Bill Text: CA AB905 | 2013-2014 | Regular Session | Amended
Bill Title: Real property: environmental fee covenants.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-02-03 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB905 Detail]
Download: California-2013-AB905-Amended.html
BILL NUMBER: AB 905 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 30, 2013
AMENDED IN ASSEMBLY MARCH 21, 2013
INTRODUCED BY Assembly Member Ting
FEBRUARY 22, 2013
An act to add Section 1471.5 to the Civil Code, relating to real
property.
LEGISLATIVE COUNSEL'S DIGEST
AB 905, as amended, Ting. Real property: environmental fee
covenants.
Existing law provides for the recording of an instrument
containing an Environmental Restriction covenant made by an owner of
land or by the grantee of land to do or refrain from doing an act
that is reasonably necessary to protect present or future human
health or safety or the environment as a result of the presence on
the land of hazardous materials.
This bill would also provide for the recording of an Environmental
Fee Covenant, as specified, that is, among other things, imposed
for no more than 50 years in connection with the
installation on the property of equipment or improvements that are
intended to promote, among other things, energy efficiency and the
reduction of the consumption of water or other natural resources.
The bill would require the instrument containing the covenant to
include specified information including a legal description of the
property subject to the covenant, the dates for commencement and
expiration of the covenant, and a specified notice relating to the
terms and conditions of the covenant. The bill would require the
covenant to be subject to and subordinate to the lien and encumbrance
of any first mortgage or any other mortgage against the property
subject to certain requirements. The bill would require the
covenantee, within a specified period following receipt of written
notice from the covenantor, to provide the covenantor with written
confirmation of specified matters relating to information about any
outstanding obligation under the terms of the covenant. The bill
would make findings and declarations in this regard.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) A significant percentage of California's existing commercial
building stock was built before the 1978 building standards. The
installation of energy and water efficiency upgrades that are
consistent with the latest building standards would benefit the
owners and tenants of these buildings through increased property
values and reduced operating costs, while also improving the level of
comfort for tenants.
(b) Upgrading the existing commercial building stock with the
installation of energy and water efficiency improvements would also
benefit the environment through the reduction of energy consumption,
water consumption, and greenhouse gas emissions.
(c) Although publicly funded programs exist to defray the cost of
installing energy and water efficiency upgrades, commercial sector
installation of these upgrades is constrained by the lack of access
to affordable private financing opportunities for many commercial
building owners.
(d) It is the intent of the Legislature to advance the achievement
of the state's environmental and economic goals by facilitating
private funding opportunities for commercial building owners to
install energy efficiency, water conservation, and clean energy
improvements on their properties through the use of voluntary real
property covenants with transfer fees that run with the land. This
funding mechanism will provide the opportunity to distribute the
costs of the improvements to a commercial building over a period of
years and across subsequent owners.
SECTION 1. SEC. 2. Section 1471.5 is
added to the Civil Code, to read:
1471.5. (a) Notwithstanding Section 1468 or any other law, a
covenant made by an owner of land or by the grantee of land to do or
refrain from doing some act on his or her own land, which doing or
refraining is expressed to be for the benefit of the covenantee,
regardless of whether or not it is for the benefit of land owned by
the covenantee, shall run with the land owned by or granted to the
covenantor if all the following requirements are met:
(1) The land of the covenantor that is to be affected by the
covenant is particularly described in the instrument containing the
covenant.
(2) The successive owners of the land are expressed to be bound
thereby for the benefit of the covenantee in the instrument
containing the covenant.
(3) The covenant is an Environmental Fee Covenant pursuant to
subdivision (e) (d) .
(4) The instrument containing the covenant is recorded in the
office of the recorder of each county in which the land or some
portion thereof is situated.
(b) Except as provided by Section 1466 and subject to
paragraph (3) of subdivision (d) or as specifically provided in
the instrument creating a covenant made pursuant to this section,
the covenant shall be binding upon each successive owner, during his
or her ownership, of any portion of the land affected thereby and
upon each person having any interest therein derived through any
owner thereof.
(c) If several persons are subject to the burden of a covenant
recorded pursuant to this section, it shall be apportioned among them
pursuant to Section 1467, except if only a portion of the land is so
affected thereby, the apportionment shall be only among the several
owners of that portion.
(d) This section shall apply to the mortgagee, trustee, or
beneficiary of a mortgage or deed of trust upon the land or any part
thereof while, but only while, he or she, in that capacity, is in
possession thereof.
(e)
(d) For purposes of this section, "Environmental Fee
Covenant" is a covenant that meets all of the following requirements:
(1) The covenant imposes a transfer fee meeting the requirements
set forth in Section 1098. The amount of the transfer fee imposed
through the covenant, combined with the amount of the fee imposed
through any prior Environmental Fee Covenant imposed on the same
property, shall not exceed 2 percent of the full cash value, as
defined in Section 110 of the Revenue and Taxation Code, of the
property upon transfer. For purposes of this section, a
"transfer" shall mean the conveyance of either an entire
or partial undivided fee ownership interest in the subject property,
and shall exclude any transfer which is excluded by Section 62 of the
Revenue and Taxation Code from classification as a "change in
ownership".
(2) The covenant encumbers property that, at the time the covenant
is entered recorded , either does not
contain residential units or contains five or more residential units
, provided that, with respect to property that contains five or
more residential units, the covenant is not prohibited under any
rules or regulations adopted by the Federal Housing Finance Agency
.
(3) The covenant shall not exceed 50 years in duration.
(3)
(4) The covenant is imposed in connection with the
installation or construction on the property of the
convenantor of equipment or improvements that are intended to
promote any of the following:
(A) Energy efficiency.
(B) The reduction of the generation of greenhouse gasses.
(C) The reduction of the consumption of water or other natural
resources.
(D) Compliance with Part 6 and Part 11 of Title 24 of the
California Code of Regulations.
(E) The generation of renewable energy using one or more means
identified in paragraph (1) of subdivision (a) of Section 25741 of
the Public Resources Code.
(4)
(5) The covenant includes in its title the words:
"Environmental Fee Covenant."
(5)
(6) The covenant recites that it meets the requirements
of this subdivision. It shall be rebuttably
presumed , which presumption shall be rebuttable, that the
covenant meets the requirements of this subdivision. The presumption
may be overcome if it is established by a preponderance of the
evidence that the covenant fails to meet the requirements of this
subdivision.
(e) The instrument containing the covenant shall:
(1) Specify the name of the covenantor and covenantee.
(2) Specify the address for the covenantor and covenantee.
(3) Contain the legal description of the property subject to the
covenant.
(4) Describe the dates for commencement and expiration of the
covenant.
(5) Contain an actual dollar-cost example of the fee for property
priced at one million dollars ($1,000,000) or more.
(6) Specify the subordination of the covenant pursuant to
subdivision (f).
(7) Specify the terms and buy-out amount for earlier satisfaction
of the covenant.
(8) Include the following language in at least 14-point boldface
type:
"BY ENTERING INTO THIS INSTRUMENT, COVENANTOR ACKNOWLEDGES AND
AGREES THAT (1) THE COVENANT CREATED PURSUANT TO THIS INSTRUMENT WILL
REMAIN AN OBLIGATION AGAINST THE PROPERTY UNTIL EXPIRATION OF THE
STATED TERM UNLESS THIS COVENANT IS EARLIER TERMINATED IN STRICT
ACCORDANCE WITH THE TERMS DESCRIBED IN THIS INSTRUMENT, (2)
COVENANTOR'S OBLIGATIONS WITH RESPECT TO THE COVENANT MAY BE
SATISFIED ONLY FROM PAYMENT OF THE TRANSFER FEE IN ACCORDANCE WITH
THE TERMS DESCRIBED HEREIN, AND (3) THAT THE OBLIGATION TO PAY A
TRANSFER FEE IN ACCORDANCE WITH THE TERMS OF THIS INSTRUMENT SHALL
REMAIN IN EFFECT AND SHALL CONTINUE TO APPLY TO ANY FUTURE TRANSFER
OF THE PROPERTY IRRESPECTIVE OF THE AMOUNT OF THE TRANSFER FEE PAID
IN CONNECTION WITH ANY PARTICULAR TRANSFER."
(f) (1) The covenant shall be subject to and subordinate to the
lien and encumbrance of any first mortgage or any other mortgage
against the property that secures the payment of any present or
future financing used to either purchase the property or finance the
construction of improvements to the property or any financing that
replaces that acquisition or construction financing, provided that
any such financing is bona fide and at arm's length, and further
provided that after any action to enforce a mortgage, including,
without limitation, any foreclosure or a transfer in lieu of
foreclosure, the property shall remain subject to the covenant and
the covenant shall continue to be valid, binding, and enforceable in
accordance with its terms.
(2) For purposes of this section, a "mortgage" shall mean any
mortgage or deed of trust recorded against the property in the
official records of the county in which the property is located.
(3) A "first mortgage" shall mean any mortgage that has lien
priority over all other mortgages.
(4) In no event shall a transfer fee be payable upon a foreclosure
sale or a transfer in lieu of foreclosure.
(g) In those situations where the covenantor desires and requests,
in writing, confirmation of information about any outstanding
obligation under the terms of the covenant, including, but not
limited to, the remaining term of the covenant and the cost to
extinguish the covenant, the covenantee named in the instrument
containing the covenant shall, within 14 days following receipt of
written notice from the covenantor, provide the covenantor with
written confirmation of the matters described in paragraphs (1), (2),
(4), (6), and (7) of subdivision (e).
