It appears that the California Legislature will soon enact a major bill in which a permanent source of funding will be provided to create low-income housing for individuals and households. Known as the Assembly Bill 1335, the bill was introduced by Tony Atkins, assembly speaker from San Diego. In order for this bill to work, between $300 million and $500 million has to be raised annually.
As imagined, a lot of people in California are curious where that kind of money will come from. The answer is actually quite simple – existing and future California homeowners. If Bill 1335 is passed, new fees will be imposed on the recording of various documents pertaining to real estate transactions. However, fees would not be raised on document recordings following a sales transaction.
In other words, with most sales, a new trust deed is created to go along with financing for the purchase of a home. In this case, no fee would be applied to the recording of that document. However, whenever an equity line of credit is added or a loan refinanced, the new trust deed would be subjected to a fee.
As outlined in the details of the bill, $75 would be charged for each document recorded. Some examples of the documents that would be impacted by the bill include:
- Abstract of Judgment
- Declaration of Homestead
- Deed of Trust
- Grant Deed
- Mechanic’s Lien
- Notice of Default
- Quitclaim Deed
Because each real estate transaction can involve a number of documents, the bill stipulates a limit of $225. The unfortunate part is that no limit is set for the amount of fees charged over time and for the same entity. Therefore, if a California homeowner were to refinance a property twice, the fee would add up to $450.
Allocation of Collected Fees
Once the fees are collected, excluding the county recorder’s administrative cost, money would be sent to the Department of Housing and Community Development (HCD) each quarter. The fees would then be deposited into the Building Homes and Jobs Trust Fund, which is overseen and handled by a Governing Board.
There is also a legislative requirement whereby 20 percent of monies in the fund would go toward affordable workforce housing that is currently occupied and 10 percent toward opportunities for affordable ownership and rental housing specific to workers in the agricultural industry, as well as their family members.
The remaining 70 percent of monies in the fund could be used to match portions of funds used for emergency shelters; transitional housing; local or regional housing trust funds; acquisition and rehabilitation of foreclosed, blighted, or vacant homes; accessibility modifications; and opportunities for homeownership, including assistance with down payments.
While some people favor the new California bill, others oppose it. The biggest concerns are that fees could discourage people from filing required documents and that none of the money collected would be allocated to be returned to the community itself.
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