Bill Text


Add To My Favorites | print page

AB-1090 Real property.(2001-2002)

SHARE THIS: share this bill in Facebook share this bill in Twitter
AB1090:v92#DOCUMENT

Assembly Bill No. 1090
CHAPTER 560

An act to amend Sections 2941 and 2943 of the Civil Code, relating to real property.

[ Filed with Secretary of State  October 07, 2001. Approved by Governor  October 05, 2001. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1090, Hertzberg. Real property.
Existing law provides that when an obligation secured by a deed of trust has been satisfied, the beneficiary, or its assignee, shall execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust. Existing law provides that the trustee shall deliver a copy of the reconveyance to the beneficiary if known. Existing law provides that the trustee, beneficiary, or mortgagee may charge a reasonable fee to the trustor or mortgagor, or the owner of the land, as the case may be, for all services involved in the preparation, execution, and recordation of the full reconveyance. If the fee does not exceed $65 it is conclusively presumed to be reasonable. Existing law also provides that the mortgagee or trustee may not record or cause the certificate of discharge or full reconveyance to be recorded under specified circumstances. A person who violates these provisions is liable to the person affected by the violation for all damages the person affected may sustain and forfeits to the person affected the sum of $300.
This bill would require the beneficiary or the assignee of the beneficiary to execute and deliver to the trustee the original note, deed of trust, request for full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust within 30 calendar days after the obligation secured by any deed of trust has been satisfied. This bill would also provide that, instead of delivering the original note and deed of trust to the trustee within 30 days of loan satisfaction, the beneficiary may, within 120 days of loan satisfaction, deliver the original note and deed of trust to either the trustee or trustor and would require that upon satisfaction, the note and deed of trust be altered to indicate that the obligation is paid in full.
This bill would also require the reconveyance instrument to specify the trustor as the person to whom the recorder will deliver the recorded instrument.
This bill would also require a beneficiary, upon satisfaction of an obligation secured by a deed of trust, to mark the note “paid in full” and, within 120 days of satisfaction, either deliver the note to the trustee or mail it to the trustor.
This bill would also require that, if the note, or deed of trust, or any copy of the note or deed of trust, is electronic, upon satisfaction of an obligation secured by a deed of trust, any electronic original, or electronic copy which has not been previously marked solely for use as a copy, of the note and deed of trust, shall be altered to indicate that the obligation is paid in full.
This bill also would change the amount of the fee for preparation, execution, and recordation of a full reconveyance to $45 and would prohibit the fee from being charged unless demand for the fee was included in the payoff demand statement. This bill would also provide that a beneficiary may, at its discretion but subject to a specified procedure, substitute as trustee the title company conducting the escrow through which the obligation is satisfied, and that the title company must comply with the requirements of a trustee and may collect applicable trustee fees. The bill also would increase the sum forfeited by a person who violates these provisions from $300 to $500.
This bill also would provide that no other fee or charge may be imposed on the trustor in connection with, or relating to, these provisions, except as specified.
The bill also would delete the provision specifying the circumstances in which a mortgagee or trustee shall not record or cause the certificate of discharge or full reconveyance to be recorded.
Existing law requires a mortgagee or beneficiary of a mortgage or deed of trust, or his or her designees, to prepare and deliver specified documents upon demand, including a beneficiary statement and a payoff demand statement. A beneficiary who provides those documents pursuant to this provision is authorized to impose a charge not to exceed $60 for furnishing each required statement, except as specified.
This bill would reduce that maximum charge for the statement to $30 and would require a beneficiary, who collects a fee for reconveyance and thereafter discovers that the release of obligation had already been recorded, to refund the fee.
This bill also would provide specified rules regarding the refiling of, and costs and attorney’s fees for, claims dismissed as a result of certain changes made to existing law by this bill.
This bill would make specified legislative findings regarding changes to, and interpretation of, existing law.

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


SECTION 1.

 Section 2941 of the Civil Code is amended to read:

2941.
 (a) Within 30 days after any mortgage has been satisfied, the mortgagee or the assignee of the mortgagee shall execute a certificate of the discharge thereof, as provided in Section 2939, and shall record or cause to be recorded in the office of the county recorder in which the mortgage is recorded. The mortgagee shall then deliver, upon the written request of the mortgagor or the mortgagor’s heirs, successors, or assignees, as the case may be, the original note and mortgage to the person making the request.
(b) (1) Within 30 calendar days after the obligation secured by any deed of trust has been satisfied, the beneficiary or the assignee of the beneficiary shall execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust.
(A) The trustee shall execute the full reconveyance and shall record or cause it to be recorded in the office of the county recorder in which the deed of trust is recorded within 21 calendar days after receipt by the trustee of the original note, deed of trust, request for a full reconveyance, the fee that may be charged pursuant to subdivision (e), recorder’s fees, and other documents as may be necessary to reconvey, or cause to be reconveyed, the deed of trust.
(B) The trustee shall deliver a copy of the reconveyance to the beneficiary, its successor in interest, or its servicing agent, if known. The reconveyance instrument shall specify the trustor as the person to whom the recorder will deliver the recorded instrument pursuant to Section 27321 of the Government Code.
(C) Following execution and recordation of the full reconveyance, upon receipt of a written request by the trustor or the trustor’s heirs, successors, or assignees, the trustee shall then deliver, or caused to be delivered, the original note and deed of trust to the person making that request.
(D) If the note or deed of trust, or any copy of the note or deed of trust, is electronic, upon satisfaction of an obligation secured by a deed of trust, any electronic original, or electronic copy which has not been previously marked solely for use as a copy, of the note and deed of trust, shall be altered to indicate that the obligation is paid in full.
(2) If the trustee has failed to execute and record, or cause to be recorded, the full reconveyance within 60 calendar days of satisfaction of the obligation, the beneficiary, upon receipt of a written request by the trustor or trustor’s heirs, successor in interest, agent, or assignee, shall execute and acknowledge a document pursuant to Section 2934a substituting itself or another as trustee and issue a full reconveyance.
(3) If a full reconveyance has not been executed and recorded pursuant to either paragraph (1) or paragraph (2) within 75 calendar days of satisfaction of the obligation, then a title insurance company may prepare and record a release of the obligation. However, at least 10 days prior to the issuance and recording of a full release pursuant to this paragraph, the title insurance company shall mail by first-class mail with postage prepaid, the intention to release the obligation to the trustee, trustor, and beneficiary of record, or their successor in interest of record, at the last known address.
(A) The release shall set forth:
(i) The name of the beneficiary.
(ii) The name of the trustor.
(iii) The recording reference to the deed of trust.
(iv) A recital that the obligation secured by the deed of trust has been paid in full.
(v) The date and amount of payment.
(B) The release issued pursuant to this subdivision shall be entitled to recordation and, when recorded, shall be deemed to be the equivalent of a reconveyance of a deed of trust.
(4) Where an obligation secured by a deed of trust was paid in full prior to July 1, 1989, and no reconveyance has been issued and recorded by October 1, 1989, then a release of obligation as provided for in paragraph (3) may be issued.
(5) Paragraphs (2) and (3) do not excuse the beneficiary or the trustee from compliance with paragraph (1). Paragraph (3) does not excuse the beneficiary from compliance with paragraph (2).
(6) In addition to any other remedy provided by law, a title insurance company preparing or recording the release of the obligation shall be liable to any party for damages, including attorneys’ fees, which any person may sustain by reason of the issuance and recording of the release, pursuant to paragraphs (3) and (4).
(7) A beneficiary may, at its discretion, in accordance with the requirements and procedures of Section 2934a, substitute the title company conducting the escrow through which the obligation is satisfied for the trustee of record, in which case the title company assumes the obligation of a trustee under this subdivision, and may collect the fee authorized by subdivision (e).
(8) In lieu of delivering the original note and deed of trust to the trustee within 30 days of loan satisfaction, as required by paragraph (1) of subdivision (b), a beneficiary who executes and delivers to the trustee a request for a full reconveyance within 30 days of loan satisfaction may, within 120 days of loan satisfaction, deliver the original note and deed of trust to either the trustee or trustor. If the note and deed of trust are delivered as provided in this paragraph, upon satisfaction of the note and deed of trust, the note and deed of trust shall be altered to indicate that the obligation is paid in full. Nothing in this paragraph alters the requirements and obligations set forth in paragraphs (2) and (3).
(c) For the purposes of this section, the phrases “cause to be recorded” and “cause it to be recorded” include, but are not limited to, sending by certified mail with the United States Postal Service or by an independent courier service using its tracking service that provides documentation of receipt and delivery, including the signature of the recipient, the full reconveyance or certificate of discharge in a recordable form, together with payment for all required fees, in an envelope addressed to the county recorder’s office of the county in which the deed of trust or mortgage is recorded. Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge. Compliance with this subdivision shall entitle the trustee to the benefit of the presumption found in Section 641 of the Evidence Code.
(d) The violation of this section shall make the violator liable to the person affected by the violation for all damages which that person may sustain by reason of the violation, and shall require that the violator forfeit to that person the sum of five hundred dollars ($500).
(e) (1) The trustee, beneficiary, or mortgagee may charge a reasonable fee to the trustor or mortgagor, or the owner of the land, as the case may be, for all services involved in the preparation, execution, and recordation of the full reconveyance, including, but not limited to, document preparation and forwarding services rendered to effect the full reconveyance, and, in addition, may collect official fees. This fee may be made payable no earlier than the opening of a bona fide escrow or no more than 60 days prior to the full satisfaction of the obligation secured by the deed of trust or mortgage.
(2) If the fee charged pursuant to this subdivision does not exceed forty-five dollars ($45), the fee is conclusively presumed to be reasonable.
(3) The fee described in paragraph (1) may not be charged unless demand for the fee was included in the payoff demand statement described in Section 2943.
(f) For purposes of this section, “original” may include an optically imaged reproduction when the following requirements are met:
(1) The trustee receiving the request for reconveyance and executing the reconveyance as provided in subdivision (b) is an affiliate or subsidiary of the beneficiary or an affiliate or subsidiary of the assignee of the beneficiary, respectively.
(2) The optical image storage media used to store the document shall be nonerasable write once, read many (WORM) optical image media that does not allow changes to the stored document.
(3) The optical image reproduction shall be made consistent with the minimum standards of quality approved by either the National Institute of Standards and Technology or the Association for Information and Image Management.
(4) Written authentication identifying the optical image reproduction as an unaltered copy of the note, deed of trust, or mortgage shall be stamped or printed on the optical image reproduction.
(g) No fee or charge may be imposed on the trustor in connection with, or relating to, any act described in this section except as expressly authorized by this section.
(h) The amendments to this section enacted at the 1999–2000 Regular Session shall apply only to a mortgage or an obligation secured by a deed of trust that is satisfied on or after January 1, 2001.
(i) (1) In any action filed before January 1, 2002, that is dismissed as a result of the amendments to this section enacted at the 2001–02 Regular Session, the plaintiff shall not be required to pay the defendant’s costs.
(2) Any claimant, including a claimant in a class action lawsuit, whose claim is dismissed or barred as a result of the amendments to this section enacted at the 2001–02 Regular Session, may, within 6 months of the dismissal or barring of the action or claim, file or refile a claim for actual damages occurring before January 1, 2002, that were proximately caused by a time lapse between loan satisfaction and the completion of the beneficiary’s obligations as required under paragraph (1) of subdivision (b). In any action brought under this section, the defendant may be found liable for actual damages, but may not be found liable for any civil penalty authorized by Section 2941.
(j) Notwithstanding any other penalties, if a beneficiary collects a fee for reconveyance and thereafter has knowledge, or should have knowledge, that no reconveyance has been recorded, the beneficiary shall cause to be recorded the reconveyance, or in the event a release of obligation is earlier and timely recorded, the beneficiary shall refund to the trustor the fee charged to perform the reconveyance. Evidence of knowledge includes, but is not limited to, notice of a release of obligation pursuant to paragraph (3) of subdivision (b).

SEC. 2.

 Section 2943 of the Civil Code is amended to read:

2943.
 (a) As used in this section:
(1) “Beneficiary” means a mortgagee or beneficiary of a mortgage or deed of trust, or his or her assignees.
(2) “Beneficiary statement” means a written statement showing:
(A) The amount of the unpaid balance of the obligation secured by the mortgage or deed of trust and the interest rate, together with the total amounts, if any, of all overdue installments of either principal or interest, or both.
(B) The amounts of periodic payments, if any.
(C) The date on which the obligation is due in whole or in part.
(D) The date to which real estate taxes and special assessments have been paid to the extent the information is known to the beneficiary.
(E) The amount of hazard insurance in effect and the term and premium of that insurance to the extent the information is known to the beneficiary.
(F) The amount in an account, if any, maintained for the accumulation of funds with which to pay taxes and insurance premiums.
(G) The nature and, if known, the amount of any additional charges, costs, or expenses paid or incurred by the beneficiary which have become a lien on the real property involved.
(H) Whether the obligation secured by the mortgage or deed of trust can or may be transferred to a new borrower.
(3) “Delivery” means depositing or causing to be deposited in the United States mail an envelope with postage prepaid, containing a copy of the document to be delivered, addressed to the person whose name and address is set forth in the demand therefor. The document may also be transmitted by facsimile machine to the person whose name and address is set forth in the demand therefor.
(4) “Entitled person” means the trustor or mortgagor of, or his or her successor in interest in, the mortgaged or trust property or any part thereof, any beneficiary under a deed of trust, any person having a subordinate lien or encumbrance of record thereon, the escrowholder licensed as an agent pursuant to Division 6 (commencing with Section 17000) of the Financial Code, or the party exempt by virtue of Section 17006 of the Financial Code who is acting as the escrowholder.
(5) “Payoff demand statement” means a written statement, prepared in response to a written demand made by an entitled person or authorized agent, setting forth the amounts required as of the date of preparation by the beneficiary, to fully satisfy all obligations secured by the loan that is the subject of the payoff demand statement. The written statement shall include information reasonably necessary to calculate the payoff amount on a per diem basis for the period of time, not to exceed 30 days, during which the per diem amount is not changed by the terms of the note.
(b) (1) A beneficiary, or his or her authorized agent, shall, within 21 days of the receipt of a written demand by an entitled person or his or her authorized agent, prepare and deliver to the person demanding it a true, correct, and complete copy of the note or other evidence of indebtedness with any modification thereto, and a beneficiary statement.
(2) A request pursuant to this subdivision may be made by an entitled person or his or her authorized agent at any time before, or within two months after, the recording of a notice of default under a mortgage or deed of trust, or may otherwise be made more than 30 days prior to the entry of the decree of foreclosure.
(c) A beneficiary, or his or her authorized agent, shall, on the written demand of an entitled person, or his or her authorized agent, prepare and deliver a payoff demand statement to the person demanding it within 21 days of the receipt of the demand. However, if the loan is subject to a recorded notice of default or a filed complaint commencing a judicial foreclosure, the beneficiary shall have no obligation to prepare and deliver this statement as prescribed unless the written demand is received prior to the first publication of a notice of sale or the notice of the first date of sale established by a court.
(d) (1) A beneficiary statement or payoff demand statement may be relied upon by the entitled person or his or her authorized agent in accordance with its terms, including with respect to the payoff demand statement reliance for the purpose of establishing the amount necessary to pay the obligation in full. If the beneficiary notifies the entitled person or his or her authorized agent of any amendment to the statement, then the amended statement may be relied upon by the entitled person or his or her authorized agent as provided in this subdivision.
(2) If notification of any amendment to the statement is not given in writing, then a written amendment to the statement shall be delivered to the entitled person or his or her authorized agent no later than the next business day after notification.
(3) Upon the dates specified in subparagraphs (A) and (B) any sums that were due and for any reason not included in the statement or amended statement shall continue to be recoverable by the beneficiary as an unsecured obligation of the obligor pursuant to the terms of the note and existing provisions of law.
(A) If the transaction is voluntary, the entitled party or his or her authorized agent may rely upon the statement or amended statement upon the earlier of (i) the close of escrow, (ii) transfer of title, or (iii) recordation of a lien.
(B) If the loan is subject to a recorded notice of default or a filed complaint commencing a judicial foreclosure, the entitled party or his or her authorized agent may rely upon the statement or amended statement upon the acceptance of the last and highest bid at a trustee’s sale or a court supervised sale.
(e) The following provisions apply to a demand for either a beneficiary statement or a payoff demand statement:
(1) If an entitled person or his or her authorized agent requests a statement pursuant to this section and does not specify a beneficiary statement or a payoff demand statement the beneficiary shall treat the request as a request for a payoff demand statement.
(2) If the entitled person or the entitled person’s authorized agent includes in the written demand a specific request for a copy of the deed of trust or mortgage, it shall be furnished with the written statement at no additional charge.
(3) The beneficiary may, before delivering a statement, require reasonable proof that the person making the demand is, in fact, an entitled person or an authorized agent of an entitled person, in which event the beneficiary shall not be subject to the penalties of this section until 21 days after receipt of the proof herein provided for. A statement in writing signed by the entitled person appointing an authorized agent when delivered personally to the beneficiary or delivered by registered return receipt mail shall constitute reasonable proof as to the identity of an agent. Similar delivery of a policy of title insurance, preliminary report issued by a title company, original or photographic copy of a grant deed or certified copy of letters testamentary, guardianship, or conservatorship shall constitute reasonable proof as to the identity of a successor in interest, provided the person demanding a statement is named as successor in interest in the document.
(4) If a beneficiary for a period of 21 days after receipt of the written demand willfully fails to prepare and deliver the statement, he or she is liable to the entitled person for all damages which he or she may sustain by reason of the refusal and, whether or not actual damages are sustained, he or she shall forfeit to the entitled person the sum of three hundred dollars ($300). Each failure to prepare and deliver the statement, occurring at a time when, pursuant to this section, the beneficiary is required to prepare and deliver the statement, creates a separate cause of action, but a judgment awarding an entitled person a forfeiture, or damages and forfeiture, for any failure to prepare and deliver a statement bars recovery of damages and forfeiture for any other failure to prepare and deliver a statement, with respect to the same obligation, in compliance with a demand therefor made within six months before or after the demand as to which the award was made. For the purposes of this subdivision, “willfully” means an intentional failure to comply with the requirements of this section without just cause or excuse.
(5) If the beneficiary has more than one branch, office, or other place of business, then the demand shall be made to the branch or office address set forth in the payment billing notice or payment book, and the statement, unless it specifies otherwise, shall be deemed to apply only to the unpaid balance of the single obligation named in the request and secured by the mortgage or deed of trust which is payable at the branch or office whose address appears on the aforesaid billing notice or payment book.
(6) The beneficiary may make a charge not to exceed thirty dollars ($30) for furnishing each required statement. The provisions of this paragraph shall not apply to mortgages or deeds of trust insured by the Federal Housing Administrator or guaranteed by the Administrator of Veterans Affairs.
(f) The preparation and delivery of a beneficiary statement or a payoff demand statement pursuant to this section shall not change a date of sale established pursuant to Section 2924g.

SEC. 3.

 The Legislature finds and declares all of the following:
(a) That, prior to this act, Section 2941, read as a whole, required that within 60 calendar days of satisfaction of an obligation secured by a deed of trust, the trustee was to execute and record or cause to be recorded, or alternatively, deliver to escrow, a full reconveyance pursuant to paragraph (2) of subdivision (c), and that the beneficiary was to deliver to the trustee such documents as were necessary for the trustee to perform within this timeframe.
(b) That delivery of a full reconveyance within 60 calendar days of satisfaction of an obligation to an escrow that had closed was not a violation of Section 2941 if, by such delivery, the reconveyance was actually recorded by the former escrowholder as a voluntary accommodation to the trustee.
(c) That, in order for the trustee to act, as required by subparagraph (A) of paragraph (1) of subdivision (b) of Section 2941, within 21 calendar days of receipt of the necessary documents from the beneficiary, and meet its obligation under paragraph (2) of subdivision (b) to execute and record, or cause to be recorded, the deed of reconveyance within 60 calendar days of satisfaction of the obligation, the time allowed for the beneficiary to perform its obligations under paragraph (1) of subdivision (b) was 39 calendar days.
(d) That, Section 2941, as it existed prior to this act, was violated if either the beneficiary failed to deliver to the trustee, within 39 calendar days of satisfaction of the obligation, the documents necessary to reconvey the deed of trust by the trustee, or the trustee failed to record or cause to be recorded a full reconveyance, pursuant to paragraph (1) of subdivision (b), or, alternatively, deliver to escrow a full reconveyance pursuant to paragraph (2) of subdivision (c), within 21 calendar days of receipt of the necessary documents from the beneficiary.
(e) That the trustee satisfied its obligation to cause a reconveyance to be recorded where it delivered to a closed escrow a full reconveyance within 60 calendar days of satisfaction of an obligation if, by that delivery, the reconveyance was actually recorded by the former escrowholder as a voluntary accommodation to the trustee.
(f) That this act is intended to specifically abrogate the decision in Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, to the extent that it is contrary to this clarification of existing law.
(g) That subdivision (j) of Section 2941, added by this act, does not represent a change in current law, but is declarative of existing law.