Existing law, the Mobilehome Residency Law, requires the owner of a mobilehome park who enters into a written listing agreement with a licensed real estate broker for the sale of the mobilehome park or who offers to sell the mobilehome park to any party to provide written notice of the owners intention to sell to specified members of a resident organization formed by homeowners for purposes of converting the mobilehome park to condominium or stock cooperative ownership interests and for purchasing the mobilehome park. Existing law requires the owner to provide this notice not less than 30 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. Existing law prohibits an offer to sell a park from being construed as an offer unless it is initiated by the park owner or their agent. Existing law provides various exceptions to this notice requirement, including that no notice is required unless the resident organization has first furnished the park owner or park manager with a written notice of the name and address of the president, secretary, and treasurer of the resident organization, as specified.

This bill would require the owner to provide the above-described notice if they accept an offer from any buyer. The bill would also require the owner to provide the above-described notice to all residents of the mobilehome park and the Department of Housing and Community Development not less than 120 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. The bill would grant the resident organization a right of first refusal to the mobilehome park and give them 6 months 120 days from the time they receive the above-described notice to make an offer. The bill would require the owner to engage in good faith negotiations, as defined, with the resident organization if they are interested in purchasing the park and prohibit the owner from negotiating with or accepting an offer from another party until the above-described 6-month 120-day right of first refusal time period has elapsed. The bill would remove the above-described exceptions to the notice requirement and would remove the prohibition on an offer to sell a park from being construed as an offer unless it is initiated by the park owner or their agent.

Existing law, the Mobilehome Residency Law, requires the owner of a mobilehome park who enters into a written listing agreement with a licensed real estate broker for the sale of the mobilehome park or who offers to sell the mobilehome park to any party to provide written notice of the owners intention to sell to specified members of a resident organization formed by homeowners for purposes of converting the mobilehome park to condominium or stock cooperative ownership interests and for purchasing the mobilehome park. Existing law requires the owner to provide this notice not less than 30 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. Existing law prohibits an offer to sell a park from being construed as an offer unless it is initiated by the park owner or their agent. Existing law provides various exceptions to this notice requirement. requirement, including that no notice is required unless the resident organization has first furnished the park owner or park manager with a written notice of the name and address of the president, secretary, and treasurer of the resident organization, as specified.

This bill would require the owner to also provide the above-described notice if they accept an offer from any buyer. The bill would also require the owner to provide the above-described notice to all residents of the mobilehome park and the Department of Housing and Community Development not less than 60 120 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. The bill would grant the resident organization a right of first refusal to the mobilehome park and give them six 6 months from the time they receive the above-described notice to make an offer. The bill would require the owner to engage in good faith negotiations good faith negotiations, as defined, with the resident organization if they are interested in purchasing the park and prohibit the owner from negotiating with or accepting an offer from another party until the above-described six month 6-month time period has elapsed. The bill would remove the above-described exceptions to the notice requirement and would remove the prohibition on an offer to sell a park from being construed as an offer unless it is initiated by the park owner or their agent.

Existing law, the Mobilehome Residency Law, requires the owner of a mobilehome park who enters into a written listing agreement with a licensed real estate broker for the sale of the mobilehome park or who offers to sell the mobilehome park to any party to provide written notice of the owners intention to sell to specified members of a resident organization formed by homeowners for purposes of converting the mobilehome park to condominium or stock cooperative ownership interests and for purchasing the mobilehome park. Existing law requires the owner to provide this notice not less than 30 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. Existing law provides various exceptions to this notice requirement.

This bill would require the owner to also provide the above-described notice to all residents of the mobilehome park and the Department of Housing and Community Development not less than 60 days nor more than one year before entering into the listing agreement or offering to sell the mobilehome park. The bill would grant the resident organization a right of first refusal to the mobilehome park and give them six months from the time they receive the above-described notice to make an offer. The bill would require the owner to engage in good faith negotiations with the resident organization if they are interested in purchasing the park and prohibit the owner from negotiating with or accepting an offer from another party until the above-described six month time period has elapsed.

Date of Hearing: May 15, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2539

Author:(Connolly) – As Amended Ver:April 24, 2024

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

SUMMARY:

This bill enacts the Mobilehome Resident Opportunity to Purchase Act, providing residents of a mobilehome park with enhanced notice of an owner’s intention to sell and providing mobilehome park resident organizations (ROs) the right of first refusal to purchase the mobilehome park.

Specifically, this bill:

1. Increases the notice timeline under which a mobilehome park owner must provide written notice of their intention to sell the mobilehome park from not less than 30 days to not less than 120 days, nor more than one year, before entering into a written listing agreement with a licensed real estate broker for the sale of the park, offering to sell the park to any party, or accepting an offer from any buyer.
2. Modifies the requirement for the written notice to be provided by first-class mail or by personal delivery to specified officers of an RO, as specified, by also requiring delivery of the notice to all residents of the mobilehome park and the Department of Housing and Community Development (HCD).
3. Provides a RO the right of first refusal to purchase the mobilehome park and requires a RO interested in purchasing the park to make an offer within 120 days of receiving the notice in 1, above.
4. Requires a mobilehome park owner to engage in good-faith negotiations with the RO, including by providing a written response within seven calendar days of receiving an offer from a RO, which must accept or reject the offer, and if rejected, must include certain information regarding an acceptable offer and why the offer is being rejected.
5. Prohibits an owner from negotiating with or accepting an offer from another party until 120 days have elapsed from delivery of the notice in 1, above.
6. Deletes an existing requirement that an offer to sell a park must not be construed as an offer unless it is initiated by the park owner or agent.
7. Deletes an existing exemption that a park owner is not required to comply with the 30-day written notice requirement of intention to sell the park unless certain conditions are met.

FISCAL EFFECT:

1. Cost pressures (Trial Court Trust Fund, General Fund) of an unknown, but likely significant, amount to the courts to adjudicate lawsuits filed to determine whether this bill constitutes an unconstitutional taking in violation of the U.S. Constitution and controlling California case law. Actual costs will depend on the number of lawsuits filed and the amount of court time needed to adjudicate each case. It generally costs approximately $1,000 to operate a courtroom for one hour. If 10 suits are filed and each takes five days of court time to resolve, the resulting cost would be $400,000 for courtroom operation. Although courts are not funded on the basis of workload, increased pressure on the Trial Court Trust Fund may create a need for increased funding for courts from the General Fund. The Governor’s proposed fiscal year 2024-25 budget proposes $83.1 million ongoing from the General Fund to backfill declining revenue to the Trial Court Trust Fund.
2. HCD estimates minor and absorbable costs.
3. Potential costs to local agencies of an unknown amount in the form of foregone property tax revenues to the extent the purchase of a mobilehome park by a nonprofit RO is exempt from reassessment for property tax purposes.

According to the Legislative Analyst’s Office, the General Fund faces a structural deficit in the tens of billions of dollars over the next several fiscal years. 

COMMENTS:

1. Purpose. According to the author:

[This bill] recognizes the need for a more equitable process, granting mobilehome park residents the time required to form a resident organization for the purpose of purchasing their community. The bill proposes a reasonable extension to the notice period, providing residents with six months from the receipt of the intention to sell notice. [This bill] embodies principles of fairness and inclusivity, offering a balanced approach to mobilehome park sales. This bill will allow us to take a significant step toward fostering resilient communities, preserving affordable housing, and empowering residents in decision-making processes.

1. Background. More than one million people live in California's approximately 4,500 mobilehome parks. A mobilehome owner whose home is located in a mobilehome park does not own the land the unit sits on, and must pay rent and fees for the land and any community spaces to their parkowner, unless the park is collectively owned by the residents, in which case the RO operates like a homeowners association. According to the Mobilehome Park Homeowners Alliance, California has 183 resident-owned parks, with an estimated 33,564 mobilehome spaces and another 1,300 recreational vehicle spaces.

According to the author and sponsor, displacement due to a park sale can be disruptive and expensive, as residents face a dilemma between attempting to move their homes, finding a new place to live which may be much less affordable, or sometimes simply abandoning their home. Even in situations where an RO is working to purchase a park, there are barriers to securing financing, especially within the existing short notice timeframe. Private investors, they note, often have access to significant capital to be able to make purchase offers quickly. According to the Lincoln Institute of Land Policy and PBS, about 800,000 mobilehome parks nationwide were purchased by institutional investors between 2014 and 2022.

The Mobilehome Residency Law (MRL) regulates the relationship between landlords and homeowners who occupy a mobilehome park. The MRL requires a mobilehome park owner to notify a RO at least 30 days and no more than a year before listing the park for sale with a real estate broker or offering to sell the park to any party.

1. Arguments in Support. Legal Aid of Sonoma County, this bill’s sponsor, along with a coalition of housing rights and public interest organizations, writes in support:

Many residents live on fixed-incomes and cannot afford the rent spikes that are now commonplace when park ownership switches from an individual park owner to corporate ownership. Not owning the land their home sits on effectively traps homeowners and forces them to pay endlessly rising rents at the discretion of the park owner or abandon their home since moving it is cost prohibitive or impossible. Mobilehome residents often have a significant financial investment in their homes, and displacement due to park sale can be disruptive and expensive. Many residents are seniors and/or living on a fixed income which is inadequate to cover rising rents. A right of first refusal allows residents to secure long-term affordability and stability by purchasing the park and controlling future rent increases.

1. Arguments in Opposition. Opponents of the measure argue this measure is an unconstitutional taking under the Takings Clause of the Fifth Amendment. According to the Western Manufactured Home Communities Association and a coalition of opponents:

The right to dispose of property is a fundamental constitutional right which may not be taken without payment of just compensation. Moreover, under current law, nothing precludes resident groups or other housing entities from proactively approaching a park or portfolio with a pre-qualified loan package to acquire ownership. Specifically, the sale of private property between two parties remains a cornerstone of economic freedom in the United States. [This bill] will involuntarily mandate a property owner to sell his or her properties to a public or private entity selected by differential treatment of the government. That requirement itself curbs the freedom of choice of buyer(s).

1. Prior Legislation. AB 2710 (Kalra), of the 2021-22 Legislative Session, would have given tenants, local public agencies, and mission-driven nonprofits right of first offer to purchase rental housing properties when owners put those properties up for sale, and a right to match an offer on those properties made by a third party. AB 2710 never received a hearing in the Assembly Committee on Housing and Community Development.

AB 519 (Voepel), of the 2019-20 Legislative Session, would have created a RO first right of refusal to purchase a park if the owner decided to sell or received a formal offer to purchase the park. AB 519 never received a hearing in the Assembly Committee on Housing and Community Development.

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

Date of Hearing: April 23, 2024

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

ABPCA Bill Id:AB 2539

Author:(Connolly) – As Amended Ver:March 21, 2024

As Proposed to be Amended

SUBJECT: Mobilehome parks: sale: notice: right of first refusal

KEY ISSUE: should california law require mobilehome park owners to give mobilehome park resident organizations a 120-day notice of their intent to sell the park, a 120-day exclusive offer period, and a right of first refusal to purchase the park?

SYNOPSIS

Mobilehomes are one of the last forms of affordable housing available in California. These parks house an estimated 700,000 Californians. Mobilehome parks enable low-income communities to attain homeownership and build equity. AB 2539 aims to create a path for mobilehome residents to organize and purchase their park when an owner is interested in selling. AB 2539 does this by requiring owners to provide mobilehome resident organizations and residents with a 120-day notice of their intention to sell, and an exclusive 120-day period within which they may make an offer for purchase. During the 120-day period, the mobilehome park owner is required to negotiate in good faith, meaning that they must evaluate the resident organization’s offer without considering factors such as the time period for closing, the type of financing or payment method, or whether the offer is contingent on financing, payment method, or title work. The owner must provide written notification of acceptance or rejection of the offer, and if the offer is rejected, the owner must provide details about the reason for the rejection, in order for the mobilehome resident organization to better compete in the future.

In response to concerns raised in the Housing and Committee Development Committee, the author proposes an amendment limiting the exclusive offer period from 6 months to 120 days, so that it is coextensive with the 120 day notice of intention to sell the owner is required to provide. That amendment is incorporated into the SUMMARY below and explained throughout the analysis. Opposition to this measure remains focused on the bill’s principle objective: providing mobilehome park residents a right of first refusal to purchase the park when the owner has an intention to sell. Opponents of the measure argue that any such provision would violate the Takings Clause of the Fifth Amendment. They further argue that mobilehome parks are currently available for sale on the open market, and that there is no need for this measure. The issues raised by the opposition are addressed throughout the analysis. As discussed in the analysis, the author may wish to make further amendments to better effectuate the bill’s ultimate objective.

This measure passed out of the Housing and Community Development Committee with a 5-2 vote. AB 2539 is sponsored by Legal Aid of Sonoma County and is supported by a coalition of housing advocates and public interest organizations. It is opposed by apartment associations, the California Association of Realtors, mobilehome park owners’ alliance and organizations such as the Western Manufactured Housing Communities Association.

SUMMARY: Enacts the Mobilehome Resident Opportunity to Purchase Act, providing residents of a mobilehome park with enhanced notice of an owner’s intention to sell and increased opportunity to purchase the mobilehome park. Specifically, this bill:

1. Increases the notice timeline under which a mobilehome park owner must provide written notice of their intention to sell the mobilehome park from not less than 30 days to not less than 120 days, nor more than one year, before entering into a written listing agreement with a licensed real estate broker for the sale of the park, offering to sell the park to any party, or accepting an offer from any buyer.
2. Modifies the requirement for the written notice to be provided by first-class mail or by personal delivery to specified officers of any resident organization (RO) formed by homeowners for purchasing the mobilehome park by also requiring delivery of the notice to the following:
   1. All residents of the mobilehome park; and
   2. The Department of Housing and Community Development (HCD).
3. Provides a RO the right of first refusal to purchase the mobilehome park, and requires a RO interested in purchasing the park to make an offer within 120 days of receiving the notice in 1).
4. Requires a mobilehome park owner to engage in good-faith negotiations with the RO, including by providing a written response within seven calendar days of receiving an offer from a RO, which must accept or reject the offer, and if rejected, must state all of the following:
   1. The current price, terms, or conditions of an acceptable offer that the owner has received to sell the mobilehome park, if the price, terms, or conditions have changed since the owner gave notice to the residents subject to 1);
   2. A written explanation of why the owner is rejecting the offer from the RO and what terms and conditions must be included in a subsequent offer for the park owner to potentially accept it;
   3. The price, terms, and conditions of an acceptable offer stated in the response must be universal and applicable to all potential buyers, and must not be specific to and prohibitive of a RO making a successful offer to purchase the park.
5. Defines “good faith negotiations” to mean evaluating an offer to purchase a mobilehome park from the park’s RO without considering factors, including, but not limited to:
   1. The time period for closing;
   2. The type of financing or the payment method; or
   3. Whether the offer is contingent on financing, payment method, appraisal, or title work.
6. Prohibits an owner from negotiating with or accepting an offer from another party until 120 days have elapsed from delivery of the notice in 1).
7. Deletes an existing requirement that an offer to sell a park must not be construed as an offer unless it is initiated by the park owner or agent.
8. Deletes an existing exemption that a park owner is not required to comply with the 30-day written notice requirement of intention to sell the park unless the following conditions are met:
   1. The RO has first furnished the park owner or park manager a written notice of the name and address of the president, secretary, and treasurer of the RO to whom the notice of sale must be given;
   2. The RO has first notified the park owner or manager in writing that the park residents are interested in purchasing the park, which must be made prior to a written listing or offer to sell the park by the park owner, and must be given once each year thereafter that the park residents are interested in purchasing the park; and
   3. The RO has furnished the park owner or manager a written notice within five days of any change in the name or address of the officers of the RO to whom the notice of sale must be given.

EXISTING LAW:

1. Requires a mobilehome park owner to provide written notice of their intention to sell the mobilehome park not less than 30 days nor more than one year before entering into a written listing agreement with a licensed real estate broker for the sale of the park, or offering to sell the park to any party. Requires the written notice to be provided by first-class mail or by personal delivery to the president, secretary, and treasurer of any RO formed by homeowners in the mobilehome park as a nonprofit corporation, stock cooperative corporation, or other entity for purposes of converting the mobilehome park to condominium or stock cooperative ownership interests and for purchasing the mobilehome park from the management. (Civil Code Section 798.80 (a). All further statutory references are to the Civil Code, unless otherwise indicated.)
2. Prohibits an offer to sell a park from being construed as an offer under existing law unless it is initiated by the park owner or agent. (Section 798.80 (a).)
3. Exempts a mobilehome park owner from being required to comply with 1) above unless the following conditions are met:
   1. The RO has first furnished the park owner or manager a written notice of the name and address of the president, secretary, and treasurer of the RO to whom the notice of sale must be given;
   2. The RO has first notified the park owner or manager in writing that the park residents are interested in purchasing the park, which must be made prior to a written listing or offer to sell the park by the park owner, and must be given once each year thereafter that the park residents are interested in purchasing the park; and
   3. The RO has furnished the park owner or manager a written notice within five days of any change in the name or address of the officers of the RO to whom the notice of sale must be given. (Section 798.80 (b).)
4. Provides that nothing in 1)-3) affects the validity of title to real property transferred in violation of specified law, although a violation subjects the seller to civil action by homeowner residents of the park or the RO. (Section 798.80 (c).)
5. Provides that nothing in 1)-3) affects the ability of a licensed real estate broker to collect a commission pursuant to an executed contract between the broker and the mobilehome park owner. (Section 798.80 (d).)
6. Exempts from 1)-3) any of the following:
   1. Any sale or other transfer by a park owner who is a natural person to any relation in specified laws;
   2. Any transfer by gift, devise, or operation of law;
   3. Any transfer by a corporation to an affiliate, as defined;
   4. Any transfer by a partnership to any of its partners;
   5. Any conveyance resulting from the judicial or nonjudicial foreclosure of a mortgage or deed of trust encumbering a mobilehome park or any deed given in lieu of such a foreclosure;
   6. Any sale or transfer between or among joint tenants or tenants in common owning a mobilehome park; or
   7. The purchase of a mobilehome park by a governmental entity under its powers of eminent domain. (Section 798.80 (e).)
7. Finds that because of the high cost of moving mobilehomes, the potential for damage resulting therefrom, the requirements relating to the installation of mobilehomes, and the cost of landscaping or lot preparation, it is necessary that the owners of mobilehomes occupied within mobilehome parks be provided with the unique protection from actual or constructive eviction, as afforded by the Mobilehome Residency Law. (Section 798.55 (a).)
8. Entitles a prevailing party in an action arising out of the Mobilehome Residency Law to reasonable attorney’s fee and costs. (Section 798.85.)
9. Provides a homeowner who prevails in a civil action against the management of a mobilehome park to damages. (Section 798.86.)
10. Exempts an organization of owners of manufactured homes or mobilehomes, who are tenants in a mobilehome park, formed for the purpose of purchasing the mobilehome park to convert it to condominium, stock cooperative, or other resident ownership interests from corporate taxes. (Revenue and Tax Code Section 23701v.)
11. Establishes that “nor shall private property be taken for public use, without just compensation.” (U.S. Const., amend. V.)
12. Establishes that “[p]rivate property may be taken or damaged for a public use and only when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner.” (Cal. Const., art I, § 19.)

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

COMMENTS: Mobilehomes are one of the last forms of naturally-occurring affordable housing in California. These parks house an estimated 700,000 Californians. Mobilehome parks enable low-income communities to attain homeownership and build equity. AB 2539 aims to create a path for more residents to organize and purchase their park when an owner is interested in selling. The author explains the impetus for this measure:

AB 2539 recognizes the need for a more equitable process, granting mobilehome park residents the time required to form a resident organization for the purpose of purchasing their community. The bill proposes a reasonable extension to the notice period, providing residents with six months from the receipt of the intention to sell notice. AB 2539 embodies principles of fairness and inclusivity, offering a balanced approach to mobilehome park sales. This bill will allow us to take a significant step toward fostering resilient communities, preserving affordable housing, and empowering residents in decision-making processes.

Mobilehomes. Communities of mobile homes are unique in that residents normally own the physical homes they live in, but do not own the land on which their homes sit. That land is rented to them by a landlord who owns the mobilehome park. The park owner usually provides private roads within the park, common facilities, such as washing machines or a swimming pool, and often utilities.

Mobilehomes are not truly mobile, in that often it is cost prohibitive to relocate them. A more accurate term is “manufactured home,” which describes a type of housing that typically is not constructed at the installation site. Originally called “mobile homes,” early versions were no more than travel trailers hitched to the back of a car. Over time, however, the predominant use of this type of housing began to shift toward a more fixed use. A mobilehome largely is immobile as a practical matter because the cost of moving one often is a significant percentage of the value of the mobile home itself.

The mobilehome owner often invests in site-specific improvements, such as driveways, steps, walkways, porches, or landscaping. Given these site-specific improvements, and the fact that mobile homes are designed to be placed permanently on a pad and maintained there for life, it is not surprising that the costs of relocating a mobilehome are very high. Because they cost less than traditional homes (less even than rental housing in some circumstances), mobilehomes are an attractive option for lower-income residents.

The combination of those factors—the immobility of mobile homes, the resulting high costs of relocation, the fact that mobile home owners typically do not own the land, and the limited financial resources of many owners of mobile homes—has led to a well-documented problem when the owner of a mobilehome park wants to convert the property to a different use.

The effects on mobilehome owners faced with moving because mobilehome park owners want to convert a mobilehome park to another use can be devastating to a homeowner who owns the mobile home, but only rents the land on which it sits. Closure and conversion of a mobile home park forces the owner either to move, or to abandon what may be their most valuable equity investment to the developer's bulldozer. Displacement from a mobile home park can mean economic ruin for a mobilehome owner.

The vulnerability of mobilehome owners renting their land is not dissimilar to renters of traditional housing if their landlord sells the building and decides to convert the affordable rentals to market-rate condos. But mobile home owners are even more likely to experience homelessness and forced abandonment of property when other parks are unable to accept new residents. The number of mobilehome parks is dwindling. Zoning that permits manufactured housing communities is limited, and while parks continue to close, additional parks that permit mobilehomes are not easily created.( Andrew Keel, Five Reasons Why Mobile Home Parks in the United States are Disappearing, Forbes (Dec. 22, 2021), available at https://www.forbes.com/sites/forbesbusinesscouncil/2021/12/22/five-reasons-why-mobile-home-parks-in-the-united-states-are-disappearing/?sh=3ab5c0194b64.)

Furthermore, local governments are often reluctant to give new communities permits because of the stigma associated with mobilehome communities. Proposals for the expansion of affordable mobile home parks are often met with NIMBY (Not In My Backyard) attitudes from residential neighbors and zoning boards who associate these communities with vagrancy and sanitation problems.

The rise of corporate ownership of mobile home parks. Over the past decades, private equity firms have been purchasing mobilehome communities in unprecedented numbers, leading to increased displacement of residents. (See Sheelah Kolhatkar, What Happens When Investment Firms Acquire Trailer Parks, New Yorker (Mar. 8, 2021), https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-parks; see also Julie Reynolds, The Vulture Fund That Picked American Newspapers Apart Has a New Target, Colum. Journalism Rev. (May 9, 2023), https://www.cjr.org/special_report/alden-smith-mobile-homes-west-virginia.php.) According to PBS, institutional investors have purchased about 800,000 mobile home parks in the last eight years. (Michael Casey, Carolyn Thompson, Rents spike as large corporate investors buy mobile home parks, PBS News Hour (July 25, 2022), accessed April 19, 2024, https://www.pbs.org/newshour/economy/rents-spike-as-large-corporate-investors-buy-mobile-home-parks#:~:text=private%20equity%20firms%20and%20real%20estate%20investment,swoop%20in%20to%20buy%20mobile%20home%20parks [Rent and fees nearly doubled for residents in some parks after they were acquired by new investors].) Some of the largest investment-services firms, such as Blackstone Group, Apollo Global Management, and Stockbridge Capital Group, have spent billions of dollars to buy mobile-home communities from independent owners. (https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-park.) When park ownership switches from an individual park owner to corporate ownership, residents often are trapped and forced to pay either exorbitant rent increases, or to abandon their home since moving it is cost-prohibitive or impossible.

According to the Mobilehome Park Homeowners Alliance, there are 5,231 Active Mobile Home and RV Parks totaling 453,250 lots/spaces in California. Of those, a small fraction are resident-owned (183 resident-owned parks, with an estimated 33,564 mobilehome spaces and another 1,300 recreational vehicle spaces). (Resident Owned Communities (ROC) - California Mobile Home Parks (mhphoa.com).)

The limited supply of alternative forms of affordable housing only worsens a mobilehome owner's options when they face a dramatic rent increase. (The Tenant Protection Act of 2019, which caps annual rent increases at percent and CPI, not to exceed 10 percent, does not apply to mobilehomes.) As a result, there is a growing effort across many states and municipalities to enact “right of first refusal” laws aimed at protecting owners of mobilehomes. As further discussed below, courts may find that those actions impinge on the property rights of the owners of mobile home parks, sometimes to such a degree that they strike down legislation on constitutional grounds.

Existing law: The Mobilehome Residency Law (MRL) regulates relations between the owners and the residents of mobilehome parks. As explained by the analysis of this bill by the Housing and Community Development Committee:

The MRL has two parts: Articles 1 through 8 apply to most mobilehome parks and Article 9 applies to resident-owned parks or parks which are established as a subdivision, cooperative or condominium. The provisions cover many issues, including, but not limited to: 1) the rental and lease contract terms and specific conditions of receipt and delivery of written leases, park rules and regulations, and other mandatory notices; 2) mandatory notice and amendment procedures for mobilehome park rules and regulations; 3) mandatory notice of fees and charges, and increases or changes in them; and 4) specified conditions governing mobilehome park evictions.

A dispute that arises regarding the MRL generally must be resolved in a civil court of competent jurisdiction. HCD oversees several areas of mobilehome law, including health and safety standards, registration and titling of mobilehomes and parks, and, through the Mobilehome Ombudsman, assists the public with questions or problems associated with various aspects of mobilehome law. The Mobilehome Ombudsman provides assistance by taking complaints and helping to resolve and coordinate the resolution of those complaints. However, the Ombudsman does not have enforcement authority for the MRL, and cannot arbitrate, mediate, negotiate, or provide legal advice on mobilehome park rent disputes, lease or rental agreements, but may provide general information on these issues. The Mobilehome Residency Law Protection Program at HCD also intakes resident complaints regarding alleged violations of the MRL and refers complaints to legal service providers.

How this bill would work. This measure adopts a framework that provides mobilehome resident organizations with notice of an owner’s intention to sell, and an exclusive time period within which they may make an offer for purchase.

• • • 1. An owner of a mobile home park gives notice of their intention to sell the mobile home park to all residents of the mobile home park, the officers of any established resident organization, and the Department of Housing and Community Development.
      2. The notice is provided no less than 120 days before the owner lists, offers to sell, or accepts an offer on the property.
      3. If the resident organization is interested in purchasing the mobile home park, they may make an offer within the 120-day notice period.
      4. During this 120-day notice period, the mobile park owner is prohibited from negotiating with or accepting an offer from another party.
      5. Upon receiving the offer from the resident organization, the mobile home park owner is required to evaluate the offer without considering factors such as: the time period for closing, the type of financing or payment method, or whether the offer is contingent on financing, payment method, or title work.
      6. Within seven (7) calendar days of receiving the offer, the mobile park owner must provide the resident organization with a written response accepting or rejecting the offer.
      7. In the event the mobile park owner rejects the offer, the owner must provide the resident park owner with the following information:
         1. The current price, terms or conditions of an acceptable offer the owner has received, and whether the price, terms, or conditions have changed since the owner gave the residents the 120-day notice of intent to sell.
         2. A written explanation of why the owner is rejecting the offer, identifying what terms and conditions must be included in a subsequent offer that the park owner may accept.

Notice provision-timing. The MRL currently requires a mobilehome park owner to notify a RO at least 30 days and no more than a year before listing the park for sale with a real estate broker or offering to sell the park to any party. This bill would increase the minimum notice period from no less than 30 days to no less than 120 days prior to listing or offering to sell the park. This extended period is intended to provide residents time to organize, engage in technical assistance, form an organization that would qualify for financing, and obtain the necessary financing to close a transaction.

Notice provision – recipients. Under existing law, the notice of intention to sell a park is only required to be given to the president, secretary, and treasurer of any resident organization formed by homeowners in the mobilehome park, as provided by law. Thus, the notice provision is not triggered if an RO does not yet exist. This measure expands the category of required recipients to include the Department of Housing and Community Development and all park residents. By mandating notice of the sale to all residents, and providing them 120 days to make an exclusive offer, it better enables residents to form an RO for purposes of purchasing the park.

Notice provision – content. The MRL does not specify what must be included in the notice, other than a written notice of intention to sell. This bill does not change the content required to be included in the notice. In order to better facilitate good faith negotiations, and to increase the likelihood of the RO’s offer to be accepted, the author may wish to consider making the content requirement of the notice more robust. For example, if the triggering event involves a potential sale, the notice should include the price, terms, conditions and any other material terms, along with all commercially reasonably disclosures, in substantially the same form and having the substantially the same content as would be provided to any prospective third-party purchaser. The author may wish to consider requiring the use of a standardized form developed by HCD that includes all material terms required in the notice.

Good faith negotiations. The MRL does not impose any obligation on the park owner other than the 30-day notice requirement of an intention to sell. This bill, in addition to the expanded notice requirement discussed above, would require the park owner to engage in “good faith negotiations” with the RO, including by providing a written response accepting or rejecting the RO’s offer, and providing a detailed explanation in the event of rejection. The measure defines “good faith negotiations” as “evaluating an offer to purchase without considering factors such as time period for closing, type of financing, or whether the offer is contingent on financing, payment method, appraisal, or title work.” The bill requires evaluation of the RO’s offer without considering these other terms, but it does not appear to prohibit the owner from rejecting the RO’s offer based on these terms. In other words, if a RO presented an offer that was the same amount as the third-party offer that triggered the notice, the park owner would still be able to reject the offer on the basis of any other factor that the park owner identifies. Indeed, the bill does not expressly prohibit the mobile home park owner from the rejecting the RO’s offer for any reason, as long as it provides an explanation for its basis for the rejection.

Right of first refusal. This bill states that a RO has “a right of first refusal” to make an offer to purchase a park within 120 days of receiving notice. But because the notice requirement does not currently include any material terms, it is unclear how the RO would successfully exercise its right of first refusal.

The author may wish to consider defining the “right of first refusal” to explain how a RO could properly exercise the right, such as by making an offer that meets all material terms in the notice. Recognizing the disparity between how a private investor and a RO could structure their respective offers, the author may wish to consider excluding the financing as a material term, so long as it does not affect the net value of the sale to the park owner.

The author may also wish to include a time period for closing and a potential re-opener provision that would expand the time to close in the event of an unforeseen occurrence that delays closing and which was not caused by the RO.

How this bill would be enforced. This bill does not contain a separate enforcement provision, but the enforcement provisions of the Mobilehome Residency Law would apply. The MRL allows a prevailing party to collect attorney’s fees and costs for any violation of the requirements imposed by the MRL, including failure to provide notice as required by this measure. (Civil Code Section 798.85.) The MRL also provides damages for willful violations and punitive damages under certain circumstances. (Section 798.86.) These damages are recoverable only for claims brought by the “homeowner” against “the management” would thus be inapplicable to claims arising from violation of this measure, which would be against park ownership (and brought by homeowners or ROs). (See Id.)

The author may wish to include further enforcement provisions for violation of this bill, or amend existing enforcement to clarify that damages are recoverable for claims brought “against the ownership” and “by a resident organization.”

Opposition’s argument #1: This measure is not necessary-almost 10% of the total mobilehome park space in the state is resident-owned. According to data from Mobile Home Park Owners Allegiance (MHPOA), there are 183 resident-owned mobile home parks, representing a total of 36,864 lots in the state. (California Mobile Home Parks, available at https://mhphoa.com/ca/roc/ (last accessed April 18, 2024.) According to the opposition, this accounts for almost 10 percent of the mobile home parks in the state. The opposition also points to the number of mobile home parks currently on the market; according to MHPOA, there are 77 active listings of parks on the open market. (https://mhphoa.com/ca/mhp/sales (last accessed April 18, 2024).) This, they argue, demonstrates that there is no need for this measure. There is an open market, where parks are available, and nothing is preventing mobile park residents from forming ROs and making an offer for those parks.

The Committee is unable to verify the accuracy of the listing number. A Google search for “mobile home parks for sale in California” show a variety of results. The listings might include some parks that have been for sale a long time for various reasons such as being overpriced or being dilapidated. The sponsors note that even if some mobilehome parks are listed, they may never intend to sell to ROs; many mobilehome park owners are seeking out a developer partner or a direct sale to an entity that will convert the land to something other than a mobile home park. The sponsors point to examples such as La Hacienda Mobile Estates in Fresno. Residents there received a notice from their owner, Harmony Communities, that the park was set to close within the year, ending their tenancies. According to Harmony, their plan for the park includes “listing this property right away and . . . seeking out either a developer partner or an outright sale to someone with the vision to re-concept this land in a way that is more compatible with the surrounding community.” (Dympna Ugwa-Oju, Embattled former Trails’ End mobile home park in northeast Fresno set to close, according to owner, Fresnoland (April 17, 2023) Embattled former Trails' End mobile home park in northeast Fresno set to close, according to owner - Fresnoland.) The sponsors argue that the bill will at least require owners to give residents an opportunity to purchase the park before they are forced out of their homes through no fault of their own.

Opposition’s argument #2: This bill constitutes an unconstitutional taking in violation of the U.S. Constitution and controlling California case law. The Fifth Amendment to the U.S. Constitution, made applicable to the states through the Fourteenth Amendment, ends with the Takings Clause: “[n]or shall private property be taken for public use, without just compensation.” (U.S. Const. amend. V.) Originally intended to prevent physical takings through eminent domain without market-rate compensation, the Fifth Amendment now is interpreted by courts to require compensation if a regulation or policy goes “too far” to effectively rob owners of their property rights. The court’s role is to determine when a state is legitimately exercising its police powers, or when the regulation justifies just compensation by the government. When a government policy goes “too far” in depriving owners of their property rights, it is the functional equivalent of eminent domain, and a taking may be found to have occurred.

At least two lower courts, including one 40-year old California appellate court decision, have ruled that “rights of first refusal” (ROFR) policies constitute a government taking of private property. (Manufactured Hous. Cmtys. of Wash. v. State (2000) 13 P.3d 183, 185; Gregory v. City of San Juan Capistrano (1983) 191 Cal. App. 3d 72.)

Gregory, the case primarily relied upon by the opposition, involved a city ordinance that required “an owner who desired to sell their mobile home park first to offer it to the resident, and if they decide to purchase it, the owner must sell it to them.” (Gregory, 191 Cal. App. 3d at p. 87.) Plaintiffs contended, and the court agreed, that this portion of the ordinance not only abrogated a park owner’s right to control the disposition of their property, but also deprived them of the right to sell a preemptive right in the property without just compensation in violation of their rights under the U.S. and California Constitutions. (Ibid.)

In Manufactured Hous., the Washington Supreme Court held that ROFR policies and other exercises of the state’s police power are subject to a categorical “facial” taking challenge because the “regulation destroys one or more of the fundamental attributes of ownership (the right to possess, exclude other and to dispose of property).” (Manufactured Hous., 13 P.3d at p. 192.) The significance of labeling ROFR policies as categorical takings is that the regulation would not have to undergo the fact-specific, “ad hoc” Penn Central test. (Penn Cent. Transp. Co. v. New York City (1978) 438 U.S. 104, 124).

The Penn Central test is fact-specific and subjective: establishing that a regulatory taking may occur — and just compensation is required — when “regulatory actions [occur] that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner” with the inquiry “focus[ing] directly upon the severity of the burden that government imposes upon private property rights.” (Lingle v. Chevron U.S.A. Inc. (2005) 544 U.S.528, 539). Penn Central identified “several factors that have particular significance” in determining whether a regulation constitutes a taking. (Id. at p. 538.) These include the regulation’s economic impact on the claimant, the extent to which the regulation interferes with distinct investment-backed expectations, and the character of the government action. (Ibid) “Primary among those factors are [t]he economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations.” (Id. at pp. 538—39.)

In the context of ROFR policies that do not constitute a physical invasion of the property, nor deprive the owner of all economically viable use, the Penn Central test likely is appropriate. The California appellate court in Gregory failed to apply the Penn Central factors that would have likely proven that the minimal infringement on the right to dispose is not a taking. In any event, even if Gregory were correctly decided, both the property infringement and the governmental interest are different in this bill than they were in Gregory and a takings challenge to this bill would likely be decided differently.

As an initial matter, unlike the ROFR policy in Gregory, this bill does not expressly require park owners to accept the RO’s offer. The bill states that a RO has a “right of first refusal,” which is undefined in the bill. It requires “good faith negotiation,” and provides the RO with an exclusive window to submit an offer, but, unlike the ordinance in Gregory, it does not expressly mandate that the offer must be accepted. Even if the measure were amended to make the ROFR more explicit as to further interfere with private property rights, Gregory’s holding might be inapplicable given the gravity of the government interest in maintaining naturally-occurring affordable housing in today’s housing landscape. When Gregory was decided 40 years ago, the City, which imposed the ROFR ordinance, could offer only one purpose for the ordinance: “to afford mobile home residents a measure of control over their own living situations.” (Gregory, 142 Cal. App. 3d at 89.) Today, against the backdrop of an affordable housing crisis, supporters of this measure argue that maintaining one of the last remaining naturally-occurring affordable housing options advances a significant government interest. Indeed, the California Supreme Court has found several government interests sufficient to overcome takings challenges to rent control (Santa Monica Beach v. Superior Court (1999) 19 Cal. 4th 952, 956) and affordable housing set asides (California Building Industry Association v. City of San Jose (2005) 61 Cal. 4th 435).

Opponents nevertheless argue that the Gregory court categorizes the ROFR policy as a “preemptive right” that has value and therefore deprives the owner of that right to sell it and would succumb to a takings challenge on that basis alone. The Gregory court held that, “[i]t is well established that a preemptive right is a valuable property right which may be bought, sold, and enforced in a court of law.” (Gregory, 142 Cal. App. 3d at p. 58.) The court maintained that enforcement of the California statute deprived the park owner of selling a right of first refusal to other parties since the government granted that right to park residents through the ordinance in question.

But a diminution in value due to an owner not being able to sell preemptive rights on the land would amount to a much lower monetary loss, and it is unclear whether it would qualify as an unconstitutional taking.

In assessing the strength of the “preemptive right” argument, it is worth noting Washington, D.C.’s Tenant Opportunity to Purchase Act, D.C. Code Section 42-3404.01 et seq. (TOPA), which provides purchase rights to tenants residing in a property if the owner wished to sell the property. One TOPA provision, which has been in place since 1980, gives tenants a 15-day right to match any third party contract. (D.C Code Section 42-3404.08 [“In addition to any and all other rights specified in this subchapter, a tenant or tenant organization shall also have the right of first refusal during the 15 days after the tenant or tenant organization has received from the owner a valid sales contract to purchase by a third party”].) No court has found this TOPA provision unconstitutional despite the fact that it interposes a tenant into an already-executed contract between the owner and the third party buyer.

And recently, numerous states have enacted mobilehome ROFR laws, including Colorado (C.R.S.A. Section 38-12-217), Massachusetts (Chapter 140, Section 32R), and Rhode Island (R.I. Gen. Laws Section 31-44-3.1), teeing up a potential takings challenge for the federal courts.

With the U.S. Supreme Court’s conservative majority and recent opinions resulting in an expanded takings doctrine (see Cedar Point Nursery v. Hassid (2021) 141 S. Ct. 2063, 2074 and Sheetz v. El Dorado County (2024) __ S. Ct.__) it is unclear whether the bill would withstand constitutional scrutiny.

Author’s amendments. In response to concerns raised in the Housing and Community Development Committee, the author proposes the following amendment, which would reduce the time period for a resident organization to make an offer from 6 month to 120 days, so that it is co-extensive with the 120 day notice of intention to sell the owner is required to provide:

(c) (1) Not less than 120 days nor more than one year before an owner of a mobilehome park enters into a written listing agreement with a licensed real estate broker, as defined in Article 1 (commencing with Section 10130) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code, for the sale of the park, offers to sell the park to any party, or accepts an offer from any buyer, the owner shall provide wsritten notice of their intention to sell the mobilehome park by first-class mail or by personal delivery to all of the following:

…

(2) A resident organization shall have the right of first refusal to the mobilehome park. If the resident organization is interested in purchasing the mobilehome park, they may make an offer within six months 120 days of receiving the notice described in paragraph (1).

ARGUMENTS IN SUPPORT: Legal Aid of Sonoma County, this bill’s sponsor, along with a coalition of housing rights and public interest organizations, express their support for the measure:

In recent years, investment firms and corporations nationwide have begun buying up mobilehome parks. Many residents live on fixed-incomes and cannot afford the rent spikes that are now commonplace when park ownership switches from an individual park owner to corporate ownership. Not owning the land their home sits on effectively traps homeowners and forces them to pay endlessly rising rents at the discretion of the park owner or abandon their home since moving it is cost prohibitive or impossible. Mobilehome residents often have a significant financial investment in their homes, and displacement due to park sale can be disruptive and expensive. Many residents are seniors and/or living on a fixed income which is inadequate to cover rising rents. A right of first refusal allows residents to secure long-term affordability and stability by purchasing the park and controlling future rent increases. It can help address the growing issue of displacement and loss of affordable housing options, particularly for vulnerable populations like fixed income seniors. Additionally, owning the park incentivizes residents to invest in repairs and upgrades whereas corporate owners or investors have little incentive to make the capital improvements so many parks need. To address this crisis, at least a dozen states have passed some form of a “right to first refusal” law.

The Mobilehome Residency Law (MRL) only requires that a park owner give residents a minimum of 30 days notice of their intent to sell. AB 2539 would provide a longer notice period of 120 days to give residents the time needed to form a resident organization for the purpose of purchasing the park. It would eliminate the requirement that a resident organization exist in advance of the potential sale of a park. The Mobilehome Resident Opportunity to Purchase Act would grant the resident organization a right of first refusal and give them six months from the time they receive notice of intent to sell, to make an offer. The park owner must then engage in good faith negotiations with the resident organization and would be prohibited from negotiating with or accepting an offer from another party until the six-month period has elapsed.

This bill has the potential to shift the housing landscape toward long-term stability for current and future mobilehome park residents and reduce the loss of naturally occurring affordable housing in California, while empowering residents.

ARGUMENTS IN OPPOSITION: The Western Manufactured Housing Communities Association opposes this measure as an unconstitutional taking. It also raises practical concerns with this measure, including its effect on the ability of park owners to negotiate, sell, and obtain market value for their property.

A coalition of organizations, including the California Business Properties Association, California Rental Housing Association raise constitutional concerns:

The right to dispose of property is a fundamental constitutional right which may not be taken without payment of just compensation. Moreover, under current law, nothing precludes resident groups or other housing entities from proactively approaching a park or portfolio with a pre-qualified loan package to acquire ownership.

Specifically, the sale of private property between two parties remains a cornerstone of economic freedom in the United States. AB 2539 will involuntarily mandate a property owner to sell his or her properties to a public or private entity selected by differential treatment of the government. That requirement itself curbs the freedom of choice of buyer(s).

Further, interference with market pace of acquisition reduces the market to a scant hardy few, thus encouraging the flight from the market and justifying significantly higher cash return for existing parks deciding to sell (see Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129). The process of market regulation skews against the right to dispose. That is a fundamental right. AB 2539 undermines the actual value that a property owner could attain without a mandated right of first refusal.

Allowing a resident organization a first right of refusal to purchase the park within six months of the notice being given would interfere with a park owner’s right to sell his or her private property to a willing and qualified buyer. That means the resident group could delay a sale by 10 months before an owner can entertain another qualified offer.

They raise additional concerns as well:

[W]e are concerned that AB 2539 will prevent the sale of a mobilehome park being purchased as a part of a like-kind exchange under Internal Revenue Code Section 1031. If a prospective buyer of a mobilehome park needs to complete a 1031 exchange, he or she only has 45 days to sign an agreement with the seller, and AB 2539 would effectively exclude mobilehome parks from being purchased by a person who needs to qualify for a 1031 exchange while the same prohibition does not apply to other types of housing developments.

REGISTERED SUPPORT / OPPOSITION:

Support

BASTA Universal

California Rural Legal Assistance Foundation

Centro Legal De LA Raza

Coalition of California Welfare Rights Organizations

Disability Rights California

Fair Housing Advocates of Northern California

Faith in The Valley

Golden State Manufactured-home Owners League, INC. (GSMOL)

Inner City Law Center

Justice in Aging

Leadership Counsel for Justice and Accountability

Legal Aid of Marin

Legal Aid of Sonoma County

MHaction

Mobile Home Residents Association/Coalition

National Housing Law Project

North Bay Organizing Project

Petaluma Estates Homeowners Association

Public Advocates

Pueblo Serena Home Owners Alliance

Rise Economy

Santa Rosa Manufactured-home Owners Association

Sonoma County Mobilehome Owners Association

Sonoma County Tenants Union

Sonoma Valley Golden State Manufactured-home Owners League

Sonoma Valley Housing Group

Western Center on Law & Poverty

Opposition

Apartment Association of Greater Los Angeles

Cabrillo Management Corporation

California Association of Realtors

California Business Properties Association

California Mobilehome Parkowners Alliance

California Rental Housing Association

Security Investment Company, LLC

Western Manufactured Housing Communities Association

Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334

Date of Hearing: April 10, 2024

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

Christopher M. Ward, Chair

ABPCA Bill Id:AB 2539 (

Author:Connolly) – As Amended Ver:March 21, 2024

SUBJECT: Mobilehome parks: sale: notice: right of first refusal

SUMMARY: Enacts the Mobilehome Resident Opportunity to Purchase Act. Specifically, this bill:

1. Increases the notice timeline under which a mobilehome park owner must provide written notice of their intention to sell the mobilehome park from not less than 30 days to not less than 120 days nor more than one year before entering into a written listing agreement with a licensed real estate broker for the sale of the park, offering to sell the park to any party, or accepting an offer from any buyer.
2. Modifies the requirement for the written notice to be provided by first-class mail or by personal delivery to specified officers of any resident organization (RO) formed by homeowners for purchasing the mobilehome park by also requiring delivery of the notice to the following:
   1. All residents of the mobilehome park; and
   2. The Department of Housing and Community Development (HCD).
3. Provides a RO the right of first refusal to purchase the mobilehome park, and requires a RO interested in purchasing the park to make an offer within six months of receiving the notice subject to 1).
4. Requires a mobilehome park owner to engage in good-faith negotiations with the RO, including by providing a written response within seven calendar days of receiving an offer from a RO, which must accept or reject the offer, and if rejected, must state the following:
   1. The current price, terms, or conditions of an acceptable offer that the owner has received to sell the mobilehome park, if the price, terms, or conditions have changed since the owner gave notice to the residents subject to 1);
   2. A written explanation of why the owner is rejecting the offer from the RO and what terms and conditions must be included in a subsequent offer for the park owner to potentially accept it;
   3. The price, terms, and conditions of an acceptable offer stated in the response must be universal and applicable to all potential buyers, and must not be specific to and prohibitive of a RO making a successful offer to purchase the park.
5. Defines “good faith negotiations” to mean evaluating an offer to purchase a mobilehome park from the park’s RO without considering factors, including, but not limited to:
   1. The time period for closing;
   2. The type of financing or the payment method; or
   3. Whether the offer is contingent on financing, payment method, appraisal, or title work.
6. Prohibits an owner from negotiating with or accepting an offer from another party until six months have elapsed from delivery of the notice subject to 1).
7. Deletes an existing requirement that an offer to sell a park must not be construed as an offer unless it is initiated by the park owner or agent.
8. Deletes an existing exemption that a park owner is not required to comply with the current law 30 day written notice requirement of intention to sell the park unless the following conditions are met:
   1. The RO has first furnished the park owner or park manager a written notice of the name and address of the president, secretary, and treasurer of the RO to whom the notice of sale must be given;
   2. The RO has first notified the park owner or manager in writing that the park residents are interested in purchasing the park, which must be made prior to a written listing or offer to sell the park by the park owner, and must be given once each year thereafter that the park residents are interested in purchasing the park; and
   3. The RO has furnished the park owner or manager a written notice within five days of any change in the name or address of the officers of the RO to whom the notice of sale must be given.

EXISTING LAW:

1. Requires a mobilehome park owner to provide written notice of their intention to sell the mobilehome park not less than 30 days nor more than one year before entering into a written listing agreement with a licensed real estate broker for the sale of the park, or offering to sell the park to any party. Requires the written notice to be provided by first-class mail or by personal delivery to the president, secretary, and treasurer of any RO formed by homeowners in the mobilehome park as a nonprofit corporation, stock cooperative corporation, or other entity for purposes of converting the mobilehome park to condominium or stock cooperative ownership interests and for purchasing the mobilehome park from the management. (Civil Code (CC) Section 798.80(a))
2. Prohibits an offer to sell a park from being construed as an offer under existing law unless it is initiated by the park owner or agent. (CC 798.80(a))
3. Exempts a mobilehome park owner from being required to comply with 1) above unless the following conditions are met:
   1. The RO has first furnished the park owner or manager a written notice of the name and address of the president, secretary, and treasurer of the RO to whom the notice of sale must be given;
   2. The RO has first notified the park owner or manager in writing that the park residents are interested in purchasing the park, which must be made prior to a written listing or offer to sell the park by the park owner, and must be given once each year thereafter that the park residents are interested in purchasing the park; and
   3. The RO has furnished the park owner or manager a written notice within five days of any change in the name or address of the officers of the RO to whom the notice of sale must be given. (CC 798.80(b))
4. Provides that nothing in 1)-3) affects the validity of title to real property transferred in violation of specified law, although a violation subjects the seller to civil action by homeowner residents of the park or the RO. (CC 798.80(c))
5. Provides that nothing in 1)-3) affects the ability of a licensed real estate broker to collect a commission pursuant to an executed contract between the broker and the mobilehome park owner. (CC 798.80(d))
6. Exempts from 1)-3) any of the following:
   1. Any sale or other transfer by a park owner who is a natural person to any relation in specified laws;
   2. Any transfer by gift, devise, or operation of law;
   3. Any transfer by a corporation to an affiliate, as defined;
   4. Any transfer by a partnership to any of its partners;
   5. Any conveyance resulting from the judicial or nonjudicial foreclosure of a mortgage or deed of trust encumbering a mobilehome park or any deed given in lieu of such a foreclosure;
   6. Any sale or transfer between or among joint tenants or tenants in common owning a mobilehome park; or
   7. The purchase of a mobilehome park by a governmental entity under its powers of eminent domain. (CC 798.80(e))

FISCAL EFFECT: Unknown.

COMMENTS:

Author’s Statement: According to the author, “AB 2539 recognizes the need for a more equitable process, granting mobilehome park residents the time required to form a resident organization for the purpose of purchasing their community. The bill proposes a reasonable extension to the notice period, providing residents with six months from the receipt of the intention to sell notice. AB 2539 embodies principles of fairness and inclusivity, offering a balanced approach to mobilehome park sales. This bill will allow us to take a significant step toward fostering resilient communities, preserving affordable housing, and empowering residents in decision-making processes.”

Background: More than 700,000 people live in California's approximately 4,700 mobilehome parks. Mobilehomes are not truly mobile, in that it is often cost prohibitive to relocate them. The cost to move a mobilehome ranges from $2,000 to upwards of $20,000 depending on the size of the home and the distance traveled. A mobilehome owner whose home is located in a mobilehome park does not own the land the unit sits on, and must pay rent and fees for the land and any community spaces to their parkowner, unless the park is collectively owned by the residents, in which case the RO operates like a homeowners association. According to the Mobilehome Park Homeowners Alliance, California currently has 183 resident-owned parks, with an estimated 33,564 mobilehome spaces and another 1,300 recreational vehicle spaces.^[1]

The Mobilehome Residency Law (MRL) extensively regulates the relationship between landlords and homeowners who occupy a mobilehome park. A limited number of provisions also apply to residents who rent, as opposed to own, their mobilehome. The MRL has two parts: Articles 1 through 8 apply to most mobilehome parks and Article 9 applies to resident-owned parks or parks which are established as a subdivision, cooperative or condominium. The provisions cover many issues, including, but not limited to: 1) the rental and lease contract terms and specific conditions of receipt and delivery of written leases, park rules and regulations, and other mandatory notices; 2) mandatory notice and amendment procedures for mobilehome park rules and regulations; 3) mandatory notice of fees and charges, and increases or changes in them; and 4) specified conditions governing mobilehome park evictions. A dispute that arises regarding the MRL generally must be resolved in a civil court of competent jurisdiction.

HCD oversees several areas of mobilehome law, including health and safety standards, registration and titling of mobilehomes and parks, and, through the Mobilehome Ombudsman, assists the public with questions or problems associated with various aspects of mobilehome law. The Mobilehome Ombudsman provides assistance by taking complaints and helping to resolve and coordinate the resolution of those complaints. However, the Ombudsman does not have enforcement authority for the MRL, and cannot arbitrate, mediate, negotiate, or provide legal advice on mobilehome park rent disputes, lease or rental agreements, but may provide general information on these issues. The Mobilehome Residency Law Protection Program at HCD also intakes resident complaints regarding alleged violations of the MRL and refers complaints to legal service providers.

Notice of Intention to Sell a Park: The MRL currently requires a mobilehome park owner to notify a RO at least 30 days and no more than a year before listing the park for sale with a real estate broker or offering to sell the park to any party. SB 1769 (Craven, 1986) initially required a park owner to provide no less than 10 and no more than 30 days’ notice, but in 1990 the Legislature increased the notice period to no less than 30 and no more than a year. This bill would increase the minimum notice from no less than 30 days to no less than 120 days prior to listing or offering to sell a park, and would create a right of first refusal for a RO to make an offer to purchase a park within six months of receiving notice. This bill would also include acceptance of an off-market offer from any buyer as an event that would trigger the 120-day notice requirement and six month first right of refusal, to address the recent increase of off-market purchase offers being made to parks that are not listed for sale. The author and sponsor points out that many of these provisions are modeled after the state of Colorado’s recently enacted mobilehome resident right of first refusal law.^[2]

Deleting Exemptions and Adding New Notice Recipients: The current MRL requirement for notice of intention to sell a park contains a fairly broad exemption that a parkowner is not required to comply with the notice requirement unless: 1) a RO has already been formed prior to the park being listed for sale; 2) a president, secretary, and treasurer have been appointed and their names provided to the parkowner; 3) the RO has provided a notice to the parkowner of their interest in purchasing the park before any listing is made; 4) the RO has continued to renew that notice each year; and 5) if any officers change, the RO has provided written notice to the parkowner within five days of that change and included the names and addresses of the new officers. There is also no current obligation on the parkowner to grant any consideration to a RO purchase offer, which the sponsor points out can discourage residents from even attempting to explore what it would take to make a purchase offer for their community despite the many benefits of park conversion to resident ownership. This bill would require a parkowner to engage in good-faith negotiations with a RO that did make a purchase offer on a park, but does not obligate the parkowner to accept a RO offer if it does not meet the parkowner’s price, terms, or conditions. A parkowner would be prohibited from applying overly restrictive conditions to a RO’s purchase offer and must make their asking price, terms, and conditions generally universal and applicable to all potential buyers.

Current Challenges for Resident Purchases: The state’s mobilehome parks are home to hundreds of thousands of Californians, many of whom are seniors, veterans, and people with disabilities living on fixed incomes in what has become one of the last naturally affordable housing options in California’s extreme housing crisis. Many homeowners have a significant financial investment in their homes and yards, though the land itself does not belong to them and their homes often depreciate in value and must be purchased with high-interest “chattel loans” because they are not considered real property. Displacement due to a park sale – which may lead to increases in rent or park closures to convert the land to a different use – can be disruptive and expensive, as residents face a dilemma between attempting to move their homes, finding a new place to live which may be much less affordable, or sometimes simply abandoning their home.

According to the author and sponsor, some residents feel that it is pointless to organize for the purposes of a potential purchase under the existing MRL process. Even in situations where a RO has already been formed and is working to purchase a park, there are barriers to securing financing, especially within the existing short notice timeframe. However, private investors have access to significant capital to be able to make purchase offers quickly, whereas resident organizations and nonprofit partners must seek competitive financing or subsidies from government programs with numerous regulatory requirements and lengthy award timelines. According to the Lincoln Institute of Land Policy and PBS, about 800,000 mobilehome parks nationwide were purchased by institutional investors between 2014 and 2022.^[3]

Residents purchasing their community can help stabilize parks, create financial security for vulnerable park residents, limit the risk of future rent spikes or park closures, and democratize the governance and management of parks. Resident organizations that successfully purchase their park become responsible for upkeep and maintenance of the park, often via a homeowners association or cooperative.

Manufactured Housing Opportunity and Revitalization (MORE) Program: The MORE program helps fund a variety of activities intended to keep mobilehome parks a safe and affordable homeownership option. MORE funds can be used for the acquisition, conversion to RO ownership, rehabilitation, reconstruction and replacement of mobilehome parks, as well the remediation of health and safety items of both parks and individual mobilehomes. Funding priorities from the most recent Notice of Funding Availability were given to resident-owned parks applying for loans to address serious health, safety, or code violations or suspended permits to operate, those with severe violations posing risks to life, health, and safety, and those with suspended permits to operate.^[4]

Preservation Notice Law: Finding that federal notice laws do not go far enough in warning tenants and local governments of the potential loss of affordable homes or in encouraging preservation transfers, California enacted its own state Preservation Notice Law in 1987. Government Code Sections 65863.10-13 contain a series of provisions designed to give tenants in affordable housing sufficient time to understand and prepare for potential rent increases, as well as to provide tenant ROs, local governments and potential preservation buyers with an opportunity to preserve property that has soon-to-expire affordability restrictions. Made permanent in 2011, the Preservation Notice Law has become a critical tool for preservation in the state as it has increased opportunities for preservation transfers, thereby extending affordability of developments with existing lower-income tenants for an additional 30-55 years and preventing displacement and possible homelessness when affordable properties might revert to market rates.

This bill would import several provisions of the Preservation Notice Law into the MRL for mobilehome park sales, including requiring notice of a sale to be provided to every resident of a park as well as to HCD at least 180 days prior to a listing being made, allowing the RO a first right of purchase opportunity before entertaining private market offers for the property, and the creation of a 180-day window for intaking those offers before private offers can be accepted. Although most mobilehome parks in the state are not deed-restricted or subject to affordability requirements outside of local rent control ordinances, they represent one of the few remaining pools of naturally-occurring affordable housing in the state. Mobilehome park residents often share many of the same characteristics with low-income tenants in affordable properties – they do not own their property and are in a similar landlord-tenant legal relationship with their parkowner; many live on social security or other forms of fixed incomes; and if they were to be displaced from their current living situation, they could face significant challenges locating other affordable housing options in their communities.

Arguments in Support: According to the bill’s sponsor, Legal Aid of Sonoma County, and a coalition of supporters including Disability Rights California, Public Advocates, and the California Rural Legal Assistance Foundation, “Mobilehome residents often have a significant financial investment in their homes, and displacement due to park sale can be disruptive and expensive. Many residents are seniors and/or living on a fixed income which is inadequate to cover rising rents. A right of first refusal allows residents to secure long-term affordability and stability by purchasing the park and controlling future rent increases. It can help address the growing issue of displacement and loss of affordable housing options, particularly for vulnerable populations like fixed income seniors. Additionally, owning the park incentivizes residents to invest in repairs and upgrades whereas corporate owners or investors have little incentive to make the capital improvements so many parks need. To address this crisis, at least a dozen states have passed some form of a ‘right to first refusal’ law.”

Arguments in Opposition: According to the Western Manufactured Home Communities Association and a coalition of opponents, “The right to dispose of property is a fundamental constitutional right which may not be taken without payment of just compensation. Moreover, under current law, nothing precludes resident groups or other housing entities from proactively approaching a park or portfolio with a pre-qualified loan package to acquire ownership. Specifically, the sale of private property between two parties remains a cornerstone of economic freedom in the United States. AB 2539 will involuntarily mandate a property owner to sell his or her properties to a public or private entity selected by differential treatment of the government. That requirement itself curbs the freedom of choice of buyer(s).”

Related Legislation:

AB 2926 (Kalra) of the current legislative session would add new requirements to the Preservation Notice Law, including requiring a seller of an assisted housing development to accept a bona fide offer to purchase the property from a qualified entity, among other changes. This bill is currently pending before this committee.

AB 2710 (Kalra) of 2022 would have established the Tenant and Community Opportunity to Purchase Act that would have given tenants, local public agencies, and mission-driven nonprofits a first opportunity to purchase rental housing properties when owners choose to put those properties up for sale, and a right to match an offer on those properties made by a third party. This bill died pending a hearing in the Assembly Judiciary Committee.

AB 519 (Voepel) of 2019 would have created a RO first right of refusal to purchase a park if the owner decided to sell or received a formal offer to purchase the park. This bill died pending a hearing in this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Legal Aid of Sonoma County (Sponsor)
BASTA Universal
California Rural Legal Assistance Foundation
Centro Legal De La Raza
Coalition of California Welfare Rights Organizations
Disability Rights California
Fair Housing Advocates of Northern California
Golden State Manufactured-home Owners League, INC. (GSMOL)
Individuals - 58
Inner City Law Center
Justice in Aging
Leadership Counsel for Justice and Accountability
Legal Aid of Marin
MH Action
Mobile Home Residents Association/coalition
National Housing Law Project
North Bay Organizing Project
Petaluma Estates Homeowners Association
Public Advocates
Pueblo Serena Home Owners Alliance
Rise Economy
Santa Rosa Manufactured-home Owners Association
Sonoma County Mobilehome Owners Association
Sonoma County Tenants Union
Sonoma Valley Golden State Manufactured-home Owners League
Sonoma Valley Housing Group
Western Center on Law & Poverty, INC

Opposition

Apartment Association of Greater Los Angeles
Cabrillo Management Corporation
California Association of Realtors
California Business Properties Association
California Mobilehome Parkowners Alliance
California Rental Housing Association
Security Investment Company, LLC
Western Manufactured Housing Communities Association

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

1. https://mhphoa.com/ca/roc/ ↑

2. https://leg.colorado.gov/bills/hb20-1201 ↑

3. https://www.pbs.org/newshour/economy/rents-spike-as-large-corporate-investors-buy-mobile-home-parks ↑

4. https://www.hcd.ca.gov/about-hcd/newsroom/california-issues-first-awards-pioneering-program-designed-to-preserve-mobilehomes-safe-quality-option-affordable-homeownership ↑