Sacramento Report
October 20, 2009
Restrictive Covenant Bill Vetoed by Governor
AB 985 (De La Torre) was vetoed by the Governor over the weekend. If the bill had been signed into law, it would have required county recorders to create a dual records system made up of "official records" which contain unlawful restrictive covenants and "public records" which are an exact copy of the official record, but with the unlawful restrictions redacted. In addition, the bill would have required title companies, homeowners associations and real estate professionals to hand out potentially unnecessary forms to consumers involved in real estate transactions, loan refi’s, etc., creating unneeded confusion in the escrow process. Furthermore, the bill provided for a recording fee of up to $2.00 per document in the first year of implementation and did not have a cap on the fee in subsequent years. Under such terms, the County Recorders responsible for charging the fee would have been able to raise the fee by an unspecified amount if they had determined that additional funds were necessary to implement the new mandates.
While CLTA made a concerted effort to work with the author’s office to reach an agreement that would improve the existing statutory process for finding and removing these offensive restrictions from antiquated documents, we were unable to reach a reasonable compromise and were forced to request a veto from the Governor’s office. The CLTA helped coordinate the opposition and veto efforts with other groups representing real estate professionals, home owners associations, and anti-tax associations.
