BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Noreen Evans, Chair 2011-2012 Regular Session AB 317 (Calderon) As Amended May 23, 2012 Hearing Date: July 3, 2012 Fiscal: No Urgency: No BCP SUBJECT Mobilehomes DESCRIPTION Existing law requires the management of a mobilehome park to provide prospective homeowners with a statutory notice entitled "INFORMATION FOR PROSPECTIVE HOMEOWNERS." This bill would clarify that notice by including a statement that prospective purchasers who do not occupy the mobilehome as their principal residence may not be subject to rent control. (This analysis reflects author's amendments to be offered in Committee.) BACKGROUND Enacted in 1978, the Mobilehome Residency Law (MRL) governs the relationship between park owners or managers and the residents of the 4,800+ mobilehome parks and manufactured housing communities in California. In most of those parks, residents own their home but lease the land on which their home is installed. Although they have historically been called "mobilehomes," it is very difficult to actually move a mobilehome once it has been installed in a park. To protect mobilehome park residents from rent increases on the property underlying their home, over 100 jurisdictions in California have enacted some form of rent control. Those rent control ordinances are a proper exercise of the local government's police power if their provisions are "reasonably calculated to eliminate excessive rents and at the same time (more) AB 317 (Calderon) Page 2 of ? provide landlords with a just and reasonable return on their property." (Birkenfeld v. Berkeley (1976) 17 Cal.3d 129, 165.) Although mobilehome parks are not subject to the Costa-Hawkins Rental Housing Act (which restricts the use of rent control in other residential properties), the MRL does limit the application of rent control in certain circumstances, including if the lease agreement is greater than 12 months, or if the mobilehome is not the owner's principal residence and is not being rented to another party. This bill, as proposed to be amended, would clarify the required statutory notice to prospective purchasers by informing purchasers that if they do not occupy the mobilehome as their principal residence, the space may not be subject to rent control. CHANGES TO EXISTING LAW Existing law requires, within two business days of receiving a request from a prospective homeowner for an application for residence for a specific space within a mobilehome park, if the management has been advised that the mobilehome occupying that space is for sale, the management shall give the prospective homeowner a separate document in at least 12-point type entitled "INFORMATION FOR PROSPECTIVE HOMEOWNERS," which includes specified information about being a tenant in a mobilehome park, including that: Some spaces are governed by an ordinance, rule, regulation, or initiative measure that limits or restricts rents in mobilehome parks. Long-term leases specify rent increases during the term of the lease. By signing a rental agreement or lease for a term of more than one year, you may be removing your rental space from a local rent control ordinance during the term, or any extension, of the lease if a local rent control ordinance is in effect for the area in which the space is located. (Civ. Code Sec. 798.74.5.) This bill would also add the following two sentences to the above statutory notice to clarify the application of rent control to residents in mobilehome parks: These laws are commonly known as "rent control." Prospective purchasers who do not occupy the mobilehome as their principal residence may be subject to rent levels which are AB 317 (Calderon) Page 3 of ? not governed by these laws. COMMENT 1. Stated need for the bill According to the author: Current law under Civil Code Section 798.21 requires that a home be occupied as the homeowner's principal residence in order to maintain the benefits of rent control. Many individuals get around this law by various means to qualify for rent control to secure a vacation home with subsidized rent by the property owner. . . . AB 318 will add a sentence to the form requested to be given to all prospective tenants in Civil Code 798.74.5 to read, "prospective purchasers who do not occupy the mobilehome as their principal residence may be subject to rent levels which are not governed by these laws (rent control)." 2. Information for prospective homeowners Under existing law, management must generally provide prospective homeowners with a document entitled "INFORMATION FOR PROSPECTIVE HOMEOWNERS" that includes information regarding owning a home in a mobilehome park, the monthly rent, additional fees and charges that the person may be obligated to pay in addition to rent, information about establishing tenancy in the park, and other pertinent information. (Civ. Code Sec. 798.45.5.) This bill would clarify that notice by adding language informing persons that "Ýp]rospective purchasers who do not occupy the mobilehome as their principal residence may be subject to rent levels which are not governed by these laws." Staff notes that the proposed language appears to accurately reflect existing Civil Code Section 798.21, which provides that rent control does not apply to a mobilehome space that is not the principal residence of the homeowner as long as the homeowner has not rented the mobilehome to another party. Thus, from a policy standpoint, prospective purchasers who are purchasing the mobilehome as a second or vacation home should be aware that the space may not be subject to any rent control laws if it is not their primary residence. 3. Opposition related to portions of the bill removed by author's amendment AB 317 (Calderon) Page 4 of ? It should be noted that while the Committee received numerous letters in opposition to this bill, those letters expressed concern about the provisions of the bill stricken by the author's amendment discussed in Comment 4. As a result, it is unknown if there is any opposition to the bill as proposed to be amended. 4. Author's amendment The author offers the following amendment to strike the proposed changes to Section 798.21 of the Civil Code relating to rent control. Amendment: On page 2, strike out lines 1 through 19, and pages 4 through 7, inclusive, and on page 8, strike out lines 1 through 4, inclusive. Support : California Association of Realtors; Western Manufactured Housing Communities Association Opposition : Unknown HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : None Known Prior Vote : Assembly Rules Committee (Ayes 9, Noes 0) Assembly Housing & Community Development Committee (Ayes 4, Noes 1) Assembly Floor (Ayes 44, Noes 22) **************