BILL ANALYSIS Ó
AB 587
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
587 (Chau)
As Amended August 15, 2016
2/3 vote
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|ASSEMBLY: |78-0 |(June 1, 2016) |SENATE: |35-3 |(August 22, |
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Original Committee Reference: H. & C.D.
SUMMARY: Creates a tax 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)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 the Department of Housing and Community
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Development's (HCD) 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
the abatement program.
2)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
vehicle license registration fee (VLF).
3)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.
4)Provides that, if the applicant is eligible for the abatement
program and the mobilehome is subject to the local property
tax (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
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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, 2020, 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,
2017. 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.
6)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
applicant.
7)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 given notice to the occupant of the registration
requirements and any registration fees due.
8)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 or an annual fee in lieu of
taxes to HCD; and adds that information on registration,
titling, and taxes can be found at HCD, with the county tax
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collector, or by calling the local county government.
9)Provides that the Legislature finds and declares that the
abatement of taxes, penalties, and interest incurred prior to
the date of sale of a mobilehome or manufactured home to an
applicant serves a public purpose and does not constitute a
gift of public funds.
10)States that if the Commission on State Mandates determines
that the bill contains costs mandated by the state,
reimbursement for those costs shall be made.
11)Provides that no appropriation is made and the state shall
not reimburse local agencies for property tax revenues lost by
them pursuant to the bill.
The Senate amendments:
1)Amend 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 or an annual fee in lieu of taxes to
HCD; and adds that information on registration, titling, and
taxes can be found at HCD, with the county tax collector, or
by calling the local county government.
2)Provide 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 HCD's registration requirements, provided that
HCD has given notice to the occupant of the registration
requirements and any registration fees due.
3)Delete the provision that prohibited eviction from a
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mobilehome park for nonconformance with the registration and
titling requirements of state law when an application for the
abatement program is filed before January 1, 2019, and the
nonconformance occurred prior to January 1, 2017.
4)Make several technical, clarifying changes.
FISCAL EFFECT: According to the Senate Appropriations
Committee:
1)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)
2)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)
3)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
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)
4)Unknown foregone local revenues as a result of the requirement
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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)
5)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)
COMMENTS: Background: HCD is responsible for the titling and
registration of mobilehomes. Homes that were purchased new
prior to July 1, 1980 were treated as vehicles and not subject
to LPT, but rather to an "in lieu" VLF paid annually to HCD.
Mobilehomes that were purchased after July 1, 1980 are generally
subject to LPT. Homeowners have the option to voluntarily
transfer their homes from the VLF system to the LPT system, but
not vice-versa.
Prior to transferring title of a mobilehome, a buyer of a home
on the LPT system must obtain a tax clearance certificate (TCC)
from the county tax collector indicating that all property taxes
have been paid. Similarly, if the mobilehome is on the VLF
system, all past due fees and penalties must be paid to HCD
prior to transfer of title, as well as a use tax. Regardless of
whether a mobilehome is on the VLF or LPT system, delinquent
fees or taxes prevent HCD from amending the title of that home.
If a buyer cannot pay, and the seller will not pay or cannot be
located, the buyer is left without legal proof of ownership of
the home, and HCD, the county tax collector, and the county tax
assessor may not have up-to-date ownership information for the
home. Nonconformance with HCD's titling requirements can cause
a number of issues. It could be the basis of an eviction from a
mobilehome park, as parks are prohibited from allowing homes
that do not conform to HCD's registration requirements in a
park. It also prevents owners from legally making repairs to
the home, insuring the home, and from transferring ownership of
the home to another party.
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Purpose of this bill: According to the author, the problem that
this bill seeks to address has been festering for over 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. The author contends that "[m]obilehomes
are an important source of affordable housing statewide, and
these homes 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."
This bill creates an abatement program to address the situation
where a buyer has already purchased a mobilehome, but is unable
to transfer title into his or her name due to delinquent fees or
taxes. Nonpayment of VLF constitutes a lien on the mobilehome
in favor of the state. Nonpayment of LPT means the county tax
collector may pursue collection of the delinquent LPT in the
same manner as other delinquent taxes on the unsecured roll.
Both of these scenarios prevent HCD from amending the title into
the new owner's name. If the buyer cannot pay the delinquent
charges associated with the home, and the seller does not agree
to pay or cannot be located, then the buyer cannot obtain legal
ownership.
Due to the sometimes informal nature of mobilehome sales, buyers
and sellers may not be aware that delinquent taxes and fees
prevent title from transferring. Sellers may not even be aware
that a delinquency exists because of, for example, limited
notification requirements for VLF delinquencies, or outdated
ownership information at the county or state level. In these
situations, a buyer may only become aware of the delinquency
when he or she tries to transfer title at HCD. If a seller does
not pay the delinquent fees or taxes and associated penalties,
and the buyer cannot pay them but has already purchased the
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mobilehome, they are left with few options other than to keep
the home with an outdated title.
The three-year abatement program proposed by this bill would
reduce specified past due taxes and fees by capping the amount
owed and waiving penalties and interest. According to the
author, this would encourage homeowners with outdated title to
come forward and apply to transfer title into their names,
thereby updating state and county records to ensure accurate VLF
and LPT billing in the future. The abatement program does not
relieve any owner other than the applicant from tax liability
arising from nonpayment prior to the date of sale to the
applicant, so a county tax collector would still have the
ability to collect these amounts, including fees and penalties,
from any owner other than the applicant.
Applicants for the abatement program would first be required to
prove ownership to the satisfaction of HCD and, upon payment of
any reduced charges assessed by HCD, or entry into a payment
plan, title would transfer for homes on the VLF system. For
homes on the LPT system, HCD would issue an applicant a
"conditional title" which the applicant would then bring to
their local county tax collector. Once the applicant pays the
reduced LPT due under the abatement program, the tax collector
would update their property tax records and issue a tax
liability certificate, which would perfect the transfer of title
once filed with HCD.
Senate amendments delete the provision that expressly prohibited
eviction from a mobilehome park for nonconformance with the
registration and titling requirements when an application for
the abatement program has been filed. However, the amendments
clarify that only after January 1, 2020 will it 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. Senate amendments also make several
technical changes, and specify additional information, including
information on registration, titling, and taxes, that must be
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included in a manufactured home park management's notice to
homeowners.
Arguments in 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.
Analysis Prepared by:
Rebecca Rabovsky / H. & C.D. / (961) 319-2085
FN:
0004352