BILL ANALYSIS
SENATE RULES COMMITTEE SB 1988
Office of Senate Floor Analyses
1020 N Street, Suite 524
(916) 445-6614 Fax: (916) 327-4478
.
THIRD READING
.
Bill No: SB 1988
Author: Craven (R), et al
Amended: 5/11/98
Vote: 21
.
SENATE HOUSING & LAND USE COMMITTEE : 4-0, 4/20/98
AYES: Costa, Kopp, Monteith, Vasconcellos
.
SUBJECT : Disclosures: mobilehomes
SOURCE : Author
.
DIGEST : This bill requires the seller of a used
manufactured home that is classified as personal property
to provide the purchaser with a "Manufactured Home and
Mobilehome Transfer Disclosure Statement".
ANALYSIS : Most manufactured homes (mobilehomes) are
placed in mobilehome parks on non-permanent foundations,
such as piers or concrete blocks. These homes are
considered personal property and sellers are not subject to
disclosure requirements when they are sold.
Other manufactured homes are placed on permanent
foundations on separate lots, and these homes are
considered real property and subject to property taxes like
conventional homes. These homes are subject to disclosure
requirements when resold. The seller must complete and
provide the buyer with a "real estate transfer disclosure
statement" (TDS) (SB 1406, Petris, 1985). The TDS provides
the buyer with information about appliances, accessories,
any known building defects or malfunctions, lawsuits,
environmental hazards, easements, and other conditions of
the property. The buyer has the opportunity to rescind the
agreement to purchase the home.
Manufactured homes on non-permanent foundations will be
subject to disclosure requirements, beginning January 1,
1999 (SB 1704, Craven, 1996). Sellers must complete and
provide the buyer with a TDS. SB 1704 created an advisory
task force to review and propose modifications or additions
to the TDS form to apply to manufactured homes that are
placed on non-permanent foundations. The task force
included representatives of mobilehome owners, mobilehome
park owners, mobilehome dealers, real estate brokers, the
Department of Housing and Community Development, and other
knowledgeable people. After last year's meetings, the task
force developed a TDS form that applies to manufactured
homes on non-permanent foundations. The author wants to
codify the TDS form.
This bill codifies the recommendations of the Task Force as
detailed in its January 5, 1998 report for implementation
of a TDS form for manufactured homes and mobilehomes and
related, necessary statutory changes, in order to meet the
January 1, 1999 deadline, the effective date for mobilehome
disclosure under SB 1704.
This bill requires the seller of a used manufactured home
that is classified as personal property (on a non-permanent
foundation) to provide the purchaser with a "Manufactured
Home and Mobilehome Transfer Disclosure Statement" as
follows:
--When the sale involves a real estate agent, the statement
shall be provided as soon as practicable, but no later
than the close of escrow.
--When the sale does not involve a real estate agent, the
statement shall be provided at the time of execution of
any purchase agreement.
The bill specifies the detailed contents of the
Manufactured Home and Mobilehome Transfer Disclosure
Statement. This TDS does not apply to manufactured homes
that are located within common interest developments or to
the transfer of homes resulting from foreclosure sales.
In addition, this bill does the following:
--Allows a purchaser to rescind a purchase contract within
three days after delivery of the disclosure statement and
any amendments.
--Specifies that, in addition to a manufactured home
dealer, a salesperson has the responsibility to visually
inspect a manufactured home and disclose any known or
obvious problems. Both the dealer and the salesperson
must complete the dealer's portion of the disclosure
statement and deliver it to the purchaser.
--Includes legislative intent to clarify and facilitate the
use of a transfer disclosure statement that applies to
the resale of manufactured homes on non-permanent
foundations.
--Includes legislative intent to not affect existing
disclosure obligations of manufactured home dealers and
salespersons or real estate brokers and salespersons.
--Defines an "agent" to mean a licensed manufactured home
dealer or salesperson, or real estate broker or
salesperson.
--Defines a "seller" to mean the lawful owner of a
manufactured home or mobilehome offering the home for
sale.
Comments
The Department of Housing and Community Development and
local officials inspect every mobilehome park and the
mobilehome spaces in those parks to assure compliance with
installation requirements. HCD and local officials have
inspected approximately 70% of the parks and discovered
numerous code violations -- misaligned stairs and risers,
faulty railings, incorrect building setbacks, improperly
designed storage sheds, and other code violations.
Mobilehome owners are cited and they are stuck with paying
for repairs. Homeowners say that this situation is unfair;
sellers should tell purchasers about these violations so
they can consider the repair costs when negotiating
purchase prices. This bill provides manufactured home
purchasers with a mechanism to learn about property
conditions.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/20/98)
California Manufactured Housing Institute
California Mobilehome Resource Action Association
Golden State Mobilehome Owners League
Western Mobilehome Parkowners Association
California Multiple Listing
OPPOSITION : (Verified 5/20/98)
California Association of Realtors
ARGUMENTS IN SUPPORT : Proponents argue, unlike
conventional homes, the mobilehome owner owns the home but
rents or leases the lot on which the home is installed.
The homeowner has no ownership or control of the park
common areas. SB 1988's mobilehome TDS form was
recommended by a joint legislative task force consisting of
mobilehome owners, park owners, mobilehome dealers, the
Department of Housing and the Association of Realtors.
Many difficult issues were resolved, but despite months of
debate, the Realtors continued to dissent on one issue,
insisting that homeowners be required to statutorily
disclose park common area conditions. Common law requires
sellers, including mobilehome owners, to disclose relevant
facts affecting the home of which they are aware.
Mobilehome owners should not be saddled with a statutory
duty to disclose park conditions, which in effect will
burden them with the requirement to seek out and inspect
for park common area problems of which they "should have
been" aware. Moreover, SB 1988's form does disclose
references and information to the prospective buyer about
where and how to inquire about the condition of the park.
The mobilehome owner's statutory duty to disclose, as SB
1988 provides, should be limited to the property which they
are selling.
ARGUMENTS IN OPPOSITION : Oponents argue that this bill
does not provide full disclosure of critical and relevant
information which are important to a buyer of a mobilehome
in a mobilehome park, but rather limits the seller's
disclosure to the mobilehome. The reason for disclosure is
to require that facts materially affecting the value and
desirability of the property, including its physical
condition, be divulged to the buyer. Some members of the
task force which recommended the disclosure form for
mobilehomes, now a part of SB 1988, do not believe the
seller should disclose all material facts affecting the
value of the mobilehome being sold. Facts about the
condition of the park, which mobilehome owners living in
parks are in a unique position to know, should not be swept
under the rug. Opponents argue that this bill should be
amended to provide full disclosure by affirmatively
requiring mobilehome owners to disclose park common area
defects, of which they are aware, and which affect the
mobilehome's value.
NC:sl 5/20/98 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****