Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. Existing law prohibits transfer of title of a registered manufactured home, mobilehome, commercial coach, truck camper, or floating home until the transferor has properly endorsed and delivered the certificate of title and delivery of the registration card to the transferee. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

This bill would prohibit an owner, as defined, from being liable for taxes and fees specified in the Manufactured Housing Act of 1980 that accrue after the compliance date if the owner properly endorses and delivers the certificate of title to the transferee and delivers or mails to the Department of Housing and Community Development the completed notice of sale or transfer form developed by the department.

Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. Existing law prohibits transfer of title of a registered manufactured home, mobilehome, commercial coach, truck camper, or floating home until the transferor has properly endorsed and delivered the certificate of title and delivery of the registration card to the transferee. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

This bill would prohibit an owner, as defined, from being liable for taxes and fees specified in the Manufactured Housing Act of 1980 that accrue after the compliance date if the owner properly endorses and delivers the certificate of title to the transferee and delivers or mails to the Department of Housing and Community Development the completed notice of sale or transfer form developed by the department.

Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. Existing law prohibits transfer of title of a registered manufactured home, mobilehome, commercial coach, truck camper, or floating home until the transferor has properly endorsed and delivered the certificate of title and delivery of the registration card to the transferee. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

This bill would prohibit an owner, as defined, from being liable for taxes and fees specified in the Manufactured Housing Act of 1980 that accrue after the compliance date if the owner properly endorses and delivers the certificate of title to the transferee and delivers or mails to the Department of Housing and Community Development the completed notice of sale or transfer form developed by the department.

Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. The act authorizes registration of a manufactured home, mobilehome, commercial coach, truck camper, or floating home to be held in the name of a company, an estate, a trust, a conservatorship, a guardianship, or an individual owners name. The act requires every registered owner, upon receipt of a registration card, to maintain the card or a copy thereof with the manufactured home, mobilehome, commercial coach, truck camper, or floating home for which it is issued. If a registration application is made in this state and the department is not satisfied as to the ownership of the manufactured home or mobilehome or the existence of foreign liens thereon, existing law authorizes the department to register the manufactured home or mobilehome and issue a registration card with distinctive markings, but requires the department to withhold issuance of a California certificate of title, unless the applicant presents sufficient documents regarding the applicants ownership the absence of any liens thereon or posts a bond. In addition, existing law authorizes the department to refuse registration or the renewal or transfer of registration of a manufactured home or mobilehome if the department is not satisfied that the applicant is entitled thereto. Existing law prohibits transfer of title of a registered manufactured home, mobilehome, commercial coach, truck camper, or floating home until the transferor has properly endorsed and delivered the certificate of title and delivery of the registration card to the transferee. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. The act authorizes registration of a manufactured home, mobilehome, commercial coach, truck camper, or floating home to be held in the name of a company, an estate, a trust, a conservatorship, a guardianship, or an individual owners name. The act requires every registered owner, upon receipt of a registration card, to maintain the card or a copy thereof with the manufactured home, mobilehome, commercial coach, truck camper, or floating home for which it is issued. If a registration application is made in this state and the department is not satisfied as to the ownership of the manufactured home or mobilehome or the existence of foreign liens thereon, existing law authorizes the department to register the manufactured home or mobilehome and issue a registration card with distinctive markings, but requires the department to withhold issuance of a California certificate of title, unless the applicant presents sufficient documents regarding the applicants ownership the absence of any liens thereon or posts a bond. In addition, existing law authorizes the department to refuse registration or the renewal or transfer of registration of a manufactured home or mobilehome if the department is not satisfied that the applicant is entitled thereto. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

This bill would provide that an owner of a new or used manufactured home or mobilehome subject to registration pursuant to the Manufactured Housing Act of 1980 who sells or transfers ownership of the manufactured home or mobilehome would not be subject to civil or criminal liability for a violation of the act after the delivery of possession of the manufactured home or mobilehome, the compliance with specified requirements in existing law regarding transfer of title, and the delivery to the department of either a notice of transfer and release of liability, as specified, or the appropriate documents and fees for registration of the manufactured home or mobilehome to the new owner pursuant to the sale or transfer. The bill would require the department to prepare and adopt a notice of transfer and release of liability form that furthers the purposes of these provisions, as specified.

Existing law, the Manufactured Housing Act of 1980, requires, with certain exceptions, manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state to be subject to annual registration with the Department of Housing and Community Development upon the appropriate forms approved by the department and payment of prescribed registration fees. The act authorizes registration of a manufactured home, mobilehome, commercial coach, truck camper, or floating home to be held in the name of a company, an estate, a trust, a conservatorship, a guardianship, or an individual owners name. The act requires every registered owner, upon receipt of a registration card, to maintain the card or a copy thereof with the manufactured home, mobilehome, commercial coach, truck camper, or floating home for which it is issued. If a registration application is made in this state and the department is not satisfied as to the ownership of the manufactured home or mobilehome or the existence of foreign liens thereon, existing law authorizes the department to register the manufactured home or mobilehome and issue a registration card with distinctive markings, but requires the department to withhold issuance of a California certificate of title, unless the applicant presents sufficient documents regarding the applicants ownership the absence of any liens thereon or posts a bond. In addition, existing law authorizes the department to refuse registration or the renewal or transfer of registration of a manufactured home or mobilehome if the department is not satisfied that the applicant is entitled thereto. Existing law makes it unlawful for any person to fail or neglect properly to endorse, date, and deliver the certificate of title and, when having possession, to fail to deliver the registration card to a transferee who is lawfully entitled to a transfer of registration.

This bill would provide that an owner of a new or used manufactured home or mobilehome subject to registration pursuant to the Manufactured Housing Act of 1980 who sells or transfers ownership of the manufactured home or mobilehome would not be subject to civil or criminal liability for a violation of the act after the delivery of possession of the manufactured home or mobilehome, the compliance with specified requirements in existing law regarding transfer of title, and the delivery to the department of either a notice of transfer and release of liability, as specified, or the appropriate documents and fees for registration of the manufactured home or mobilehome to the new owner pursuant to the sale or transfer.

 UNFINISHED BUSINESS  

Bill No: SB 542

Author:

Amended: 6/21/17

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 12-0, 3/28/17

AYES: Beall, Cannella, Allen, Atkins, Bates, McGuire, Mendoza, Morrell, Roth, Skinner, Wieckowski, Wiener

NO VOTE RECORDED: Gaines

SENATE JUDICIARY COMMITTEE: 7-0, 4/18/17

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/15/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SENATE FLOOR: 40-0, 5/30/17

AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 73-0, 8/31/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill states that the owner of a new or used manufactured home or mobilehome who sells or transfers ownership of the home shall not be subject to civil or criminal liability for vehicle license fees or local property taxes after the delivery of possession of the home to the purchaser or transferee and provides specified notice to the Department of Housing and Community Development (HCD).

Assembly Amendments remove “homeowner” as defined from the definition of “owner.”

ANALYSIS:

Existing law:

1. Requires mobilehomes sold as new prior to July 1, 1980, to pay a vehicle license fee (VLF), and requires annual payment to HCD.
2. Provides that non-payment of the VLF constitutes a lien on the mobilehome, and prohibits HCD from issuing a duplicate or new certificate of title or registration card or amending the permanent title record of the mobilehome that is the subject of that lien.
3. Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT) until the applicant presents a tax clearance certificate (TCC) or conditional TCC issued by the county tax collector.
4. Requires the county tax collector to issue a TCC to a mobilehome owner if specified requirements are met.
5. Provides that LPT on unsecured property, including mobilehomes, are transferred from the secured roll to the unsecured roll of the corresponding year by the county auditor and are collected in the same manner as other delinquent taxes on the unsecured roll.
6. Authorizes the management of a mobilehome park to terminate a tenancy for failure of the homeowner or resident to comply with a local ordinance or state law or regulation relating to mobilehomes within a reasonable time after the homeowner receives a notice of noncompliance from the appropriate governmental agency.
7. Prohibits any person from using or causing to be used, or permitting to be used for occupancy, a mobilehome that does not conform to HCD’s registration requirements.
8. 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 through 2019.

This bill:

1. States that an owner of a manufactured home or mobilehome (hereinafter “home”) shall not be liable for taxes or fees related to ownership of a mobilehome that accrue after the date of compliance if the owner does both of the following:
   1. Properly endorses and delivers the certificate of title to the transferee, and
   2. Delivers the completed notice of sale or transfer form to HCD or deposits it in the mail, addressed to HCD.
2. States that this bill shall not be construed to impose any additional duties upon the owner who sells or transfers ownership of a home.
3. Defines “owner” as an owner of record, a legal owner, or a junior lienholder.

Background

HCD is responsible for titling and registering mobilehomes. Mobilehomes purchased before July 1, 1980, are treated as vehicles and subject to a VLF rather than an LPT. Mobilehomes purchased after July 1, 1980, however, are subject to LPT. Before transferring title of a mobilehome, a buyer of a mobilehome subject to LPT must obtain a TCC from the county tax collector, indicating that all property taxes have been paid. If a mobilehome is subject to VLF, the buyer must pay all fees and penalties to HCD before title can be transferred. Non-payment of VLF constitutes a lien on the mobilehome in favor of the state, and nonpayment of LPT means the county tax collector can pursue collection of the delinquent LPT in the same way as other delinquent taxes on the unsecured roll. If either of these situations arises, HCD cannot amend the title to reflect the new owner’s name, and therefore the new owner cannot obtain proof of ownership over the home.

Without proper title to a mobilehome, a buyer may face a number of issues. Current law provides that the buyer may be subject to eviction from a mobilehome park because parks are prohibited from renting to homes that do not conform to HCD’s registration requirements. Additionally, buyers cannot legally make repairs to the home, insure their home, or transfer ownership to another person.

Comments

1. Purpose. According to the author, this bill will amend current law to allow a mobilehome owner to sign a release of liability when they sell a mobilehome or manufactured home. The new law would be substantially similar to the process where an automobile owner notifies the Department of Motor Vehicles. In the past there had been safeguards to require compliance with registration and titling but those laws and processes have been repealed or not enforced by HCD. For example, as a cost saving measure, HCD has made it a business practice to not attempt to mail delinquent title holders if they do not receive a response within 180 days. Sections of the Health and Safety Code have been removed requiring homeowners to submit a duplicate registration to the park owner on an annual basis or requiring the decal on the outside of the home to indicate the current status of the registration fee.

This bill will implement a release of liability for sellers of manufactured home/mobilehomes that limits their exposure to the date of sale. By the seller informing HCD about the new owner HCD will be able to have up-to-date contact information to ensure proper registration and titling.

1. Widespread problem. Buying and selling mobilehomes often transpires informally, which means that buyers and sellers may not be aware of delinquent taxes and fees that prevent the transfer of title. Presently, there are few notification requirements for VLF delinquencies, and a buyer may only become aware of a delinquency when he or she attempts to transfer title of an already purchased mobilehome. If a seller does not pay these delinquent fees and a buyer is unable to do so, there is little else the buyer can do.
2. AB 587 (Chau, 2015) Abatement program. Last year, the Legislature passed and the Governor signed AB 587 (Chau, Chapter 396, Statues of 2016) , which created an 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 until 2019. This abatement program allows a buyer to transfer title in his or her name in instances where the mobilehome is subject to delinquent fees or taxes. For mobilehomes subject to VLF, applicants must first prove ownership to HCD and, upon the payment of reduced charges assessed by HCD or entry into a payment plan, title could transfer. For mobilehomes subject to LPT, HCD would issue the applicant a “conditional title” that is then taken to the county tax collector. Once the applicant pays a reduced LPT pursuant to the abatement program, the tax collector would update their property tax records and issue a tax liability certificate. This tax liability certificate would permit HCD to transfer title.
3. Limiting liability. This bill permits the former homeowner to reduce their liability once they sell their home and provide notice to HCD. In other words, if a subsequent purchaser fails to pay their VLF or LPT, the prior owner will not be liable. In addition, this bill provides notice to HCD that there is a new owner of the home and enables HCD to get in contact with them.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, ongoing HCD costs of up to $54,000 annually for up to ½ PY of staff time to process additional ownership transfer documentation and update the registration and titling database. (Mobilehome-Manufactured Home Revolving Fund)

SUPPORT: (Verified 8/31/17)

Golden State Manufactured Home Owners League

Western Manufactured Housing Communities Association

OPPOSITION: (Verified 8/31/17)

None received

ASSEMBLY FLOOR: 73-0, 8/31/17

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

No Vote Recorded: Bloom, Burke, Cristina Garcia, Eduardo Garcia, Quirk-Silva, Ridley-Thomas

Prepared by:

8/31/17 18:16:14

**** END ****

Date of Hearing: August 23, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 542

Author:(Leyva) – As Amended Ver:June 21, 2017

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

SUMMARY:

This bill protects a seller of a mobilehome from liability for taxes and fees accrued after the date of sale if certain steps are taken to notify the Department of Housing and Community Development (HCD) of the sale. Specifically, this bill:

1. Provides that an owner will not be liable for taxes or fees related to the ownership of a mobilehome that accrue after the date of sale if the owner does both of the following:
   1. Properly endorses and delivers the certificate of title to the transferee; and
   2. Delivers or mails the completed notice of sale or transfer form to HCD.
2. States that this bill may not be construed to impose any additional duties upon an owner who sells or transfers ownership of a mobilehome pursuant to any other law.

FISCAL EFFECT:

Ongoing HCD costs of up to $54,000 annually for up to ½ PY of staff time to process additional ownership transfer documentation and update the registration and titling database. (Mobilehome-Manufactured Home Revolving Fund)

COMMENTS:

1. Purpose. According to the author, there are likely thousands of homeowners who believe they own their mobilehomes, but the title has never been properly transferred to them and HCD is not aware of who the true owner is. A buyer may pay cash for the home, obtain a bill of sale, and take possession of the property without any problem. If the buyer subsequently tries to transfer title into his or her name and discovers that the previous owner fell behind on a tax bill, then problems arise. If the buyer cannot pay the delinquent tax bills, and the seller will not pay them or cannot be located, the buyer is left without legal proof of ownership of the home, which can cause a host of other issues such as the inability to legally make repairs to the home, or obtain insurance. In addition, HCD, the county tax collector, and the county tax assessor may be left with records that show outdated ownership information for the home, compounding the problem of large numbers of delinquent properties.

To address the problem of high nonconformance with HCD title and registration requirements, the Governor signed AB 587 (Chau), Chapter 396, Statutes of 2016. AB 587 took the approach of trying to increase compliance by mobilehome buyers. That bill established a three-year tax abatement program to encourage buyers to properly transfer title and register their mobilehomes with HCD by relieving them from liability for tax bills incurred by the seller and previous owner.

On the other hand, if the buyer does not complete the HCD process for transferring title of the mobilehome into his or her name, then the seller may be held liable for fees and property taxes that accrue even after the date of sale. This bill, addressing the same mobilehome titling and registration problems, takes a complementary approach to AB 587 by trying to increase compliance by sellers of mobilehomes by implementing a Release of Liability for sellers of mobilehomes that limits their exposure following the date of sale. By the seller informing HCD about the new owner, HCD will be able to have up-to-date contact information to ensure proper registration and titling.

1. Background. Homes that were purchased new prior to July 1, 1980, were treated as vehicles and not subject to local property taxes (LPT), but rather were subject to an “in lieu” vehicle license fee (VLF) paid annually to HCD. Mobilehomes that were purchased after July 1, 1980 are generally subject to LPT. Homeowners have the option to voluntarily transfer their homes from the VLF system to the LPT system, but not vice-versa. Prior to transferring title of a mobilehome, a buyer of a home on the LPT system must obtain a Tax Clearance Certificate (TCC) from the county tax collector indicating that all property taxes have been paid. Similarly, if the mobilehome is on the VLF system, all past due fees and penalties must be paid to HCD, as well as a use tax, prior to transfer of title. Regardless of whether a mobilehome is on the VLF or LPT system, delinquent fees or taxes prevent HCD from amending the title of that home under existing law.

Existing law requires that both the transferor and the transferee of a manufactured home or mobilehome execute a certificate of title at the time of the transfer and notify HCD, which shall amend the record of title accordingly. Unlike conventional homes that are sold through an escrow process, however, mobilehomes are often sold through a more informal process and, in practice, the responsibility for transferring title of a mobilehome and notifying HCD of the transaction often falls upon the buyer. Nonconformance with these HCD titling and registration requirements can cause a number of problems for mobilehome sellers and buyers alike.

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

Date of Hearing: July 11, 2017

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 542

Author:(Leyva) – As Amended Ver:June 21, 2017

PROPOSED CONSENT

SENATE VOTE: 40-0

SUBJECT: MANUFACTURED HOUSING ACT OF 1980: NOTICE OF TRANSFER AND RELEASE OF LIABILITY

KEY ISSUE: should a seller of a mobilehome be protected from liability for taxes and fees accrued after the date of the sale by delivering the certificate of title to the transferee and providing a notice of transfer to the department of housing and community development?

SYNOPSIS

The Department of Housing and Community Development (HCD) is responsible for the titling and registration of mobilehomes and manufactured homes. According to the author, the current HCD system is ineffective and plagued by outdated and incorrect ownership and registration information for thousands of mobilehomes. This can be attributed in part to the fact that mobilehomes are often sold through a more informal process than conventional homes, which are sold through an escrow process, and in practice the responsibility for transferring title of a mobilehome falls upon the buyer. Recognizing problems with the current state of mobilehome titling and registration in California, the Legislature enacted a three-year tax abatement program last year to remove obstacles that potentially discouraged parties from properly registering mobilehomes with HCD after a change in ownership.

This bill addresses a different aspect of the problem that was not addressed by last year's legislation. If the buyer does not complete the HCD process for transferring title of the mobilehome into his or her name, then the seller may be held liable for fees and property taxes accrued after the date of sale. In addition, HCD and county tax officials are also impacted because they are not able to update their ownership records if correct transfer of title information is not provided to them. To address these issues, this bill would allow a mobilehome owner to sign a release of liability form upon the sale of a mobilehome, and thereby limit the seller's liability for taxes, registration, or fees that accrue after the date of sale. To receive this protection, the bill would require the seller to properly endorse and deliver the certificate of title to the transferee, and then deliver or mail the completed Notice of Sale or Transfer (an existing form) to HCD. By ensuring that the seller may limit his or her own liability for future taxes or registration fees by completing the Notice of Sale or Transfer form, the author believes the bill will incentivize greater compliance by sellers with registration requirements. Proponents note that this process is substantially similar to the current process that vehicle owners use to notify the Department of Motor Vehicles of the sale of a car or truck, by which the seller is released from further liability or fees arising from the ownership of the vehicle. The bill is supported by groups representing both mobilehome owners and the owners of mobilehome parks, and has no known opposition. This bill previously was approved by the Senate without a single "No" vote, and passed the Assembly Housing and Community Development Committee by a 7-0 vote.

SUMMARY: Protects a seller of a mobilehome from liability for taxes and fees accrued after the date of sale if certain steps are taken to notify the Department of Housing and Community Development (HCD) of the sale. Specifically, this bill:

1. Provides that an owner shall not be liable for taxes or fees related to the ownership of a mobilehome that accrue after the date of sale if the owner does both of the following:
   1. Properly endorses and delivers the certificate of title to the transferee; and
   2. Delivers or mails the completed notice of sale or transfer form to HCD.
2. States that this bill shall not be construed to impose any additional duties upon an owner who sells or transfers ownership of a mobilehome pursuant to any other law.
3. Defines “owner” as the registered owner of record, the legal owner, or a junior lienholder, as specified.

EXISTING LAW:

1. Provides that all manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state shall be subject to annual registration with HCD and payment of registration fees. (Health & Safety Code Section 18075.5. All further references are to this code unless otherwise stated.)
2. Requires that the transferor and the transferee of a manufactured home, mobilehome, commercial coach, or floating home execute a certificate of title at the time of the transfer and notify HCD, which shall amend the record of title accordingly. (Section 18100.5.)
3. Subjects mobilehomes sold as new prior to July 1, 1980, to a vehicle license registration fee (VLF) and requires annual payment to HCD. (Sections 18115 and 18116.)
4. Provides that nonpayment of the VLF constitutes a lien on the mobilehome, and prohibits HCD from issuing a duplicate or new certificate of title or registration card or amending the permanent title record of the mobilehome that is the subject of that lien. (Section 18116.1.)
5. Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT), and requires HCD to withhold amending the title of any mobilehome subject to LPT until the applicant presents a tax clearance certificate (TCC) or conditional tax clearance certificate issued by the county tax collector. (Section 18092.7.)
6. Establishes a tax abatement program, until December 31, 2019, for mobilehome owners who cannot transfer title into their names due to delinquent taxes and fees that may have been incurred by prior owners. (Section 18116.1.)
7. Prohibits any person to use or cause, or permit to be used for occupancy, a mobilehome that does not conform to HCD's registration requirements. (Section 18550.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Last year, the Legislature approved and the Governor signed AB 587 (Chau), Ch. 396, Stats. 2016, which created a three-year tax abatement program to help mobilehome owners who cannot transfer title into their names because of delinquent taxes and fees incurred by the prior owner of the mobilehome. That legislation highlighted policy concerns about HCD's current system for recording the title and registration of mobilehomes and manufactured homes, including the facts, according to the author, that it is inaccurate, ineffective, and inefficient. The author further states:

In HCD’s finding of emergency adoption of regulation to implement AB 587 (2016), it found that “The cumulative amount for all outstanding account for all manufactured homes / mobilehomes in which registration renewal is delinquent through 2014 is approximately $51.5 million.” This outstanding amount proves that the current system has not been working and sellers should be able to limit their liability.

SB 542 would implement a Release of Liability for sellers of manufactured homes or mobilehomes that limits their exposure following the date of sale. By the seller informing the California Department of Housing and Community Development about the new owner, the Department will be able to have up-to-date contact information to ensure proper registration and titling.

Background on title and registration of mobilehomes. Homes that were purchased new prior to July 1, 1980 were treated as vehicles and not subject to local property taxes (LPT), but rather were subject to an “in lieu” vehicle license fee (VLF) paid annually to HCD. Mobilehomes that were purchased after July 1, 1980 are generally subject to LPT. Homeowners have the option to voluntarily transfer their homes from the VLF system to the LPT system, but not vice-versa. Prior to transferring title of a mobilehome, a buyer of a home on the LPT system must obtain a Tax Clearance Certificate (TCC) from the county tax collector indicating that all property taxes have been paid. Similarly, if the mobilehome is on the VLF system, all past due fees and penalties must be paid to HCD, as well as a use tax, prior to transfer of title. Regardless of whether a mobilehome is on the VLF or LPT system, delinquent fees or taxes prevent HCD from amending the title of that home under existing law.

Existing law requires that both the transferor and the transferee of a manufactured home or mobilehome execute a certificate of title at the time of the transfer and notify HCD, which shall amend the record of title accordingly. (Section 18100.5.) Unlike conventional homes that are sold through an escrow process, however, mobilehomes are often sold through a more informal process and, in practice, the responsibility for transferring title of a mobilehome and notifying HCD of the transaction often falls upon the buyer. Nonconformance with these HCD titling and registration requirements can cause a number of problems for mobilehome sellers and buyers alike. HCD and county tax officials are also impacted because they are not able to update their ownership records when either the buyer or seller does not transfer title or notify HCD of the sale.

According to the author, there are likely thousands of homeowners who believe they own their mobilehomes, but the title has never been properly transferred to them and HCD is not aware of who the true owner is. A buyer may pay cash for the home, obtain a bill of sale, and take possession of the property without any problem. If the buyer subsequently tries to transfer title into his or her name and discovers that the previous owner fell behind on a tax bill, then problems arise. If the buyer cannot pay the delinquent tax bills, and the seller will not pay them or cannot be located, the buyer is left without legal proof of ownership of the home, which can cause a host of other issues such as the inability to legally make repairs to the home, or obtain insurance. In addition, HCD, the county tax collector, and the county tax assessor may be left with records that show outdated ownership information for the home, compounding the problem of large numbers of delinquent properties. To address the problem of high nonconformance with HCD title and registration requirements, AB 587 took the approach of trying to increase compliance by mobilehome buyers. That bill established a three-year tax abatement program ("amnesty") to encourage buyers to properly transfer title and register their mobilehomes with HCD by relieving them from liability for tax bills incurred by the seller and previous owner.

On the other hand, if the buyer does not complete the HCD process for transferring title of the mobilehome into his or her name, then the seller may be held liable for fees and property taxes that accrue even after the date of sale. This bill, addressing the same mobilehome titling and registration problems, takes a complementary approach to AB 587 by trying to increase compliance by sellers of mobilehomes.

This bill would establish a release of liability for sellers of mobilehomes. Specifically, this bill would allow a mobilehome owner to sign a release of liability form when she sells a mobilehome, and thereby limit her liability for taxes, registration, or fees that accrue after the date of sale. To receive this protection, the bill would require the seller to properly endorse and deliver the certificate of title to the transferee, and then deliver or mail the completed Notice of Sale or Transfer form to HCD. (Form HCD RT 476.8; Available at http://www.hcd.ca.gov/ manufactured-mobile-home/docs/HCDRT476.8.pdf.) Although sellers can already comply with existing requirements to notify HCD of a sale by completing this form, proponents contend that too few of them do so because there is not enough incentive to ensure compliance. By ensuring that the seller may limit his or her own liability for future taxes or registration fees by completing the Notice of Sale or Transfer form, the author believes the bill will incentivize greater compliance by sellers with registration requirements. Proponents note that this process is substantially similar to the current process where vehicle owners complete a form that notifies the Department of Motor Vehicles upon sale of a car or truck, and are released from further liability or fees arising from ownership of the vehicle.

Under this bill, the term "owner" is defined to mean not only the owner of record registered with HCD, but also a legal owner or junior lienholder of the mobilehome. Under Section 18005.8, a "legal owner" is a person holding a security interest in a manufactured home, mobilehome, commercial coach, floating home, or truck camper perfected by filing the appropriate documents with HCD, while a "junior lienholder" is a person, other than a legal owner, who likewise possesses such a security interest in the property and has filed the appropriate documents with HCD.

ARGUMENTS IN SUPPORT: This bill is supported by associations representing both mobile home owners, and the owners of mobilehome parks. Western Manufactured Housing Communities Association (WMA), the statewide trade association representing owners of mobilehome parks, writes: "Over the years, there have been an increasing number of instances or scenarios in which the buyer of a mobilehome fails to record title. SB 542 would create a 'release of liability' which would exonerate the seller from any future liability in those instances in which the buyer doesn’t record title, leaving the seller 'on the hook' for accumulated taxes, fees and penalties."

The Golden State Manufactured Home Owners League (GSMOL) states: "In addition, by the seller informing the Department about a new owner, the state will continue to improve the contact information of new owners to ensure the proper registration and titling of all homes in the state."

REGISTERED SUPPORT / OPPOSITION:

Support

Golden State Manufactured Home Owners League

Western Manufactured Communities Association

Opposition

None on file

Analysis Prepared by: Anthony Lew / JUD. / (916) 319-2334

Date of Hearing: June 28, 2017

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

SBPCA Bill Id:SB 542

Author:(Leyva) – As Amended Ver:June 21, 2017

SENATE VOTE: 40-0

SUBJECT: Manufactured Housing Act of 1980: notice of transfer and release of liability

SUMMARY: Provides that the owner of a new or used manufactured home or mobilehome (hereinafter "mobilehome") who sells or transfers ownership of the home shall not be subject to civil or criminal liability for vehicle license fees or local property taxes after the delivery of possession of the home to the purchaser or transferee if the owner properly endorses and delivers the certificate of title to the transferee and delivers or mails to the Department of Housing and Community Development (HCD) the completed notice of sale or transfer form. Specifically, this bill:

1. Provides that an owner shall not be liable for taxes or fees related to the ownership of a mobilehome that accrue after the date of sale if the owner does both of the following:
   1. Properly endorses and delivers the certificate of title to the transferee; and
   2. Delivers or mails the completed notice of sale or transfer form to HCD.
2. States that this bill shall not be construed to impose any additional duties upon an owner who sells or transfers ownership of a mobilehome.
3. Defines “owner” as an owner of record, a legal owner, or a junior lienholder.

EXISTING LAW:

1. Subjects mobilehomes sold as new prior to July 1, 1980, to a vehicle license registration fee (VLF) and requires annual payment to HCD (Health and Safety Code Sections 18115-18116).
2. Provides that HCD must transfer a mobilehome which is subject to VLF to LPT upon a request for the transfer from the owner (Health and Safety Code Section 18119).
3. Provides that nonpayment of VLF constitutes a lien on the mobilehome, and prohibits HCD from issuing a duplicate or new certificate of title or registration card or amending the permanent title record of the mobilehome that is the subject of that lien (Health and Safety Code Section 18116.1).
4. Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT), and requires HCD to withhold amending the title of any mobilehome subject to LPT until the applicant presents a tax clearance certificate (TCC) or conditional tax clearance certificate issued by the county tax collector (Health and Safety Code Section 18092.7).
5. Requires the county tax collector to issue a TCC to a mobilehome owner if specified requirements are met (Revenue and Taxation Code Section 5832).
6. Provides that a TCC may indicate that no LPT is due or is likely to become due, or that any applicable LPT has been paid or will be paid in a manner not requiring the withholding of registration or the transfer of registration (Revenue and Taxation Code Section 5832).
7. Provides that LPT on unsecured property, including mobilehomes, are transferred from the secured roll to the unsecured roll of the corresponding year by the county auditor, and are collected in the same manner as other delinquent taxes on the unsecured roll (Revenue and Taxation Code Section 2921.5).
8. Provides that used mobilehomes subject to LPT are exempt from the payment of use tax upon resale or transfer (Health and Safety Code Section 18116.5).
9. Authorizes the management of a mobilehome park to terminate a tenancy for failure of the homeowner or resident to comply with a local ordinance or state law or regulation relating to mobilehomes within a reasonable time after the homeowner receives a notice of noncompliance from the appropriate governmental agency (Civil Code Section 798.56).
10. Prohibits any person to use or cause, or permit to be used for occupancy, a mobilehome that does not conform to HCD's registration requirements (Health and Safety Code Section 18550).
11. 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 through 2019 (Health and Safety Code Section 18116.1).

FISCAL EFFECT: According to the Senate Appropriations Committee, ongoing HCD costs of up to $54,000 annually for up to ½ PY of staff time to process additional ownership transfer documentation and update the registration and titling database. (Mobilehome-Manufactured Home Revolving Fund)

COMMENTS:

Background: HCD is responsible for the titling and registration of mobilehomes. Homes that were purchased new prior to July 1, 1980 were treated as vehicles and not subject to LPT, but rather to an “in lieu” VLF paid annually to HCD. Mobilehomes that were purchased after July 1, 1980 are generally subject to LPT.  Homeowners have the option to voluntarily transfer their homes from the VLF system to the LPT system, but not vice-versa.

Prior to transferring title of a mobilehome, a buyer of a home on the LPT system must obtain a TCC from the county tax collector indicating that all property taxes have been paid.  Similarly, if the mobilehome is on the VLF system, all past due fees and penalties must be paid to HCD prior to transfer of title, as well as a use tax. Non-payment of VLF constitutes a lien on the mobilehome in favor of the state, and nonpayment of LPT means the county tax collector can pursue collection of the delinquent LPT in the same way as other delinquent taxes on the unsecured roll. If either of these situations arises, HCD cannot amend the title to reflect the new owner’s name, and therefore the new owner cannot obtain proof of ownership over the home.

Nonconformance with HCD's titling requirements can cause a number of issues. It could be the basis of an eviction from a mobilehome park, as parks are prohibited from allowing homes that do not conform to HCD's registration requirements in a park. It also prevents owners from legally making repairs to the home, insuring the home, and from transferring ownership of the home to another party.

Due to the sometimes informal nature of mobilehome sales, buyers and sellers may not be aware that delinquent taxes and fees prevent title from transferring. Sellers may not even be aware that a delinquency exists because of, for example, limited notification requirements for VLF delinquencies, or outdated ownership information at the county or state level. In these situations, a buyer may only become aware of the delinquency when he or she tries to transfer title at HCD. If a seller does not pay the delinquent fees or taxes and associated penalties, and the buyer cannot pay them but has already purchased the mobilehome, they are left with few options other than to keep the home with an outdated title.

AB 587 abatement program: Last year, the Legislature passed and the Governor signed AB 587 (Chau, Chapter 396, Statues of 2016) , which created an 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 until 2019. This abatement program allows a buyer to transfer title in his or her name in instances where the mobilehome is subject to delinquent fees or taxes. For mobilehomes subject to VLF, applicants must first prove ownership to HCD and, upon the payment of reduced charges assessed by HCD or entry into a payment plan, title will transfer. For mobilehomes subject to LPT, HCD would issue the applicant a “conditional title” that is then taken to the county tax collector. Once the applicant pays a reduced LPT pursuant to the abatement program, the tax collector would update their property tax records and issue a tax liability certificate. This tax liability certificate would permit HCD to transfer title.

Need for the bill: According to the author, in HCD’s findings for the emergency adoption of regulations to implement AB 587, it found that “the cumulative amount for all outstanding account for all manufactured homes / mobilehomes in which registration renewal is delinquent through 2014 is approximately $51.5 million.” This outstanding amount proves that the current system has not been working and sellers should be able to limit their liability once ownership has been transferred. This bill would implement a Release of Liability for sellers of mobilehomes that limits their exposure following the date of sale. By the seller informing HCD about the new owner, HCD will be able to have up-to-date contact information to ensure proper registration and titling.

Related legislation:

AB 587 (Chau), Chapter 396, Statutes of 2016: Established a three-year tax and penalty abatement program for owners of mobilehomes who are unable to properly register their ownership interest with the HCD because of past due taxes and fees that may have been incurred by previous owners, as specified.

Double referral: If SB 542 passes out of this committee, the bill will be referred to the Committee on Judiciary.

REGISTERED SUPPORT / OPPOSITION:

Support

Golden State Manufactured Home Owners League

Western Manufactured Housing Communities Association

Opposition

None on file

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

 THIRD READING  

Bill No: SB 542

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 12-0, 3/28/17

AYES: Beall, Cannella, Allen, Atkins, Bates, McGuire, Mendoza, Morrell, Roth, Skinner, Wieckowski, Wiener

NO VOTE RECORDED: Gaines

SENATE JUDICIARY COMMITTEE: 7-0, 4/18/17

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/15/17

AYES: Lara, Bates, Beall, Bradford, Hill, Nielsen, Wiener

SUBJECT:

SOURCE: Author

DIGEST:

This bill states that the owner of a new or used manufactured home or mobilehome who sells or transfers ownership of the home shall not be subject to civil or criminal liability for vehicle license fees or local property taxes after the delivery of possession of the home to the purchaser or transferee and provides specified notice to the Department of Housing and Community Development (HCD).

ANALYSIS:

Existing law:

1. Requires mobilehomes sold as new prior to July 1, 1980, to pay a vehicle license fee (VLF), and requires annual payment to HCD.
2. Provides that non-payment of the VLF constitutes a lien on the mobilehome, and prohibits HCD from issuing a duplicate or new certificate of title or registration card or amending the permanent title record of the mobilehome that is the subject of that lien.
3. Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT) until the applicant presents a tax clearance certificate (TCC) or conditional TCC issued by the county tax collector.
4. Requires the county tax collector to issue a TCC to a mobilehome owner if specified requirements are met.
5. Provides that LPT on unsecured property, including mobilehomes, are transferred from the secured roll to the unsecured roll of the corresponding year by the county auditor and are collected in the same manner as other delinquent taxes on the unsecured roll.
6. Authorizes the management of a mobilehome park to terminate a tenancy for failure of the homeowner or resident to comply with a local ordinance or state law or regulation relating to mobilehomes within a reasonable time after the homeowner receives a notice of noncompliance from the appropriate governmental agency.
7. Prohibits any person from using or causing to be used, or permitting to be used for occupancy, a mobilehome that does not conform to HCD’s registration requirements.
8. 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 through 2019.

This bill:

1. States that an owner of a manufactured home or mobilehome (hereinafter “home”) shall not be liable for taxes or fees related to ownership of a mobilehome that accrue after the date of compliance if the owner does both of the following:
   1. Properly endorses and delivers the certificate of title to the transferee, and
   2. Delivers the completed notice of sale or transfer form to HCD or deposits it in the mail, addressed to HCD.
2. States that this bill shall not be construed to impose any additional duties upon the owner who sells or transfers ownership of a home.
3. Defines “owner” as the homeowner, an owner of record, a legal owner, and a junior lienholder.

Comments

1. Purpose. According to the author, this bill will amend current law to allow a mobilehome owner to sign a release of liability when they sell a mobilehome or manufactured home. The new law would be substantially similar to the process where an automobile owner notifies the Department of Motor Vehicles. In the past there had been safeguards to require compliance with registration and titling but those laws and processes have been repealed or not enforced by HCD. For example, as a cost saving measure, HCD has made it a business practice to not attempt to mail delinquent title holders if they do not receive a response within 180 days. Sections of the Health and Safety Code have been removed requiring homeowners to submit a duplicate registration to the park owner on an annual basis or requiring the decal on the outside of the home to indicate the current status of the registration fee.

This bill will implement a release of liability for sellers of manufactured home/mobilehomes that limits their exposure to the date of sale. By the seller informing HCD about the new owner HCD will be able to have up-to-date contact information to ensure proper registration and titling.

1. Background. HCD is responsible for titling and registering mobilehomes. Mobilehomes purchased before July 1, 1980, are treated as vehicles and subject to a VLF rather than an LPT. Mobilehomes purchased after July 1, 1980, however, are subject to LPT. Before transferring title of a mobilehome, a buyer of a mobilehome subject to LPT must obtain a TCC from the county tax collector, indicating that all property taxes have been paid. If a mobilehome is subject to VLF, the buyer must pay all fees and penalties to HCD before title can be transferred. Non-payment of VLF constitutes a lien on the mobilehome in favor of the state, and nonpayment of LPT means the county tax collector can pursue collection of the delinquent LPT in the same way as other delinquent taxes on the unsecured roll. If either of these situations arises, HCD cannot amend the title to reflect the new owner’s name, and therefore the new owner cannot obtain proof of ownership over the home.

Without proper title to a mobilehome, a buyer may face a number of issues. Current law provides that the buyer may be subject to eviction from a mobilehome park because parks are prohibited from renting to homes that do not conform to HCD’s registration requirements. Additionally, buyers cannot legally make repairs to the home, insure their home, or transfer ownership to another person.

1. Widespread problem. Buying and selling mobilehomes often transpires informally, which means that buyers and sellers may not be aware of delinquent taxes and fees that prevent the transfer of title. Presently, there are few notification requirements for VLF delinquencies, and a buyer may only become aware of a delinquency when he or she attempts to transfer title of an already purchased mobilehome. If a seller does not pay these delinquent fees and a buyer is unable to do so, there is little else the buyer can do.
2. AB 587 (Chau, 2015) Abatement program. Last year, the Legislature passed and the Governor signed AB 587 (Chau, Chapter 396, Statues of 2016) , which created an 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 until 2019. This abatement program allows a buyer to transfer title in his or her name in instances where the mobilehome is subject to delinquent fees or taxes. For mobilehomes subject to VLF, applicants must first prove ownership to HCD and, upon the payment of reduced charges assessed by HCD or entry into a payment plan, title could transfer. For mobilehomes subject to LPT, HCD would issue the applicant a “conditional title” that is then taken to the county tax collector. Once the applicant pays a reduced LPT pursuant to the abatement program, the tax collector would update their property tax records and issue a tax liability certificate. This tax liability certificate would permit HCD to transfer title.
3. Limiting liability. This bill permits the former homeowner to reduce their liability once they sell their home and provide notice to HCD. In other words, if a subsequent purchaser fails to pay their VLF or LPT, the prior owner will not be liable. In addition, this bill provides notice to HCD that there is a new owner of the home and enables HCD to get in contact with them.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee ongoing HCD costs of up to $54,000 annually for up to ½ PY of staff time to process additional ownership transfer documentation and update the registration and titling database. (Mobilehome-Manufactured Home Revolving Fund)

SUPPORT: (Verified 5/16/17)

Golden State Manufactured Home Owners League

Western Manufactured Housing Communities Association

OPPOSITION: (Verified 5/16/17)

None received

Prepared by:

5/17/17 9:53:32

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 542 (Leyva) - Manufactured Housing Act of 1980: notice of transfer and release of liability

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

SB 542 would specify that the seller of a manufactured home is not liable for any taxes or fees that accrue after the date by which the certificate of title is endorsed and delivered to the buyer, and the completed notice of sale or transfer form is delivered to the Department of Housing and Community Development (HCD).

Fiscal Impact:

Ongoing HCD costs of up to $54,000 annually for up to ½ PY of staff time to process additional ownership transfer documentation and update the registration and titling database. (Mobilehome-Manufactured Home Revolving Fund)

Background:

Existing law requires HCD to maintain a title registry of all mobilehomes and manufactured homes in the state. Owners of mobilehomes sold as new before July 1, 1980 are required to pay an annual vehicle license fee (VLF) to HCD in lieu of a local property tax, which is deposited into the General Fund, in addition to other annual fees. Existing law specifies that failure to pay the VLF by the due date results in a 20 percent delinquency penalty, and nonpayment of the VLF, annual fees, and any penalties constitutes a lien on the mobilehome. Until the lien is paid, HCD is prohibited from issuing duplicate or new title or registration documents, and from amending existing title records for purpose of transferring any ownership interest in the mobilehome.

Existing law requires the owner of any mobilehome or manufactured home sold after July 1, 1980 to pay the local property tax as personal property, imposed at a rate of 1 percent of the assessed value. Existing law specifies that failure to pay property taxes by the due date results in a 10 percent delinquency penalty and additional interest charges of 1.5 percent per month (18 percent per year), as specified. HCD is required to withhold registration or transfer of registration of any mobilehome or manufactured home that is subject to local property taxation until the applicant presents a tax clearance certificate or conditional tax clearance certificate issued by the county tax collector that indicates satisfaction of tax liability. A tax collector is required to issue a tax clearance certificate when he or she finds that no local property tax is due or is likely to become due, or that any applicable local property taxes have been paid or are to be paid in a manner not requiring the withholding of registration or transfer of registration of a mobilehome.

Existing law establishes a three-year tax abatement program through 2019 for mobilehome and manufactured home owners who cannot transfer title into their name due to delinquent taxes and fees that may have been incurred by previous owners. The abatement program is intended to be an incentive that allows clearance for a buyer to properly register the mobilehome or manufactured home with HCD by limiting their liability for taxes and fees only to the date of purchase.

Proposed Law:

SB 542 relieves the owner of a mobilehome or manufactured home from liability for taxes or fees that accrue after the date of compliance if the owner does both of the following:

• Properly endorses and delivers the certificate of title to the transferee, as specified.
• Delivers the completed notice of sale or transfer form to HCD, or deposits that notice in the mail addressed to HCD.

Related Legislation:

AB 587 (Chau), Chap. 396/2016, established a three-year tax and penalty abatement program for owners of mobilehomes who are unable to properly register their ownership interest with the HCD because of past due taxes and fees that may have been incurred by previous owners, as specified.

Staff Comments:

The current abatement program, as enacted by AB 587, provides an incentive for buyers to properly title and register their mobilehome or manufactured home by relieving them of liability for taxes and fees that were incurred prior to the date of purchase. This bill would provide an incentive for sellers to submit their documentation for transferring ownership in a timely fashion by limiting their tax and fee liability to those incurred up to the date of compliance. Under current law, the seller remains owner of record and continues to be legally liable for the property, including payment of taxes and fees, until the buyer submits a completed registration form package. HCD anticipates that the incentive in this bill would result in an increase in the volume of ownership transfer submissions, and estimates up to ½ PY of additional staff workload at a cost of up to $54,000.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: SB 542 (Author:Leyva)

Version: March 21, 2017

Hearing Date: April 18, 2017

Fiscal: Yes

Urgency: No

Consultant: TSG

SUBJECT

Manufactured Housing Act of 1980: notice of transfer and release of liability

DESCRIPTION

This bill would cut off the former owner’s obligation to pay any further taxes or fees accruing on a manufactured home (including mobilehomes, commercial coaches, and floating homes) once the former owner has: (1) made proper endorsement and delivery of the certificate of title to the transferee; and (2) delivered to the Housing and Community Development (HCD) department a notice of transfer form as required by HCD.

(This analysis reflects author’s amendments to be taken in Committee. See Comment 2.)

BACKGROUND

When someone sells or transfers their manufactured home or mobilehome to someone else, the parties are supposed to execute a certificate of title documenting the change in ownership. They are also supposed to notify HCD of the transaction so that HCD can update its ownership records. This helps to facilitate tracking of manufactured home and mobilehome registration, and the associated payment of fees, which owners are supposed to do annually. (Health & Saf. Code Sec. 18075.5.)

Maintaining these records and collecting these fees has become a chronic problem, in large measure because in many instances HCD does not know who owns the manufactured homes and mobilehomes since they are neither properly titled nor registered. Many manufactured homes and mobilehomes change hands under relatively informal circumstances in which no title is ever passed. Such is the informality of the market that some manufactured home and mobilehome owners may not even be aware of the requirement that they register their home with HCD each year. As a result, in 2015, HCD estimated that there were 160,000 California manufactured homes and mobilehomes that lacked proper title and registration. HCD has estimated that: “[t]he cumulative amount for all homes in which registration renewal is outstanding or delinquent… is approximately $51.5 million.” (Finding of Emergency for Proposed Fee and Tax Waiver Program, Department of Housing and Community Development Division of Codes and Standards, p. 16 <http://www.hcd.ca.gov/manufactured-mobile-home/docs/AB587FOE.pdf> [as of Apr. 6, 2017].)

This bill would incentivize people selling or transferring their manufactured home to formalize the transaction legally and to notify HCD of the conveyance, by providing an explicit release from further tax and registration liability in exchange. According to the bill’s proponents, this would enable the former owners to rest assured that they will not incur any further tax or registration liability on the home after the transfer and also help HCD to maintain current information on new owners.

CHANGES TO EXISTING LAW

Existing law subjects all manufactured homes, mobilehomes, commercial coaches, and floating homes sold or used within this state shall be subject to annual registration with HCD and payment of registration fees. (Health & Saf. Code Sec. 18075.5.)

Existing law directs HCD to provide the owner of a manufactured home, mobilehome, commercial coach, or floating home with title to it upon intial registration with HCD. (Health & Saf. Code Sec. 18090.5.)

Existing law requires that the transferor and the transferee of a manufactured home, mobilehome, commercial coach, or floating home execute a certificate of title at the time of the transfer and notify HCD, which shall amend the record of title accordingly.. (Health & Saf. Code Sec. 18100.5.)

Existing law states that anyone who knowingly violates the laws regarding licensing and title or registration of a manufactured home is guilty of a misdemeanor punishable by a fine of up to $2,000 and imprisonment for up to 30 days, or both, and may also be assessed civil penalties of up to $2,000 per violation by HCD. (Health & Saf. Code Sec. 18021.5.)

This bill states that the owner of a new or used manufactured home or mobilehome (hereinafter “home”) who sells or transfers ownership of the home shall not be liable for any taxes or fees accruing after that owner:

• has made proper endorsement and delivery of the certificate of title to the transferee; and
• has delivered to the department or has deposited in the United States mail, addressed to the department, the notice of transfer form as required by the department.

COMMENT

1. Stated need for the bill

According to the author:

[T]he registration and titling of mobilehomes and manufactured homes in California has become ineffective. Unlike conventional homes that usually go through an escrow process, the onus to transfer title resides with the buyer. Hence, if the buyer does not complete the paperwork with the California Department of Housing and Community Development (Department), the seller (previous owner) may be liable for past due fees and property taxes with penalties.

There have historically been safeguards to require compliance with registration and titling, but those laws and processes have been repealed or not enforced by the Department…

In support, the Golden State Manufactured Home Owners League writes:

…SB 542 would implement a release of liability for sellers of manufactured homes for the purpose of limiting their exposure following the date of sale. In addition, by the seller informing the Department about a new owner, the state will continue to improve the contact information of new owners to ensure the proper registration and titling of all homes in the state…

In further support, Western Manufactured Housing Communities Association writes:

…This bill would create a new process and form for sellers of manufactured homes or mobilehomes to inform the Department of Housing and Community Development of the new purchaser similar to the Department of Motor Vehicles process when a car is sold… Over the years, there have been an increasing number of instances or scenarios in which the buyer of a mobilehome fails to record title. SB 542 would create a “release of liability” which would exonerate the seller from any future liability in those instances in which the buyer doesn’t record title, leaving the seller “on the hook” for accumulated taxes, fees and penalties…

2. Author’s amendments

The author offers the following amendments for the purposes of clarifying and simplifying the bill:

Amendent 1

On page 2, strike out lines 3 to 13, inclusive, strike out page 3, on page 4, strike out lines 22 to 34 inclusive, and insert:

18107. (a) An owner shall not be liable for taxes or fees pursuant to Article 6 (commencing with Section 18114) that accrue after the date of compliance if the owner does both of the following:

1. Properly endorses and delivers the certificate of title to the transferee as provided in this code.
2. Delivers to the Department of Housing and Community Development or deposits in the United States mail, addressed to the department, the completed notice of sale or transfer form developed by the department.

Amendment 2

On page 4, in line 36, strike out “(c)” and insert:

(b)

Amendment 3

On page 4, in line 39, strike out “(d)” and insert:

(c)

3. Challenges to formalizing manufactured home transfers

Under existing law, mobilehomes are taxed either as vehicles under the Vehicle License Fee program, or as property subject to local property taxes. When sold as new, the Manufactured Housing Act of 1980 (Health & Saf. Code 18000 et seq.) requires mobilehome dealers to register and establish legal title of a mobilehome with HCD in the name of the new owner. HCD issues title to the new registered owner or to the lien holder in cases where the home is financed. Until 2001, HCD issued owners of mobilehomes registration decals – much like an automobile’s – which the owner was required to place in a specific location outside the mobilehome. However, in 2000, the Legislature passed AB 984 (Correa, Ch. 23, Stats. 2000), which eliminated this requirement, and instead left to HCD and its inspectors the duty to enforce compliance with titling and registration requirements.

Unlike the formal sale process for real property, transferring ownership of a mobilehome is often done informally, and as a consequence, parties to a sale transaction may not realize that a mobilehome must be re-registered and titled in the name of the new owner or purchaser. Consequently, California now has an unknown number of mobilehomes that are improperly registered or titled, leading to difficulties in collecting property taxes or vehicle license fees from the appropriate party.

Support: Golden State Manufactured Home Owners League; Western Manufactured Communities Association

Opposition: None known

HISTORY

Source: Senate Select Committee on Manufactured Home Communities

Related Pending Legislation: None known

Prior Legislation: AB 587 (Chau, Chapter 396, Statutes of 2016) created an 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.

Prior Vote: Senate Transportation and Housing Committee (Ayes 12, Noes 0)

**************

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: March 28, 2017

SUBJECT: .

DIGEST: This bill states that the owner of a new or used manufactured home or mobilehome who sells or transfers ownership of the home shall not be subject to civil or criminal liability for vehicle license fees or local property taxes after the delivery of possession of the home to the purchaser or transferee and provides specified notice to the Department of Housing and Community Development (HCD).

ANALYSIS:

Existing law:

1. Requires mobilehomes sold as new prior to July 1, 1980, to pay a vehicle license fee (VLF), and requires annual payment to HCD.
2. Provides that non-payment of the VLF constitutes a lien on the mobilehome, and prohibits HCD from issuing a duplicate or new certificate of title or registration card or amending the permanent title record of the mobilehome that is the subject of that lien.
3. Provides that mobilehomes not subject to the VLF are subject to local property tax (LPT) until the applicant presents a tax clearance certificate (TCC) or conditional TCC issued by the county tax collector.
4. Requires the county tax collector to issue a TCC to a mobilehome owner if specified requirements are met.

1. Provides that LPT on unsecured property, including mobilehomes, are transferred from the secured roll to the unsecured roll of the corresponding year by the county auditor and are collected in the same manner as other delinquent taxes on the unsecured roll.
2. Authorizes the management of a mobilehome park to terminate a tenancy for failure of the homeowner or resident to comply with a local ordinance or state law or regulation relating to mobilehomes within a reasonable time after the homeowner receives a notice of noncompliance from the appropriate governmental agency.
3. Prohibits any person from using or causing to be used, or permiting to be used for occupancy, a mobilehome that does not conform to HCD’s registration requirements.
4. 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 through 2019.

This bill:

1. States that the owner of a new or used manufactured home or mobilehome (hereinafter “home”) who sells or transfers ownership of the home shall not be subject to civil or criminal liability after the delivery of possession of the home to the purchaser or transferee and if both of the following requirements are met:
   1. The owners has endorsed, released, and delivered the certificate of title or, if the certificate is unavailable, complied with HCD requirements for the transfer of title to relinquish all rights, title, and interest in and to the home, and
   2. The owner has delivered or mailed to HCD, either of the following:
   3. Notice of transfer and release of liability endorsed by the purchaser, or
   4. The registration documents and fees required by HCD for the sale or transfer of the home to the new owner
2. Requires HCD to prepare and adopt a notice of transfer and release of liability form. The form shall require the name, address, and current phone number of the buyer and seller. The form shall also include the following statement: “Before your name is removed from the records of the Department of Housing and Community Development as the owner, the new owner must apply for a transfer of ownership using the endorsed certificate of title received from you and the new owner must complete all of the transfer requirements.”
3. States that this bill shall not be construed to impose any additional duties upon the owner who sells or transfers ownership of a home
4. Defines “owner” as the homeowner, an owner of record, a legal owner, and a junior lienholder.

COMMENTS:

1. Purpose. According to the author, this bill will amend current law to allow a mobilehome owner to sign a release of liability when they sell a mobilehome or manufactured home. The new law would be substantially similar to the process where an automobile owner notifies the Department of Motor Vehicles. In the past there had been safeguards to require compliance with registration and titling but those laws and processes have been repealed or not enforced by HCD. For example, as a cost saving measure, HCD has made it a business practice to not attempt to mail delinquent title holders if they do not receive a response within 180 days. Sections of the Health and Safety Code have been removed requiring homeowners to submit a duplicate registration to the park owner on an annual basis or requiring the decal on the outside of the home to indicate the current status of the registration fee.

This bill will implement a Release of Liability for sellers of manufactured home/mobilehomes that limits their exposure to the date of sale. By the seller informing the Department about the new owner the Department will be able to have up-to-date contact information to ensure proper registration and titling.

1. Background. HCD is responsible for titling and registering mobilehomes. Mobilehomes purchased before July 1, 1980, are treated as vehicles and subject to a VLF rather than an LPT. Mobilehomes purchased after July 1, 1980, however, are subject to LPT. Before transferring title of a mobilehome, a buyer of a mobilehome subject to LPT must obtain a TCC from the county tax collector, indicating that all property taxes have been paid. If a mobilehome is subject to VLF, the buyer must pay all fees and penalties to HCD before title can be transferred. Non-payment of VLF constitutes a lien on the mobilehome in favor of the state, and nonpayment of LPT means the county tax collector can pursue collection of the delinquent LPT in the same way as other delinquent taxes on the unsecured roll. If either of these situations arises, HCD cannot amend the title to reflect the new owner’s name, and therefore the new owner cannot obtain proof of ownership over the home.

Without proper title to a mobilehome, a buyer may face a number of issues. Current law provides that the buyer may be subject to eviction from a mobilehome park because parks are prohibited from renting to homes that do not conform to HCD’s registration requirements. Additionally, buyers cannot legally make repairs to the home, insure their home, or transfer ownership to another person.

1. Widespread problem. Buying and selling mobilehomes often transpires informally, which means that buyers and sellers may not be aware of delinquent taxes and fees that prevent the transfer of title. Presently, there are few notification requirements for VLF delinquencies, and a buyer may only become aware of a delinquency when he or she attempts to transfer title of an already purchased mobilehome. If a seller does not pay these delinquent fees and a buyer is unable to do so, there is little else the buyer can do.
2. AB 587 (Chau, 2015) Abatement program. Last year, the Legislature passed and the Governor signed AB 587 (Chau, Chapter 396, Statues of 2016) , which created an 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 until 2019. This abatement program allows a buyer to transfer title in his or her name in instances where the mobilehome is subject to delinquent fees or taxes. For mobilehomes subject to VLF, applicants must first prove ownership to HCD and, upon the payment of reduced charges assessed by HCD or entry into a payment plan, title could transfer. For mobilehomes subject to LPT, HCD would issue the applicant a “conditional title” that is then taken to the county tax collector. Once the applicant pays a reduced LPT pursuant to the abatement program, the tax collector would update their property tax records and issue a tax liability certificate. This tax liability certificate would permit HCD to transfer title.
3. Limiting liability. This bill would permit the former homeowner to reduce their liability once they sell their home and provide notice to HCD. In other words, if a subsequent purchaser fails to pay their VLF or LPT, the prior owner will not be liable. In addition, this bill would provide notice to HCD that there is a new owner of the home and enable HCD to get in contact with them.
4. Double Referral. This bill has been double referred to the Senate Judiciary committee.

Related Legislation:

AB 587 (Chau, Chapter 396, Statues of 2016) — created an 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.

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

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

March 28, 2017.)

SUPPORT:

Golden State Manufactured Home Owners League

Western Manufactured Housing Communities Association

OPPOSITION:

None received.

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