BILL ANALYSIS �
AB 2026
Page 1
Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB 2026 (Stone) - As Amended: April 21, 2014
SUBJECT : Mobilehome parks: sales.
SUMMARY : Creates a standard that mobilehome park owners must
use in determining a prospective mobilehome purchaser's
financial ability to pay the rent and park charges and the
likelihood a purchaser will comply with park rules and
regulations. Specifically, this bill :
1) Requires that, upon request of a prospective purchaser
of a mobilehome that will remain in the park, management
must provide a list of the information it requires in order
to determine if the person will be acceptable as a
homeowner in the park, together with a copy of the current
written procedures, standards or requirements that
management will use to evaluate the purchaser's
application.
2) Requires that, for purposes of approving a mobilehome
purchaser, a purchaser is presumed to have the financial
ability to pay the rent and park charges if he or she has
been approved by a state or federally chartered financial
institution for a loan to purchase the mobilehome that the
purchaser intends to occupy, and written documentation of
this approval has been provided to park management.
3) Provides that, where the purchaser has not been approved
for a loan to purchase the mobilehome, management must
determine the purchaser's financial ability to pay the rent
and charges of the park based upon consideration of all
asset and income producing information provided by the
purchaser.
4) Provides that management's income standard for a
prospective purchaser must not exceed a multiplier of three
times the purchaser's income over the projected
housing-related expenses of the proposed mobilehome
tenancy.
5) Provides that a purchaser who demonstrates sufficient
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monthly income from all sources that meets or exceeds the
income standard disclosed by management is presumed to have
the financial ability to pay the rent and charges of the
park.
6) Prohibits park management from withholding approval of a
purchaser on the basis that the purchaser will not comply
with the rules and regulations of the park unless
management provides the purchaser with documentary evidence
that the purchaser has failed to comply with the rules and
regulations during a previous tenancy within the three
years preceding the application for tenancy.
7) Prohibits park management from withholding approval of a
mobilehome purchaser solely because the purchaser owns
another mobilehome or real property residence, and
prohibits management from requiring that the mobilehome be
the sole residence of the purchaser.
8) Clarifies that, if a purchaser's application is denied,
management must notify the purchaser in writing of the
specific reason or reasons for the denial.
9) Provides that, if a purchaser's application is denied,
the selling homeowner and the purchaser may, within five
business days of receiving the denial, request an in-person
meeting with management. This meeting must take place
within ten days, at which time management must reconsider
its denial based upon any additional information the
purchaser provides.
10) Provides that, if the approval of a purchaser is
withheld for any unauthorized reason, the management or
owner may be held liable for all damages to both the
selling homeowner and the prospective purchaser proximately
resulting therefrom.
11) Provides that, if a mobilehome that will remain in the
park is transferred or sold, management may only require
repairs or improvements to the exterior of the mobilehome
as determined following an inspection by the appropriate
enforcement agency.
EXISTING LAW:
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1) Regulates, pursuant to the Mobilehome Residency Law
(MRL), the rights, responsibilities, obligations, and
relationships between mobilehome park management and park
residents. (Civil Code Section 789, et seq.)
2) Provides that the management of a mobilehome park may
require prior approval of a purchaser of a mobilehome that
will remain in the park. (Civil Code Section 798.74)
3) Provides that management cannot withhold approval of a
purchaser's application for residency if the purchaser has
the financial ability to pay the rent and charges of the
park, unless management reasonably determines that the
purchaser, based on his or her prior tenancies, will not
comply with the rules and regulations of the park. (Civil
Code Section 798.74)
4) Authorizes management to require the purchaser to
document the amount and source of his or her gross monthly
income or other means of support, but prohibits management
from requiring personal income tax returns in order to
obtain approval for residency in the park. (Civil Code
Section 798.74)
5) Provides that a park management or owner may be held
liable for all damages if the approval of a prospective
purchaser is withheld for any unauthorized reason. (Civil
Code Section 798.74)
6) Provides that, in the case of a sale or transfer of a
mobilehome that will remain in the park, management may
require repairs or improvements to the exterior of the
mobilehome if they are based upon or required by a local
ordinance or state statute or regulation, or a rule or
regulation of the mobilehome park implementing such a law.
(Civil Code Section 798.73.5)
7) Exempts any mobilehome that is not the principal
residence of the homeowner and that has not been rented to
another party from rent control. (Civil Code Section
798.21)
8) Specifies that a mobilehome is considered the homeowners
principal residence unless the homeowner is receiving a
homeowner's exemption for another property or mobilehome in
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California, or unless a review of public records reasonably
demonstrates that the principal residence of the homeowner
is out of state. (Civil Code Section 798.21)
FISCAL EFFECT : Unknown
COMMENTS :
More than 700,000 people live in California's approximately
4,700 mobilehome parks. The cost to move a mobilehome ranges
from $2,000 to upwards of $20,000 depending on the size of the
home and the distance traveled. A mobilehome owner whose home
is located in a mobilehome park does not own the land the unit
sits on, and he or she must pay rent and fees for the land and
any community spaces. In order to sell a mobilehome located in
a park, potential buyers must be approved by park management.
Homeowners trying to sell their home are therefore reliant on
park management to approve the buyer so that the sale can be
completed.
Purpose of the bill:
According to the author, park management is not limited in the
number of potential buyers they can reject, which places
pressure on homeowners to find a buyer that qualifies under the
standards set in place by management. The author explains that
"most standards are not set or regulated by the state and can
vary widely from park to park. As a result, responsible and
trustworthy potential buyers can be unfairly turned away." This
bill "seeks to protect home owners from unreasonable standards
set by mobilehome park owners" by standardizing certain aspects
of the approval process for a potential buyer, including
defining the phrase "financial ability to pay."
Mobilehome parks' right of prior approval:
There is a delicate balance between a mobilehome park's interest
in who resides in the park and a homeowner's right to sell his
or her own property. Mobilehomes are not truly mobile, in that
it is often cost prohibitive to relocate them. Selling a
mobilehome is a three-party transaction, as the park owns the
land under the mobilehome and has an interest in who will
purchase the home and live in the park. If a park resident is
unable to find a purchaser that meets the park's requirements,
that resident most often either sells the home to the park owner
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at below fair market rates or incurs the high expense of moving
the home to another park.
Existing law authorizes parks to require the right of prior
approval of a purchaser of a mobilehome that will remain in the
park. Approval may be withheld if management determines that
the purchaser does not have the financial ability to pay the
rent and charges of the park, or if management reasonably
determines, based on the purchaser's prior tenancies, that he or
she will not comply with the park's rules and regulations. AB
2026 clarifies and standardizes the framework for management's
right of prior approval of a purchaser, making the process more
predictable for buyers and sellers.
A purchaser's financial ability to pay rent and park charges:
AB 2026 requires that, upon request of any prospective homeowner
that will remain in the park, management must provide a list of
the information they will require to determine if the person
will be acceptable as a homeowner in the park. Any income
standard set by the park cannot exceed a multiplier of three
times the purchaser's income over the projected housing-related
expenses in connection with the proposed tenancy. Management
must consider all income and asset information provided by the
purchaser in considering his or her financial ability to pay.
This bill also shifts the burden, in two specific circumstances,
to the park to demonstrate why a purchaser does not financially
qualify to live in the park. First, it creates a presumption of
a purchaser's financial ability to pay if the purchaser provides
documentation that he or she has been approved by a state or
federally chartered financial institution for a loan to purchase
the mobilehome that the purchaser intends to occupy. Second, in
the event that a purchaser has not been approved for a loan to
purchase a mobilehome, a purchaser who demonstrates sufficient
monthly income from all sources that meets or exceeds the park's
income standard is presumed to have the financial ability to pay
the rent and charges of the park. However, these presumptions
do not mandate that a park accept a purchaser that meets these
specifications. Rather, it shifts the burden to the park to
demonstrate why the purchaser does not financially qualify.
Management is still authorized to require the purchaser to
document the amount and source of his or her gross monthly
income or other means of support.
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A purchaser's compliance with rules and regulations of the park:
Under existing law, management may deny a purchaser's
application if it reasonably determines, based on the
purchaser's prior tenancies, that he or she will not comply with
the park's rules and regulations. AB 2026 narrows this
provision by prohibiting park management from withholding
approval of a mobilehome purchaser on the basis unless
management provides the purchaser with documentary evidence that
the purchaser has failed to comply with the rules and
regulations during a previous tenancy within the three years
preceding the purchaser's application for tenancy.
While the intent behind this section is to standardize the
application process and provide a needed level of
predictability, it does not address the scenario where a park
may already be familiar with a prospective purchaser's previous
tenancies due to a prior eviction from the park. The Committee
may wish to take an amendment, stated below in the Committee
amendments section, providing that a park may deny a purchaser
on this basis if he or she has been evicted from the same park
where he or she is applying for residency at any time preceding
the purchaser's application.
Post-denial procedure:
AB 2026 also makes changes to the law relating to a prospective
purchaser's rights if his or her application is denied. Under
existing law, there is no right to a post-denial meeting. This
bill clarifies that management must notify the prospective
purchaser in writing of the specific reason or reasons for the
denial. The bill also provides that, if a prospective purchaser
is denied, the selling homeowner and the purchaser may, within
five business days of receiving the denial, request an in-person
meeting with management. This meeting must take place within
ten days, and management must reconsider its denial based upon
any additional information provided by the prospective
purchaser.
Liability:
AB 2026 also provides that, if management denies a prospective
purchaser for any unauthorized reason, the management or owner
may be held liable for all damages to both the selling homeowner
and the prospective purchaser proximately resulting therefrom.
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Repairs:
Under existing law, upon the sale or transfer of a mobilehome,
management may require repairs or improvements to the exterior
of the mobilehome so long as the repair or improvement is based
upon or required by a local ordinance or state statute or
regulation relating to mobilehomes, or a rule or regulation of
the park implementing such a law. AB 2026 provides that
management may only require repairs or improvements as
determined following an inspection by the appropriate
enforcement agency. Nearly 70 local enforcement agencies
throughout the state have assumed enforcement powers from the
Department of Housing and Community Development (HCD). In those
jurisdictions that have not assumed enforcement powers, HCD
conducts mobilehome inspections. There is a fee associated with
these inspections that varies depending on the enforcement
agency.
Sole residence requirement:
AB 2026 prohibits park management from withholding approval of a
mobilehome purchaser solely because the purchaser owns another
mobilehome or real property residence, and prohibits management
from requiring that the mobilehome that is the subject of the
purchase be the sole residence of the purchaser as a condition
of granting approval. This would apply to, for example, a
situation where a purchaser is in the process of selling his or
her previous home while purchasing a mobilehome. This bill
would not affect the existing provision of the MRL that provides
an exemption to rent control for mobilehomes that are not the
principal residence of the homeowner.
Arguments in Support:
Supporters contend that most park standards for prospective
purchasers are not regulated by the state and can vary widely
from park to park. As a result, responsible and trustworthy
potential purchasers can be unfairly turned away as a result of
the park management approval process. In supporters' view,
current law is too vague and has led to numerous problems
statewide for manufactured homeowners. A lack of fair standards
creates an unfair dynamic that invites abuse, as homeowners who
are prevented from completing a sale are often forced to sell
their homes at steep discounts, usually to the park. Supporters
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point to examples of park failing to fairly evaluate buyers and
setting unreasonably high standards that frustrate sale
completion. In supporters' view, AB 2026 restores balance to
the selling-in-park process.
Arguments in Opposition:
Opponents argue that the bill would place the responsibility to
approve or disapprove tenancy in the hands of financial
institutions, and have concerns that financial institutions only
have an interest in determining that a borrower can repay the
loan on a mobilehome, but have no interest in the mobilehome
park community as a whole. In opponents' view, AB 2026 removes
management's ability to filter out a prospective bad tenant,
which would be a disservice to current residents and potentially
lead to a costly eviction action. Certain opponents also
expressed concerns that requiring an official inspection for
repairs upon resale could be cost-prohibitive.
The Committee may wish to accept the amendments below, which
make the following substantive changes:
1) Provides that a park may deny a purchaser's application
if the purchaser has been evicted from the same park where
he or she is applying for residency at any time preceding
the purchaser's application for tenancy.
2) Clarifies that, if management denies a purchaser due to
a reasonable determination of noncompliance with park rules
and regulations, based on the purchaser's tenancies during
the previous 3 years, it shall provide the prospective
purchaser with documentary evidence supporting this
determination in the written rejection of the purchaser's
application.
3) Deletes the requirement that management may only require
repairs or improvements as determined following an
inspection by the appropriate enforcement agency.
4) Deletes the language added to the subsection relating to
a park's liability, if it denies a purchaser for any
unauthorized reason, providing that management is liable to
both the seller and the buyer.
Committee Amendments:
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1) On page 3, in line 15, restore the language
" mobilehome." and in lines 15 through 17, strike out
"mobilehomes, as determined following an inspection by the
appropriate enforcement agency, as defined in Section 18207
of the Health and Safety Code. "
2) On page 4, in line 20, strike out "support" and insert:
support, but in no event shall the income standard exceed a
multiplier of three times the purchaser's income over the
projected housing-related expenses to be paid by the
purchaser in connection with the proposed mobile home
tenancy.
3) On page 4, in line 39, strike out "disclosed by", on
page 5, in line 1, strike out "management pursuant to
subdivision (d)" and insert:
established pursuant to subdivision (a)
4) On page 5, in line 6, strike out "management provides
the purchaser with documentary", strike out lines 7 to 9,
inclusive, and insert:
either of the following apply:
(A) The prospective purchaser has been evicted from
the same park where he or she is applying for residency at
any time preceding the purchaser's application for tenancy.
(B) Management reasonably determines, based upon the
prospective purchaser's
prior tenancies within the three years preceding the
purchaser's application, that the prospective purchaser
will not comply with the rules and regulations of the park.
If management withholds approval on this basis, it shall
provide the prospective purchaser with documentary evidence
supporting this determination in the written rejection of
the purchaser's application pursuant to subdivision (e).
5) On page 5, in line 24, after "ability" insert:
to pay
6) On page 5, in line 25, strike out "The income standard
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shall not" and strike out lines 26 to 28, inclusive
7) On page 5, in line 39, after "10" insert:
business
8) On page 5, in line 40, strike out "denial based upon
any", on page 6, strike out line 1 and insert:
denial, including the consideration of any additional
information relevant to the application provided by the
prospective homeowner.
9) On page 6, in lines 4 through 5, strike out "to the
selling homeowner and the prospective homeowner"
REGISTERED SUPPORT / OPPOSITION :
Support
Golden State Manufactured-Home Owners League (co-sponsor)
Western Center on Law and Poverty (co-sponsor)
California Rural Legal Assistance Foundation (co-sponsor)
Educational Community for Homeowners (ECHO)
California Senior Legislature
Bay Federal Credit Union
Senior Citizens Legal Services
City of Capitola
City of Watsonville
County of Santa Barbara
Homeowners Organized To Maintain Equity (H.O.M.E.)
Northern Santa Barbara County Manufactured Homeowners Team
Residents of mobilehome parks (3)
Opposition
Western Manufactured Housing Communities Association (WMA)
California Mobilehome Parkowners Alliance (CMPA)
A V Ranchos Mobile Home Park
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Arbor Mobile Home Park
Bal Trailer Court
Beachwood Mobile Home Park
Belmont Shores Mobile Estates
Bessire and Casenhiser, INC
Birtcher Anderson Realty Management
Boulders At The Lake MHP
Camellia Village Mobil Home Estates
Casa De Santiago
Castle City Mobile Home Park
Civic Justice Association of California
Clayton Regency Mobile Home Park
Corona La Linda Mobilehome Community
Crane Lakeside Park and Resort, Inc.
Crestview
Del Ray Estates
Delta Hawaii Mobile Home Park
Desert Sands Estates
Diamond K
Donner Creek Mobile Park
Eagle City Mobile Estates
El Dorado Mobile Home Park
El Rancho Verde
Evans Management Services (EMS)
Fernwood Mobile Home Community
Garden Terrace Estates
Garden West Estates
Glenwood Park
Grecian Isle
Haven Management Services
Holiday Island Mobile Home Park
Hometown America Communities
Huntington Harbor Village
Imperial Manor Mobile Home Community
Imperial Village MHP
Investment Property Group (IPG)
J & C Management, INC
Lake Los Serranos Company
Lakehills Estates
Lamplighter Mobile Home Park
Leisure Lake Mobile Estates
Los Amigos Mobile Home Park
Mission Mobile Manor
Morehead Park
Morro Palms Mobile Lodge
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Mountain View Estates
N & K Commercial Property
Oak Tree Ranch
Ojai Valley Estates
Olive Lane Mobile Estates
Orchard Trailer Park, INC.
Palo Mobile Estates
Park Lane Mobile Home Estates
Peach Mobile Estates
PHTRE, LP
Ramble Greek Inc.
Rancho Bonita Mobile Home Park
Rancho Del Rio Estates
Rancho La Siesta
Rancho Riverside MHC
Rancho San Jose MHC
Rancho Santa Paula
Rancho Santa Ynez Mobile Estates
RDPH Properties, Inc.
Redwood Village Mobile Home Estates
Resident Owned Parks (ROP)
River Ranch Mobile Home Park
RoadRunner Club
San Roque MHP
San Vicente
Snug Harbor Mobile Home Park, LLC
Spanish Ranch 1
Stonegate Estates
T & L Property Management
The Boulder at the Ranch I
The Boulders at the Ranch II
The Caritas Corporation
The Willows at Bethel Island
Trade Winds Mobile Estates
Villa Corona Mobile Home Park
Vista De Santa Barbara
Woodland Park Mobile Estates
Individual Owners and Managers of Mobilehome Parks (37)
Analysis Prepared by : Rebecca Rabovsky / H. & C.D. / (916)
319-2085
AB 2026
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