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 ----------------------------------------------------------------- |Author: |Chau | |----------+------------------------------------------------------| |Version: |6/8/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |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 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 -- END --