When reading through the hundreds of bills introduced into the California legislature, the word “neverendum” comes to mind: – a series of referendums on the same issue held in an attempt to achieve an unpopular result. AB 1335 (Atkins) is basically just that – a re-introduction of SB 391 (DeSaulnier), which failed to make it off of the assembly floor last year. County Recorders manage and protect the integrity of land records for the public. The basic cost to record a document ranges from $6 to $10 depending on where you live in the state. This bill would place a $75 tax on this service, increasing the basic recording fee to anywhere between $81 and $85 per document; amounting to a tax increase of up to 1,250%.
The intent of AB 1335 is to fund a state-run affordable housing program for Californians. Yet, this bill would impose an additional tax burden on those vulnerable homeowners that are already struggling to pay their mortgages. This is because families experiencing financial difficulties only have two options when it comes to the inability to pay their mortgage – refinance or default on the loan. Both the typical refinance and the process of defaulting require document recordings. This bill would place an additional tax burden on families in either of these predicaments.
AB 1335 also amounts to a regressive tax by charging the fee on those living on the edge financially but exempting someone buying a multimillion-dollar home because sales transactions are exempted in the bill. Why should a person buying a multimillion dollar home be exempt from paying the tax, but the family attempting to refinance their high interest mortgage, the widow filing the affidavit of her husband’s death, the contractor filing a mechanics lien for unpaid work or the senior citizen on a fixed income refinancing his mortgage be required to pay? In essence, the majority of the people required to pay the tax would be the least financially capable of doing so.
Any deterrent to record documents is contrary to the very purpose for which the land records system was designed. Congress and legislatures developed our system of recording documents so that Californians could prove home ownership. If Californians could not afford to record their documents, it could lead to deception and confusion in the housing market. Weakening the integrity of the land records system in an already depressed economy will perpetuate the state’s chronic housing crisis.
I urge lawmakers to reject AB 1335, like they have the past two years and work to craft a more equitable way to fund affordable housing.