(This material is for discussion purposes only and has not been
approved by the Legislative, Equal Opportunity or Executive Committees nor
by the Board of Directors)
Issue: Should C.A.R. sponsor its own legislation
setting up a pilot program to encourage a county recorder to test the use
of software programs to remove historic unconstitutional restrictions from
real property records?
Options: 1. Do Nothing. Existing policy would oppose
legislation requiring removal at time of sale.
2. Support legislation of others. The California Land Title Association has
expressed interest in proactive legislation to “scrub” title records in a
way that does not add prohibitive costs to the recording process.
3. Sponsor or Co-Sponsor C.A.R. legislation to either mask or redact the
4. Wait until January 2010, when the fate of AB 985 will be known, to make
a decision on legislation.
AB 985 (De La Torre) has been passed to the Governor; C.A.R. continues to
have an Oppose Unless Amended position on the bill because it creates an
unlimited authority for local governments to surcharge real estate
recordings. Whether or not the bill is signed by the Governor, should
C.A.R. sponsor its own bill to adopt an alternative approach.
This issue has a lengthy history with organized real estate. The title
records of older housing stock sometimes contain offensive restrictive
covenants that attempt to impose a "whites only" ownership limitation, or
other unconstitutional limitations, on ownership or occupancy. While these
covenants have been illegal for decades and unenforceable since the 1950s,
they may none the less give offense to owners or prospective owners that
discover them in the course of researching title. In 2008, C.A.R.
successfully opposed legislation (AB 2204, De La Torre) imposing a time of
sale purging requirement that was estimated to cost hundreds of millions of
dollars. A similar bill was introduced in 2009 as AB 985.
The Real Estate Summit. In January 2009, the Legislative
Committee considered, but did not pass, a motion to sponsor C.A.R.
legislation on this subject, and instead directed staff to seek the input
of the Real Estate Leadership Summit, an umbrella organization of various
ethnic real estate professions. Members of the Summit expressed opposition
to the point of sale approach in the De la Torre legislation.
C.A.R.'s Equal Opportunity Committee. In June 2009, the Equal
Opportunity and Cultural Diversity Committee went on record to support
"C.A.R.’s existing policy to “OPPOSE UNLESS AMENDED” AB 985 (De La
Torre) to replace the existing Point-of-Sale provision with an electronic
screening approach based upon the existing social security number removal
law. The legislation will be funded by a $1-$2 per page charge, not to
exceed $10, on recorded documents on an ongoing basis."
Status of AB 985 (De La Torre) Consistent with existing policy,
C.A.R. has pursued an Oppose Unless Amended position. The author has
retreated from a point of sale solution, but has also backed away
from a comprehensive electronic screening approach like that in use for
social security numbers (SSNs). As sent to the Governor, the bill now
simply allows a person without an ownership interest in a property to use
the existing mechanism to record a "sanitized" real estate document over
the top of one containing an illegal discriminatory restriction. C.A.R. has
continued to oppose because the bill creates a new recording fee authority
for counties that has no "hard dollar" cap and need only be "reasonably
related" to implementing the requirements of the bill. It is effectively a
new tax on real estate recordings.
While AB 985 has been sent to the Governor, he may not make a final
decision to sign or veto the bull until early October.
The question for REALTORS®, whether or not AB 985 is signed, is whether
the issue is important enough for C.A.R. to sponsor its own
legislation. If the bill is signed, it may make the area less likely
to be successfully legislated. On the other hand, if the bill
is vetoed, the author might try yet again to pass some variation of a
burdensome point of sale requirement to research old title documents
in every transaction. Either way, the law will not contain the
requirement to scan and purge all property records that C.A.R. has
policy to support.
The AB 1168(Jones) approach. In 2007 Assemblyman Jones introduced
legislation, which eventually became law, that required county recorders to
use a new software program to "scrub" their electronic records and remove
Social Security Numbers (SSNs). The legislation effectively creates a new
property data base that is made available to the public, and which will not
include the SSN in a reported title document. It has been suggested, and
C.A.R has expressed support for using the same approach for illegal
restrictions. At least one county recorder has indicated that he would be
willing to attempt such a process on a pilot basis.
In 2009, the CLTA was unwilling to sponsor legislation creating the
program, but would be supportive of legislation of others (i.e. C.A.R. or
the recorders assn.) to do so.
The Previous legislation. Restrictive covenants have been the subject of
corrective action since 1948, when racially restrictive covenants were
struck down by the U.S. Supreme Court as unconstitutional.
The issue has been the subject of frequent legislation as well. In fact,
C.A.R. was the first interest group in California to successfully sponsor
legislation (SB 716, Lockyer, Chap. 500, Stat.s of 1987) on the subject.
That legislation, by operation of law, eliminated racial restrictions from
real estate documents. Unfortunately, the illegal restrictions are still in
the historical record, and continue to inspire legislation. Indeed, just
since 1999 the legislature has passed at least four different measures on
the subject. The area appears ripe for further activity, because
appearances continue to trump legal reality.
Existing law (Government Code 12956.1) requires deeds, governing documents
and other documents delivered in a transaction to have a cover sheet or
stamp that says:
"If this document contains any restriction based on race, color, religion,
sex, sexual orientation, familial status, marital status, disability,
national origin, source of income as defined in subdivision (p) of Section
12955, or ancestry, that restriction violates state and federal fair
housing laws and is void, and may be removed pursuant to Section 12956.2 of
the Government Code. Lawful restrictions under state and federal law on the
age of occupants in senior housing or housing for older persons shall not
be construed as restrictions based on familial status." AB 985 (De La
Torre) contains a "new and improved version of this advisory that will take
effect only if the bill is signed into law. The new disclosure is more
readable, but doesn't otherwise change the law.
Recent Legislation. The problem presented by recent
legislation is twofold:
First, they attempt to "fix" the problem at time of sale, and don't
take a comprehensive approach that avoids burdening escrows with untimely
delays and costs. Second, no matter what, the old illegal documents are ultimately
still discoverable in the property record if the owner wants to search back
Possible guiding principles for a legislative solution. In discussing a
legislative solution for satisfying the concerns of REALTORS®, property
owners and activists, suggestions have been made that it include (at least)
the following features:
1. It would be comprehensively applied, and not be triggered by a
2. It would not excessively increase costs or create delays of title or
transfers. Sponsors will have to decide what level of cost is acceptable,
but a $1 or $2 per document cap has been suggested.
3. It will actually “redact” or remove the offensive language from the
public data base, and not just put additional language on top of it in the
chain of title.
4. It will not unduly burden county recorders and result in costs that
ultimately fall to transactions.
5. It will be self-executing and not require property owner intervention.
A final note on the value of history - the restrictive
covenants that exist today are artifacts of an earlier, less enlightened
time. They are potentially offensive reminders of conduct that is now
neither allowed nor enforceable. Is it appropriate to remove these
evidences of the past, or should they be preserved as reminders of a past
that should not be repeated? C.A.R. has no policy on the point, but the
question has been raised in previous discussions.