Written by Bob Hunt
It appears likely that the California legislature is about to enact a major bill that will provide a permanent source of funding to create housing for low-income individuals and households. The legislation, Assembly Bill 1335, introduced by Assembly Speaker Toni Atkins (D — San Diego), is expected to raise $300 – $500 million annually. Where will all this money come from? Current and future California homeowners.
The fee to be imposed is $75 per document. The documents affected include, but are not limited to, the following: grant deed, quitclaim deed, deed of trust, declaration of homestead, notice of default, mechanics lien, CC&Rs, easement, abstract of judgment, and reconveyance.
In any single transaction there is a limit of $225 that can be imposed by these fees. There is no limit to the amount of fees that can be charged over any period of time to the same entity. If, for example, you refinanced twice, you might pay $450 in fees.
The total fees collected, minus any administrative cost to the county recorder, is to be forwarded each quarter to the Department of Housing and Community Development (HCD) where it is to be deposited into the “Building Homes and Jobs Trust Fund”. The Trust Fund will be administered by a Governing Board.
The legislation requires the following: “(A) Twenty percent of moneys in the fund shall be expended for affordable owner-occupied workforce housing. (B) Ten percent of the money in the fund shall be expended to address affordable homeownership and rental housing opportunities for agricultural workers and their families.”
Among the purposes for which the remainder of the money could be used for are matching portions of funds placed into local or regional housing trust funds, emergency shelters and transitional housing, accessibility modifications, efforts to acquire and rehabilitate foreclosed, vacant, or blighted homes, and homeownership opportunities, including but not limited to down payment assistance.
AB 1335 has garnered an unusual amount of support, much of it from specific cities and from a variety of building industry associations. 176 individuals and organizations registered support for the bill. Sixteen registered opposition, twelve of whom were county clerks, assessors, and/or recorders.
The opposition centered on two concerns: (1) the fees might discourage some people from recording documents that they really should (for their protection) record; and (2) nothing in the bill required that any of the money collected would come back to the communities where it was generated.
It came as a surprise to many that the California Association of REALTORS®(CAR) weighed in supporting the bill, as it had opposed a similar bill (SB 391) last year. But this bill differed in important respects (e.g. the $225 cap, and the 20% set aside for homeownership purposes). It probably didn’t hurt, either, that the composition of the Trust Fund Governing Board is practically guaranteed to include two representatives from CAR.
Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way.