BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 587


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          ASSEMBLY THIRD READING


          AB  
          587 (Chau)


          As Amended  April 30, 2015


          2/3 vote


           ------------------------------------------------------------------ 
          |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         |                     |
          |                |      |                    |                     |
          |                |      |                    |                     |
           ------------------------------------------------------------------ 


          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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