An Express Article from the California Land Title Association
Bulletin 10/11-97 - May 31, 2011
CLTA was recently successful in having AB 1090 (Blumenfield) amended to delete the "superlien" provision in the bill. That lien provision would have created a dangerous precedent impacting all lending in California. This is the second time in two years that CLTA and lenders have successfully opposed such a provision.
Prior to 2009, California had a "Tax Postponement Program" that allowed seniors and the disabled to defer their property taxes. Under the program, the State Controller's Office paid the deferred taxes to the counties and recorded a judgment lien that was junior to outstanding recorded liens. A fund associated with this program had millions of dollars in revenues and the program was, by all accounts, successful, self-supporting, and supported by both CLTA and lenders because it did not impose a superpriority lien. Unfortunately, the State Legislature raided this fund in 2009 and used the money to cover a gap in that year's budget.
Unable to fund the previously successful program, AB 1718 (Blumenfield) was amended in 2010 to create an alternative tax postponement program for seniors and disabled persons that used a complicated approach that relied upon a "superpriority lien" for the outstanding unpaid taxes deferred by seniors and disabled persons. Under this bill, these unpaid taxes (and the associated lien) could have accumulated over many years and wiped out the lender's security interest in the property. CLTA, the California Bankers Association, and the Howard Jarvis Taxpayers Association (HJTA) mounted an aggressive campaign against the bill and obtained a veto from former Governor Schwarzenegger.
In 2011, AB 1090 was introduced with virtually the same "superpriority" lien approach incorporated into the bill, requiring the CLTA and the California Bankers Association to strongly oppose the bill. Because of this opposition and aggressive lobbying, on May 27th, the author of the bill eliminated the "superpriority" lien provision in the bill. AB 1090 moved out of the Appropriations Committee minus this language.
On a positive note, the Governor's revised Budget Proposal reinstates the money taken out of the program in 2009. CLTA and CBA are strongly supporting this budget proposal and hope the Legislature utilizes this approach in addressing this issue.