By Michael J. Arnold & Michael D. Belote, Esq.
CMA Legislative Advocates
Real Estate Issues
Front and Center For 2021
If the analogy was to a horse race, we might say that the California Legislature is “off and running” for 2021, the first year of the new 2021-2022 session. During the pandemic, however, we really should say that the state Senate and Assembly are “off and limping” to begin the legislative year, as 2021 is beginning in the same remote fashion as last year. To be clear, the legislative process does not function well in a remote environment: in a recent hearing on evictions, an overwhelmed AT&T conference operator attempted gamely to shepherd nearly 1000 landlords and tenants wishing to testify on a bill. The result was exactly what would be expected, with barking dogs, crying babies, bad connections, disconnections, drunk callers, abusive callers, and even people calling in on the wrong bill.
It turns out that legislating and lobbying is both more effective and more efficient when done in-person. Who knew? But in contrast to restaurants and baseball games, which might be able to function with reduced capacity, the Capitol pretty much has to be either open or closed. Because the building cannot accommodate unlimited visitors in the near-term, the remote environment is likely to continue for some time.
Several of the key issues of particular focus this year have implications for CMA. On evictions and foreclosures for example, a budget trailer bill already has been enacted extending eviction protections until summer. Legislators believe, correctly or incorrectly, that an unlawful detainer tsunami will occur when the moratorium ends. Foreclosures are a good deal more nuanced, in that foreclosure rates are not rising significantly, forbearances largely seem available for those affected by the pandemic, and property owners still have equity, because of the increases in home values. But with the recent CFPB proposal on foreclosures, it is likely that California legislators will want to visit the issue this year.
A second key issue with ramifications for CMA members is housing and homelessness. Of the over 2500 discreet pieces of legislation introduced for 2021, literally hundreds relate to housing in some fashion. Given the personal interest of Senate President Pro Tem Toni Atkins in the housing shortage, it is very likely that legislation will be enacted this year. But housing has proven to be a veritable Rubik’s Cube of complexity in the past, because of the multiplicity of interests involved, including local governments, NIMBYs, YIMBYs, lawyers, labor, environmentalists, builders, and more. Probably every subject involving the creation of housing is the subject of bills this year, including such disparate topics as local fair allocations of housing needs, zoning, CEQA, finance, and many others.
Third, Governor Newsom and the legislature are concerned about wildfires and homeowners insurance availability. As this column is written, the legislature is considering a budget trailer bill allocating over $500 million for wildfire costs and prevention, including home hardening. Obviously nothing could derail a healthy real estate market faster than the inability to obtain homeowner’s insurance, so this too is a big issue.
Beyond these mega-issues, CMA is also involved in numerous individual bills, including the following:
- SB 373: Economic Abuse
Would prohibit collection activities in situations where various persons specified in the bill opine that the debt is the result of “economic abuse,” broadly defined to include, among other circumstances, defrauding the debtor of money or assets, in the provision of products and services. Real property-secured loans are not exempt.
- SB 449: Financial Institutions Climate Risk
This bill would require institutional lenders and certain California Finance Lenders to submit an annual report to the Department of Financial Protection and Innovation about climate-related financial risks in their portfolios. The bill is not specific about which types of climate risk are to be evaluated, nor what authority the DFPI would have once the information is provided.
- SB 531: Debt Collection
SB 531 would extend to debt collectors, broadly defined in the bill to include servicers of first-party debt, many of the requirements presently applicable in present law only to debt buyers. The bill would apply to efforts to collect delinquent debt, prior to charge-off. The new provisions would be inserted in the Rosenthal Fair Debt Collection Practices Act.
Stay tuned for updates on these and many other bills, and thank you for your support of CMA-it matters!