SENATE BILL SB 237 BY MIGDEN PROHIBITS AGREMENT TO INCLUDE
RIGHT OF FIRST REFUSAL FOR PARKS TO BUY YOUR HOME
Senate Bill SB 237 prohibits a rental agreement in a mobilehome park entered into or renewed on or after January 1, 2006 from including a provision that would grant the management of the park the right of first refusal to purchase the homeowners’ mobilehome for sale to a third party. Specifically, this bill provides the park owner or management and homeowner of a mobilehome park may enter into a separate agreement which would grant the park owner or management the right of first refusal.
There are approximately 4,850 mobilehome parks and manufactured housing communities in California providing spaces for an estimated 675,000 residents. According to the Senate Select Committee on Mobile and Manufactured Homes of the rental agreements their office has reviewed in the past, an estimated one third include a clause granting the park management a right of first refusal to purchase an owner’s mobilehome. A right of first refusal in a rental agreement requires the mobilehome owner to inform the park when they receive a legitimate offer from a third party and provide the park a copy of the offer and a period of time to respond with a matching offer. If the park chooses not to match the offer the homeowner can accept the offer from the third party if they are still interested.
According to the sponsor this bill is needed to prevent abuses that arise when rental agreements give park owners the right of first refusal. Prospective buyers may be deterred because of the delay caused by the park’s right of first of refusal could range up to 10 days. Additionally, in mobilehome parks the buyer of a mobilehome must negotiate the rental price of a space with the management while simultaneously purchasing a mobilehome from an individual in the park. In a park in which the management has a right of first refusal, the park could abuse this relationship by offering unfavorable lease terms and making the purchase of the mobilehome less attractive to drive the purchaser away and the price of the mobilehome down.
Supporters also argue the park owner has an interest in including the right of first refusal in their leases to guarantee their ability to purchase the mobilehomes in their park. If the owners of the mobilehome parks also own the homes
within the park, then they are exempt from certain burdens of the Mobilehome Residency Law, such as rent control. Through another scenario, the park owner could purchase all of the mobilehomes in a park and eventually be renting fewer than two mobilehome spaces making the property no longer a mobilehome park by legal definition. As a result they would no longer have to provide rent control, could close their park and change it to another use and effectively diminish the amount of affordable housing.
Although leases are theoretically a negotiated contract, mobilehome owners have little negotiating power to keep the right of first refusal out of a lease agreement. Mobilehomes are not really mobile and residents are forced to accept the terms of a park owner in a lease agreement. This bill seeks to ensure any right of first refusal is truly negotiated and not a part of a boilerplate rental agreement.
Supporters of the bill were: Golden State Manufactured-Home Owners League (Sponsor), AARP California and Western Manufactured Housing Communities Association (WMA). There was no opposition.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
GOVERNOR VETOES FOUR BILLS
Governor Schwarzenegger has vetoed all four of the following bills. All were introduced to help mobilehome owners: SB 40 (Dunn) – Park Receivership, SB 106 (Dunn) – Park Inspections, SB 198 ( Lowenthal) – Mobilehome Installation Standards, and SB 765 (Dunn) – Sewer dumping from permanent buildings
In the Assembly, several bills have not passed and have been made two year bills, with the hope that they could get additional support in order to pass. Those bills are AB 197 (Umberg) – Right of First Refusal to Buy Park, AB 396 (Lieber) – Park Conversion to Another Land, AB 791 (Lieber) – Extending Conventional Tenancy Rights, AB 954 ( Coto) – Park Managers at Homeowner Meetings, AB 1469 (Negrete-Mcleod) Park Manager licensing. Our friends up north were instrumental in getting Sacramento to look at licensing managers. Mr. Jim Burr will have an article on this subject in an upcoming newsletter.
Editor’s Note: I will not detail each bill at this time, perhaps in another newsletter – if you want more information, call me, or go online and “google” each bill to get additional information. By the way, SB 237 on the previous page was passed and signed by the Governor. It will take effect on January 1, 2006.