BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 587|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
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                                   THIRD READING 


          Bill No:  AB 587
          Author:   Chau (D) 
          Amended:  8/15/16 in Senate
          Vote:     27 

           SENATE TRANS. & HOUSING COMMITTEE:  10-0, 6/14/16
           AYES:  Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,  
            McGuire, Mendoza, Roth
           NO VOTE RECORDED:  Wieckowski

           SENATE JUDICIARY COMMITTEE:  6-1, 6/28/16
           AYES:  Jackson, Anderson, Hertzberg, Leno, Monning, Wieckowski
           NOES:  Moorlach

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/11/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  78-0, 6/1/15 - See last page for vote

           SUBJECT:   Mobilehomes:  payments:  nonpayment or late payments


          SOURCE:    California Rural Legal Assistance Foundation
                               Golden State Manufactured-Home Owners  
               League
                               Western Center on Law and Poverty

          
          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.









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          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 a  
               copy can be obtained from management at no charge.

             b)   A list of rights and responsibilities for homeowners and  
               park management, including but not limited to the  
               following: management may require certain upgrades; the  
               sale of a mobilehome; management's rights to enter the  
               space upon which a mobilehome resides and for what purpose;  
               and rules and regulations for improvements or alterations  
               to a mobilehome.

          2)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).   
            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.  The county tax collector shall issue a  
            TCC to a mobilehome owner if specified requirements are met.   
            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. 

          4)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.   
            Management of a mobilehome park may terminate a tenancy for  
            failure of the homeowner or resident to comply with a local  







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            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.  

          5)Prohibits any person from using or causing to be used, or  
            permitting to be used for occupancy, a mobilehome that does  
            not conform to HCD's registration requirements.  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: adds that when a mobilehome is sold, the owner  
            is required to transfer the title to the buyer; adds that in  
            California, mobilehome owners must pay annual property tax to  
            the county tax collector fee in lieu of taxes to HCD; and 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. 

          2)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 times 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 program has  
               been satisfied.
             f)   The applicant has not previously filed for relief under  







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               this section. 

          3)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.  

          4)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.  

          5)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.  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 and meets the requirement of the  
            abatement program. 

          6)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.  Upon the issuance of a tax liability certificate, the  
            applicant shall be listed as the owner of record for all LPT  
            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 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  







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            applicant.
          
          8)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. 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 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  







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            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 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. This 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  







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            requirements, provided that HCD has provided notice to the  
            occupant of the registration requirements and any registration  
            fees due.

          4)Opposition.  The California Association of County Treasurers  
            and Tax Collectors (CATTC) oppose 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, this bill would remove the fiscal incentive to pay  
            taxes in a timely manner.  The California State Association of  
            Counties proposes reducing the length of the program to two  
            years, 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. 


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes
          
          According to the Senate Appropriations Committee:  
          
           HCD administrative costs of approximately $360,000 annually  
            for three years to process an estimated 10,000 titling and  
            registration applications each year for the duration of the  
            program.  These costs would likely be offset by application  
            fee revenues.  (Mobilehome-Manufactured Home Revolving Fund)

           Unknown, potentially significant, foregone state revenues a  
            result of the requirement that HCD waive specified past due  
            charges, fees, and penalties if an applicant meets specified  
            requirements.  This impact would be partially mitigated to the  
            extent a portion of these revenues would have otherwise  
            remained uncollected in the absence of the abatement program.   
            (General Fund, various mobilehome-related special funds)  

           Unknown significant foregone property tax revenues as a result  
            of the specified limit on the amount of delinquent taxes that  
            an applicant would pay to the county tax collector in exchange  
            for a tax clearance or liability certificate.  This impact  







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            would be partially mitigated to the extent a portion of these  
            revenues would have otherwise remained uncollected in the  
            absence of the abatement program.  Senate Appropriations staff  
            notes that any impacts to the K-14 school share of the  
            property tax revenues are generally backfilled by the State  
            General Fund.  (General Fund, local funds)  

           Unknown foregone local revenues as a result of the requirement  
            that county tax collectors waive all property tax penalties  
            and interest that would otherwise be owed by eligible  
            participants in the abatement program. (local funds)

           Unknown reimbursable state-mandated local costs for county tax  
            collectors to establish administrative procedures and issue  
            tax clearance or liability certificates to eligible  
            participants in the abatement program.  (General Fund)




          SUPPORT:   (Verified8/12/16)


          California Rural Legal Assistance Foundation (co-source)
          Golden State Manufactured-Home Owners League (co-source)
          Western Center on Law and Poverty (co-source)
          Cabrillo Wetland Village HOA, Inc.
          Educational Community for Homeowners 
          Fountain Valley Estates Homeowners Association
          Golden State Manufactured-home Owners League, Chapter 1128
          Golden State Manufactured-home Owners League, Chapter 708 
          Golden State Manufactured-home Owners League, Chapter 776
          Golden State Manufactured-home Owners League, Sonoma Valley
          Los Casas Homeowners 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







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          Sea Oaks Mobilehome Park Homeowners Association
          Sierra Homeowners Association
          Trico Mobile Estates Homeowners Association
          188 individuals


          OPPOSITION:   (Verified8/12/16)


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

          ASSEMBLY FLOOR:  78-0, 6/1/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,  
            Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark  
            Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams,  
            Wood, Atkins
          NO VOTE RECORDED:  Gipson, Obernolte

          Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
          8/15/16 20:10:01


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