provide the SOS with the date of organization in the state or other jurisdiction where they are organized.
• Requires a foreign limited partnership to provide a statement that the foreign limited partnership is authorized to exercise its powers and privileges in the state or jurisdiction where it is organized.

AB 1410 (Chapter 858) Enforceability of Governing Documents/Restrictions on Rental and Leasing

Among other topics, the act deals with retaliation by the association against its members, prohibits restrictions by the association of its members to use social media to discuss association issues, disallows prohibitions of renting a portion of an owner occupied property, and prohibits the association from taking any enforcement action for violating governing documents during a declared emergency. 

SB 1005 (Chapter 91) Sale of Conservatee’s Personal Residence

This act adds to the provisions authorizing the sale of the conservatee’s personal residence or the sale of other real or personal property of the estate to include the power to consent and agree to a partition of the personal residence or other legal or personal property of the estate. The act further grants the guardian or conservator the power to bring an action for partition of the personal residence or other real or personal property of the estate. The partition would be subject to the same conditions applicable to the sale of the residence under the existing law.

SB 49 (Chapter 237) Corporations: Conversion of a Corporation into Another Business Entity

This act deals with the conversion of a corporation into a domestic other business entity, foreign other business entity, or foreign corporation.

SB 852 (Chapter 266) Financing Districts: Climate Resilience Districts/Formation/Funding Mechanisms

This act authorizes a city, county, city and county, special district, or a combination of any of those entities to form a climate resilience district for purposes of raising and allocating funding for eligible projects and the operating expenses of eligible projects. Under the act, each district constitutes an enhanced infrastructure financing district and requires each district to comply with existing law concerning enhanced infrastructure financing district. The act requires a district to finance only specified projects that meet the definition of an eligible project, meaning projects that address sea level rise, extreme heat, extreme cold, the risk of wildfire, drought, and the risk of flooding. The act establishes project priorities and authorizes districts to establish additional priorities.

SB 1311 (Chapter 620) Mortgages and Deeds of Trust

The act creates the Military and Veteran Consumer Protection Act of 2022, which contains several provisions related to military veterans. The act provides various rules pertaining to mortgage payments and enforcement remedies and, among other things it provides that no foreclosure or repossession of property will take place during the deferment period unless ordered by a court or agreed to by the parties of the obligation.

SB 1131 (Chapter 554) Privacy: Address Confidentiality

This act authorizes an applicant seeking address confidentiality under the program to submit a certified statement by the employee, patient, or volunteer for a reproduction health care services facility that they have been a target of threats, harassment, or acts of violence, or a workplace violence restraining order issued because of threats or acts of violence connected with a reproductive health care services facility. This statement is in lieu of a certified one from a representative of the reproductive health care services facility. This act further expands the address confidentiality program to other individuals working for a public entity who face threats of violence or violence or harassment from the public due to their work and creates a similar address confidentiality program for qualified workers.

AB 2234 (Chapter 651) Housing: Planning and Zoning/Postentitlement Phase Permits

The new law addresses the housing crises in the state and applies to all cities, counties, and cities and counties, including charter cities, counties, and cities and counties.

The act requires a local agency to provide an option for postentitlement phase permits to be applied for, completed, and retrieved by the applicant on its internet website, and accept applications for postentitlement phase permits and any related documentation by electronic mail until that process has been established. The local agency then is to list on its internet website or provide by electronic mail upon request, the current status of the applicant’s permit. The act specifies that the local agency must complete the denial or acceptance within a specified timeframe and the failure to comply with the timeframe constitutes a violation of the Housing Accountability Act.

With respect to the California Coastal Act of 1976, the act provides that the planning and regulation of development, under a coastal development permit process, within the coastal zone, based on various coastal resources planning government agencies, does not apply the permits required and issued by specified government agencies, including permits required and issued by the CA Coastal Commission.

AB 2245 (Chapter 82) Real Property: Partition of Real Property

The Uniform Partition of Heirs Property Act (“UPHPA”), effective January 1, 2022, changed existing law and required specified procedures in an action to partition real property that is the heirs’ property. Under UPHPA, if a co-tenant requests a partition by sale, co-tenants who did not request the partition have the option to buy all of interests of the co-tenants that requested partition by sale. If those interests are not purchased or a co-tenant who has requested partition in kind remains therein after purchase, the court must partition the property in kind or by sale, as specified. This act implements the Partition of Real Property Act (“PRPA”), which renames the Uniform UPHPA to the PRPA. This act expands the scope of existing law to apply to any real property held in tenancy in common, not just heirs, where there is no agreement in a record binding all the co-tenants which governs the partition of the property.

SB 1112 (Chapter 834) Recording: Notice and Recordation of Decarbonization Charge

This act requires the Energy Commission, on or before December 31, 2023, to identify state and federal financing or investment solutions that will enable electrical corporations, community choice aggregators, or other eligible entities to provide zero-emission, clean energy, or decarbonizing building upgrades. This act also requires the Energy Commission to provide technical assistance to certain entities to apply for state and federal financing or investment solutions. Further, on or before December 31, 2023, the Energy Commission must prepare and submit a report to the relevant committees of the Legislature describing any statutory changes necessary to improve access to federal funding for financing or investment solutions. The act repeals these provisions on January 1, 2028.

AB 1745 (Chapter 30) Trusts and Estates: Notifications

The current law generally limits the time period within which a person may bring an action to contest a trust to no more than 120 days from when the trustee serves notification upon the person or 60 days on which a copy of the terms of the trust is mailed or personally delivered to the person during that 120-day period, whichever is later. This act specifies that the 120-day period only applies when a revocable trust becomes irrevocable upon the death of a settlor of the trust or because of a contingency related to the death of a settlor or trust.

SB 1489 (Chapter 427) Williamson Act: Mutual Contract Rescission/Solar-Use Easements

The Williamson Act authorizes the parties to a Williamson Act contract to mutually agree to rescind a contract under the act in order to simultaneously enter into an open-space easement for a certain period of years. This act authorizes the parties to mutually agree to rescind the contract in order to simultaneously enter into a solar-use easement. The act further requires the city or county to charge the property owner a rescission fee based upon the fair market value of the property at the time of the rescission and to transmit the fee to the Controller.

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