Senate Committee on Transportation and Housing

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular

Bill No: AB 999 Hearing Date: 6/23/2015 Author: Daly Version: 6/15/2015 Urgency: No Fiscal: Yes Consultant: Christine Hochmuth

SUBJECT: Mobilehomes: salvage and disposal.

DIGEST: This bill allows mobilehome park owners to dispose of abandoned mobilehomes without being required to pay a homeowner’s unpaid property taxes, either through a specified due process proceeding or through enforcement of a warehouse lien.

ANALYSIS:

Existing law:

1) Defines a mobilehome as “abandoned” when it is 1) located in a mobilehome park on a site for which no rent has been paid for the prior 60 days, 2) unoccupied, and 3) believed to be abandoned by reasonable standards. A mobilehome can be deemed abandoned if it meets the above criteria and is also uninhabitable due to total or partial destruction that cannot be fixed.

2) Establishes procedures for mobilehomes that have been determined to be abandoned and allows mobilehome park management (referred to hereafter as “management”) to sell the home and its contents following a court-supervised process. This procedure includes posting and mailing a notice of belief of abandonment, filing a court petition and receiving a judicial declaration of abandonment at a court hearing, taking an inventory of the contents of the mobilehome, and posting and mailing notice of intent to sell the abandoned mobilehome and its contents.

The management may not make money above the total amount due to them, as determined by the court at the time of hearing on the petition, from the public sale of the home and its contents by this process. The unclaimed amount above what management is entitled to must be paid to the county treasurer within 30 AB 999 (Daly) Page 2 of 6

days, at which point it may be reclaimed by the former homeowner for up to one year. 3) Requires management to provide the purchaser with a copy of the judgment of abandonment and evidence of the sale. The Department of Housing and Community Development (HCD) or the Department of Motor Vehicles (DMV) are required to register title to the purchaser after receipt of this paperwork. The title is required to be passed to the purchaser free of any prior interest, including any security interest or lien, excepting a lien of state due to nonpayment of fees and penalties.

4) Requires management to have a warehouse lien against a mobilehome for the costs of dismantling and moving, if appropriate, as well as storage, if the homeowner does not respond to a notice of termination of tenancy within 60 days. A warehouse lien is superior to all other liens, except a lien of state.

This bill:

1) Defines “dispose” or “disposal” as the removal and destruction of an abandoned mobilehome from a mobilehome park, thus making it unusable for any purpose.

2) Adds the requirement that a mobilehome cannot be permanently affixed to the ground to be considered abandoned.

3) Establishes procedural regulations to obtain a judicial declaration of abandonment for purposes of disposal. The management is required to:

a) Declare in the court petition that they will dispose of the abandoned mobilehome, and therefore will not seek a tax clearance certificate. b) Declare whether they intend to sell the contents of the abandoned mobilehome before its disposal. c) Send the county tax collector and HCD a copy of the court petition as notification that they plan to dispose of the abandoned mobilehome.

4) Authorizes management to dispose of an abandoned mobilehome following the judgment of abandonment, but not less than 10 days following the notice of disposal (below).

5) Establishes procedural regulations for the disposal of an abandoned mobilehome by management. The management is required to: AB 999 (Daly) Page 3 of 6

a) Enter the abandoned mobilehome and complete an inventory of the contents and submit the inventory to the courts within 10 days following a judgment of abandonment. b) Post and mail a notice of intent to dispose of the abandoned mobilehome and its contents, announcing the date of disposal, to the homeowner, any known registered owner, any known holder of security interest, the county tax collector, and HCD. c) Submit to the court, county tax collector, and HCD, within 30 days of the date of disposal of an abandoned mobilehome and its contents, a statement that the abandoned mobilehome and its contents were disposed with supporting documentation. d) Submit to the court, county tax collector, and HCD, within 30 days of the date of disposal or the date of the sale of its contents, a statement that the abandoned mobilehome was disposed with supporting documentation and an accounting of the moneys received from the sale and disposition of the money and the items contained in the inventory.

6) Relieves management from the obligation of obtaining a tax clearance certificate to dispose of an abandoned mobilehome and dispose of its contents, following these procedures. However, if contents are sold, management will be subject to the tax clearance certificate requirements.

7) Authorizes any person having a right to possession of the abandoned mobilehome to recover and remove it from the premises, at any time prior to the disposal, upon payment to the management of all rent or other charges due, including reasonable costs of storage and other costs awarded by the court. Following receipt of payment and removal of the mobilehome, management is required to immediately file an acknowledgement of satisfaction of judgment.

8) Relieves management from the obligation of obtaining a tax clearance certificate after enforcing the warehouse lien and obtaining approval from HCD to designate the mobilehome for salvage, provided management notifies the county tax collector and HCD and applies to have the mobilehome designated for salvage.

COMMENTS:

1) Purpose of the bill. According to the author and sponsor, each year manufactured homes/mobilehomes are abandoned in manufactured housing communities. Under current law, management must proceed with a warehouse lien to dispose of an abandoned property. These homes are often not worth the AB 999 (Daly) Page 4 of 6

cost of rehabilitation and must be salvaged (destroyed). However, before an owner may legally complete the warehouse lien, he or she is required to pay any past due personal property tax owed on the property to the county tax collector. Frequently, the taxes owed can exceed the value of the home. The author and sponsor believe this is an unfair burden on the mobilehome park owner.

The author and sponsor contend that this bill will benefit landlords, residents, and tax collectors by creating a new method to expeditiously deal with abandoned property, which may ultimately allow for replacement of these abandoned, tax-delinquent homes with newer homes.

2) Disposal. This bill creates a definition for disposal, namely that to dispose of an abandoned mobilehome means to “remove it from a mobilehome park and destroy it, thus making it unusable for any purpose.” This is an important distinction to make because the procedure authorized by this bill requires management to destroy an abandoned mobilehome upon removal from the park and does not allow management to resell it to others. Sale of a mobilehome is still permissible under separate, existing regulations.

3) Tax liability. Under existing law, owners of mobilehome parks must follow a specified court-supervised abandonment proceeding to dispose of a mobilehome when the homeowner has not only stopped paying rent on the site, but apparently abandoned the mobilehome itself, leaving it unoccupied and in a condition rendering it uninhabitable and unattractive for resale. In many cases, the property is burdened with unpaid property taxes owed by the homeowner — taxes which create an obstacle to disposal and removal of the home by management. This is because current law requires the unpaid taxes to be paid off before title to the mobilehome can be transferred to the park management, even for the purpose of disposal. This bill would allow management to dispose of an abandoned mobilehome without first being required to pay the unpaid property taxes on the home.

This bill should not result in any tax abatement because under existing law, the registered owner of the home ultimately remains responsible for unpaid taxes after those taxes are transferred from the secured roll to the unsecured roll for tax collection.

This bill does not change procedures for the sale of abandoned mobilehomes. Current law dictating priority for the proceeds of the sale still applies when the park owner elects to sell an abandoned mobilehome, thus ensuring that proceeds will go towards paying off tax liens or other obligations on the home. AB 999 (Daly) Page 5 of 6

This bill clarifies that management is only relieved of its obligation to obtain a tax clearance certificate if the mobilehome alone or the mobilehome and its contents are disposed. If the contents are sold, management is still required to obtain a tax clearance certificate. Any proceeds from the sale of contents must go towards paying past due taxes, as is required in current law for the sale of an abandoned mobilehome.

4) Due process for disposing of an abandoned mobilehome. This bill establishes due process procedures for disposal of abandoned mobilehomes and their contents — provisions that largely track those currently governing the sale of abandoned mobilehomes. As a prerequisite, the management must first post a notice of belief of abandonment on the mobilehome for a minimum of 30 days and mail copies of the notice to the homeowner and any known lienholders. To further protect due process for the homeowner who may wish to contest abandonment, existing law requires the management to file a petition for judicial declaration of abandonment and serve it upon the homeowner, as well as any known lienholders on the home. Because the bill seeks to relieve park management from clearing unpaid taxes on the home, the bill requires management to declare its intent in the petition to not seek a tax clearance certificate, and then requires notification to the county tax collector and HCD by mailing first-class a copy of the petition. If, at the hearing on the petition, the petitioner shows sufficient evidence that the criteria for abandonment are satisfied and no party establishes a right to possession or security interest in the mobilehome, then the court shall enter a judgment of abandonment.

5) Warehouse lien. A warehouse lien is a procedure that management may use to gain ownership of a home for termination of tenancy. Under existing law, HCD approval of this process requires a free and clear title. This bill allows management to enforce a warehouse lien without obtaining a tax clearance certificate to designate the mobilehome for salvage. While separate from the court-monitored judicial declaration of abandonment process, the warehouse lien process provides the registered owner with a notice of termination and allows 60 days for a response.

6) Double-referral. The Rules Committee has referred this bill to both this committee and the Judiciary Committee.

RELATED/PRIOR LEGISLATION: AB 999 (Daly) Page 6 of 6

AB 587 (Chau) — 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. AB 587 is currently pending hearing in the Senate Transportation and Housing Committee.

AB 682 (Williams) — authorizes a person to have specified alterations, conversions, and repairs made to a mobilehome without filing an application with HCD. AB 682 is also being heard in this committee today.

Assembly Votes:

Floor: 74-0 Appr: 17-0 H&CD: 6-0 Jud: 10-0

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

POSITIONS: (Communicated to the committee before noon on Wednesday, June 17, 2015.)

SUPPORT:

Western Manufactured Housing Communities Association (sponsor) California Mobilehome Parkowners Alliance

OPPOSITION:

None received

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