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SB-479 Real property: trustee of deed of trust.(2017-2018)

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Date Published: 03/27/2017 09:00 PM
SB479:v98#DOCUMENT

Amended  IN  Senate  March 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 479


Introduced by Senator Morrell

February 16, 2017


An act to amend Section 2924d Sections 2924d, 2929.3, and 2929.4 of the Civil Code, relating to mortgages. real property.


LEGISLATIVE COUNSEL'S DIGEST


SB 479, as amended, Morrell. Mortgages: deed of trust. Real property: trustee of deed of trust.

Existing

(1) Existing law authorizes, upon the sale of property under a power of sale, the trustee or his or her agent or successor in interest, to demand and receive, in lieu of other specified changes, charges, from a beneficiary, or his or her agent or successor in interest, or to deduct from the proceeds of the sale, those reasonable costs and expenses that are actually incurred in enforcing the terms of the obligation and the trustee’s or attorney’s fees that are authorized in an amount not to exceed $425 or 1 percent of the unpaid sum secured, whichever is greater.
This bill would increase the above maximum trustee’s or attorney’s fees from $425 to $475.
(2) Existing law requires a legal owner to maintain vacant residential property purchased at a foreclosure sale or acquired by that owner through foreclosure under a mortgage or deed of trust. Existing law authorizes a governmental entity to impose civil fines and penalties for failure to maintain that property of up to $1,000 per day for a violation. Existing law requires a governmental entity that seeks to impose those fines and penalties to give notice of the claimed violation and an opportunity to correct the violation at least 14 days prior to imposing the fines and penalties, and to allow a hearing for contesting those fines and penalties.
Existing law requires a governmental entity, prior to imposing a fine or penalty for failure to maintain a vacant property that is subject to a notice of default, that is purchased at a foreclosure sale, or that is acquired through foreclosure under a mortgage or deed of trust, to provide the owner of that property with a notice of the violation and an opportunity to correct the violation. Existing law exempts a governmental entity from this requirement if that governmental entity determines that a specific condition of the property threatens public health or safety.
This bill would provide that a trustee under a deed of trust shall not be a legal owner or owner, as applicable, for purposes of the provisions described above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 2924d of the Civil Code is amended to read:

2924d.
 (a) Commencing with the date that the notice of sale is deposited in the mail, as provided in Section 2924b, and until the property is sold pursuant to the power of sale contained in the mortgage or deed of trust, a beneficiary, trustee, mortgagee, or his or her agent or successor in interest, may demand and receive from a trustor, mortgagor, or his or her agent or successor in interest, or any beneficiary under a subordinate deed of trust, or any other person having a subordinate lien or encumbrance of record those reasonable costs and expenses, to the extent allowed by subdivision (c) of Section 2924c, that are actually incurred in enforcing the terms of the obligation and trustee’s or attorney’s fees that are hereby authorized to be in a base amount that does not exceed four hundred seventy-five dollars ($475) if the unpaid principal sum secured is one hundred fifty thousand dollars ($150,000) or less, or four hundred ten dollars ($410) if the unpaid principal sum secured exceeds one hundred fifty thousand dollars ($150,000), plus 1 percent of any portion of the unpaid principal sum secured exceeding fifty thousand dollars ($50,000) up to and including one hundred fifty thousand dollars ($150,000), plus one-half of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150,000) up to and including five hundred thousand dollars ($500,000), plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500,000). For purposes of this subdivision, the unpaid principal sum secured shall be determined as of the date the notice of default is recorded. Any charge for trustee’s or attorney’s fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amounts authorized herein. Any charge for trustee’s or attorney’s fees made pursuant to this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (d) of Section 2924c.
(b) Upon the sale of property pursuant to a power of sale, a trustee, or his or her agent or successor in interest, may demand and receive from a beneficiary, or his or her agent or successor in interest, or may deduct from the proceeds of the sale, those reasonable costs and expenses, to the extent allowed by subdivision (c) of Section 2924c, that are actually incurred in enforcing the terms of the obligation and trustee’s or attorney’s fees that are hereby authorized to be in an amount which does not exceed four hundred seventy-five dollars ($475) or 1 percent of the unpaid principal sum secured, whichever is greater. For purposes of this subdivision, the unpaid principal sum secured shall be determined as of the date the notice of default is recorded. Any charge for trustee’s or attorney’s fees authorized by this subdivision shall be conclusively presumed to be lawful and valid where that charge does not exceed the amount authorized herein. Any charges for trustee’s or attorney’s fees made pursuant to this subdivision shall be in lieu of and not in addition to those charges authorized by subdivision (a) of this section and subdivision (d) of Section 2924c.
(c) (1) No person shall pay or offer to pay or collect any rebate or kickback for the referral of business involving the performance of any act required by this article.
(2) Any person who violates this subdivision shall be liable to the trustor for three times the amount of any rebate or kickback, plus reasonable attorney’s fees and costs, in addition to any other remedies provided by law.
(3) No violation of this subdivision shall affect the validity of a sale in favor of a bona fide purchaser or the rights of an encumbrancer for value without notice.
(d) It shall not be unlawful for a trustee to pay or offer to pay a fee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee’s obligations under the terms of the deed of trust. Any payment of a fee by a trustee to an agent or subagent of the trustee for work performed by the agent or subagent in discharging the trustee’s obligations under the terms of the deed of trust shall be conclusively presumed to be lawful and valid if the fee, when combined with other fees of the trustee, does not exceed in the aggregate the trustee’s fee authorized by subdivision (d) of Section 2924c or subdivision (a) or (b) of this section.
(e) When a court issues a decree of foreclosure, it shall have discretion to award attorney’s fees, costs, and expenses as are reasonable, if provided for in the note, deed of trust, or mortgage, pursuant to Section 580c of the Code of Civil Procedure.

SEC. 2.

 Section 2929.3 of the Civil Code is amended to read:

2929.3.
 (a) (1) A legal owner shall maintain vacant residential property purchased by that owner at a foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust. A governmental entity may impose a civil fine of up to one thousand dollars ($1,000) per day for a violation. If the governmental entity chooses to impose a fine pursuant to this section, it shall give notice of the alleged violation, including a description of the conditions that gave rise to the allegation, and notice of the entity’s intent to assess a civil fine if action to correct the violation is not commenced within a period of not less than 14 days and completed within a period of not less than 30 days. The notice shall be mailed to the address provided in the deed or other instrument as specified in subdivision (a) of Section 27321.5 of the Government Code, or, if none, to the return address provided on the deed or other instrument.
(2) The governmental entity shall provide a period of not less than 30 days for the legal owner to remedy the violation prior to imposing a civil fine and shall allow for a hearing and opportunity to contest any fine imposed. In determining the amount of the fine, the governmental entity shall take into consideration any timely and good faith efforts by the legal owner to remedy the violation. The maximum civil fine authorized by this section is one thousand dollars ($1,000) for each day that the legal owner fails to maintain the property, commencing on the day following the expiration of the period to remedy the violation established by the governmental entity.
(3) Subject to the provisions of this section, a governmental entity may establish different compliance periods for different conditions on the same property in the notice of alleged violation mailed to the legal owner.
(b) For purposes of this section, “failure to maintain” means failure to care for the exterior of the property, including, but not limited to, permitting excessive foliage growth that diminishes the value of surrounding properties, failing to take action to prevent trespassers or squatters from remaining on the property, or failing to take action to prevent mosquito larvae from growing in standing water or other conditions that create a public nuisance.
(c) Notwithstanding subdivisions (a) and (b), a governmental entity may provide less than 30 days’ notice to remedy a condition before imposing a civil fine if the entity determines that a specific condition of the property threatens public health or safety and provided that notice of that determination and time for compliance is given.
(d) Fines and penalties collected pursuant to this section shall be directed to local nuisance abatement programs, including, but not limited to, legal abatement proceedings.
(e) A governmental entity may not impose fines on a legal owner under both this section and a local ordinance.
(f) These provisions shall not preempt any local ordinance.
(g) This section shall only apply to residential real property.
(h) The rights and remedies provided in this section are cumulative and in addition to any other rights and remedies provided by law.
(i) A trustee under a deed of trust shall not be a legal owner for the purpose of this section.

SEC. 3.

 Section 2929.4 of the Civil Code is amended to read:

2929.4.
 (a) Prior to imposing a fine or penalty for failure to maintain a vacant property that is subject to a notice of default, that is purchased at a foreclosure sale, or that is acquired through foreclosure under a mortgage or deed of trust, a governmental entity shall provide the owner of that property with a notice of the violation and an opportunity to correct that violation.
(b) This section shall not apply if the governmental entity determines that a specific condition of the property threatens public health or safety.
(c) A trustee under a deed of trust shall not be an owner for the purpose of this section.