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Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1046 (Anderson) - As Introduced: February 27, 2009
PROPOSED CONSENT
SUBJECT : ENFORCEMENT OF JUDGMENTS: EXEMPTIONS: HOMESTEADS
KEY ISSUE : Should the "homestead exemption," which protects a
specified amount of home equity from judgment creditors, be
increased and regularly adjusted to reflect inflation?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
An identical version of this bill, AB 2878, passed off the floor
of both houses last year on consent, but was one of dozens of
bills summarily vetoed by the Governor without regard to its
merit. This bill, again sponsored by the California Teamsters
Union, raises the existing levels of the "homestead exemption"
to reflect inflation. The purpose of the homestead exemption is
to allow judgment debtors to salvage at least a portion of any
equity that they may have built up in their principal dwelling
of residence. Existing law sets a $50,000 base amount, which
increases to $75,000 for married couples who reside in the home
at the time of attempted sale, and to $150,000 if the judgment
debtor or spouse who resides at the home at the time of the sale
is either 65 years of age or older, disabled, or 55 years of age
or older living on a limited income, as specified. This bill
would raise those amounts, respectively, to $75,000, $100,000,
and $175,000. In addition, this bill would require the Judicial
Council, beginning in 2010, to determine appropriate amounts of
increase of the exemption at 3-year intervals and report those
amounts to the Legislature. This bill prevents these proposed
increases from taking effect unless they are approved by the
Legislature. There is no known opposition to the bill.
SUMMARY : Increases homestead exemptions and requires the
Judicial Council to determine, at three-year intervals, the
amount by which the exemption should be increased and to report
that amount to the Legislature. Specifically,
this bill :
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1)Increases the base exemption from $50,000 to $75,000;
increases the exemption from $75,000 to $100,000 for a married
couple who resides in the homestead; and increases the
exemption from $150,000 to $175,000 if the judgment debtor or
spouse who resides in the homestead is 65 years of age or
older, disabled, or 55 years of age or older with a limited
income, as specified.
2)Requires the Judicial Council to determine on or before April
1, 2010, and at each three year interval thereafter, the
amount by which the dollar amounts may be increased and to
submit this amount to the Legislature. Provides further that
the proposed increases shall not take effect unless they are
approved by the Legislature and that the Judicial Council
shall then publish a list of the current dollar amounts of
those exemptions.
EXISTING LAW :
1)Provides that a specified portion of equity in a homestead,
defined as the principal dwelling in which a judgment debtor
resides, is exempt from execution to satisfy a judgment debt.
(Code of Civil Procedure Section 704.720.)
2)Sets the amount of homestead exemption as follows:
a) $50,000 unless the judgment debtor or spouse of the
judgment debtor who resides in the homestead is a person
described in (b) or (c) below;
b) $75,000 if the judgment debtor or spouse of the judgment
debtor who resides in the homestead is a member of the
family unit at the time of the sale, and there is at least
one member of the family unit who owns no interest in the
homestead or whose only interest in the property is a
community property interest with the judgment debtor; and,
c) $150,000 if the judgment debtor or spouse of the
judgment debtor who resides in the homestead at the time of
the attempted sale is either: i) a person who is 65 years
of age or older; ii) a person with a disability who, as a
result of that disability, is unable to engage in gainful
employment; or, iii) a person who is 55 years of age or
older with a limited income, as specified. (Code of Civil
Procedure Section 704.730.)
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3)Provides, generally, for stepped increases in the other
categories of statutory exemptions and requires the Judicial
Council to determine the amount based on change in the annual
California Consumer Price Index for All Urban Consumers.
(Code of Civil Procedure Section 703.150(d).)
COMMENTS : This bill, sponsored by the California Teamsters
Union, raises the existing levels of the "homestead exemption"
to reflect inflation. The purpose of the homestead exemption is
to allow judgment debtors to salvage at least a portion of any
equity that they may have built up in their house. Existing law
sets a $50,000 base amount, which increases to $75,000 for
married couples who reside in the home at the time of attempted
sale, and to $150,000 if the judgment debtor or spouse who
resides at the home at the time of the sale is either 65 years
of age or older, disabled, or 55 years of age or older and
living on a limited income, as specified. This bill would raise
those amounts, respectively, to $75,000, $100,000, and $175,000.
In addition, this bill would require the Judicial Council,
beginning in 2010, to determine appropriate amounts of increase
of the exemption at 3-year intervals and report those amounts to
the Legislature. The bill provides that these proposed
increases shall not take effect unless they are approved by the
Legislature.
Existing law provides for stepped increases in other types of
exemptions, with amounts to be determined by the Judicial
Council using a consumer price index. Since the homestead
exemptions were first codified in 1982, the Legislature has
enacted increases every few years. It was last increased in
2003, but only the exemption for elderly and disabled persons,
was raised, from $125,000 to $150,000.
The bill is strongly supported by labor unions, who state that
due to the current economic downturn, it is imperative to
increase the homestead exemption levels to provide increased
protection to homeowners facing serious financial difficulties.
Prior Legislation : AB 2878 (Anderson, DeSaulnier, and Jones) of
2008: This bill as introduced is identical to the version of
last year's AB 2878 that was summarily vetoed by the Governor,
without regard to its merit. Prior to being vetoed, AB 2878 was
approved by this Committee by a 10-0 vote and, after some minor
amendments, was passed off the floors of both houses on consent.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Teamsters Union (sponsor)
Amalgamated Transit Union
California Conference of Machinists
Engineers and Scientists of California
IFPTE Local 21
International Longshore and Warehouse Union (ILWU)
Strategic Committee of Public Employees, Laborers' International
Union of North America
San Diego County Court Employees Association
United Food and Commercial Workers Union, Western States Council
UNITE HERE!
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
