BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular Session


          AB 587 (Chau)
          Version: June 20, 2016
          Hearing Date: June 28, 2016
          Fiscal: Yes
          Urgency: No
          TH   


                                        SUBJECT
                                           
                 Mobilehomes: Payments: Nonpayment or Late Payments

                                      DESCRIPTION  

          This bill establishes, until December 31, 2019, a tax amnesty  
          program for owners of mobilehomes who have not registered their  
          ownership interest with the Department of Housing and Community  
          Development (HCD).  This tax amnesty program authorizes HCD to  
          release specified liens imposed and waive all outstanding  
          charges assessed by the department prior to December 31, 2015,  
          as specified, in order to allow an owner to register or transfer  
          registration of a manufactured home or mobilehome, as specified.  
           This bill also alters the content of information to be provided  
          annually to residents of mobilehome parks.

                                      BACKGROUND  

          Under existing law, mobilehomes are taxed either as vehicles  
          under the Vehicle License Fee program, or as property subject to  
          local property taxes.  When sold as new, the Manufactured  
          Housing Act of 1980 (Health & Saf. Code 18000 et seq.) requires  
          mobilehome dealers to register and establish legal title of a  
          mobilehome with HCD in the name of the new owner.  HCD issues  
          title to the new registered owner or to the lien holder in cases  
          where the home is financed.  Until 2001, HCD used to issue  
          owners of mobilehomes registration decals - much like an  
          automobile's - which the owner was required to place in a  
          specific location outside the mobilehome.  However, in 2000, the  
          Legislature passed AB 984 (Correa, Ch. 23, Stats. 2000), which  
          eliminated this requirement, and instead left to HCD and its  








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          inspectors the duty to enforce compliance with titling and  
          registration requirements.

          Unlike the formal sale process for real property, transferring  
          ownership of a mobilehome is often done informally, and as a  
          consequence, parties to a sale transaction may not realize that  
          a mobilehome must be re-registered and titled in the name of the  
          new owner or purchaser.  Consequently, California now has an  
          unknown number of mobilehomes that are improperly registered or  
          titled, leading to difficulties in collecting property taxes or  
          vehicle license fees from the appropriate party, and obstructing  
          the ability to sell or transfer these homes to new owners unless  
          all past due taxes and fees - which may be the responsibility of  
          another party - are paid in full.

          This bill creates an amnesty program that would allow owners of  
          unregistered or untitled mobilehomes to register their property  
          without having to pay the full amount of unpaid taxes and fees.   
          It would authorize HCD to issue new title and registration  
          documents, and for a local tax assessor to issue a tax clearance  
          certificate, when an applicant provides documentation  
          demonstrating ownership of a mobilehome and their date of  
          acquisition, and the applicant pays both the charges assessed by  
          the department between the time the applicant took ownership or  
          December 31, 2015, whichever is later, and the taxes owed from  
          the date of sale, without penalties or interest, not to exceed  
          the amounts attributable one year prior to January 1, 2017.   
          This bill would also modify an annual notice provided to  
          mobilehome park residents by park management educating them on  
          the need to register and title a mobilehome in the name of the  
          new owner upon sale.

                                CHANGES TO EXISTING LAW
           
           1.Existing law  , the Mobilehome Residency Law (MRL), governs the  
            relationship between park owners or managers and the residents  
            and homeowners in mobilehome parks and manufactured housing  
            communities.  (Civ. Code Sec. 798 et seq.)

             Existing law  specifies terms and conditions that must appear  
            in a rental agreement governing a mobilehome.  Existing law  
            requires a specified notice to be provided by mobilehome park  
            management annually providing notice of certain rights and  
            responsibilities of parties under the MRL.  (Civ. Code Sec.  
            798.15.)







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             This bill  modifies the content of the above notice to, among  
            other things, state:
                 homeowners must pay rent, utility charges, and  
               reasonable incidental service charges in a timely manner.  
               Failure to comply could be grounds for eviction from the  
               park. (Civil Code Section 798.56);
                 if you sell your home, you are required to provide a  
               manufactured home and mobilehome transfer disclosure  
               statement to the buyer prior to sale.  (Civil Code Section  
               1102.6d) When a home 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 the Department of  
               Housing and Community Development to register the home in  
               his or her name.  (Civil Code Sections 798.70-798.74);
                 in California, mobilehome owners must pay annual  
               property tax to the county tax collector or an annual fee  
               in lieu of taxes to the Department of Housing and Community  
               Development (HCD).  If you are 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; and
                 for more information on registration, titling, and  
               taxes, contact: the Department of Housing and Community  
               Development www.hcd.ca.gov (800) 952-8356; County Tax  
               Collector, www.cacttc.org (for listing); or call your local  
               county government.

           1.Existing law  provides that HCD shall withhold the registration  
            or transfer of registration of any manufactured home,  
            mobilehome, or floating home which is subject to local  
            property taxation, other than a new manufactured home,  
            mobilehome, or floating home for which application is being  
            made for an original registration, until the applicant  
            presents a tax clearance certificate or a conditional tax  
            clearance certificate issued by the tax collector of the  
            county where the manufactured home, mobilehome, or floating  
            home is located.  (Health & Saf. Code Sec. 18092.7.)

             Existing law  provides that nonpayment of specified fees and  
            penalties that are due on a mobilehome, manufactured home,  
            commercial coach, truck camper, or floating home shall  
            constitute a lien in favor of the State of California in the  
            amount owing.  Until the amount of the lien is paid to HCD,  
            the department shall not do either of the following:







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                 amend the permanent title record of the manufactured  
               home, mobilehome, commercial coach, truck camper, or  
               floating home which is the subject of the lien for the  
               purpose of transferring any ownership interest or  
               transferring or creating any security interest in the  
               manufactured home, mobilehome, commercial coach, truck  
               camper, or floating home; or
                 issue any duplicate, substitute, or new certificate of  
               title, registration card, or copy of a registration card  
               with respect to the manufactured home, mobilehome,  
               commercial coach, truck camper, or floating home which is  
               the subject of the lien.  (Health & Saf. Code Sec.  
               18116.1.)

             This bill  states that when application is made to HCD for  
            registration or transfer of registration of a manufactured  
            home or mobilehome, and the applicant is not currently the  
            registered owner, with respect to all charges assessed by the  
            department prior to the date the title or interest in the  
            manufactured home or mobilehome was transferred to the  
            applicant, the department shall release specified liens  
            imposed and waive all outstanding charges assessed by the  
            department, if all of the following requirements are met:
                 the applicant provides documentation demonstrating to  
               the satisfaction of the department ownership and the date  
               of acquisition of ownership interest;
                 the application is made prior to December 31, 2019;
                 the applicant pays any charges assessed by the  
               department 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; and
                 the applicant has not previously filed for relief, as  
               specified.

             This bill  specifies that if the applicant meets the above  
            requirements and the other specified requirements, the  
            department 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 with respect to the manufactured  
            home or mobilehome.

             This bill  states that for specified amounts owing, HCD may  
            establish a long term payment program of up to five years.   
            The department may provide that any amounts owing under the  







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            payment program shall constitute a lien in favor of the State  
            of California in the amount owing and shall be paid in full if  
            the manufactured home or mobilehome is subsequently  
            transferred.

             This bill  specifies that if the manufactured home or  
            mobilehome for which an application has been submitted and  
            approved is subject to local property taxation, the department  
            shall issue a conditional transfer of title.  Upon  
            presentation of a completed tax liability certificate, if the  
            applicant meets specified requirements, the department shall  
            amend the title record and issue a duplicate, substitute, or  
            new certificate of title.

           1.Existing law  directs the county tax collector to issue a tax  
            clearance certificate or a conditional tax clearance  
            certificate when the tax collector finds that no local  
            property tax is due or is likely to become due, or that any  
            applicable local property taxes have been paid or are to be  
            paid in a manner not requiring the withholding of registration  
            or the transfer of registration.  Existing law specifies that  
            a tax clearance certificate shall be used to permit  
            registration of used manufactured homes.  (Rev. & Tax. Code  
            Sec. 5832.)

             This bill  states, prior to January 1, 2020, a person with a  
            specified conditional transfer of title may apply to the tax  
            collector to issue either a tax liability or tax clearance  
            certificate.  The county tax collector shall issue a tax  
            liability certificate if the person pays the taxes 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,  
            2017.

             This bill  states that upon issuance of a tax clearance or  
            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  
            specified unpaid taxes, penalties, or interest.

             This bill  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, or prohibit a  
            county tax collector from collecting delinquent taxes,  







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            penalties, or interest due prior to the date of sale, from any  
            owner other than the applicant.

             This bill  makes other conforming changes to existing law.

                                        COMMENT
           
           1.Stated need for the bill
           
          According to the author:

            Mobilehomes are an important source of affordable housing  
            statewide.  The Department of Housing and Community  
            Development (HCD) is responsible for titling mobilehomes.   
            Mobilehomes that were purchased new after July 1980 are  
            generally subject to local property taxes (LPT).  Homes that  
            were purchased new prior to July 1980 are not subject to LPT,  
            but rather an "in lieu" vehicle license fee paid annually to  
            HCD.  To transfer title of a mobilehome, an owner on the LPT  
            system must obtain a Tax Clearance Certificate from the County  
            Tax Collector. Similarly, if the mobilehome is on the  
            "in-lieu" system, past due fees must be paid to HCD prior to  
            transfer of title.

            Mobilehomes 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 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.

            AB 587 establishes a tax abatement program for mobilehome  
            owners who are unable to transfer title of their homes into  
            their names due to tax delinquencies that may have been  
            incurred by prior owners.  The abatement program would run for  
            three years, starting in January 2017.  Eligible homeowners  
            would apply for the abatement program with HCD.  If a  
            mobilehome is on the local property tax system, then the  
            County Tax Collector would also be involved in processing and  
            approving the tax abatement.  AB 587 also refines the exiting  







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            title transfer process by requiring sellers to obtain a  
            transfer clearance certificate from HCD (indicating that HCD  
            may legally amend the title).

           2.Increasing compliance with title and registration requirements
           
          The three-year tax and fee amnesty program created by this bill  
          would incentivize mobilehome owners lacking legal title to their  
          home to obtain title and begin paying taxes and fees as required  
          by law.  The Western Center on Law and Poverty, a co-sponsor of  
          this bill, states:

            There is a growing crisis in California: thousands, perhaps  
            tens of thousands, of homeowners who believe they own their  
            manufactured home, but have never had title properly  
            transferred to them.  As a result, these homeowners do not  
            have clear title to the homes.  In many cases, without his or  
            her name on state and local records, the homeowner is  
            accumulating growing back taxes and fees that could stretch  
            into the thousands of dollars.  Without title in their name,  
            these homeowners also face the risk that the prior owner could  
            re-appear and claim ownership.  Moreover, they may be  
            prevented from selling, insuring, and obtaining permits to  
            safely maintain their homes.
            . . .
            A growing number of manufactured homes in California are being  
            transferred without the proper paperwork being filed with HCD  
            to transfer title into the new owner's name.  Whether because  
            of lack of knowledge of the law, fraud by the seller, or other  
            reason, the result is that unpaid taxes and/or fees continue  
            to accumulate.  Not only does this expose the new owner to  
            potentially thousands of dollars in taxes and penalties, but  
            it also puts a cloud on the homeowner's title.
            . . .
            AB 587 would establish an abatement program to give homeowners  
            an opportunity to bring title into their name without having  
            to pay certain outstanding amounts owing.  It also provides  
            the framework for ensuring that in the future, the state and  
            local government has procedures in place to ensure that title  
            is properly transferred when a home is sold.

           3.Opposition concerns
           
          The tax amnesty program proposed in this bill would eliminate a  
          potential party from whom HCD or a local tax assessor could  







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          collect back property taxes and registration fees, and would  
          relieve current owners of their obligation to pay up to three  
          years' worth of back taxes and fees.  Depending on the level of  
          applicants, this amnesty program could result in the loss of  
          significant revenue to affected counties and the department.   
          The California State Association of Counties, writing in  
          opposition, states:

            We recognize that AB 587 would serve as an opportunity for a  
            large number of existing mobilehome owners to come into  
            compliance for registration and tax obligations, despite  
            lacking the necessary documentation to do so under the current  
            system.  Any amnesty program requires a balance of losses in  
            light of potential benefits.  As such, we respectfully request  
            consideration of the following:
                 further narrowing of the amnesty window from three to  
               two years, similar to other tax amnesty programs;
                 maintaining a level of obligation for taxes owed and  
               their associated penalties and interest; and 
                 promoting future compliance for mobilehome owners to  
               remain in good standing for registration and tax  
               obligations. 

          Staff notes that this bill would not relieve a prior mobilehome  
          owner from their tax liabilities, including penalties and  
          interest, accruing prior to the date of sale, and would not  
          prohibit a county tax collector from collecting delinquent  
          taxes, penalties, or interest from that prior owner.


           Support :  Cabrillo Wetland Village HOA; Educational Community  
          for Homeowners; Fountain Valley Estates Homeowners Association;  
          GSMOL Chapter 708; GSMOL Chapter 1128; GSMOL Homeowners  
          Association at San Joaquin Village Mobile Park; Las Casas  
          Homeowners Association; Northern Santa Barbara County  
          Manufactured Homeowners Team; Oceanside Manufactured Homeowners  
          Alliance; Orcutt Ranch Home Owners Association; Prothero  
          Homeowners Association; Ranch Club Mobile Estates Homeowner  
          Association; San Luis Obispo Mobilehome Residents Assistance  
          Panel; San Marcos Mobilehome Residents Association; Sandpiper  
          Homeowner's Association; Santa Cruz County Manufactured/Mobile  
          Homeowners Association; Santee Mobilehome Owner's Action  
          Committee; Sea Oaks Mobilehome Park; Sonoma Valley GSMOL; Trico  
          Mobile Estates HOA; 295 Individuals








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           Opposition  :  California Association of County Treasurers and Tax  
          Collectors; California State Association of Counties; Rural  
          County Representatives of California 

                                        HISTORY
           
           Source  :  California Rural Legal Assistance Foundation; Golden  
          State Manufactured Home Owner's League (GSMOL); Western Center  
          on Law and Poverty

           Related Pending Legislation  :  SB 434 (Allen, 2015) would require  
          the assessor to notify the Department of Housing and Community  
          Development (HCD), the legal owner, and each assessee whose  
          manufactured home is to be placed on the local assessment role.   
          This bill would also require HCD to transfer a manufactured home  
          that is subject to the vehicle license fee to local property  
          taxation when it is found that the home has been rebuilt and is  
          no longer mobile.  This bill is pending in the Assembly  
          Committee on Housing and Community Development.

           Prior Legislation  :

          AB 999 (Daly, Ch. 376, Stats. 2015) amended the Mobilehome  
          Residency Law to, among other things, authorize the management  
          of a mobilehome park to enforce a warehouse lien and to  
          designate a mobilehome for disposal without requiring the  
          management or other person enforcing the lien to pay past or  
          current vehicle license fees or to obtain a tax clearance  
          certificate.  This bill also authorized the management of a  
          mobilehome park to dispose of an abandoned mobilehome and its  
          contents without requiring the management to pay past or current  
          vehicle license fees or to obtain a tax clearance certificate.  

          AB 1457 (Keeley, Ch. 772, Stats. 2001) relieved certain  
          mobilehome park residents of additional property tax liability  
          for escape assessments when the assessor failed to act, and  
          forgave certain outstanding tax bills, but prohibited refunds.

          AB 984 (Correa, Ch. 23, Stats. 2000) See Background.

          SB 415 (Craven, Ch. 506, Stats. 1991) required that unless  
          specified liens in favor of the State of California are paid to  
          HCD, the department is prohibited from amending the permanent  
          title record of a commercial coach, truck camper, or floating  
          home which is the subject of the lien for the purpose of  







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          transferring any ownership interest or transferring or creating  
          any security interest thereon and is prohibited from issuing any  
          duplicate, substitute, or new certificate of title or  
          registration card.

          AB 2227 (Mays, Ch. 796, Stats. 1991) provides for a system of  
          taxing manufactured and mobilehomes first sold as new on or  
          after July 1, 1980.

           Prior Vote  :

          Senate Transportation and Housing Committee (Ayes 10, Noes 0)
          Assembly Floor (Ayes 78, Noes 0)
          Assembly Appropriations Committee (Ayes 17, Noes 0)
          Assembly Judiciary Committee (Ayes 10, Noes 0)
          Assembly Housing and Community Development Committee (Ayes 7,  
          Noes 0)

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