BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 379
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: Brown
VERSION: 5/28/13
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: June 4, 2013
SUBJECT:
Mobilehomes
DESCRIPTION:
This bill changes the process whereby the law deems a mobilehome
a fixture or improvement to real property.
ANALYSIS:
Under current law mobilehomes are either personal property or
real property. To be real property, someone must affix the
mobilehome to a piece of land. This occurs when a mobilehome
owner places the mobilehome on a permanent foundation.
Alternatively, an owner may install a mobilehome on piers with
tie-downs, and then the law considers the home personal property
(or chattel) because it is not permanently affixed to the
underlying land.
The Mobilehome Parks Act (MPA) directs the Department of Housing
and Community Development (HCD) to regulate mobilehome parks to
assure protection of the health, safety, and general welfare of
all mobilehome park residents. HCD has adopted statewide
regulations to enforce the act's provisions. Local agencies,
however, have the option of assuming enforcement authority
within their jurisdictions through agreement with HCD. In
addition, the MPA requires HCD to establish regulations for
mobilehome foundations systems.
The MPA further specifies that installation of a mobilehome as a
fixture or improvement to a piece of real property must meet
these requirements:
The owner or contractor installing the home must get a
building permit from the local agency;
The enforcement agency (i.e., either HCD or the local agency)
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must record with the county recorder a document stating that
someone has affixed the mobilehome to real property by
installing a foundation system. The enforcement agency must
record this document on the same day it issues the certificate
of occupancy; and
The owner must surrender to HCD the registration and title to
the mobilehome that HCD issues for mobilehomes that are
personal property.
This bill :
1.Provides that, notwithstanding any other law, a mobilehome is
not a fixture or improvement to real property until all of the
above bulleted steps are completed.
2.Gives the enforcement agency five days to record the document
showing that someone has affixed a mobilehome to real property
rather than requiring that it record the document the same day
it issues the certificate of occupancy.
COMMENTS:
Purpose . Health and Safety Code Section 18551 sets forth the
procedures under which a mobilehome may be installed on and
become a fixture to real property. These procedures are
important both for tax purposes for local government entities
and for the financing of mobilehomes. Because mobilehomes are
deemed personal property (or chattel) and not real property at
the time of purchase, buyers do not finance these homes with a
mortgage as they do with site-built homes. The law recognizes
this and allows companies that finance the purchase of
mobilehomes to maintain a security interest in a home until it
is paid off.
Last year, the 1st District Court of Appeal in Vieira
Enterprises v. City of East Palo Alto found that a mobilehome
purchased and installed on real property was itself real
property. As a result of the ruling, the court held that the
financing company had no security interest in the mobilehome
because it was real property. This essentially allowed the
borrower to forgo paying the lender the balance owed on the
home.
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In that case, the court held that because the owners had
installed their mobilehome on their real estate, Civil Code
provisions, which generally deem when a thing is affixed to the
land, controlled over Health and Safety Code Section 18551,
which specifically describes how a mobilehome may be deemed
affixed to the land. While the Vieira case had unique and
specific circumstances, the proponents of this bill are
concerned that that ruling could be read as allowing a borrower
to install a mobilehome on a foundation system and potentially
avoid the lender's security interest. That interpretation could
have a chilling effect on lenders' willingness to finance
mobilehome purchases in the future.
This bill clarifies that the process set forth in Health and
Safety Code Section 18551 for "converting" a mobilehome into
real property and thus extinguishing a lender's security
interest applies, notwithstanding any other law. The change
clears up the ambiguity created by the Vieria case, thus
ensuring that consumers will continue to be able to obtain loans
to purchase mobilehomes.
This bill also makes a minor change to the law by giving
enforcement agencies five days to record a document related to
the installation of a manufactured home on real property.
Current law requires the recording to happen on the same day as
the issuance of the certificate of occupancy. Receipt of the
certificate of occupancy and recording of the proper documents
by the enforcement agency on the same day is nearly impossible
and rarely, if ever, occurs. This bill acknowledges that
reality.
Assembly Votes:
Floor: 75-0
H&CD: 7-0
POSITIONS: (Communicated to the committee before noon on
Wednesday, May 29,
2013.)
SUPPORT: California Manufactured Housing Institute
Western Manufactured Housing Communities
Association
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OPPOSED: None received.