The Mobilehome Parks Act requires the Department of Housing and Community Development to establish regulations for manufactured home, mobilehome, and commercial modular foundation systems. Existing law requires an owner or licensed contractor to obtain a building permit from the appropriate enforcement agency to install a manufactured home, mobilehome, or commercial modular on a foundation system by, among other things, submitting written evidence that the manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property where the manufactured home, mobilehome, or commercial modular is to be installed. A willful violation of those provisions is a crime.

This bill would specify that a registered owner of a manufactured home or mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, stock cooperative, or condominium project, may submit written evidence of that owners resident ownership in the mobilehome park in order to comply with this requirement. Because the bill would expand the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

The Mobilehome Parks Act requires the Department of Housing and Community Development to establish regulations for manufactured home, mobilehome, and commercial modular foundation systems. Existing law requires an owner or licensed contractor to obtain a building permit from the appropriate enforcement agency to install a manufactured home, mobilehome, or commercial modular on a foundation system by, among other things, submitting written evidence that the manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property where the manufactured home, mobilehome, or commercial modular is to be installed. A willful violation of those provisions is a crime.

This bill would specify that a registered owner of a manufactured home or mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, stock cooperative, or condominium project, may submit written evidence of that owners resident ownership in the mobilehome park in order to comply with this requirement. Because the bill would expand the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

The Mobilehome Parks Act requires the Department of Housing and Community Development to establish regulations for manufactured home, mobilehome, and commercial modular foundation systems. Existing law requires an owner or licensed contractor to obtain a building permit from the appropriate enforcement agency to install a manufactured home, mobilehome, or commercial modular on a foundation system by, among other things, submitting written evidence that the manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property where the manufactured home, mobilehome, or commercial modular is to be installed. A willful violation of those provisions is a crime.

This bill would specify that written evidence that the manufactured home, mobilehome, or commercial modular owner owns a separate interest in a common interest development would be deemed a registered owner of a manufactured home or mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, stock cooperative, or condominium project, may submit written evidence of that owners resident ownership in the mobilehome park in order to comply with this requirement. Because the bill would expand the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

The Mobilehome Parks Act requires the Department of Housing and Community Development to establish regulations for manufactured home, mobilehome, and commercial modular foundation systems. Existing law requires an owner or licensed contractor to obtain a building permit from the appropriate enforcement agency to install a manufactured home, mobilehome, or commercial modular on a foundation system by, among other things, submitting written evidence that the manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property where the manufactured home, mobilehome, or commercial modular is to be installed. A willful violation of those provisions is a crime.

This bill would specify that written evidence that the manufactured home, mobilehome, or commercial modular owner owns a separate interest in a common interest development would be deemed to comply with this requirement. Because the bill would expand the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

 CONSENT  

Bill No: AB 1943

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 8-0, 6/26/18

AYES: Beall, Cannella, Allen, Dodd, Gaines, Morrell, Vidak, Wiener

NO VOTE RECORDED: Galgiani, McGuire, Roth, Skinner, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 78-0, 5/29/18 (Consent) - See last page for vote

SUBJECT:

SOURCE: Rancho Monserate Country Club Homeowners Association, Inc.

DIGEST:

This bill allows a registered owner of a mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned park to submit written evidence of ownership as proof that they own, hold title to, or are purchasing the real property where the mobilehome is to be installed

ANALYSIS:

Existing law:

1. Requires the Department of Housing and Community Development (HCD) to adopt regulations for manufactured home, mobilehome, and commercial modular (hereafter referred to as “mobilehome”) foundation systems that shall be applicable throughout the state and shall supersede local ordinances.
2. Authorizes installation of a mobilehome on a foundation system as either a fixture or improvement to the real property, or on a foundation system as a chattel.
3. Requires, prior to a mobilehome being deemed a fixture or improvement to the real property, for the installation to comply with all of the following:
   1. Prior to installation of the mobilehome on a foundation system, the homeowner or a licensed contractor shall obtain a building permit from the appropriate enforcement agency. To obtain a permit, the owner or contractor shall provide the following:
      1. Written evidence that the homeowner holds title to the mobilehome or is purchasing the real property where the mobilehome is to be installed on a foundation system.
      2. Written evidence that the registered owner owns the mobilehome free of any liens or encumbrances or, in the event the legal owner is not the registered owner, or liens and encumbrances exist on the home, written evidence provided by the legal owner and any lienors or encumbrancers that the legal owner, lienor, or encumbrancer consents to the attachment of the home upon the discharge of any personal lien.
      3. Plans and specifications required by HCD regulations or an HCD-approved alternate for the mobilehome foundation system.
      4. The mobilehome installation instructions, or plans and specifications signed by a California-licensed architect or engineer, covering the installation of an individual mobilehome in the absence of manufacturer’s instructions.
      5. Building permit fees established by ordinance or regulation of the appropriate enforcement agency.
      6. An $11 fee for each transportable section of the mobilehome, to be transmitted to HCD at the time the certificate of occupancy is issued with a copy of the building permit and any other information required by HCD.
   2. Requires the appropriate enforcement agency, within five business days of the issuance of the certificate of occupancy, to record a document naming the owner of the real property and stating that a mobilehome has been affixed to that real property by installation on a foundation system.
   3. Requires the certification of title and other indicia of registration to be surrendered to HCD, pursuant to HCD regulations providing for the cancellation of registration of a mobilehome that is permanently attached to the ground on a foundation system. Provides that permanent affixation to a foundation shall be deemed to have occurred on the day a certificate of occupancy is issued to the homeowner and the document is recorded.
   4. Provides that a mobilehome shall be deemed a fixture and a real property improvement once it is installed on a foundation system.

This bill allows a registered owner of a mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, cooperative, or condominium project, to submit written evidence of ownership as proof that they own, hold title to, or are purchasing the real property where the mobilehome is to be installed.

Background

About 70% of California’s mobilehomes are currently located in a mobilehome park. The residents of California’s nearly 5,000 mobilehome parks typically own their homes and rent the spaces in the park in which the homes are placed. For various reasons, residents in some parks have decided to join together and buy the park or their individual spaces within it. Resident-owned parks can take several different legal forms, including nonprofit corporations or common interest developments (CIDs). Parks that operate as nonprofit corporations have the corporation purchase the park as a single property, and residents become shareholders or members of the corporation. Parks converted to CIDs are generally converted into a subdivision, condominium, planned development, or stock cooperative. Residents in a CID park own either a separate interest in the park, the actual parcel of land, or an exclusive right to occupy a portion of real property and a share of stock or membership.

Comments

1. Purpose. The author states that due to the Lilac Fire in San Diego County, at least 75 manufactured homes burned to the ground, while others were seriously damaged. When the owners went to rebuild their homes, they found they could no longer obtain traditional loans because of a gap in the law. The only procedure for a manufactured home to be permanently affixed to a foundation is by obtaining a specific building permit. Unless a manufactured home owner is able to receive and record a 433A permit, HCD does not consider the home to be “real property.” As a result, these homeowners are severely limited in their ability to obtain standardized financing and thus cannot afford to rebuild their homes. The author states that this bill will assist the homeowners who lost everything in the fire to rebuild their homes by clarifying existing law.
2. Personal property v. real property. Existing law considers mobilehomes as either personal property or real property. To be considered real property, the home must be affixed to a piece of land, which occurs when the home is placed on a permanent foundation. Alternatively, an owner may install a home on piers with tie-downs; in this case, state law considers the home to be personal property (or chattel) because it is not permanently affixed to the underlying land.

Existing law sets forth the procedures under which a mobilehome may be installed on, and become a fixture to, real property. These procedures culminate in a document, known as a 433A form, being recorded to certify that the home has been affixed to a foundation. These procedures are important both for tax purposes for local government entities, and for mobilehome financing. Because mobilehomes are deemed personal property (or chattel) rather than real property at the time of purchase, buyers do not finance these homes with a mortgage as they do with site-built homes. The law recognizes this and allows companies that finance the purchase of mobilehomes to maintain a security interest in a home until it is paid off.

Existing law also sets out a process by which an owner of a mobilehome in a resident-owned park may apply for voluntary conversion of the home to a fixture and improvement to the underlying real property – without actually attaching the home to a foundation system. This was intended to allow conversion to real property for mobilehome park residents in a manner that would enable them to access traditional home financing, similar to that available to owners who actually attach their homes to foundations. However, most lenders do not consider the form that is generated under this process, referred to as a 433C form, sufficient to provide traditional financing options; the few lenders who will lend on a 433C will only offer chattel loans, which carry higher rates.

According to the author, San Diego County – the local enforcement agency – had been issuing mobilehome park owners who lived in CID parks the 433A form up until three years ago. At that time, the County became concerned that ownership of a separate interest in a CID did not constitute real property. This bill provides that evidence of ownership in a CID is equivalent to holding title to, or purchasing the real property where the mobilehome is to be installed on the foundation system.

1. Where are the banks? Because mobilehomes are not traditional “stick built” homes, and tend to depreciate quickly, few lenders are willing to engage in mobilehome financing. Several lenders support this bill, and none have come out in opposition. Sequoia Home Funding states that as manufactured housing becomes an increasingly important part of affordable senior housing, making these units eligible for the widest range of financing options is an important social consideration. In addition, many seniors in mobilehome communities will replace older, obsolete, energy inefficient units if financing is available.

Related/Prior Legislation

AB 379 (Brown, Chapter 137, Statutes of 2013) changed the process whereby the law deems a mobilehome a fixture or improvement to real property.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 8/6/18)

Rancho Monserate Country Club Homeowners Association, Inc. (source)

Cornerstone Home Lending, Inc.

NLC loans

San Diego County Board of Supervisors

Sequoia Home Funding

The Loftin Firm

Western Manufactured Housing Communities Association

OPPOSITION: (Verified 8/6/18)

None received

ARGUMENTS IN SUPPORT: The Rancho Monserate Country Club Homeowners Association states that this bill will remedy an inadequacy in existing law by specifying that “real property” is defined to include a CID, including separate interest in a CID.

ASSEMBLY FLOOR: 78-0, 5/29/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

Prepared by:

8/7/18 17:24:02

**** END ****

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/26/2018

SUBJECT:

DIGEST: This bill allows a registered owner of a mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned park to submit written evidence of ownership as proof that they own, hold title to, or are purchasing the real property where the mobilehome is to be installed.

ANALYSIS:

Existing law:

1. Requires HCD to adopt regulations for manufactured home, mobilehome, and commercial modular (hereafter referred to as “mobilehome”) foundation systems that shall be applicable throughout the state and shall supersede local ordinances.
2. Authorizes installation of a mobilehome on a foundation system as either a fixture or improvement to the real property, or on a foundation system as a chattel.
3. Requires, prior to a mobilehome being deemed a fixture or improvement to the real property, for the installation to comply with all of the following:
   1. Prior to installation of the mobilehome on a foundation system, the homeowner or a licensed contractor shall obtain a building permit from the appropriate enforcement agency. To obtain a permit, the owner or contractor shall provide the following:
      1. Written evidence that the homeowner holds title to the mobilehome or is purchasing the real property where the mobilehome is to be installed on a foundation system.
      2. Written evidence that the registered owner owns the mobilehome free of any liens or encumbrances or, in the event the legal owner is not the registered owner, or liens and encumbrances exist on the home, written evidence provided by the legal owner and any lienors or encumbrancers that the legal owner, lienor, or encumbrancer consents to the attachment of the home upon the discharge of any personal lien.
      3. Plans and specifications required by HCD regulations or an HCD-approved alternate for the mobilehome foundation system.
      4. The mobilehome installation instructions, or plans and specifications signed by a California-licensed architect or engineer, covering the installation of an individual mobilehome in the absence of manufacturer’s instructions.
      5. Building permit fees established by ordinance or regulation of the appropriate enforcement agency.
      6. An $11 fee for each transportable section of the mobilehome, to be transmitted to HCD at the time the certificate of occupancy is issued with a copy of the building permit and any other information required by HCD.
   2. Requires the appropriate enforcement agency, within five business days of the issuance of the certificate of occupancy, to record a document naming the owner of the real property and stating that a mobilehome has been affixed to that real property by installation on a foundation system.
   3. Requires the certification of title and other indicia of registration to be surrendered to HCD, pursuant to HCD regulations providing for the cancellation of registration of a mobilehome that is permanently attached to the ground on a foundation system. Provides that permanent affixation to a foundation shall be deemed to have occurred on the day a certificate of occupancy is issued to the homeowner and the document is recorded.
   4. Provides that a mobilehome shall be deemed a fixture and a real property improvement once it is installed on a foundation system.

This bill allows a registered owner of a mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, cooperative, or condominium project, to submit written evidence of ownership as proof that they own, hold title to, or are purchasing the real property where the mobilehome is to be installed.

COMMENTS

1. Purpose. The author states that due to the Lilac Fire in San Diego County, at least 75 manufactured homes burned to the ground, while others were seriously damaged. When the owners went to rebuild their homes, they found they could no longer obtain traditional loans because of a gap in the law. The only procedure for a manufactured home to be permanently affixed to a foundation is by obtaining a specific building permit. Unless a manufactured home owner is able to receive and record a 433A permit, HCD does not consider the home to be “real property.” As a result, these homeowners are severely limited in their ability to obtain standardized financing and thus cannot afford to rebuild their homes. The author states that this bill will assist the homeowners who lost everything in the fire to rebuild their homes by clarifying existing law.
2. Resident-owned mobilehome parks. About 70% of California’s mobilehomes are currently located in a mobilehome park. The residents of California’s nearly 5,000 mobilehome parks typically own their homes and rent the spaces in the park in which the homes are placed. For various reasons, residents in some parks have decided to join together and buy the park or their individual spaces within it. Resident-owned parks can take several different legal forms, including nonprofit corporations or common interest developments (CIDs). Parks that operate as nonprofit corporations have the corporation purchase the park as a single property, and residents become shareholders or members of the corporation. Parks converted to CIDs are generally converted into a subdivision, condominium, planned development, or stock cooperative. Residents in a CID park own either a separate interest in the park, the actual parcel of land, or an exclusive right to occupy a portion of real property and a share of stock or membership.
3. Personal property v. real property. Existing law considers mobilehomes as either personal property or real property. To be considered real property, the home must be affixed to a piece of land, which occurs when the home is placed on a permanent foundation. Alternatively, an owner may install a home on piers with tie-downs; in this case, state law considers the home to be personal property (or chattel) because it is not permanently affixed to the underlying land.

Existing law sets forth the procedures under which a mobilehome may be installed on, and become a fixture to, real property. These procedures culminate in a document, known as a 433A form, being recorded to certify that the home has been affixed to a foundation. These procedures are important both for tax purposes for local government entities, and for mobilehome financing. Because mobilehomes are deemed personal property (or chattel) rather than real property at the time of purchase, buyers do not finance these homes with a mortgage as they do with site-built homes. The law recognizes this and allows companies that finance the purchase of mobilehomes to maintain a security interest in a home until it is paid off.

Existing law also sets out a process by which an owner of a mobilehome in a resident-owned park may apply for voluntary conversion of the home to a fixture and improvement to the underlying real property – without actually attaching the home to a foundation system. This was intended to allow conversion to real property for mobilehome park residents in a manner that would enable them to access traditional home financing, similar to that available to owners who actually attach their homes to foundations. However, most lenders do not consider the form that is generated under this process, referred to as a 433C form, sufficient to provide traditional financing options; the few lenders who will lend on a 433C will only offer chattel loans, which carry higher rates.

According to the author, San Diego County – the local enforcement agency – had been issuing mobilehome park owners who lived in CID parks the 433A form up until three years ago. At that time, the county became concerned that ownership of a separate interest in a CID did not constitute real property. This bill would provide that evidence of ownership in a CID is equivalent to holding title to, or purchasing the real property where the mobilehome is to be installed on the foundation system.

1. Where are the banks on this? Because mobilehomes are not traditional “stick built” homes, and tend to depreciate quickly, few lenders are willing to engage in mobilehome financing. Several lenders support this bill, and none have come out in opposition. Sequoia Home Funding states that as manufactured housing becomes an increasingly important part of affordable senior housing, making these units eligible for the widest range of financing options is an important social consideration. In addition, many seniors in mobilehome communities will replace older, obsolete, energy inefficient units if financing is available.

Related Legislation:

AB 379 (Brown, Chapter 137, Statutes of 2013) — changed the process whereby the law deems a mobilehome a fixture or improvement to real property.

Assembly Votes:

Floor: 78-0

Approps: 16-0

H&CD: 7-0

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

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 20, 2018.)

SUPPORT:

(Rancho Monserate Country Club Homeowners Association, Inc. – sponsor

Cornerstone Home Lending, Inc.

NLC loans

San Diego County Board of Supervisors

Sequoia Home Funding

The Loftin Firm

Western Manufactured Housing Communities Association

OPPOSITION:

None received.

-- END --

Date of Hearing: May 23, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1943

Author:(Waldron) – As Amended Ver:May 10, 2018

Urgency: Yes State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill, an urgency measure, specifies that a registered owner of a manufactured home or mobilehome in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, cooperative, or condominium project, may submit written evidence of ownership as proof that they own, hold title to, or are purchasing the real property where the mobilehome is to be installed.

FISCAL EFFECT:

Minor costs to local agencies. These costs are not reimbursable by the state.

COMMENTS:

1. Background and Purpose. Existing law establishes the procedures under which a mobilehome may be installed and affixed to real property. Because mobilehomes are considered personal property and not real property, owners cannot finance these homes with traditional mortgages and cannot obtain reverse mortgages to finance repairs or improvements. However, very few mobilehomes are relocated once they have been installed on a site.

To convert a mobilehome to real property the mobilehome owner must affix their mobilehome to a permanent foundation. To do so, the owner must obtain a building permit from the appropriate local agency by showing that either they own, hold title to, are purchasing, or have a lease for the exclusive use of the real property where the mobilehome will be installed. After the owner submits the necessary documents and an $11 fee to the local agency, the agency must record a document (433A form) stating that the mobilehome has been affixed to the real property, and the owner must surrender the certificate of title in order to cancel the registration of the mobilehome as personal property with the Department of Housing and Community Development (HCD).

Existing law also sets out a process by which an owner of a manufactured home or mobilehome in a resident-owned park may apply for voluntary conversion of that home to a fixture and improvement to the underlying real property—without actually attaching the home to a foundation system. This law was an attempt to permit conversion to real property for mobilehome park residents to give them access to traditional home financing. However, the form that is generated under this process, referred to as a 433C form, is not sufficient for most lenders to provide traditional financing options.

This bill would clarify that written evidence that a manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property complies with the requirements to provide written evidence as proof that an owner owns, holds title to, or is purchasing the real property where the mobilehome is to be installed on the foundation system.

1. Prior Legislation. AB 379 (Brown), Chapter 137, Statutes of 2013, made technical and clarifying changes to the law relative to the installation and removal of mobilehomes.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

ABPCA Bill Id:AB 1943 (

Author:Waldron) – As Introduced Ver:January 29, 2018

SUBJECT: Manufactured housing: foundation systems: installation: common interest developments

SUMMARY: Provides that written evidence that a manufactured home, mobilehome, or commercial modular owner owns a separate interest in a common interest development (CID) complies with requirements in existing law for the purpose of installing a manufactured home, mobilehome, or commercial modular on a foundation system. Specifically, this bill:

1. Provides that written evidence that the manufactured home, mobilehome, or commercial modular owner owns a separate interest in a CID complies with requirements in existing law to demonstrate ownership or purchase of the real property in order to obtain a building permit from the appropriate enforcement agency prior to installation of a manufactured home, mobilehome, or commercial modular on a foundation system.
2. Provides that no reimbursement is required by this Act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this Act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
3. Includes an urgency clause.

EXISTING LAW:

1. Requires the California Department of Housing and Community Development (HCD) to establish regulations for manufactured home, mobilehome, and commercial modular foundation systems that shall be applicable throughout the state.
2. Provides that a manufactured home, mobilehome, or commercial modular may be installed on a foundation system as either a fixture or improvement to the real property, as specified, or a manufactured home or mobilehome may be installed on a foundation system as a chattel, as specified.
3. Notwithstanding any other law, prior to a manufactured home, mobilehome, or commercial modular being deemed a fixture or improvement to the real property, the installation shall comply with all of the following:
   1. Prior to installation of a manufactured home, mobilehome, or commercial modular on a foundation system, the manufactured home, mobilehome, or commercial modular owner or a licensed contractor shall obtain a building permit from the appropriate enforcement agency. To obtain a permit, the owner or contractor shall provide the following:
      1. Written evidence acceptable to the enforcement agency that the manufactured home, mobilehome, or commercial modular owner owns, holds title to, or is purchasing the real property where the mobilehome is to be installed on a foundation system. A lease held by the manufactured home, mobilehome, or commercial modular owner, that is transferable, for the exclusive use of the real property where the manufactured home, mobilehome, or commercial modular is to be installed, shall be deemed to comply with this paragraph if the lease is for a term of 35 years or more, or if less than 35 years, for a term mutually agreed upon by the lessor and lessee, and the term of the lease is not revocable at the discretion of the lessor except for cause, as described in subdivisions 2 to 5, inclusive, of Section 1161 of the Code of Civil Procedure;
      2. Written evidence acceptable to the enforcement agency that the registered owner owns the manufactured home, mobilehome, or commercial modular free of any liens or encumbrances or, in the event that the legal owner is not the registered owner, or liens and encumbrances exist on the manufactured home, mobilehome, or commercial modular, written evidence provided by the legal owner and any lienors or encumbrancers that the legal owner, lienor, or encumbrancer consents to the attachment of the manufactured home, mobilehome, or commercial modular upon the discharge of any personal lien, that may be conditioned upon the satisfaction by the registered owner of the obligation secured by the lien;
      3. Plans and specifications required by department regulations or a department-approved alternate for the manufactured home, mobilehome, or commercial modular foundation system;
      4. The manufactured home, mobilehome, or commercial modular manufacturer’s installation instructions, or plans and specifications signed by a California-licensed architect or engineer covering the installation of an individual manufactured home, mobilehome, or commercial modular in the absence of the manufactured home, mobilehome, or commercial modular manufacturer’s instructions;
      5. Building permit fees established by ordinance or regulation of the appropriate enforcement agency; and
      6. A fee payable to the department in the amount of $11 for each transportable section of the manufactured home, mobilehome, or commercial modular, that shall be transmitted to the department at the time the certificate of occupancy is issued with a copy of the building permit and any other information concerning the manufactured home, mobilehome, or commercial modular that the department may prescribe on forms provided by the department.
4. Provides that, notwithstanding any other provision of law, the registered owner of a manufactured home or mobilehome in a mobilehome park, converted or proposed to be converted to a resident-owned subdivision, cooperative, condominium, or nonprofit corporation formed pursuant to Section 11010.8 of the Business and Professions Code, may, if the registered owner is also a participant in the resident ownership, apply for voluntary conversion of the manufactured home or mobilehome to a fixture and improvement to the underlying real property without compliance with subdivision (a) of Section 18551.
5. Requires a city, including a charter city, county, or city and county, to allow the installation of manufactured homes certified under the National Manufactured Housing Construction and Safety Standards Act of 1974 on a foundation system, as specified, on lots zoned for conventional single-family residential dwellings.
6. Defines, under the Davis-Stirling CID Act, a “CID” to mean a community apartment project, a condominium project, a planned development, or a stock cooperative.
7. Defines, under the Davis-Stirling CID Act, a “separate interest” to have the following meanings:
   1. In a community apartment project, “separate interest” means the exclusive right to occupy an apartment;
   2. In a condominium project, “separate interest” means a separately owned unit;
   3. In a planned development, “separate interest” means a separately owned lot, parcel, area, or space; and
   4. In a stock cooperative, “separate interest” means the exclusive right to occupy a portion of the real property.

FISCAL EFFECT: Unknown.

COMMENTS:

Background: According to the U.S. Census Bureau’s 2016 American Community Survey, there were approximately 517,000 mobilehomes in California in 2016. Mobilehomes (also known as manufactured homes) may be located within a mobilehome park or, in other cases, may be located on private property outside a park, like other traditional “stick-built” homes. About 70% of California’s mobilehomes are currently located in a mobilehome park, down from 80% in 1979. The residents of California’s nearly 5,000 mobilehome parks typically own their mobilehomes and rent the spaces in the park in which the homes are placed. For various reasons, mobilehome park residents in some parks have decided to join together and buy the park or their individual spaces within it. This is referred to as a conversion to resident ownership.

Resident-owned parks can take several different legal forms, including nonprofit corporations or CIDs. Resident-owned parks that operate as nonprofit corporations have the corporation purchase the park as a single property, and residents become shareholders or members of the corporation, as well as members of the board of directors of the corporation if they choose to run for those positions. Parks converted to CIDs are generally converted into a subdivision, condominium, planned development, or stock cooperative. These parks are subject to the provisions of the Davis-Stirling Common Interest Development Act, and must have an elected governing board (homeowners association) to fulfill some financial and legal requirements, including managing the common area in the development. Residents in a CID park will own either a separate interest in the park (in a condominium or subdivision), the actual parcel of land (in a planned development), or an exclusive right to occupy a portion of real property and a share of stock or membership (in a stock cooperative).

Personal vs. real property: Health and Safety Code (HSC) Section 18551 establishes the procedures under which a mobilehome may be installed on and become a fixture to real property. These procedures are important both for tax purposes for local governments and for the financing of manufactured homes. Because mobilehomes are considered to be personal property (chattel) and not real property at the time of purchase, the financing of these homes is different than with “stick-built” homes. Owners cannot finance these homes with a traditional mortgage, and cannot obtain reverse mortgages at a later point in order to finance repairs or improvements. However, very few mobilehomes are relocated once they have been installed on a site, and attaching to a permanent foundation is safer in case of earthquakes.

To convert a mobilehome to real property under HSC 18551, the mobilehome owner must affix their mobilehome to a permanent foundation. The owner must first obtain a building permit from the appropriate local agency by showing that either: 1) they own, hold title to, or are purchasing the real property where the mobilehome will be installed, or 2) they have a lease for the exclusive use of the real property where the mobilehome will be installed. After submitting certain documents and an $11 fee to the enforcement agency, the agency must record a document (a 433A form) stating that the mobilehome has been affixed to the real property, and the owner must surrender the certificate of title in order to cancel the registration of the mobilehome with HCD.

Conversely, HSC Section 18555 sets out a process by which an owner of a manufactured home or mobilehome in a resident-owned park may apply for voluntary conversion of that home to a fixture and improvement to the underlying real property—without actually attaching the home to a foundation system. HSC 18555 was an attempt to permit conversion to real property for mobilehome park residents in a way that would allow them to access traditional home financing, like what is available to owners using HSC 18551. However, the form that is generated under HSC 18555, referred to as a 433C form, is not sufficient for most lenders to provide traditional financing options. Instead, the few lenders that will lend on a 433C will offer chattel loans.

According to the author, San Diego County—the local enforcement agency—had been issuing mobilehome park owners who lived in CID parks the 433A form up until three years ago, when they became concerned that the ownership of a separate interest in a CID did not constitute real property as was required under HSC 18551. This bill would clarify that written evidence that a manufactured home, mobilehome, or commercial modular owner owns a separate interest in a CID complies with the requirements under HSC 18551 for providing written evidence that an owner owns, holds title to, or is purchasing the real property where the mobilehome is to be installed on the foundation system.

Urgency clause: This bill includes an urgency clause necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are: “Due to a gap in existing law, 75 homeowners who lost their homes in the recent Lilac Fire and other natural disasters are unable to secure affordable financing to rebuild their homes. In order to ensure prompt recovery as a result of the widespread damage caused by the Lilac Fire, as well as other recent disasters, it is necessary for this act to take effect immediately.”

Need for the bill: According to the author, “The definition of real property in the current statute became an issue for the first time approximately three years ago. The initiating entity for raising this issue is the County of San Diego. The County ceased the recordation of 433As at that time because of its position that the term real property in section 18551 did not include single family manufactured housing condominium communities.

“The process to legally affix the manufactured home under section 18551 is required as a prerequisite by market lenders to provide loans, including reverse mortgages. Without access to loans, the mobile or manufactured homes cannot be replaced (at least 90% of the mobilehome parks were built and filled with mobilehomes prior to 1976), refinanced, including [through] a reverse mortgage, and [owners] have difficulty selling the homes.”

Committee amendment:

In order to ensure that the HSC 18551 process is explicitly made accessible not just to residents in CID parks, but also to other forms of resident-owned parks, the Committee may wish to consider the following amendments:

1. Delete provisions stating that written evidence that an owner owns a separate interest in a CID complies with the requirement to provide written evidence that an owner owns, holds title to, or is purchasing the real property where the mobilehome is to be installed.
2. Instead specify that, notwithstanding HSC 18555, an owner of a manufactured home in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, cooperative, condominium, or nonprofit corporation may submit written evidence of that owner’s resident ownership in the park in order to comply with the requirement to provide written evidence that an owner owns, holds title to, or is purchasing the real property where the mobilehome is to be installed.

Related legislation:

AB 379 (Brown, Chapter 137, Statutes of 2013): Made technical and clarifying changes to the law relative to the installation and removal of mobilehomes in HSC 18551.

SB 259 (Haynes), 1997: Reduced the fee required to convert a mobilehome to a fixture and improvement to the underlying real property from $22 to $11, and permitted mobilehomes to be installed as chattel to the underlying real property.

AB 3179 (Hauser), 1992: Permitted a mobilehome owner in a park converting to resident ownership to apply for voluntary conversion of the mobilehome to a fixture and improvement to the underlying real property, without attaching the home to a foundation system.

REGISTERED SUPPORT / OPPOSITION:

Support

Bonsall Chamber of Commerce

Burnham USA

Capistrano Shores

Carlsbad Chamber of Commerce

Champagne Village Property Owners Association

Chiles and Associates Real Estate Company

City of San Marcos

Crest Homes

Factory Housing

Les Frame Management

Manufactured Homes 4U

ON THE LEVEL

Rancho Monserate Country Club Homeowners Association

Real Equity Real Estate

San Diego County Board of Supervisors

Sequoia Home Funding

The Aramco Group

Numerous Individuals

Opposition

None on file

Analysis Prepared by: Rebecca Rabovsky / H. & C.D. / (916) 319-2085