BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2015-2016 Regular Session SB 419 (McGuire) Version: April 27, 2015 Hearing Date: May 12, 2015 Fiscal: No Urgency: No TH SUBJECT Mobilehomes: Homeowners: Sale DESCRIPTION Existing law, the Mobilehome Residency Law, regulates the advertisement, rental, and sale of mobilehomes in a mobilehome park. This bill would amend the Mobilehome Residency Law to authorize the seller of a mobilehome to display a "for sale" sign of a generally accepted yard-arm type design or L-frame design, would allow for the display of an "open house" sign and the holding of an open house in accordance with park rules, would require the management of a mobilehome park, upon request, to provide in writing the information and standards management will use to review a prospective homeowner, and would specify that park management may withhold approval of a prospective homeowner for reasons based upon fraud, deceit, or concealment of material facts. BACKGROUND Enacted in 1978, the Mobilehome Residency Law (MRL) governs the relationship between park owners or managers and the residents of the 4,800+ mobilehome parks and manufactured housing communities in California. In most of those parks, residents own their home but lease the land on which their home is installed. Although they have historically been called "mobilehomes," it is very difficult to actually move a mobilehome once it has been installed in a park. Mobilehome parks generally offer two types of tenancy; the first SB 419 (McGuire) Page 2 of ? being where the park rents a plot of land and associated services to the owner of a mobilehome; and the second being where the park itself owns the mobilehome and rents it to tenants. For park tenants who own their own mobilehome, the sale of the home is more complicated than the sale of an "ordinary" home because the prospective purchaser must also reach agreement with park management on a tenancy agreement before purchasing the mobilehome. To prevent park management from taking unfair advantage of its power to approve new tenants, the MRL significantly regulates park management's conduct during a pending sale. This bill would make minor changes to the MRL as follows: authorizes sellers to hold an "open house," and clarifies that a park may establish by rule or regulation reasonable rules governing how an open house may be conducted, including rules regarding hours and parking; authorizes sellers to display L-frame or generally accepted yard-arm type design signs indicating that a mobilehome is for sale; requires the management of the park, upon request, to provide in writing the information and standards that will be used to determine if a prospective homeowner will be acceptable as a homeowner in the park; specifies that management approval of a prospective homeowner may be withheld for reasons based upon fraud, deceit, or concealment of material facts by the prospective purchaser without liability; and makes other technical changes to existing law. CHANGES TO EXISTING LAW 1.Existing law , the Mobilehome Residency Law (MRL), governs the relationship between park owners or managers and the residents in mobilehome parks and manufactured housing communities. (Civ. Code Sec. 798 et seq.) Existing law provides that a homeowner, an heir, joint tenant, or personal representative of the estate who gains ownership of a mobilehome in the mobilehome park through the death of the owner, or the agent of any such person, may advertise the sale or exchange of his or her mobilehome, or, if not prohibited by the terms of an agreement with the management, may advertise the rental of his or her mobilehome, by displaying a sign in the window of the mobilehome, or by a SB 419 (McGuire) Page 3 of ? sign posted on the side of the mobilehome facing the street, or by a sign in front of the mobilehome facing the street. Existing law provides that any such person also may display a sign conforming to these requirements indicating that the mobilehome is on display for an "open house," unless the park rules prohibit the display of an open house sign. (Civ. Code Sec. 798.70.) This bill would strike the provision allowing a park to prohibit the display of an open house sign, and would instead provide that a park may establish by rule or regulation reasonable rules governing how an open house may be conducted, including rules regarding hours and parking. 2.Existing law specifies that signs posted in front of a mobilehome pursuant to the MRL may be of an H-frame or A-frame design with the sign face perpendicular to, but not extending into, the street. (Civ. Code Sec. 798.70.) This bill would provide, in addition to the above, that signs posted in front of a mobilehome pursuant to the (MRL) may be of an L-frame or generally accepted yard-arm type design. 3.Existing law specifies that the management of a mobilehome park shall prohibit neither the listing nor the sale of a manufactured home or mobilehome within the park by the homeowner, an heir, joint tenant, or personal representative of the estate who gains ownership of a manufactured home or mobilehome in the mobilehome park through the death of the owner, or the agent of any such person other than the management. (Civ. Code Sec. 798.71(b).) This bill would specify that for purposes of the above section, "listing" includes advertising the address of the home to the general public. 4.Existing law states that upon request of any prospective homeowner who proposes to purchase a mobilehome that will remain in the park, management shall inform that person of the information management will require in order to determine if the person will be acceptable as a homeowner in the park. (Civ. Code Sec. 798.74.) This bill would provide that a selling homeowner may also request information pursuant to the section above, that SB 419 (McGuire) Page 4 of ? management's response to such a request must be in writing, and, in addition to the information specified above, management shall also inform the requesting party of the standards that will be utilized in determining if the person will be acceptable as a homeowner in the park. 5.Existing law provides that within 15 business days of receiving all of the information requested from a prospective homeowner, the management shall notify the seller and the prospective homeowner, in writing, of either acceptance or rejection of the application, and the reason if rejected. Existing law provides that if the approval of a prospective homeowner is withheld for any reason other than those stated in the MRL, the management or owner may be held liable for all damages proximately resulting therefrom. This bill would state that the approval of a prospective homeowner may also be withheld for reasons based upon fraud, deceit, or concealment of material facts by the prospective purchaser without the management or owner being held liable for damages proximately resulting therefrom. This bill would also make technical and conforming changes to the MRL. COMMENT 1.Stated need for the bill The author writes: Mobilehome and manufactured home owners have an inherent disadvantage when it comes to selling their home. Unlike traditional [homeowners], who have the ability to line the street with for sale signs, mobilehome owners must actively court additional attention from buyers. The Mobilehome Residency Law needs to be updated to give sellers a more broad ability to advertise- both on site and publicly. Additionally, the process of allowing mobilehome park owners and management to decide whether the prospective owner has been cleared for residency in the final phase of a transaction SB 419 (McGuire) Page 5 of ? lacks transparency and can seem arbitrary to both the seller and purchaser. SB 419 will do four things. First, it would modernize California's Mobilehome Residency Law to allow a seller to advertise the sale of a home in a manner consistent with generally accepted yard sign designs, rather than be limited to only an "A" or "H" frame design. For example, this bill would allow, but not limit sellers to, an "A", "H", or "L" shaped sign. Current law already allows these signs to contain the name, address, and telephone number of the owner of the mobilehome or his or her agent, so long as the sign face does not exceed 24 inches in width and 36 inches in height, and this bill would keep those requirements the same. Second, this bill would guarantee the seller's ability to advertise an open house, with appropriate limits. Third, SB 419 would require management to notify the seller in writing what their standards are and what additional information they require to accept the new resident into the mobilehome park. Finally, this bill makes non-substantive clean up changes to the Mobilehome Residency Law, including clarifying what constitutes a "listing" . . . 2.Improving Sale Efficiency and Transparency This bill would make a series of minor changes to the Mobilehome Residency Law (MRL) regarding the sale and purchase of mobilehomes in a mobilehome park. As noted in the Background, the MRL strictly regulates the sale of mobilehomes in an effort to prevent park management from taking unfair advantage of its power to approve new tenants. Unlike traditional home sales, the sale of a mobilehome is often a three-party transaction. Not only do the buyer and seller have to agree to the terms of the sale of the home, but mobilehome park management must also approve the buyer for residency in the park. Many of the changes proposed in this bill would modernize the MRL's sale provisions so that they track existing practices for selling other real property, such as authorizing sellers to hold an "open house" or display a yard-arm type sign in front of their property. Additionally, this bill would improve transparency for both buyers and sellers by requiring park management, upon request, to disclose the criteria by which new tenants are deemed acceptable become homeowners in a park. The Ranch Club Mobile Estates Homeowners Association, in support, SB 419 (McGuire) Page 6 of ? states that this bill "would increase transparency for both buyers and sellers regarding park admission standards for new buyers by requiring the clear disclosure of income and eligibility requirements." 3.Clarifying Amendment This bill would provide that upon the request of any selling homeowner or prospective homeowner who proposes to purchase a mobilehome that will remain in a mobilehome park, management shall inform that person, in writing, of the information management will require and the standards that it will use to determine if a person will be acceptable as a homeowner in the park. The author offers the following amendment to clarify that such a request must also be made in writing. Author's Amendment : On page 7, line 31, following "upon" insert: "written" Support : El Toro Mobile Estates GSMOL Chapter 999; GSMOL Chapter 708; GSMOL Chapter 1128; GSMOL Homeowners Association, San Joaquin Village Mobile Home Park; Northern Santa Barbara County Manufactured Homeowners Team; Oceanside Manufactured Homeowners Alliance; Orcutt Ranch Home Owners Association; Prothero Mobile Estates Homeowners' Association; Ranch Club Mobile Estates Homeowners Association; Sandpiper Homeowner's Association; Santa Cruz County Manufactured/Mobile Homeowners Association; Santee Mobilehome Owner's Action Committee; Sonoma Valley GSMOL; Trico Mobile Estates Homeowners Association; multiple individuals Opposition : None Known HISTORY Source : Golden State Manufactured Home Owners League (GSMOL) Related Pending Legislation : SB 244 (Vidak, 2015) would extend indefinitely the authority of the management of a mobilehome park to file a motion petition for an order to enjoin violations of a reasonable rule or regulation of the mobilehome park within the limited SB 419 (McGuire) Page 7 of ? jurisdiction of the superior court. This bill is pending referral in the Assembly Rules Committee. AB 999 (Daly, 2015) would you authorize the management of a mobilehome park to sell or dispose of a mobilehome left upon the premises by a tenant or lienholder under specified circumstances. This bill would require the landlord, prior to disposing of the mobilehome, to provide written notice to the tenant and owner, and would specify that the management of a mobile home park need not obtain a tax clearance certificate to dispose of an abandoned mobilehome. This bill is pending in the Assembly Appropriations Committee. Prior Legislation : SB 804 (Leno, Ch. 66, Stats. 2009) prohibited the management of a mobilehome park from requiring a homeowner to use a specific broker, dealer, or other person as an agent in the purchase or installation of a replacement home. SB 1090 (Dunn, Ch. 567, Stats. 2004) prohibited the management of a mobilehome park from requiring a homeowner, or an heir, joint tenant, or personal representative of a mobilehome to use a specified agent of the management in the sale of the home as a condition of resale. AB 2026 (Stone, 2014) would have, among other things required the management of a mobilehome park to provide a prospective purchaser with a list of information that management will require in order to determine if the person will be acceptable as a homeowner in the park and a copy of the current written procedures, standards, or requirements that will be used by management to evaluate the purchaser's application. This bill would have also required the management, if a prospective homeowner is denied approval and if requested, to meet with the purchaser or homeowner at which time the management would be required to reconsider the denial, including any additional information relevant to the application provided by the prospective homeowner. This bill died on the Assembly Floor. ************** SB 419 (McGuire) Page 8 of ?