BILL ANALYSIS Ó
AB 587
Page 1
Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 587
(Chau) - As Amended March 26, 2015
As Proposed to be Amended
SUBJECT: MOBILEHOMES: REGISTRATION REQUIREMENTS: EVICTION
KEY ISSUES:
1)TO ENCOURAGE MOBILEHOME PARK RESIDENTS TO CORRECT INACCURATE
TITLES ON THEIR HOMES BY TAKING ADVANTAGE OF A PROPOSED
THREE-YEAR TAX ABATEMENT PROGRAM, SHOULD THERE BE A
SIMULTANEOUS THREE-YEAR MORATORIUM ON EVICTIONS BASED ON
NONCOMPLIANCE WITH THE TITLE REQUIREMENT WITH WHICH THE
RESIDENT SEEKS TO COMPLY?
2)SHOULD IT ALSO BE CLARIFIED THAT, FOR THE DURATION OF THE TAX
ABATEMENT PROGRAM, IT IS NOT UNLAWFUL FOR THE MOBILEHOME PARK
OWNER TO ALLOW A PARK RESIDENT LIVING IN A MOBILE HOME WITH AN
INACCURATE TITLE CONTINUE TO OCCUPY A MOBILEHOME IN THE PARK
WHILE HE OR SHE SEEKS TO CORRECT THE TITLE THROUGH THE
PROGRAM?
SYNOPSIS
AB 587
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This bill, co-sponsored by Western Center on Law & Poverty
(WCLP), California Rural Legal Assistance Foundation (CRLAF),
and the Golden State Manufactured Homes Owners League, seeks to
address problems stemming from years when manufactured homes and
mobile homes were transferred without proper paperwork being
filed with the Department of Housing and Community Development
to transfer title into the new owner's name. According to the
proponents, lack of knowledge about the law is often the reason,
but that the result is that unpaid taxes and fees accumulate on
these homes and cloud the homeowner's title. A homeowner who
wishes to come into compliance with the law and put title in his
or her name would in most cases, the co-sponsors assert, be
forced to pay off the prior owner's past due taxes and fees-a
huge disincentive to clarifying the title. Without title in
their name, they contend, existing law effectively prohibits the
homeowner from being able to properly transfer the home or get
repairs made, and may even expose them to eviction under
provisions barring the occupancy of mobilehomes that do not
conform to HCD registration requirements.
To address this problem, the bill establishes a tax abatement
program until 2019, allowing mobilehome owners to bring their
title into compliance without having to pay past due taxes and
fees on the home, often accrued by a previous owner. The
Assembly Housing and Community Development Committee analyzed
the bill generally and the tax abatement program specifically,
and approved this bill by a unanimous 7-0 vote prior to its
referral to Assembly Judiciary. With respect to the eviction
protections in the bill, Committee staff finds that the
objectives of the abatement pilot program would be stymied if
program applicants were essentially inviting potential eviction
by applying to use the program to bring their title into
compliance with the law. To encourage owners to come forward,
the bill creates a temporary moratorium, coinciding with the
abatement program, on evictions that are based on lack of
accurate title, as long as the park resident has applied for the
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abatement program and completes the title transfer within a
specified time. County tax collectors, however, oppose the bill
unless amended to eliminate any abatement of taxes. They
contend that by removing a county's ability to enforce tax
collection on taxes in arrears and assess penalties and
interest, the bill would eliminate the fiscal incentive to pay
taxes in a timely manner, and instead would establish a
financial incentive not to pay taxes in a timely manner. If the
bill were to become law, opponents assert that it would result
in millions of dollars of unpaid taxes and fees being denied to
local governments who would lose their ability to collect these
funds. Should this bill pass, it will be referred to the
Assembly Appropriations Committee.
SUMMARY: Establishes a tax abatement program, until 2019, that
allows a mobilehome owner under certain conditions to correct
inaccurate title to the home without having to pay delinquent
taxes and fees on the home, and protects program applicants from
being evicted by park management on the basis of noncompliance
with the title requirements that the applicant seeks to address.
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 the applicant is eligible for the abatement
program and the mobilehome is subject to LPT, HCD must issue a
conditional transfer of title.
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5)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.
6)Provides that a park owner may allow a resident not in
compliance with HCD 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
year of the filing date.
7)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.
8)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.
9)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.
EXISTING LAW:
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1)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.)
2)Prohibits any person to use or cause, or permit to be used for
occupancy, a mobilehome that does not conform to HCD's
registration requirements. (Health and Safety Code Section
18550(c).)
3)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 Sections
18115-18116.)
4)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.)
5)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.)
6)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
clearance certificate (TCC) or conditional tax clearance
certificate issued by the county tax collector. (Health and
Safety Code Section 18092.7.)
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7)Requires the county tax collector to issue a TCC to a
mobilehome owner if specified requirements are met. (Revenue
and Taxation Code Section 5832.)
8)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.)
9)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.)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: This bill, co-sponsored by Western Center on Law &
Poverty (WCLP), California Rural Legal Assistance Foundation
(CRLAF), and the Golden State Manufactured Homes Owners League,
seeks to address a confounding problem that has affected mobile
home owners and mobilehome park owners for over 30 years.
According to the author:
There are thousands, perhaps tens of thousands, of
homeowners who believe they own their homes but never had
title properly transferred to them. Mobilehomes 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
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his or her name and discovers that the previous owner fell
behind on their tax bill.
Mobilehomes that were purchased after July 1980 are
generally subject to local property taxes (LPT). Homes
that were purchased new prior to July 1980 are not subject
to LPT, but rather treated as vehicles and subject to an
"in lieu" vehicle license registration fee paid annually
to HCD. To transfer title of a mobilehome, an owner on
the LPT system must first obtain a Tax Clearance
Certificate from the County Tax Collector, (whereas) if
the mobilehome is on the "in-lieu" system, past due fees
must be paid to HCD prior to transfer of title.
In either case, if the buyer is unable to pay the past due
tax bill, 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.
This bill establishes a tax abatement program for
mobilehome owners who are unable to transfer title of
their homes into their names due to tax delinquencies that
may have been incurred by prior owners. The abatement
program would run for three years, starting in January
2016. Eligible homeowners would apply for the abatement
program with HCD. If a mobilehome is on the local
property tax system, then the County Tax Collector would
also be involved in processing and approving the tax
abatement.
Background on title and registration of mobilehomes. HCD is
responsible for the titling and registration of mobilehomes.
Homes that were purchased new prior to July 1, 1980 were treated
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as vehicles and not subject to LPT, but rather to an "in lieu"
vehicle license fee (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 Tax Clearance Certificate (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
under existing law. 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 and registration requirements
can cause a number of problems for mobilehome owners, including
preventing them from legally making repairs to the home,
insuring the home, and from transferring ownership of the home
to another party. As discussed below, simple nonconformance may
also subject the homeowner to eviction from the park under
existing law.
Description of proposed three-year tax abatement program.
According to the author, because of 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
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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.
The three-year abatement program proposed by this bill would
reduce past due taxes and fees by capping the amount owed and
waiving penalties and interest. According to the author, this
encourages 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
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.
Temporary moratorium on evictions to further objectives. Health
and Safety Code Section 18550 prohibits a person from using or
occupying a mobilehome that does not conform to HCD's
registration requirements, and similarly prohibits a mobilehome
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park from permitting nonconforming homes from being used or
occupied. For a tenant of a mobilehome park, this is
particularly problematic because nonconformance with HCD
registration requirements could serve as the basis of an
eviction from a mobilehome park under Civil Code Section
798.56(a), which authorizes termination of a tenancy by park
management for failure to comply with "any state law or
regulation relating to mobilehomes" within a reasonable time
after receiving notice of noncompliance.
As previously discussed, the number of mobilehomes in California
with potential title registration problems is likely in the
thousands, or even tens of thousands. The objectives of the
pilot abatement program proposed here would be stymied if
program applicants were essentially inviting potential eviction
against them by virtue of coming forward to use the program to
address nonconformance of title. To further encourage owners to
come forward, the bill sensibly creates a temporary moratorium,
coinciding with the abatement program, on evictions that are
based on lack of accurate title, as long as the park resident
has applied for the abatement program and completes the title
transfer within a specified time.
Author's technical amendments to clarify moratorium period.
Proposed amendments to the bill address a technical oversight in
language relating to the temporary moratorium on eviction.
Section 1 of the bill prohibits eviction based on nonconformance
with registration requirements prior to Jan 1, 2017 (in order to
provide an initial opportunity and incentive to apply), and then
also with respect to the period prior to Jan 1, 2019, provided
the resident has applied for the abatement program. Similarly,
Section 4 of the bill provides that it is not unlawful for a
mobilehome park to allow someone to occupy a home without proper
title prior to Jan 1, 2019, provided they have applied for the
abatement program; however, this provision fails to also include
the initial one-year moratorium from January 1, 2016 to January
1, 2017 that is intended to provide an initial opportunity and
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incentive to apply. The proposed amendment to eliminate this
inconsistency is:
On Page 7, strike lines 13 to 19 inclusive, and insert:
(2) Nonconformance is not a basis for eviction from a
mobilehome park of a person claiming to be an owner of
a manufactured home or mobilehome in either of the
following situations:
(a) Prior to January 1, 2017.
(b) If the person files an application to transfer
title pursuant to Article 4 (commencing with Section
18098) of Chapter 8 of Part 2 of Division 13 or
subdivision (d) of Section 18116.1 prior to January
1, 2019, and completes the application within one
year of the filing date.
In addition, the author proposes to make the following two
technical amendments:
On page 5, line 31, strike "title or interest" and insert
"ownership interest"
On page 5, lines 34-35, strike "title or interest" and
insert "ownership interest"
ARGUMENTS IN SUPPORT: The bill is supported by advocates for
mobilehome owners as well as many homeowners' associations.
Among others, the Educational Community for Homeowners (ECHO),
representing more than 1,300 homeowner associations that
comprise its membership, states in support: "AB 587 provides a
fair and commonsense approach to ensure that mobilehome owners
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are not caught in an untenable position due to the liabilities
of a previous owner, and ensures that they will not be evicted
from their mobilehome park due to lack of compliance with local
or state laws, but rather be allowed to remain in their home."
Western Center notes that, in addition to attempting to unravel
problems caused by years of bad registration practices, the bill
"provides the framework for ensuring in the future that state
and local government has procedures in place to ensure that
title is properly transferred when a home is sold. . . and that
they can collect fees and taxes and ensure their records are
accurate and up-to-date."
ARGUMENTS IN OPPOSITION: The California Association of County
Treasurers and Tax Collectors (CACTTC) oppose this bill unless
amended to eliminate any abatement of taxes-the central feature
of the bill. CACTTC contends that by removing a county's
ability to enforce tax collection on taxes in arrears and assess
penalties and interest, the bill would "eviscerate the fiscal
incentive to pay taxes in a timely manner" and would "establish
a financial incentive not to pay timely because the statute
would provide an inexpensive way to pay taxes eventually and
without penalty." CACTTC disputes the premise of the bill that
many people purchasing a mobilehome do not realize the necessary
steps that must be taken to properly transfer title and
ownership of the home. Instead, they contend that most buyers
and seller do understand there is a role for the state and local
agencies in these transactions, and that as a result, "there are
far too many taxpayers who may game this proposed statute . . .
An amnesty program will ultimately reward people who knowingly
or unknowingly ignore existing law. Tax collectors cannot abide
that."
In addition, CACTTC objects to the large financial losses that,
it asserts, counties would incur if this bill were to become
law. They state:
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If the majority of mobilehome owners avail themselves
of the program established under this bill, it could
translate to millions of dollars in loss to the county.
Of the 26 counties that have responded to our survey
regarding mobile homes that are in arrears and what
those amounts are, the total is 26,318 mobile homes,
totaling nearly $17 million in taxes owed. The
financial losses, coupled with the increased workload
to implement the payment plan program proposed would be
financially crippling to county departments that do not
have any way to recover those costs. [This bill] would
bar the counties from being able to seek reimbursement
through the mandate process for these costs-both to
implement the mandated program and to recover the lost
property tax dollars. That is an incredible burden to
place on counties.
Pending related legislation. AB 999 (Daly) seeks to establish
due process requirements for mobilehome park owners to dispose
of an abandoned mobilehome without first being required to pay
any unpaid property taxes on the mobilehome. This bill is
currently in Assembly Housing and Community Development
Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Western Center on Law and Poverty (co-sponsor)
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California Rural Legal Assistance Foundation (co-sponsor)
Golden State Manufactured-Home Owners League (GSMOL)
(co-sponsor)
Cabrillo Wetland Village HOA, Inc.
Educational Community for Homeowners (ECHO)
Fountain Valley Estates Homeowners Association
GSMOL, Chapter 1128, Ramona, CA
Los Casas Homeowner's Association
Northern Santa Barbara County Manufactured Homeowners Team
Orcutt Ranch Home Owners Association (ORHOA)
Ranch Club Homeowners Association
San Joaquin Village Mobile Park Homeowners Association
San Louis Obispo Mobilehome Residents Assistance Panel (SLOMAP)
San Marcos Mobilehome Residents Association (SMMRA)
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Santa Cruz County Manufactured/Mobile Homeowners Association
(SCCMMHA)
Sea Oak Mobilehome Park Homeowners Association
Sierra Homeowners Association
Numerous individuals
Oppose (Unless Amended)
California Association of County Treasurers and Tax Collectors
Analysis Prepared by:Anthony Lew / JUD. / (916) 319-2334