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California's Foreclosure Reform Law (SB 1137): Property Maintenance Requirements for Lenders

This article is one of several entries regarding California's recent enactment of its Foreclosure Reform Law (SB 1137). The general purpose of the new law is to alleviate the negative effects of the rising foreclosure rate in California on lenders, borrowers and renters.

Section 5 of SB 1137 states that the legal owner of vacant residential property purchased at foreclosure sale, or acquired by that owner through foreclosure under a mortgage or deed of trust, is required to "maintain" the property.  The hope is that the foreclosure crisis does not leave our neighborhoods and communities strewn with abandoned, overgrown properties thereby inviting crime, damaging the aesthetic qualities of the neighborhood and decreasing surrounding property values.

"Failure to maintain" is described as "failure to care for the exterior of the property, including, but not limited to, permitting excess foliage growth that diminishes the value of surrounding properties, failing to take action to prevent trespassers or squatters from remaining on the property, or failing to take action to prevent mosquito larvae from growing in standing water or other conditions that create a public nuisance."

This provision grants the power to governmental entities to impose a civil penalty of up to $1000.00 per day for a violation.  If such entity chooses to impose fines, the entity must provide notice to the legal owner, including a description of the violative conditions, and allow the opportunity for a hearing to contest the imposition of such fines.  Generally, the entity must allow the legal owner fourteen days to commence remedying the violation and thirty days to complete the remedy.

This provision remains in effect up to January 1, 2013.

To consult with a real estate attorney regarding the above-described requirements, please contact Griswold Law at (858) 481-1300 or rgriswold@griswoldlawsandiego.com.

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