BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 587


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          Date of Hearing:  April 15, 2015


               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT


                                   Ed Chau, Chair


          AB 587  
          (Chau) - As Amended March 26, 2015


          SUBJECT:  Mobilehomes:  payments:  nonpayment or late payments


          SUMMARY:  Creates a tax abatement program for mobilehome owners  
          who cannot transfer title into their names due to delinquent  
          taxes and fees that may have been incurred by prior owners.   
          Specifically, this bill: 


          1)Creates a tax abatement program for mobilehome owners meeting  
            the following requirements:


               a)     The applicant applies for the abatement program with  
                 the Department of Housing and Community Development (HCD)  
                 prior to December 31, 2018;


               b)     The applicant is not currently the registered owner;


               c)     The applicant provides satisfactory documentation  
                 demonstrating the date of acquisition of title or  
                 interest in the mobilehome; 










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               d)     The applicant pays any charges assessed by HCD  
                 during the period between the time the applicant took  
                 title or interest or December 31, 2014, whichever is  
                 later, and the time the applicant applies for the  
                 abatement program;


               e)     If the applicant's mobilehome is on the local  
                 property tax (LPT) system, the applicant must pay the  
                 taxes reasonably owed from the date of sale of the  
                 mobilehome, without penalties or interest, but not to  
                 exceed the amounts attributable one year prior to January  
                 1, 2016; and


               f)     The applicant is in compliance with other  
                 registration and titling requirements not related to  
                 nonpayment or late payment of the HCD charges related to  
                 registration and titling.


          2)Provides that, if the applicant meets the requirements of the  
            abatement program, HCD must release any lien related to those  
            charges, issue a duplicate or new certificate of title or  
            registration card, and amend the title record of the  
            mobilehome.


          3)Provides that HCD may establish a long-term payment program of  
            up to five years, and may take out a lien in favor of the  
            state in the amount owing which must be paid in full if the  
            mobilehome is later transferred. 


          4)Provides that, if an abatement program participant is on a  
            long term payment plan with HCD, failure to make the payments  
            required by the plan is a violation of the program and HCD may  
            suspend, revoke, or cancel the certificate of title.









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          5)Provides that, if the applicant is eligible for the abatement  
            program and the mobilehome is subject to LPT, HCD must issue a  
            conditional transfer of title.


          6)Requires a county tax collector to issue a tax liability  
            certificate to a person with a conditional transfer of title  
            who applies for the certificate prior to January 1, 2019 and  
            pays the reduced taxes under the abatement program. 


          7)Provides that upon issuance of a tax liability certificate,  
            the applicant must be listed as the owner of record for all  
            local property tax purposes and the home is not subject to  
            lien or seizure based on any taxes abated pursuant to the  
            program.


          8)Provides that the abatement program does not relieve any owner  
            other than the applicant from tax liability, including  
            penalties and interest, arising from nonpayment prior to the  
            date of sale to the applicant, or prohibit a county tax  
            collector from collecting delinquent taxes, penalties, or  
            interest due prior to the date of sale, from any owner other  
            than the applicant.


          9)Prohibits eviction from a mobilehome park for nonconformance  
            with the registration and titling requirements of state law  
            when an application for the abatement program is filed prior  
            to January 1, 2019, and title is transferred within one year  
            of the filing date.


          10)Provides that a park owner may allow a resident not in  
            compliance with the State registration requirements to occupy  
            a mobilehome if the resident applies for the abatement program  
            prior to January 1, 2019, and title is transferred within one  








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            year of the filing date.





          11)Provides that if the Commission on State Mandates determines  
            that the bill contains costs mandated by the state,  
            reimbursement for those costs shall be made.


          12)Provides that no appropriation is made and the state shall  
            not reimburse local agencies for property tax revenues lost by  
            them pursuant to the bill.


          EXISTING LAW:  


          1)Subjects mobilehomes sold as new prior to July 1, 1980, to a  
            vehicle license registration fee (VLF) and requires annual  
            payment to HCD (Health and Safety Code Section 18115-18116).


          2)Provides that HCD must transfer a mobilehome which is subject  
            to VLF to LPT upon a request for the transfer from the owner  
            (Health and Safety Code Section 18119).


          3)Provides that nonpayment of VLF constitutes a lien on the  
            mobilehome, and prohibits HCD from issuing a duplicate or new  
            certificate of title or registration card or amending the  
            permanent title record of the mobilehome that is the subject  
            of that lien (Health and Safety Code Section 18116.1).


          4)Provides that mobilehomes not subject to the VLF are subject  
            to LPT, and requires HCD to withhold amending the title of any  
            mobilehome subject to LPT until the applicant presents a tax  








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            clearance certificate (TCC) or conditional tax clearance  
            certificate issued by the county tax collector (Health and  
            Safety Code Section 18092.7).


          5)Requires the county tax collector to issue a TCC to a  
            mobilehome owner if specified requirements are met (Revenue  
            and Taxation Code Section 5832).


          6)Provides that a TCC may indicate that no LPT is due or is  
            likely to become due, or that any applicable LPT has been paid  
            or will be paid in a manner not requiring the withholding of  
            registration or the transfer of registration (Revenue and  
            Taxation Code Section 5832).


          7)Provides that LPT on unsecured property, including  
            mobilehomes, are transferred from the secured roll to the  
            unsecured roll of the corresponding year by the county  
            auditor, and are collected in the same manner as other  
            delinquent taxes on the unsecured roll (Revenue and Taxation  
            Code Section 2921.5).


          8)Provides that used mobilehomes subject to LPT are exempt from  
            the payment of use tax upon resale or transfer (Health and  
            Safety Code Section 18116.5).


          9)Authorizes the management of a mobilehome park to terminate a  
            tenancy for failure of the homeowner or resident to comply  
            with a local ordinance or state law or regulation relating to  
            mobilehomes within a reasonable time after the homeowner  
            receives a notice of noncompliance from the appropriate  
            governmental agency (Civil Code Section 798.56).


          10)Prohibits any person to use or cause, or permit to be used  








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            for occupancy, a mobilehome that does not conform to HCD's  
            registration requirements (Health and Safety Code Section  
            18550).


          FISCAL EFFECT:  Unknown.


          COMMENTS:  


           Background:


           HCD is responsible for the titling and registration of  
          mobilehomes. Homes that were purchased new prior to July 1, 1980  
          were treated as vehicles and not subject to LPT, but rather to  
          an "in lieu" VLF paid annually to HCD.  Mobilehomes that were  
          purchased after July 1, 1980 are generally subject to LPT.   
          Homeowners have the option to voluntarily transfer their homes  
          from the VLF system to the LPT system, but not vice-versa.  


          Prior to transferring title of a mobilehome, a buyer of a home  
          on the LPT system must obtain a TCC from the county tax  
          collector indicating that all property taxes have been paid.   
          Similarly, if the mobilehome is on the VLF system, all past due  
          fees and penalties must be paid to HCD prior to transfer of  
          title, as well as a use tax.  Regardless of whether a mobilehome  
          is on the VLF or LPT system, delinquent fees or taxes prevent  
          HCD from amending the title of that home.  If a buyer cannot  
          pay, and the seller will not pay or cannot be located, the buyer  
          is left without legal proof of ownership of the home, and HCD,  
          the county tax collector, and the county tax assessor may not  
          have up-to-date ownership information for the home.   
          Nonconformance with HCD's titling requirements can cause a  
          number of issues. It could be the basis of an eviction from a  
          mobilehome park, as parks are prohibited from allowing homes  
          that do not conform to HCD's registration requirements in a  








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          park. It also prevents owners from legally making repairs to the  
          home, insuring the home, and from transferring ownership of the  
          home to another party.


           Purpose of this bill:


           According to the author, the problem that AB 587 seeks to  
          address has been festering for over 30 years.  There are  
          thousands, perhaps tens of thousands, of homeowners who believe  
          they own their homes, but never had title properly transferred  
          to them. The author contends that "[m]obilehomes are an  
          important source of affordable housing statewide, and these  
          homes are regularly sold on a somewhat informal basis. For  
          example, a buyer pays cash for the home, obtains a bill of sale,  
          and takes possession of the property.  The problem arises when  
          the buyer subsequently tries to transfer title into his or her  
          name and discovers that the previous owner fell behind on their  
          tax bill.  If the buyer is unable to pay, then the title cannot  
          transfer.  As a result, some buyers are in a situation where  
          they paid for their home, but have no meaningful proof of  
          ownership, which can cause a host of other issues such as the  
          inability to legally make repairs to the home."   


           Staff Comments:  


          AB 587 creates an abatement program to address the situation  
          where a buyer has already purchased a mobilehome, but is unable  
          to transfer title into his or her name due to delinquent fees or  
          taxes.  Nonpayment of VLF constitutes a lien on the mobilehome  
          in favor of the state.  Nonpayment of LPT means the county tax  
          collector may pursue collection of the delinquent LPT in the  
          same manner as other delinquent taxes on the unsecured roll.   
          Both of these scenarios prevent HCD from amending the title into  
          the new owner's name.  If the buyer cannot pay the delinquent  
          charges associated with the home, and the seller does not agree  








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          to pay or cannot be located, then the buyer cannot obtain legal  
          ownership.


          Due to the sometimes informal nature of mobilehome sales, buyers  
          and sellers may not be aware that delinquent taxes and fees  
          prevent title from transferring. Sellers may not even be aware  
          that a delinquency exists because of, for example, limited  
          notification requirements for VLF delinquencies, or outdated  
          ownership information at the county or state level.  In these  
          situations, a buyer may only become aware of the delinquency  
          when he or she tries to transfer title at HCD.  If a seller does  
          not pay the delinquent fees or taxes and associated penalties,  
          and the buyer cannot pay them but has already purchased the  
          mobilehome, they are left with few options other than to keep  
          the home with an outdated title. 


          It is in the state's best interest to keep accurate records  
          relating to mobilehome ownership.  The three-year abatement  
          program proposed by AB 587 would reduce specified past due taxes  
          and fees by capping the amount owed and waiving penalties and  
          interest.  This would encourage homeowners with outdated title  
          to come forward and apply to transfer title into their names,  
          thereby updating state and county records to ensure accurate VLF  
          and LPT billing in the future. 


          Applicants for the abatement program would first be required to  
          prove ownership to the satisfaction of HCD and, upon payment of  
          any reduced charges assessed by HCD, or entry into a payment  
          plan, title would transfer for homes on the VLF system.  For  
          homes on the LPT system, HCD would issue an applicant a  
          "conditional title" which the applicant would then bring to  
          their local county tax collector.  Once the applicant pays the  
          reduced LPT due under the abatement program, the tax collector  
          would update their property tax records and issue a tax  
          liability certificate, which would perfect the transfer of title  
          once filed with HCD.  The abatement program does not relieve any  








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          owner other than the applicant from tax liability arising from  
          nonpayment prior to the date of sale to the applicant, so a  
          county tax collector would still have the ability to collect  
          these amounts, including fees and penalties, from any owner  
          other than the applicant.


          To further encourage owners to come forward, the bill also  
          creates a moratorium on evictions, coinciding with the abatement  
          program, based on lack of accurate title if the resident has  
          applied for the abatement program and completes the title  
          transfer within a specified time.


           Double-referred:  AB 587 was also referred to the Committee on  
          Judiciary, where it will be heard should it pass out of this  
          committee.  


           REGISTERED SUPPORT / OPPOSITION:




          Support


          Boyd, Nancy


          Cabrillo Wetland Village HOA, Inc.


          California Rural Legal Assistance Foundation (co-sponsor)


          DeMatteo, Anthony C.










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          Fountain Valley Estates Homeowners Association


          Golden State Manufactured-Home Owners League (GSMOL)  
          (co-sponsor)


          GSMOL, Chapter 1128, Ramona, CA


          Hard, Sybil A.


          Hard, William T.


          Los Casas Homeowner's Association


          Morrissey, Daphne


          Northern Santa Barbara County Manufactured Homeowners Team


          Orcutt Ranch Home Owners Association (ORHOA)


          Parmelee, Susan


          Powell, Bonnie


          Ranch Club Homeowners Association


          Risley, Joanna









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          San Joaquin Village Mobile Park Homeowners Association


          San Louis Obispo Mobilehome Residents Assistance Panel (SLOMAP)


          San Marcos Mobilehome Residents Association (SMMRA)


          Santa Cruz County Manufactured/Mobile Homeowners Association  
          (SCCMMHA)


          Sea Oak Mobilehome Park Homeowners Association


          Sierra Homeowners Association


          Simpson, Kirk


          Western Center on Law and Poverty (co-sponsor)




          Opposition


          None on file.




          Analysis Prepared by:Rebecca Rabovsky / H. & C.D. / (916)  
          319-2085









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