BILL ANALYSIS �
AB 1938
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Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 1938 (Williams) - As Amended: April 18, 2012
SUBJECT : Mobilehomes: rental agreements.
SUMMARY : Makes changes to the laws governing rental agreements
in mobilehome parks. Specifically, this bill :
1)Requires rental agreements in excess of 12 months' duration to
include a summary page attached to the front of the rental
agreement entitled "Summary Page of Rent, Utilities and Other
Charges" that clearly and concisely summarizes each financial
or monetary charge the homeowner shall be liable for during
the term of the rental agreement, including, but not limited
to, any amounts to be paid for annual rent increases, the
pass-through of any expense amount as part of rent, utilities,
known incidental reasonable charges for services actually
rendered, rent increases intended to take effect upon the sale
or transfer of the mobilehome, or any other rent increases
that can be obtained during the term of the rental agreement.
2)Prohibits a rental agreement from containing any provision
that authorizes the management to increase the amount of rent
to be paid by the homeowner, or to separately charge the
homeowner, for any of the following:
a) Losses incurred by a park owner that are not fully
compensated by insurance.
b) Losses or expenses that a park owner is ordered by any
court or arbitrator to pay as damages or to compensate any
person or group of persons, because of any claim, lawsuit,
arbitration, or administrative action brought against the
park or park owner that for any reason is not paid by
insurance.
3)Specifies that a homeowner has 72 hours from the time the
homeowner receives an executed copy of a rental agreement to
void the agreement.
EXISTING LAW
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1)Specifies that a rental agreement in a mobilehome park in
excess of 12 months' duration that is entered into between the
management and a homeowner for the personal residence of the
homeowner is exempt from any ordinance, rule, regulation, or
initiative measure adopted by any local governmental entity
that establishes a maximum amount that a landlord may charge a
tenant for rent (Civil Code Section 798.17).
2)Provides that a homeowner shall have at least 30 days from the
date the rental agreement is first offered to accept or reject
the rental agreement (Civil Code Section 798.17).
3)Specifies that a homeowner who executes a long-term rental
agreement may void the agreement by notifying management in
writing within 72 hours of the homeowner's execution of the
rental agreement (Civil Code Section 798.17).
4)Specifies that at the time a long-term rental agreement is
first offered to the homeowner, the management shall provide
written notice to the homeowner of the homeowner's right (1)
to have at least 30 days to inspect the rental agreement, and
(2) to void the rental agreement by notifying management in
writing within 72 hours of the acceptance of a rental
agreement (Civil Code Section 798.17).
5)Requires management to return an executed copy of the rental
agreement to the homeowner within 15 business days after
management has received the rental agreement signed by the
homeowner (Civil Code Section 798.16).
6)Prohibits management from charging or imposing upon a
homeowner any fee or increase in rent that reflects the cost
to the management of any fine, forfeiture, penalty, money
damages, or fee assessed or awarded by a court of law against
the management for a violation of the Mobilehome Residency
Law, including any attorney's fees and costs incurred by the
management in connection therewith (Civil Code Section
798.39.5).
7)Defines "homeowner" as a person who has a tenancy in a
mobilehome park under a rental agreement (Civil Code Section
798.9).
FISCAL EFFECT : None
COMMENTS :
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There are approximately 4,822 mobilehome parks and manufactured
housing communities in California, with an estimated 700,000
residents living in these parks. In the majority of parks,
mobilehome residents own their homes but rent the spaces on
which their homes are installed. "Mobilehome" is something of a
misnomer in that once installed in a park, it is very rare for a
mobilehome to be moved. This is due to both the difficulty and
cost involved, and also because the supply of mobilehome spaces
is very limited, vacancies are rare, and most park owners do not
allow the installation of older mobilehomes in their parks.
Over 100 jurisdictions in California have some form of local
rent control ordinance limiting the amount of rent or
establishing a maximum amount of rent that the management of a
mobilehome park may charge a tenant. However, under existing
law, long-term rental agreements, those with a term longer than
twelve months, are exempt from local rent control.
According to AB 1938's sponsor, the Golden State
Manufactured-Home Owners League (GSMOL), the number of
long-term leases in mobilehome parks has seen a steady increase
in both rent-controlled and non-rent controlled jurisdictions.
These leases, which commonly run anywhere from two to ten years,
can have advantages for both the homeowner and the park
management. However, they can also be long and more complicated
than a one-year rental agreement.
AB 1938 contains a number of provisions related to long-term
leases in mobilehome parks aimed at making such rental
agreements more consumer-friendly. First, the bill requires all
long-term leases to include a cover sheet that clearly and
concisely summarizes all of the charges that the homeowner will
be liable for during the course of the lease. A long-term lease
typically includes authorizations for various charges scattered
throughout the document. This provision would allow a homeowner
to see all charges for which they will be responsible, such as
annual rent increases, pass-throughs for various expenses,
utilities, and service charges, in one place.
Additionally, AB 1938 specifies that the 72-hour window that
homeowners have to void a long-term lease does not begin until
the homeowner receives the executed lease from the management.
Under current law, a homeowner has 72 hours to void a lease once
signed. "Homeowner" is defined is a person who has a tenancy in
AB 1938
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a mobilehome park under a rental agreement; in other words, an
existing park resident. Current law also gives park management
15 business days to return a copy of the executed lease to the
homeowner. Thus, the window of opportunity for a homeowner to
void the lease without penalty closes 12 days before the park
management is required to provide the homeowner with a copy of
the fully executed lease. This bill starts the 72-hour clock
after the homeowner receives the executed lease.
Finally, AB 1938 prohibits a long-term lease from containing a
provision authorizing park management to pass on to homeowners
costs related to uninsured losses or damages the park owner is
ordered to pay by a court or arbitrator. Existing law already
prohibits park owners from passing on damages imposed by a court
under the Mobilehome Residency Law, which governs the
relationship between landlords and tenants in mobilehome parks,
but does not cover damages awarded under other provisions of
law.
Staff Comments
With respect to the cover sheet summarizing charges, the
Committee may wish to ask the author to specify that in the
event there is an error in the cover sheet that conflicts with
the terms of the lease, the lease shall be the prevailing
document.
While the provision prohibiting park owners from passing through
uninsured losses is aimed at preventing owners from purposely
underinsuring their parks, it could result in park owners
overinsuring instead. Because insurance costs can be passed on
to residents, overinsuring may actually prove more costly to
park residents over the long term than uninsured losses. The
Committee may wish to consider asking the author to remove this
provision.
With respect to the provision prohibiting the pass-through of
any damages imposed on the park owner by any court or arbitrator
for any claim brought against the park, the Committee may wish
to consider whether this provision is overly broad. The
Committee may wish to consider asking the author to strike this
provision and instead expand the existing prohibition on passing
through judgments against park owner under the Mobilehome
Residency Law to also include judgments under the Mobilehome
Parks Act, which governs health and safety conditions in
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mobilehome parks.
Committee Amendments
1.Add language clarifying that in the event that the summary of
charges is inconsistent with the terms of the lease, the lease
shall prevail.
2.Delete the prohibition on including a provision in a rental
agreement authorizing the pass-through of uninsured losses and
narrow the prohibition on passing through court-imposed
damages to damages under the Mobilehome Parks Act.
3.Rewrite the language relating to the 72-hour rescission right
as follows to improve clarity:
On page 5, amend lines 13-17 as follows:
(4) The homeowner who executes a rental agreement offered
pursuant to this section may void the rental agreement by
notifying management in writing within 72 hours of the
homeowner's execution of a written acknowledgment indicating
that the homeowner has received an of receipt of an executed
copy of the rental agreement as required pursuant to Section
798.16.
Double referred :
If AB 1938 passes this committee, the bill will be referred to
the Committee on Judiciary.
REGISTERED SUPPORT / OPPOSITION :
Support
Golden State Manufactured Homeowner's League (sponsor)
California Rural Legal Assistance foundation
Western Center on Law and Poverty
Opposition
California Mobilehome Parkowners Alliance
Western Manufactured Housing Communities Association
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
AB 1938
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319-2085