BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 1938 (Williams)
          As Amended May 17, 2012
          Hearing Date: June 26, 2012
          Fiscal: No
          Urgency: No
          BCP:rm
                    

                                        SUBJECT
                                           
                           Mobilehomes: Rental Agreements

                                      DESCRIPTION  

          Existing law allows a homeowner in a mobilehome park to void a 
          long-term lease within 72 hours of the homeowner's execution of 
          the agreement.  This bill would, instead, generally allow a 
          homeowner to void the agreement within 72 hours of receiving a 
          copy of the signed agreement.

          This bill would also expand the existing prohibition on park 
          management passing through various fines, fees, or damages 
          assessed by a court relating to violations of the Mobilehome 
          Residency Law to also cover violations of the Mobilehome Park 
          Act and amounts assessed by enforcement agencies.


                                      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. Although 
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          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 rental 
          agreement is longer than 12 months.  For homeowners who elect to 
          sign those rental agreements (which are exempt from rent 
          control), existing law requires a homeowner to have at least 30 
          days to accept or reject the agreement from the time it is first 
          offered, and, permits a homeowner to void the agreement within 
          72 hours of execution.

          In response to concerns about management returning executed 
          agreements after the 72-hour rescission timeframe, this bill 
          seeks to allow a homeowner to void the agreement within 72 hours 
          of actually receiving a copy of the executed agreement.  This 
          bill would also expand the existing prohibition on park 
          management passing through various fines, fees, or damages 
          assessed by a court relating to violations of the MRL to also 
          cover violations of the Mobilehome Park Act, and amounts 
          assessed by enforcement agencies.

                                CHANGES TO EXISTING LAW
           
          1.    Existing law  requires mobilehome rental agreements to be in 
            writing and to include, in addition to any other provisions 
            required by law: (1) the term of the tenancy and the rent 
            thereof; the rules and regulations of the park; (2) the 
            relative responsibilities of mobilehome park management and 
            owners to maintain the physical property; (3) a provision 
            listing any services that will be provided and the fees to be 
            charged for those services; (4) a provision stating that 
            management may charge a reasonable fee for services relating 
            to maintenance in the event that the homeowner fails to 
            maintain the land or premises in accordance with the rules and 
            regulations; and (5) all other provisions governing the 
            tenancy.  (Civ. Code Sec. 798.15.)

             Existing law  provides that a copy of the Mobilehome Residency 
            Law (MRL) be attached to the agreement, and that homeowners 
            must be notified of any changes to this law, as specified.  
            (Civ. Code Sec. 798.15.)

             Existing law  requires management to return an executed copy of 
            the rental agreement to the homeowner within 15 business days 
            after management has received the rental agreement signed by 
            the homeowner.  (Civ. Code Sec. 798.16.)
                                                                      



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             Existing law  provides that a rental agreement in a mobilehome 
            park in excess of 12 months' duration is exempt from any 
            ordinance, rule, regulation, or initiative measure adopted by 
            any local governmental entity that establishes a maximum 
            amount that a landlord may charge a tenant for rent.  (Civ. 
            Code Sec. 798.17 (a).)

             Existing law  gives a homeowner at least 30 days from the date 
            when a rental agreement in excess of 12 months is first 
            offered to accept or reject the agreement, and permits the 
            homeowner to void the agreement by notifying management in 
            writing within 72 hours of the homeowner's execution of the 
            agreement.  Existing law requires management, at the time the 
            agreement is first offered, to provide the homeowner with 
            written notice of the homeowner's right to have 30 days to 
            inspect the rental agreement and the homeowner's right to void 
            the agreement up to 72 hours after execution.  Failure to 
            provide this notice makes the agreement voidable at the 
            homeowner's option.  (Civ. Code Sec. 798.17 (b), (f).)


























                                                                      



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             This bill  would revise the above ability to void a contract 
            within 72 hours, as follows:
                 If management provides the homeowner with a copy of the 
               signed rental agreement at the time the homeowner returns 
               the agreement, a homeowner may void the agreement by 
               notifying the management within 72 hours of returning the 
               signed agreement.  
                 If management does not provide a homeowner with a copy 
               of the agreement at the time the borrower returns the 
               signed agreement, a homeowner may void the agreement within 
               72 hours of receiving an executed copy of the agreement.

             This bill  would conform the required written notice of the 
            homeowner's right to void the agreement within 72 hours to the 
            above changes.

          2.    Existing law  prohibits management from charging or imposing 
            upon a homeowner any fee or increase in rent that reflects the 
            cost to the management of any fine, forfeiture, penalty, money 
            damages, or fee assessed or awarded by a court of law against 
            the management for a violation of the MRL.  (Civ. Code Sec. 
            798.39.5.)

             This bill  would extend the above provisions to fines, fees, or 
            damages assessed or awarded by the court or an enforcement 
            agency against the management for a violation of the MRL or 
            the Mobilehome Parks Act. 

             The bill  would clarify that these provisions do not apply to 
            violations for which the registered owner of the mobilehome is 
            initially responsible, as specified.

                                        COMMENT
           
          1.   Stated need for the bill  

          According to the author:

            This bill will address Ýseveral] consumer protection issues 
            that have arisen in mobilehome park leases.  Current law 
            allows a park owner to offer a long-term lease (these leases 
            can be 1-10 years in length or more) to manufactured 
            homeowners.  Since a homeowner is bound to such a lease for 
            a very long time, it is critical that the homeowner have 
            adequate information about the terms of the lease.  

                                                                      



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            ÝFirst, this] bill will ensure that homeowners have the 
            protections of existing law which allows homeowners who have 
            signed a long-term lease to rescind the agreement within the 
            first 72 hours by clarifying when the 72-hour rescission 
            right window begins. . . . .

            Second, under a long-term lease, a homeowner may be subject 
            to many possible "passthroughs", additional fees or charges, 
            in addition to rent that the long-term lease provides for.  
            These passthroughs are intended to allow the parkowner to 
            recapture any costs or losses incurred by the parkowner in 
            the future.  However, it is generally against public policy 
            to allow a parkowner to provide for a recapture of a 
            judgment obtained by the park residents against the park 
            owner for actions that harm the residents. The law already 
            prohibits such passthroughs for violations of the 
            ÝMobilehome Residency Law]; this bill would expand that 
            prohibition to include judgments for violation of the 
            Mobilehome Parks Act (MPA).

          2.   Meaningful right of rescission  

          As noted above, residents of mobilehome parks generally own 
          their home but lease the land upon which the home is installed.  
          Lease agreements that are longer than 12 months are exempt from 
          rent control, and pursuant to existing law, homeowners must have 
          at least 30 days to accept the lease agreement and have a right 
          to void the rental agreement within 72 hours of execution 
          (signing).  Park management must provide written notice of those 
          rights to the homeowner at the time the rental agreement is 
          first offered to the homeowner.

          In order to strengthen those protections for homeowners who may 
          elect to sign a long-term lease, this bill would, instead, allow 
          homeowners to void the lease within 72 hours of (1) returning 
          the signed agreement to management, if management provides a 
          copy of the agreement at that time or (2) receiving an executed 
          copy of the rental agreement.  Thus, the 72 hour time period for 
          voiding the lease would essentially start upon receiving a copy 
          of the lease, not upon execution.  In support of the need to 
          72-hour timeframe at receipt of the lease as opposed to 
          execution, the author states:

            Currently, most homeowners do not receive a copy of the 
            rental agreement when they sign it, and pursuant to 798.16 
            (b) park management has no obligation to return an executed 
                                                                      



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            copy to the homeowner until 15 business days after its 
            signature.  This delay essentially frustrates the rescission 
            right, and renders it moot, since it is not reasonable to 
            expect that a homeowner can recall the content of all that 
            he or she signed from memory.  Thus, rescission rights are 
            often forgotten or exercised belatedly once the written 
            agreement is provided to the homeowner and they see in black 
            and white what they have signed.  

          From a practical standpoint, any homeowner who wants to void his 
          or her lease would likely first review the lease to see what 
          options that he or she has in that situation.  For homeowners 
          who elect to reread their lease after receiving the executed 
          copy from park management, the revised timeframe would 
          essentially give them 72 hours to do so and void the agreement 
          if an objectionable provision was found.   

          It should also be noted that while existing law requires park 
          management to return a copy of the executed lease within 15 
          business days after receiving the signed agreement, nothing 
          precludes management from immediately providing a copy to the 
          homeowner, thus, starting the 72 hour right to void the lease.

          3.   Pass through charges  

          Under existing law, park management cannot pass through the cost 
          to management of any fine, forfeiture, penalty, money damages, 
          or fee assessed or awarded by a court against the management for 
          a violation of the MRL.  That prohibition arguably ensures that 
          the residents of the park do not ultimately end up paying for 
          the violations committed by the persons running the park.  

          This bill would expand that prohibition to also include fines, 
          penalties, or fees assessed or awarded by an enforcement agency 
          and apply the prohibition to violations of the MPA. In support 
          of that expansion, the author writes:  

            Allowing landlords to pass through judgments, allows them to 
            potentially recoup judgments from the very people who were 
            awarded the judgment. For example, if homeowners are forced 
            to take the park owner to court for failing to make repairs 
            at the park, this provision would allow the park owner to 
            immediately turn to those same homeowners to recoup the 
            value of the judgment the homeowners had successfully 
            obtained from a court.

                                                                      



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          It should be noted that the MPA includes various requirements, 
          including that the Department of Housing and Community 
          Development (or city and county has assumed responsibility for 
          enforcement) must inspect parks where complaints have been made 
          regarding serious health and safety violations.  (Health & Saf. 
          Code Sec. 18400.1 (b).) By expanding the prohibition to also 
          prevent management from passing through the cost of violating 
          the MPA, this bill would further appear to ensure that residents 
          are not required to pay for the cost of violations by park 
          management. 


           Support  :  California Rural Legal Assistance Foundation; 
          Coalition for Economic Survival; Western Center on Law & Poverty

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Golden State Manufactured-Home Owners League

           Related Pending Legislation  :  None Known

           Prior Legislation  :  None Known


           Prior Vote  :

          Assembly Housing & Community Development Committee (Ayes 5, Noes 
          2)
          Assembly Judiciary Committee (Ayes 10, Noes 0)
          Assembly Floor (Ayes 73, Noes 2)

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