Sacramento Report
June 16, 2009
Unlawful Restrictions Addressed in Amendments
Originally, AB 985 (De La Torre), would have required title companies to find and eliminate all offensive covenants found in the chain of title prior to the transfer of real property in a transaction. The bill has been significantly amended to eliminate this point-of-sale requirement, but would require title companies to provide a modification form with the declaration already required in existing law so that the buyer can request the county recorder to modify documents after the close of escrow.
County counsel and recorders would have to make a determination whether the original document contains an unlawful restriction within three months after a request and process that request accordingly. A list of phrases identified as unlawfully restrictive language could be compiled by county counsel to expedite the determination. Also, the modification form could be made on behalf of several homes or lots. In order to ensure that the offensive covenants do not resurface in real estate transactions, county recorders would be required to create a public record version of each document where the offensive covenant is removed and a unmodified version of the document will continue to exist in a separate set of official records. The bill provides for continued access to all necessary documents by title companies and others during this transition period.
