BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 587            Hearing Date:     6/14/2016
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          |Author:   |Chau                                                  |
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          |Version:  |6/8/2016                                              |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Alison Dinmore                                        |
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          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 mobilehome park management, prior to February 1  
              of each year, to provide a notice to all homeowners which  
              contains, among other things, the following:
             a)   The Mobilehome Residency Law establishes the rights and  
               responsibilities of homeowners and park management and that  
               a copy can be obtained by management at no charge.
             b)   A list of rights and responsibilities for homeowners and  
               park management, including but not limited to the  
               following:
                  i.        Management may require certain upgrades
                  ii.       The sale of a mobilehome
                  iii.      Management's rights to enter the space upon  
                    which a mobilehome resides and for what purpose
                  iv.       Rules and regulations for improvements or  
                    alterations to a mobilehome

            1)  Requires mobilehomes sold as new prior to July 1, 1980, to  
              pay a vehicle license fee (VLF), and requires annual payment  







          AB 587 (Chau)                                       Page 2 of ?
          
          
              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.
            
            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.  








          AB 587 (Chau)                                       Page 3 of ?
          
          

            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. 
          
            12) Requires a tenancy to be terminated by the management for  
              failure of the homeowner or resident to comply with a state  
              law or regulation within a reasonable amount of time after  
              the homeowner receives a notice of noncompliance from the  
              appropriate governmental agency.  

          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.   
          Specifically, this bill: 

             1)   Amends the Management Notice to All Homeowners in the  
               following ways:

             a)   Removes information regarding management's rights to  
               require certain upgrades; rights regarding the sale of a  
               mobilehome; management's rights to enter the space upon  
               which a mobilehome resides and for what purpose; and the  
               rules and regulations for improvements or alterations to a  
               mobilehome.

             b)   Adds that when a mobilehome is sold, the owner is  
               required to transfer the title to the buyer.  The sale of  
               the home is not complete until you receive the title from  
               the seller.  The buyer must also file paperwork with HCD.

             c)   Adds that in California, mobilehome owners must pay  
               annual property tax to the county tax collector fee in lieu  
               of taxes to HCD.  If a homeowner is unsure which to pay,  
               contact HCD.  Failure to pay taxes or in lieu fees can have  
               serious consequences, including losing your home at a tax  
               sale.








          AB 587 (Chau)                                       Page 4 of ?
          
          

             d)   Adds that information on registration, titling, and  
               taxes, can be found at the HCD web site and provides a  
               phone number, provides the web site for a listing of the  
               county tax collector, and instructs homeowners to call the  
               local county government. 

             1)   Creates an abatement process for mobilehome owners if  
               the following requirements are met:

             a)   The applicant is not currently the registered owner.
             b)   The applicant provides documentation demonstrating  
               ownership and the date of acquisition of ownership  
               interest, to HCD's satisfaction.
             c)   The application is made prior to December 31, 2019.
             d)   The applicant pays any charges assessed by HCD during  
               the period between the time the applicant took ownership  
               interest or December 31, 2015, whichever is later, and the  
               time the applicant applies for relief.
             e)   Any lien under the Property Tax Postponement (PTP)  
               program has been satisfied.
             f)   The applicant has not previously filed for relief under  
               this section. 

             1)   Requires HCD to 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.  

             2)   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. 

             3)   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. 

             4)   Requires HCD to amend the title record and issue a  
               duplicate, substitute, or new certificate of title if the  








          AB 587 (Chau)                                       Page 5 of ?
          
          
               applicant presents a completed tax liability certificate  
               and meets the requirement of the abatement program. 

             5)   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.  

             6)   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.

             7)   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.
          
             8)   Removes the provision that is unlawful for any person to  
               use or permit a mobilehome to be used if the mobilehome  
               does not conform with HCDs registration requirements.  

             9)   Provides that on or after January 1, 2020, it is  
               unlawful for any person to use, cause, or permit to be used  
               for occupancy, any mobilehome, wherever the mobilehome is  
               located, that does not conform to HCDs registration  
               requirements, provided that HCD has provided notice to the  
               occupant of the registration requirements and any  
               registration fees due. 

          COMMENTS:

             1)   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  








          AB 587 (Chau)                                       Page 6 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  
               into 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 2017, and eligible homeowners would apply through  
               HCD.  

             2)   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 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  








          AB 587 (Chau)                                       Page 7 of ?
          
          
               HCD's registration requirements.  Additionally, buyers  
               cannot legally make repairs to the home, insure their home,  
               or transfer ownership to another person. 

             3)   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. The bill  
               further clarifies that after January 1, 2020, it will be  
               unlawful for anyone to use a mobilehome that does not  
               conform to HCD's registration requirements, provided that  
               HCD has provided notice to the occupant of the registration  
               requirements and any registration fees due.

               Current law permits mobilehome park owners to evict a  
               tenant for failure to abide by state law, such as properly  
               titling a mobilehome.  To encourage owners to come forward  
               and utilize this program, this bill removes the provision  
               that makes it unlawful for a person to fail to conform with  








          AB 587 (Chau)                                       Page 8 of ?
          
          
               HCD's registration requirements and instead states that on  
               or after January 1, 2020, it is unlawful for any person to  
               fail to conform to HCD's registration requirements,  
               provided that HCD provided that the department has provided  
               notice to the occupant of the registration requirements any  
               fees due.

             4)   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 by  
               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.  

             5)   Double-referred.  This bill has been referred to both  
               this committee and the Senate Judiciary Committee. 

          Assembly Votes:

            Floor:    78-0 
            Appr:     17-0 
            Jud:      10-0
            H&CD:     7-0 
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  Yes









          AB 587 (Chau)                                       Page 9 of ?
          
          

            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 8, 2016.)

          SUPPORT:  

          California Rural Legal Assistance Foundation (co-sponsor)
          Golden State Manufactured-Home Owners League (co-sponsor)
          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 


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