BILL ANALYSIS Ó
AB 587
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ASSEMBLY THIRD READING
AB
587 (Chau)
As Amended April 30, 2015
2/3 vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+---------------------|
|Housing |7-0 |Chau, Steinorth, | |
| | |Burke, Chiu, Beth | |
| | |Gaines, Lopez, | |
| | |Mullin | |
| | | | |
|----------------+------+--------------------+---------------------|
|Judiciary |10-0 |Mark Stone, Wagner, | |
| | |Alejo, Chau, Chiu, | |
| | |Gallagher, Cristina | |
| | |Garcia, Holden, | |
| | |Maienschein, | |
| | |O'Donnell | |
| | | | |
|----------------+------+--------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, | |
| | |Eggman, Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
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| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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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 ownership interest
in the mobilehome;
d) The applicant pays any charges assessed by HCD during the
period between the time the applicant took ownership 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
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(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.
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.
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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
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
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reimburse local agencies for property tax revenues lost by them
pursuant to the bill.
FISCAL EFFECT: According to the Assembly Committee on
Appropriations:
1)Significant costs to HCD of $360,000 (Mobilehome Manufactured
Home Revolving Fund) in 2015-16, 2016-17, and 2017-18 to fund
five positions to process the anticipated increase in
applications. HCD estimates approximately 100,000 mobilehome
owners could be eligible to participate in the tax abatement
program. If 10% of those eligible participate each year, 30,000
additional applications for registration and titling will be
generated over the three-year period.
2)Lost property tax revenues to local taxing entities, potentially
in the low millions of dollars, resulting from the abatement
program provisions that cap the amount of delinquent property
taxes owed and waive interest and penalties. These losses are
not reimbursable under the bill. Staff notes that not all past
taxes are forgiven, but rather a portion of the taxes accrued by
the current owner (applicant). Past owners are still liable for
their taxes and penalties owed.
3)Potentially reimbursable costs to county tax collectors to
implement the program.
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" vehicle license registration fee (VLF) paid
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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. 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 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
this bill 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
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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 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 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.
The three-year abatement program proposed by this bill would
reduce specified past due taxes and fees by capping the amount
owed and waiving penalties and interest. According to the author,
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
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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.
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.
Analysis Prepared by:
Rebecca Rabovsky / H. & C.D. / (916) 319-2085 FN:
0000615
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