Just as in the world of litigation (and now that I think of it, also the world of escrow) the legislative process moves from a series of deadlines to deadlines. When voters created the “full-time legislature” in California in the mid-1960s, one of the goals was to smooth out the work flow, to avoid rushing bills through at the end of session. The plan was perfect, except for human nature: legislators, and parties to real estate transactions, tend to procrastinate, which leads to lots of work at “closing.”

In any event, although the calendar year is just over half-finished, the legislative year is much nearer completion. With a relatively on-time state budget accomplished, the legislature is in summer recess until mid-August. They return for only four more weeks of work until September 9, when they recess for the balance of the year. It all feels a little like a school year: nine months in, and then school’s out!

Thus far 2005 is shaping up as a very good year legislatively for CEA and our real estate allies. Perhaps more than ever before, we have forged very close working relationships with our friends at the California Land Title Association, California Association of Realtors, Escrow Institute of California and others. This cooperation has led to success on a number of bills which would have directly affected escrow.

There are at least a half-dozen examples of good outcomes resulting from working together. They include the following:

• AB 361 (Runner): Notaries. This bill would have made it a felony to notarize an instrument where the party did not personally appear before the notary, at the time of executing the instrument. While well-intentioned, we objected to the felony penalty and also assisted the author in better understanding the nature of the notarial function. The “personally appeared” language was corrected and the penalty was reduced to a misdemeanor.

• AB 459 (Oropeza): Supplemental Taxes. AB 459 would have required sellers to provide buyers with a reasonably accurate estimate of supplemental property tax obligations. CEA, CLTA and others were concerned that this obligation would in fact fall upon escrow officers, who would hear about it later if the estimates were not exactly right. The bill was amended to require a simple disclosure that the buyer would be receiving one or more supplemental tax bills, with no obligation to estimate the amount.

• AB 1078 (Keene): Contaminated Property. This bill deals with remediation and disclosure of properties contaminated through the manufacturing of controlled substances, such as methamphetamine. While everyone agrees that clean-up and disclosure are appropriate, lengthy meetings resulted in language properly crafted relating to recording and releasing liens for clean-up costs, and disclosure to potential purchasers.


• AB 1539 (Bass): Notaries. AB 1539 basically proposed a mandatory reporting obligation for notaries who reasonably suspect that the person executing the instrument is facing coercion or does not understand the nature of the document. The CEA position was similar to that on bills proposing mandated reporting of suspected elder abuse. On this bill we worked cooperatively with the California Land Title Association, California Association of Realtors, and National Notary Association. The author has made AB 1539 into a two-year bill, so it will not be enacted this year.

• AB 1628 (Klehs): Real Estate Withholding. On this bill, CEA, CLTA and the Escrow Institute worked together effectively. The bill proposes to make escrow officers immediately subject to penalty for not disclosing to buyers the existence of the withholding law, instead of current law which relieves escrow of any penalty if the seller ultimately files a tax return and pays the taxes when due. The author agreed to delay this change for two years, and the various organizations are now discussing the possibility of sponsoring changes to the law.

• SB 728 (Escutia): Title Solicitors. SB 728 would require certification by the Department of Insurance of “title solicitors” within title companies, as a method of combating illegal rebating. The way title solicitors was drafted, however, would have inadvertently swept in virtually all escrow personnel within title companies. This was CEA’s main concern, although CLTA and CAR had other issues with the bill. SB 728 has also become a two-year bill, and the proponents have promised to redraft the language to clearly exempt employees performing only escrow functions.

On many of these bills, telephone calls and letters from CEA members were instrumental in achieving the desired outcomes. This illustrates the grassroots power of the CEA membership!

by Michael D. Belote
California Advocates, Inc., Sacramento

Allies Working Together
Achieve Success