BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 1938 (Williams)
As Amended May 17, 2012
Hearing Date: June 26, 2012
Fiscal: No
Urgency: No
BCP:rm
SUBJECT
Mobilehomes: Rental Agreements
DESCRIPTION
Existing law allows a homeowner in a mobilehome park to void a
long-term lease within 72 hours of the homeowner's execution of
the agreement. This bill would, instead, generally allow a
homeowner to void the agreement within 72 hours of receiving a
copy of the signed agreement.
This bill would also expand the existing prohibition on park
management passing through various fines, fees, or damages
assessed by a court relating to violations of the Mobilehome
Residency Law to also cover violations of the Mobilehome Park
Act and amounts assessed by enforcement agencies.
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.
To protect mobilehome park residents from rent increases on the
property underlying their home, over 100 jurisdictions in
California have enacted some form of rent control. Although
(more)
AB 1938 (Williams)
Page 2 of ?
mobilehome parks are not subject to the Costa-Hawkins Rental
Housing Act (which restricts the use of rent control in other
residential properties), the MRL does limit the application of
rent control in certain circumstances, including if the rental
agreement is longer than 12 months. For homeowners who elect to
sign those rental agreements (which are exempt from rent
control), existing law requires a homeowner to have at least 30
days to accept or reject the agreement from the time it is first
offered, and, permits a homeowner to void the agreement within
72 hours of execution.
In response to concerns about management returning executed
agreements after the 72-hour rescission timeframe, this bill
seeks to allow a homeowner to void the agreement within 72 hours
of actually receiving a copy of the executed agreement. This
bill would also expand the existing prohibition on park
management passing through various fines, fees, or damages
assessed by a court relating to violations of the MRL to also
cover violations of the Mobilehome Park Act, and amounts
assessed by enforcement agencies.
CHANGES TO EXISTING LAW
1. Existing law requires mobilehome rental agreements to be in
writing and to include, in addition to any other provisions
required by law: (1) the term of the tenancy and the rent
thereof; the rules and regulations of the park; (2) the
relative responsibilities of mobilehome park management and
owners to maintain the physical property; (3) a provision
listing any services that will be provided and the fees to be
charged for those services; (4) a provision stating that
management may charge a reasonable fee for services relating
to maintenance in the event that the homeowner fails to
maintain the land or premises in accordance with the rules and
regulations; and (5) all other provisions governing the
tenancy. (Civ. Code Sec. 798.15.)
Existing law provides that a copy of the Mobilehome Residency
Law (MRL) be attached to the agreement, and that homeowners
must be notified of any changes to this law, as specified.
(Civ. Code Sec. 798.15.)
Existing law 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. (Civ. Code Sec. 798.16.)
AB 1938 (Williams)
Page 3 of ?
Existing law provides that a rental agreement in a mobilehome
park in excess of 12 months' duration 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. (Civ.
Code Sec. 798.17 (a).)
Existing law gives a homeowner at least 30 days from the date
when a rental agreement in excess of 12 months is first
offered to accept or reject the agreement, and permits the
homeowner to void the agreement by notifying management in
writing within 72 hours of the homeowner's execution of the
agreement. Existing law requires management, at the time the
agreement is first offered, to provide the homeowner with
written notice of the homeowner's right to have 30 days to
inspect the rental agreement and the homeowner's right to void
the agreement up to 72 hours after execution. Failure to
provide this notice makes the agreement voidable at the
homeowner's option. (Civ. Code Sec. 798.17 (b), (f).)
AB 1938 (Williams)
Page 4 of ?
This bill would revise the above ability to void a contract
within 72 hours, as follows:
If management provides the homeowner with a copy of the
signed rental agreement at the time the homeowner returns
the agreement, a homeowner may void the agreement by
notifying the management within 72 hours of returning the
signed agreement.
If management does not provide a homeowner with a copy
of the agreement at the time the borrower returns the
signed agreement, a homeowner may void the agreement within
72 hours of receiving an executed copy of the agreement.
This bill would conform the required written notice of the
homeowner's right to void the agreement within 72 hours to the
above changes.
2. Existing law 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 MRL. (Civ. Code Sec.
798.39.5.)
This bill would extend the above provisions to fines, fees, or
damages assessed or awarded by the court or an enforcement
agency against the management for a violation of the MRL or
the Mobilehome Parks Act.
The bill would clarify that these provisions do not apply to
violations for which the registered owner of the mobilehome is
initially responsible, as specified.
COMMENT
1. Stated need for the bill
According to the author:
This bill will address �several] consumer protection issues
that have arisen in mobilehome park leases. Current law
allows a park owner to offer a long-term lease (these leases
can be 1-10 years in length or more) to manufactured
homeowners. Since a homeowner is bound to such a lease for
a very long time, it is critical that the homeowner have
adequate information about the terms of the lease.
AB 1938 (Williams)
Page 5 of ?
�First, this] bill will ensure that homeowners have the
protections of existing law which allows homeowners who have
signed a long-term lease to rescind the agreement within the
first 72 hours by clarifying when the 72-hour rescission
right window begins. . . . .
Second, under a long-term lease, a homeowner may be subject
to many possible "passthroughs", additional fees or charges,
in addition to rent that the long-term lease provides for.
These passthroughs are intended to allow the parkowner to
recapture any costs or losses incurred by the parkowner in
the future. However, it is generally against public policy
to allow a parkowner to provide for a recapture of a
judgment obtained by the park residents against the park
owner for actions that harm the residents. The law already
prohibits such passthroughs for violations of the
�Mobilehome Residency Law]; this bill would expand that
prohibition to include judgments for violation of the
Mobilehome Parks Act (MPA).
2. Meaningful right of rescission
As noted above, residents of mobilehome parks generally own
their home but lease the land upon which the home is installed.
Lease agreements that are longer than 12 months are exempt from
rent control, and pursuant to existing law, homeowners must have
at least 30 days to accept the lease agreement and have a right
to void the rental agreement within 72 hours of execution
(signing). Park management must provide written notice of those
rights to the homeowner at the time the rental agreement is
first offered to the homeowner.
In order to strengthen those protections for homeowners who may
elect to sign a long-term lease, this bill would, instead, allow
homeowners to void the lease within 72 hours of (1) returning
the signed agreement to management, if management provides a
copy of the agreement at that time or (2) receiving an executed
copy of the rental agreement. Thus, the 72 hour time period for
voiding the lease would essentially start upon receiving a copy
of the lease, not upon execution. In support of the need to
72-hour timeframe at receipt of the lease as opposed to
execution, the author states:
Currently, most homeowners do not receive a copy of the
rental agreement when they sign it, and pursuant to 798.16
(b) park management has no obligation to return an executed
AB 1938 (Williams)
Page 6 of ?
copy to the homeowner until 15 business days after its
signature. This delay essentially frustrates the rescission
right, and renders it moot, since it is not reasonable to
expect that a homeowner can recall the content of all that
he or she signed from memory. Thus, rescission rights are
often forgotten or exercised belatedly once the written
agreement is provided to the homeowner and they see in black
and white what they have signed.
From a practical standpoint, any homeowner who wants to void his
or her lease would likely first review the lease to see what
options that he or she has in that situation. For homeowners
who elect to reread their lease after receiving the executed
copy from park management, the revised timeframe would
essentially give them 72 hours to do so and void the agreement
if an objectionable provision was found.
It should also be noted that while existing law requires park
management to return a copy of the executed lease within 15
business days after receiving the signed agreement, nothing
precludes management from immediately providing a copy to the
homeowner, thus, starting the 72 hour right to void the lease.
3. Pass through charges
Under existing law, park management cannot pass through the cost
to management of any fine, forfeiture, penalty, money damages,
or fee assessed or awarded by a court against the management for
a violation of the MRL. That prohibition arguably ensures that
the residents of the park do not ultimately end up paying for
the violations committed by the persons running the park.
This bill would expand that prohibition to also include fines,
penalties, or fees assessed or awarded by an enforcement agency
and apply the prohibition to violations of the MPA. In support
of that expansion, the author writes:
Allowing landlords to pass through judgments, allows them to
potentially recoup judgments from the very people who were
awarded the judgment. For example, if homeowners are forced
to take the park owner to court for failing to make repairs
at the park, this provision would allow the park owner to
immediately turn to those same homeowners to recoup the
value of the judgment the homeowners had successfully
obtained from a court.
AB 1938 (Williams)
Page 7 of ?
It should be noted that the MPA includes various requirements,
including that the Department of Housing and Community
Development (or city and county has assumed responsibility for
enforcement) must inspect parks where complaints have been made
regarding serious health and safety violations. (Health & Saf.
Code Sec. 18400.1 (b).) By expanding the prohibition to also
prevent management from passing through the cost of violating
the MPA, this bill would further appear to ensure that residents
are not required to pay for the cost of violations by park
management.
Support : California Rural Legal Assistance Foundation;
Coalition for Economic Survival; Western Center on Law & Poverty
Opposition : None Known
HISTORY
Source : Golden State Manufactured-Home Owners League
Related Pending Legislation : None Known
Prior Legislation : None Known
Prior Vote :
Assembly Housing & Community Development Committee (Ayes 5, Noes
2)
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Floor (Ayes 73, Noes 2)
**************