Until January 1, 2018, existing law permits an owner of specified residential property in the Cities of Palmdale and Lancaster in the County of Los Angeles or the City of Ukiah in the County of Mendocino to register vacant real property with the local law enforcement agency and to execute, under penalty of perjury, a Declaration of Ownership of Residential Real Property that may be filed with the local law enforcement agency of the jurisdiction in which the property is located. Existing law requires the local law enforcement agency with which the property is registered to respond as soon as practicable after being notified that an unauthorized person has been found on the property and take specified action, including requiring a person who is found on the property to produce written authorization to be on the property or other evidence demonstrating the persons right to possession, and notifying any person who does not produce that authorization or other evidence that the owner or owners agency may seek to obtain a court order and that the person will be subject to arrest for trespass if he or she is subsequently found on the property in violation of that order.

This bill would repeal the January 1, 2018, extend the sunset date for these provisions. provisions until January 1, 2020. The bill would also make its provisions applicable to all cities and counties that adopt the County of San Bernardino and its cities, if the county or city adopts an ordinance or resolution indicating the intent of the city or county to participate, as specified.

Until January 1, 2018, existing law permits an owner of specified residential property in the Cities of Palmdale and Lancaster in the County of Los Angeles or the City of Ukiah in the County of Mendocino to register vacant real property with the local law enforcement agency and to execute a Declaration of Ownership of Residential Real Property that may be filed with the local law enforcement agency of the jurisdiction in which the property is located. Existing law requires the local law enforcement agency with which the property is registered to respond as soon as practicable after being notified that an unauthorized person has been found on the property and take specified action, including requiring a person who is found on the property to produce written authorization to be on the property or other evidence demonstrating the persons right to possession, and notifying any person who does not produce that authorization or other evidence that the owner or owners agency may seek to obtain a court order and that the person will be subject to arrest for trespass if he or she is subsequently found on the property in violation of that order.

This bill would repeal the January 1, 2018, sunset date for these provisions. The bill would also make its provisions applicable to all cities and counties that adopt an ordinance or resolution indicating the intent of the city or county to participate, as specified.

Date of Hearing: April 12, 2016

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 2391

Author:(Steinorth) – As Amended Ver:March 30, 2016

SUBJECT: RESIDENTIAL PROPERTY: POSSESSION BY DECLARATION

KEY ISSUE: should a controversial pilot program that may impair the due process rights of occupants in foreclosed homes be expanded geographically and extended until 2020, despite the fact that the program has only been in effect for 15 months out of an intended 36 month pilot period and no evaluation has been made of its effectiveness or impact?

SYNOPSIS

In 2014, the Legislature approved and the Governor signed AB 1513 (Fox), Ch. 666, Stats. 2014, which provided temporary authority to owners of residential property in three California cities to declare their property to be vacant, register it with local law enforcement, and obtain a TRO against any person not authorized to be on the property. This bill seeks to extend authorization for this temporary pilot program by two years, until January 1, 2020, and to expand authorization for the pilot program to include the County of San Bernardino and any city within the County of San Bernardino that adopts an ordinance or resolution to participate and comply with the pilot program. Proponents of the bill, including the Realtors and the California Apartment Association, contend that, other than this pilot program, the only process available today for property owners to remove a squatter from residential property is the formal court eviction (unlawful detainer) process, which can take months to complete and does not allow the owner to take immediate possession of the premises. The bill is opposed by tenant advocates who contend that the court eviction process—a summary expedited proceeding-- is indeed the best way for a property owner to regain possession of the property while also allowing a tenant who claims a legal right to possess the property to have his or her claim decided by a court on its merits—thereby ensuring due process for both parties. Opponents emphasize that due process protections are particularly important here, where the author seeks to expand the AB 1513 pilot program to areas containing so many residential properties that have gone through foreclosure, because of a history of post-foreclosure owners improperly treating legitimate tenants as "squatters" or otherwise unauthorized occupants of the property. Opponents note that the Legislature in 2012 passed AB 2610, part of the Homeowners' Bill of Rights, to protect innocent tenants in foreclosed homes (i.e. typically tenants who paid their rent every month but whose landlord defaulted on the mortgage payments) from being removed from their homes without due process and judicial review. They strongly oppose this bill on the ground that it would allow property owners to undermine or circumvent the very protections established by the Legislature in the HBOR. In addition to the concerns expressed about this bill's impact on tenants in foreclosed homes, the Committee's own analysis of the pilot program provisions, as well as a review of the legislative history of the program, reveal a number of other due process and workability concerns about the program that have never been addressed. For these reasons, it appears that it is premature to expand and extend authorization of the AB 1513 pilot program, prior to any meaningful evaluation of its operation and impact.

SUMMARY: Expands participation of cities in a residential property pilot program and renews program authorization for an additional two years, until 2020. Specifically, this bill:

1. Expands authorization for the CCP Section 527.11 pilot program to include the County of San Bernardino and any city within the County of San Bernardino, provided that the city or county has adopted an ordinance or resolution indicating the intent of the city or county to participate and comply with the program requirements.
2. Provides that the County of San Bernardino or any participating city within the county may withdraw its participation at any time by adopting a subsequent ordinance or resolution of the legislative body indicating the intent of the city or county to withdraw its participation.
3. Extends authorization for the pilot program an additional two years by extending the sunset date from January 1, 2018 to January 1, 2020.

EXISTING LAW:

1. Provides the statutory requirements for unlawful detainer, a summary proceeding the primary purpose of which is to determine right to possession of real property. (Code of Civil Procedure Section 1161 et seq. All further references are to this code unless otherwise stated.)
2. Provides that a former owner of a foreclosed property who holds over and remains in the property after it has been sold through foreclosure may be removed after a three-day notice to quit has been served. (Section 1161a.)
3. Requires a tenant or subtenant in possession of a rental housing unit under a month-to-month lease or periodic tenancy at the time the property is sold in foreclosure to be given 90 days’ written notice to quit before the tenant or subtenant may be removed from the property as prescribed. (Section 1161b, subd. (a).)
4. Provides that the purchaser or successor in interest shall bear the burden of proof in establishing that tenants or subtenants holding possession of a rental housing unit under a fixed-term residential lease entered into before transfer of title at the foreclosure sale do not have the right to possession until the end of the lease term. (Section 1161b, (b)-(c).)
5. Provides that every person other than a public officer or employee acting within the course and scope of his or her employment in performance of a duty imposed by law, who enters or remains in any noncommercial dwelling house, apartment, or other residential place without consent of the owner, his or her agent, or the person in lawful possession thereof, is guilty of a misdemeanor. (Penal Code Section 602.5 (a).)
6. Establishes, until January 1, 2018, a pilot program to facilitate removal of persons unlawfully occupying residential property that, pursuant to the program, has been registered with and verified by local law enforcement to be vacant. This program:
   1. Authorizes the owner of vacant real property, or his or her agent, to register vacant property with the local police agency using a specified form, signed under penalty of perjury, and attesting that the property is vacant and is not authorized to be occupied by any person. (Section 527.11 (a).)
   2. Authorizes the owner or his or her agent to execute a "Declaration of Ownership," worded as specified or in substantially similar language, and file it with the appropriate local law enforcement agency where the property is located. (Section 527.12.)
   3. Requires a licensed private security services company or police agency retained by the owner or owner's agent pursuant to the pilot program to inspect the vacant property not less than once every three days, and immediately notify the police agency where the property is registered if any unauthorized person is found on the property. (Section 527.11 (e).)
   4. Requires the police agency where the property is registered to respond to the property as soon as practicable after being notified by the licensed security business that an unauthorized person is found on the property, and requires the responding officer to take action, as specified. (Section 527.11 (f).)
   5. Authorizes the owner to file an action for a temporary restraining order (TRO) and injunctive relief against any person found on the vacant property not less than 48 hours after that person has been notified by local law enforcement to produce written authorization to be on the property or other evidence demonstrating right to possession, or face arrest. Allows the court to order a hearing on a TRO within three days following service of the summons and complaint, and to grant a TRO including an order directing that the property be vacated in not less than 48 hours. (Section 527.11 (g).)
   6. Limits application of these provisions to residential property consisting of one to four units, located in the cities of Palmdale and Lancaster, in Los Angeles County, and the city of Ukiah, in Mendocino County. (Section 527.11 (k).)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: In 2014, the Legislature approved and the Governor signed AB 1513 (Fox), Ch. 666, Stats. 2014, which provided temporary authority to owners of residential property in three California cities to declare their property to be vacant, register it with local law enforcement, and obtain a TRO against any person not authorized to be on the property. This bill seeks to extend the operation of this temporary pilot program by two years, until January 1, 2020, and expand authorization for the pilot program to include the County of San Bernardino and any city within the County of San Bernardino, provided that the city or county has adopted an ordinance or resolution indicating its intent to participate in and comply with program requirements. According to the author, expansion of the program is needed because:

Cities and counties across the state are grappling with the ongoing issue of how to deal with unauthorized tenants occupying vacant properties. There have been numerous stories from around the state in recent years detailing the vandalism and even burning down of vacant property occupied by “squatters.” Existing law does not provide a direct method for evicting squatters, making it very difficult and time-consuming to quickly control the issue.

In response, California enacted AB 1513 (Fox) in 2014 to create a pilot program that allowed the cities of Palmdale, Lancaster, and Ukiah to utilize an expedited process for inspecting for and removing squatters from vacant property. The program is set to expire after next year, and is very restrictive geographically, leaving many communities’ safety at risk.

Background on AB 1513 pilot program. According to the intent language of AB 1513, the pilot program was intended to provide a means to prevent squatting in vacant residential property and to provide a timely and orderly procedure for squatters to vacate the premises in lieu of arrest, and is not intended to be an abridgment of other statutes relating to trespass or civil eviction proceedings.

As enacted under CCP Section 527.11, the property owner registering the property under the pilot program must provide a phone number where he or she can be reached within a 24-hour period, which is intended to enable law enforcement to quickly contact the owner should unauthorized occupants ever be discovered on the property during one of the regular inspections required under the program. In addition, the owner must retain either law enforcement or a private security service to regularly inspect the vacant property, and provide a copy of the contract or agreement to perform those services at the time of registration. The security company or law enforcement agent must then inspect the vacant property at least every three days to ensure that it is vacant.

Under the program, law enforcement is required to respond in a timely manner after being notified that an unauthorized person is found on the property. Law enforcement personnel responding to a first call shall not arrest the person for trespass, but must instead advise the person that he or she is required to produce written authorization from the owner to be on the property or other evidence demonstrating his or her right to possession, or the owner may seek to obtain a TRO and the person may be subject to arrest for trespass if subsequently found on the property in violation of the order.

An owner of vacant real property may file an action for a temporary restraining order and injunctive relief against any person who is found on the property 48 hours or more after that person has been notified by local law enforcement to produce written authorization from the owner to be on the property or other evidence demonstrating right to possession. Without either being produced, that person subsequently may face arrest for trespass, pursuant to Penal Code Section 602.5, for failing to vacate the property pursuant to the TRO, and may therefore be subject to a criminal penalty of imprisonment in the county jail for up to one year and a fine of up to $1,000, or both.

Numerous due process concerns remain with the provisions expanded by this bill, particularly with respect to tenants in foreclosed homes. According to the author of AB 1513, the reason for the bill is to address a district-wide epidemic of "squatting" (i.e. people occupying vacant residential properties without permission of the owner). The author asserted that the primary reason for the high number of vacant properties ripe for squatting is the foreclosure crisis of the past ten years has resulted in a large number of bank-owned foreclosure properties in the district. According to the author of this bill, local governments in his district are interested in expanding this pilot program to San Bernardino County, where not coincidentally there are a large number of vacant homes due to the foreclosure crisis. (According to figures compiled by RealtyTrac, for example, in May 2012 the Riverside-San Bernardino metropolitan area posted the highest foreclosure rate among the country's 20 largest metropolitan areas—more than 3.5 times the national average.)

The bill is supported by the District Attorney from San Bernardino County, the California Association of Realtors, and the California Apartment Association (CAA), among others. In support of the bill, CAA states:

The current statute extended and expanded by AB 2391 is a fair and equitable process for the removal of squatters from property. The law gives property owners the ability to execute a written form and file that with the district attorney, therein declaring that the property owner has authorized no one to occupy the property. Law enforcement is required to enforce the declaration as an order for immediate possession of the premises. Unfortunately, the only process available today for property owners to remove a squatter is the formal court eviction process. That process can take months to complete, all the while the squatter is living illegally at the property and in many cases damaging the premises.

The legislative history of AB 1513 reveals many concerns expressed about whether the pilot program affords sufficient due process to persons who are alleged by a property owners to be unauthorized occupants of the property. (See, e.g. Assembly Judiciary Committee analysis (April 29, 2014) and Senate Public Safety Committee analysis (June 24, 2014)). Opponents of this bill continue to be concerned that the pilot program, sought to be expanded by AB 2391 without any additional protections, does not provide sufficient due process, especially with respect to the occupants of foreclosed homes. As the Western Center on Law and Poverty explains:

The problem with the policy in AB 2391 is that it puts innocent tenants at risk of being summarily removed from property, despite a legitimate claim to possession. In the foreclosure crisis that followed the collapse of the nation’s housing market, legal services attorneys represented thousands of lawful tenants of landlords that had lost properties in foreclosure. The foreclosing entity or its agents commonly regarded anyone in the property post-foreclosure as trespassers, despite the tenants’ statutory and contractual rights to remain on the premises. Tenants’ rights to a termination notice and a hearing in court through the normal unlawful detainer process were routinely ignored.

The policy in AB 2391 reinforces this erroneous notion that a person inhabiting a foreclosed home must be there unlawfully, and we fear that it will be abused as an end-run around the unlawful detainer process. Stripping tenants of legal protections is unwise policy, particularly in light of California’s housing crisis

Tenants Together, a statewide organization for renters' rights, contends that the current pilot program should not be expanded or extended because it runs contrary to the recently enacted Homeowners' Bill of Rights (HBOR), which included reforms intended to protect tenants in foreclosed properties. They state:

Tenants Together operates a renters’ rights hotline through which we have counseled over 8,000 tenant households since 2009. We regularly receive calls from legitimate tenants being falsely accused of being unauthorized occupants. Whether because of ignorance or bad faith, many owners, particularly after foreclosure, treat tenants as if they are trespassers despite the fact that rental agreements run with the land and verbal rental agreements are fully enforceable and legitimate in California. These new owners threaten to call, and in some cases call, the police or sheriff to have tenants arrested or otherwise removed as trespassers. Giving these owners an additional tool for summary removal would be extremely harmful.

For years, post-foreclosure owners blatantly violated tenants’ rights by improperly treating tenants as “unknown occupants,” utilizing a loophole in state law that was recently addressed by the tenant protections in the Homeowner Bill of Rights (HBOR). HBOR allows any tenant in the property unnamed in an unlawful detainer action to file a claim of right to possession at any time to get a hearing to determine whether the tenant can become a party to the eviction action. CCP 415.46(e)(2). By allowing owners to circumvent the entire court eviction process when the right to occupy is disputed, the current proposal would undermine the very protections the legislature just adopted in HBOR.

With respect to due process concerns expressed by opponents, the author contends that the pilot program sought to be expanded by this bill "has a thorough set of requirements in order to accomplish (due process)" and further states that:

This concern is mitigated by the fact that the property owner (or their agent) and the law enforcement agency or security service must follow a rigorous process to assure that the property is supposed to be vacant. The owner (or their agent) must declare and demonstrate that the property is vacant, under penalty of perjury. Law enforcement must follow a regular inspection protocol. Upon discovery, law enforcement must provide notification to anyone they discover on the property that they are subject to arrest for trespassing or removal after 48 hours if they cannot provide evidence that they have a right to be on the property. Finally, the court has the discretion to not grant the owner’s request for a temporary restraining order or injunctive relief if they do not believe it is merited.

Despite the requirements cited by the author as examples of due process protections built into operation of the AB 1513 pilot program, it appears that the pilot program still provides less due process to a tenant in a foreclosed property who may have a legitimate right to possession under the HBOR, than is afforded under the existing unlawful detainer proceeding that has traditionally allowed property owners to regain possession of property from trespassers or unauthorized occupants. As the Senate Public Safety committee analysis (June 24, 2014) explains, there is some reason to question whether the program requirements cited by the author are sufficient to ensure adequate due process:

The foreclosure crisis has created circumstances where ownership and rental tenancy of property may be difficult to determine. A person in possession of property - perhaps a person who believes that he or she still owns the property - might even have difficulty determining the person or entity to contact for questions about the status of the property. A person subject to ejectment and a misdemeanor conviction for failure to leave property within 48 hours after notice could be a legitimate tenant or reasonably believe that he or she is validly in possession of the property. While the bill provides that a person in possession of property shall not be arrested for trespass if he or she presents written authorization from the owner, the bill does not provide a method for the police or the courts to resolve conflicting claims of ownership or authorization. The person in possession could have a lease from a former owner. The new owner of a foreclosed residence might have no knowledge of a lease between the former owner and the tenant. Further, the person in possession may have been a victim of a sham rental from a person pretending to be the owner of the property. This has occurred often enough on foreclosed properties that former Assembly Member Fiona Ma authored a bill that raised penalties for sham rentals. (citing AB 1800 (Ma), Ch. 531, Stats. 2010.)

[. . . ]

The lack of a clearly defined defense to trespass through later establishing the right to be on the property could be particularly problematic where the owner of the property is a large bank or mortgage company and the alleged trespasser is the former owner of the house. The person may have received oral authority to temporarily remain in the house from one department or person at a company, but this authority or permission was not conveyed to another department that prepares foreclosure properties for sale. It could take a person some time to document his or her authority.

For these reasons, the Committee may wish to consider whether it is appropriate to expand the AB 1513 pilot program to San Bernardino or other areas where its application would appear to impair the due process rights of tenants in foreclosed properties, including those established recently through passage of the Homeowners' Bill of Rights.

This bill seeks to expand and renew the pilot program prematurely, prior to any real evaluation of its operation and impact. In part because of due process concerns with the original legislation, it should be noted that the Legislature only approved AB 1513 for a three year period, establishing a January 1, 2018 sunset date, and further limited its application to residential property of one to four units, in the Cities of Palmdale, Lancaster, and Ukiah.

In response to concerns that it may be premature to expand the AB 1513 program at this time, the author states that "the program has been in law for over a year, and will have been in effect for two years by the time this bill would become effective." The author also contends there have been no known issues with it in that time, and states that the Ukiah Police Department indicated that they would like to retain the authority to use the program going forward.

The Committee notes that the AB 1513 program became effective on January 1, 2015, and is set to sunset 36 months later, on January 1, 2018. At the time this Committee is being asked to vote to approve expansion and reauthorization of the program, the program has only been in effect for 15 months out of the 36 months during which it was intended by the Legislature to operate. When AB 205 (Wood), a bill that similarly sought to expand this pilot program, was in this Committee in March 2015, the Committee’s preliminary outreach to officials in Lancaster and Palmdale revealed that the program was still largely unknown to the public, and local implementation of the registration and other requirements was still in progress. (AB 205 was not pursued by its author in April 2015 at its first hearing, nor in January 2016, when it was eligible to be moved forward as a two-year bill.)

With respect to the existence of "no known issues" with the bill, that may simply reflect the difficulty in ascertaining any reliable, empirical information about program implementation to date. When AB 1513 was in this Committee, the author declined to take amendments that would have greatly aided the Legislature in conducting evaluation and oversight of the program--namely, amendments specifying key reporting requirements by cities participating in the program, similar to those that apply to cities participating in the ongoing weapon and drug nuisance eviction pilot program. (See Civil Code Sections 3485(g) and 3486.5(b).) Because AB 1513 was considered primarily to be a stopgap measure to address a crisis associated with vacant properties in the author's district, the bill was allowed to proceed with a three-year sunset date with the understanding that it would not be expanded beyond the initial set of participating cities, particularly because the bill did not help facilitate the Legislature's evaluation of its operation or its impact upon residents who might be adversely affected.

At the time of this analysis, the Committee had received no information about how many property owners have elected to register their properties with local law enforcement under the program, so it is not even known what the universe of cases is where the program can be said to have worked properly or improperly. Furthermore, the definition of what constitutes an "issue" with the program is subjective, as is what constitutes "success". Proponents indicate that they would consider it a success if the program helped expedite the removal of "squatters" from vacant property. However, opponents point out that without being able to evaluate whether the person removed actually had a legal right to occupy the property, the simple fact that the person in question is no longer occupying the property cannot be considered a measure of success. What if the person did not receive the due process that he or she was entitled to under the circumstances, but the person elected to vacate the property rather than face possible arrest or retaliation? What if, for the sake of argument, no homeowners in an entire city elected to register their properties through the program? Would the lack of "issues" somehow make that a program worth expanding and extending to other cities? Or would it indicate that perhaps property owners themselves do not find the pilot program worthy of participation?

Additional due process and workability questions remain unanswered. The Senate Public Safety committee analysis (June 24, 2014) raised additional due process and workability questions about the current pilot program that were not addressed by subsequent amendments to AB 1513, but remain concerning to the present day. Among these questions are:

1. What constitutes “inspection” of the property – to verify that the property is vacant, such that any persons later found on the property are trespassers?
2. What happens in cases where ownership – perhaps by a large bank or mortgage company – is unclear?
3. Is a person still guilty of a misdemeanor for failure to leave property within 48 hours, if the person later establishes that he or she owns or leases the property, or has permission to be on the property?
4. In the misdemeanor defined by this bill for failure to vacate residential property, should the prosecution have to prove as an element of the offense that a defendant did not have the right to occupy the property?
5. Should a defendant have the right to an affirmative defense that he or she had a reasonable belief in his or her right to occupy the property?
6. Would prosecutors have difficulty obtaining perjury convictions for fraudulent or questionable claims of ownership?

Until these questions are answered, the Committee may conclude that it does not have enough information about the program to judge its merit as it was originally conceived to operate for a limited period in a limited area and certainly not enough information to consider expanding it to operate for a longer period of time in a larger area.

REGISTERED SUPPORT / OPPOSITION:

Support

California Apartment Association

California Association of Realtors

California Police Chiefs Association

San Bernardino County, Office of the District Attorney

Opposition

California Rural Legal Assistance Foundation

Tenants Together

Western Center on Law and Poverty

Analysis Prepared by: Anthony Lew / JUD. / (916) 319-2334