BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: AB 587 Hearing Date: 6/30/2015 ----------------------------------------------------------------- |Author: |Chau | |----------+------------------------------------------------------| |Version: |6/23/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Alison Dinmore | |: | | ----------------------------------------------------------------- SUBJECT: Mobilehomes: payments: nonpayment or late payments DIGEST: This bill creates an 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. ANALYSIS: Existing law: 1) Requires mobilehomes sold as new prior to July 1, 1980, to pay a vehicle license fee (VLF) and requires annual payment to the Department of Housing and Community Development (HCD). 2) Provides that non-payment of the 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. 3) Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT) until the applicant presents a tax clearance certificate (TCC) or conditional TCC issued by the county tax collector. 4) Requires the county tax collector to issue a TCC to a mobilehome owner if specified requirements are met. AB 587 (Chau) Page 2 of ? 5) 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. 6) 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. 7) Requires specified information to be included in a rental agreement between the management and the homeowner, establishing the terms and conditions of a park tenancy. 8) Permits the management to require the right of prior approval of a purchaser of a mobilehome that will remain in the park and may require that the selling homeowner give notice of the sale to the management before the close of the sale. 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. 10) Prohibits any person to use or cause to be used, or permit to be used for occupancy, a mobilehome that does not conform to HCD's registration requirements. 11) Reinstates the State Controller's Property Tax Postponement Program, which allows senior, blind, and disabled citizens with an annual household income of $35,500 or less and 40% equity in their homes to apply to defer payment of property taxes on their principal residence. Applications may be filed with the State Controller's Office beginning September 1, 2016. This bill creates an 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. This bill AB 587 (Chau) Page 3 of ? also establishes notification requirements for the transfer of any ownership interest or transferring or creating any security interest in a mobilehome. 1) Abatement process a) Creates an abatement process for mobilehome owners if the following requirements are met: The applicant is not currently the registered owner; The applicant provides documentation demonstrating ownership and the date of acquisition of ownership interest, to HCD's satisfaction; The application is made prior to December 31, 2018; 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 relief; Any lien under the Property Tax Postponement (PTP) program has been satisfied; and The applicant has not previously filed for relief under this section. a) HCD shall waive the outstanding charges, fees, or penalties, amend the title record, and issue a duplicate, substitute, or new certificate of title, registration card, or copy of a registration card, if the applicant meets the requirements of the abatement program and is subject to the VLF. b) 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 after the applicant takes ownership, which must be paid in full if the mobilehome is later transferred. Failure to make payments required by the plan is a violation of the program and HCD may suspend, revoke, or cancel the certificate of title. c) Provides that, if the applicant is eligible for the abatement program and the mobilehome is subject to the LPT, HCD must issue a conditional transfer of title. d) Requires HCD to amend the title record and issue a duplicate, substitute, or new certificate of title if the applicant presents a completed tax liability certificate AB 587 (Chau) Page 4 of ? and meets the requirement of the abatement program. e) Requires a county tax collector to issue a tax liability or tax clearance 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. The reduced taxes include those reasonably owed from the date of sale as shown on the conditional transfer of title without penalties or interest, and not to exceed the amounts attributable one year prior to January 1, 2016. f) Provides that upon the issuance of a tax liability certificate, the applicant shall be listed as the owner of record for all local property tax purposes and the home shall not be subject to lien or seizure based on any taxes abated pursuant to this program. g) Provides that the abatement program does not relieve any owner other than the applicant from tax liability, including penalties and interest, arising from the non-payment prior to the date of sale. The abatement program does not 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. 2) Notification requirements - transferor/owner a) Requires a registered owner to apply to HCD for a transfer clearance certificate indicating HCD may amend the title and transfer the registration of the mobilehome, before transferring any ownership interest or transferring or creating any security interest in the mobilehome. b) The transferor shall notify HCD within 20 days whenever any title or interest in a mobilehome is transferred to another person. The transferor shall provide the interest transferred and the party to whom it was transferred. 3) Notification requirements - HCD a) Requires HCD to issue a transfer clearance certificate to a registered owner upon application if HCD determines that it is not prohibited by law from amending the title AB 587 (Chau) Page 5 of ? and transferring the mobilehome registration. The certificate will expire 90 days from the date of issuance. b) Requires HCD to notify the transferee of the obligation of and procedure for titling and registering the home upon notification of any transfer of any ownership interest or transferring or creating any security interest in a mobilehome. If after 90 days the transferee has not complied with titling and registration, HCD shall notify the transferee and, if the mobilehome is located in a mobilehome park, the park management of the transferee's failure to comply. 4) Notification requirements - mobilehome park management a) Requires the rental agreement between the management and the homeowner to contain a provision stating that, prior to transferring any ownership interest in the mobilehome, the management may require proof of registration as owner and a copy of a TCC issued by HCD. b) Permits the management to require the selling homeowner to give proof of registration as owner and a copy of the TCC issued by HCD. c) Requires management to notify HCD of the sale of a home by providing the name of the transferor, the name of the transferee, and the address or location of the home, if the management approves a prospective homeowner who is purchasing a home that will stay in the park and enters a lease agreement with the prospective homeowner. d) Requires the owners of a mobilehome park to notify HCD within 20 days whenever any title or interest of a registered owner of a mobilehome located within a mobilehome park is transferred to another person or entity. The owner shall provide the name of the transferor, the name of the transferee, and the address or location of the home. 5) Eviction protections a) Prohibits eviction from a mobilehome park for nonconformance with the registration and titling requirements of state law when an application for the AB 587 (Chau) Page 6 of ? abatement program is filed before January 1, 2019, and the nonconformance occurred prior to January 1, 2017. COMMENTS: Purpose of the bill. According to the author, the problem this bill seeks to address has been festering for more than 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. Mobilehomes are an important source of affordable housing statewide and are regularly sold on an 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 in his or her name and discovers that the prior owner fell behind on their tax bill. If the buyer is unable to pay, 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 creates a tax abatement program for mobilehome owners who are unable to transfer title of their home into their name due to tax delinquencies incurred by prior owners. The program would run for three years, beginning January 2016, and eligible homeowners would apply through HCD. This bill also creates a moratorium on evictions, coinciding with the abatement program, based on lack of accurate title, to encourage owners to come forward. Background. HCD is responsible for titling and registering mobilehomes. Mobilehomes purchased before July 1, 1980, are treated as vehicles and subject to a VLF rather than an LPT. Mobilehomes purchased after July 1, 1980, however, are subject to LPT. Before transferring title of a mobilehome, a buyer of a mobilehome subject to LPT must obtain a TCC from the county tax collector indicating that all property taxes have been paid. If a mobilehome is subject to VLF, the buyer must pay all fees and penalties to HCD before title can be transferred. Non-payment of VLF constitutes a lien on the mobilehome in favor of the state, and nonpayment of LPT means the county tax collector can pursue collection of the delinquent LPT in the same way as other delinquent taxes on the unsecured roll. If either of these situations arises, HCD cannot amend the title to reflect the new owner's name, and therefore the new owner cannot obtain proof of AB 587 (Chau) Page 7 of ? ownership over the home. Without proper title to a mobilehome, a buyer may face a number of issues. Current law provides that the buyer may be subject to eviction from a mobilehome park because parks are prohibited from renting to homes that do not conform to HCD's registration requirements. Additionally, buyers cannot legally make repairs to the home, insure their home, or transfer ownership to another person. Widespread problem. Buying and selling mobilehomes often transpires informally, which means that buyers and sellers may not be aware of delinquent taxes and fees that prevent the transfer of title. Presently, there are few notification requirements for VLF delinquencies, and a buyer may only become aware of a delinquency when he or she attempts to transfer title of an already purchased mobilehome. If a seller does not pay these delinquent fees and a buyer is unable to do so, there is little else the buyer can do. This abatement program allows a buyer to transfer title in his or her name in instances where the mobilehome is subject to delinquent fees or taxes. For mobilehomes subject to VLF, applicants must first prove ownership to HCD and, upon the payment of reduced charges assessed by HCD or entry into a payment plan, title could transfer. For mobilehomes subject to LPT, HCD would issue the applicant a "conditional title" that is then taken to the county tax collector. Once the applicant pays a reduced LPT pursuant to the abatement program, the tax collector would update their property tax records and issue a tax liability certificate. This tax liability certificate would permit HCD to transfer title. The abatement program would not relieve any prior owners from liability for the non-payment of taxes, and does not 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. Going forward, this bill establishes reporting requirements on owners or transferors, HCD, and mobilehome park owners. This will help ensure the state maintains accurate records of mobilehome ownership and encourage proper titling of homes when sold. Additionally, this will ensure the state and county receive adequate fees and taxes. Current law permits mobilehome park owners to evict a tenant for AB 587 (Chau) Page 8 of ? failure to abide by state law, such as property titling a mobilehome. To encourage owners to come forward and utilize this program, this bill creates a moratorium on evictions based upon lack of title, if the owner applies for the program and completes the title transfer in time. Opposition. The California Association of County Treasurers and Tax Collectors (CATTC) opposes this bill unless amended to remove any abatement of taxes, which is the central purpose of the bill. CATTC disputes that people purchasing mobilehomes in California do not understand the necessary steps to property transfer title and ownership of mobilehomes. CATTC contends that removing a county's ability to enforce tax collection on taxes in arrears and assess penalties in interest, the bill would remove the fiscal incentive to pay taxes in a timely manner. CATTC proposes reducing the length of the program to two years, requiring the payment of overdue taxes, and permitting tax collectors to charge a fee for processing paperwork associated with the program. The Western Manufactured Housing Communities Association (WMA) opposes this bill unless amended because it maintains the responsibility for reporting ownership transfers should lie with mobilehome owners and HCD, not with mobilehome park owners. WMA is also concerned that the provisions in the bill that reference evictions create a responsibility on park management to police residents for inadequate restrictions, and fear that these provisions will require park management to evict residents based on their status with HCD. Double-referred. This bill has been referred to both this committee and the Senate Judiciary Committee. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes POSITIONS: (Communicated to the committee before noon on Wednesday, June 24, 2015.) SUPPORT: California Rural Legal Assistance Foundation (co-sponsor) Golden State Manufactured-Home Owners League (co-sponsor) AB 587 (Chau) Page 9 of ? Western Center on Law and Poverty (co-sponsor) Cabrillo Wetland Village HOA, Inc. Educational Community for Homeowners Fountain Valley Estates Homeowners Association Golden State Manufactured-home Owners League, Chapter 708 Golden State Manufactured-home Owners League, Chapter 776 Golden State Manufactured-home Owners League, Chapter 1128 Golden State Manufactured-home Owners League, Sonoma Valley Los Casas Homeowner's Association Northern Santa Barbara County Manufactured Homeowners Team Oceanside Manufactured homeowners Alliance Orcutt Ranch Home Owners Association Prothero Mobile Estates Homeowners' Association Ranch Club Homeowners Association San Joaquin Village Mobile Park Homeowners Association San Louis Obispo Mobilehome Residents Assistance Panel San Marcos Mobilehome Residents Association Santa Cruz County Manufactured/Mobile Homeowners Association Santee Mobile Home Owner's Action Committee Sea Oaks Mobilehome Park Homeowners Association Sierra Homeowners Association Trico Mobile Estates Homeowners Association 188 individuals OPPOSITION: California Association of County Treasurers and Tax Collectors Western Manufactured Housing Communities Association -- END --