Analysis of AB 2778 and AB 2539
By Ryan D. Jones, Associate Attorney
As you may be aware, the Mobilehome industry recently achieved two significant legislative victories. The proactive efforts in Sacramento led to the successful defeat of AB 2778 which proposed mobile home park rent control and AB 2539 which proposed a right of first refusal for Park residents. These legislative proposals posed substantial risks to park owners’ property rights and could have imposed severe economic challenges on park owners and operators.
Presently, the Mobilehome Residency Law limits the ability of “qualified mobilehome park[s],” those located between and governed by two or more jurisdictions, from raising the gross rental rent by more than 3% plus the percentage change in the cost of living, or 5%, whichever is lower. Further, existing law precludes a qualified Park from increasing the rent more than two times in a 12-month period for any resident with a tenancy in the park for more than 12 months. A “tenancy” is defined by the MRL as the right of a homeowner to use a site within a mobilehome park on which to locate, maintain, and occupy a mobilehome.
AB 2778 would have extended this rent control scheme beyond qualified mobilehome parks to all mobilehome parks in the State, with very limited exceptions. Specifically, AB 2778 would have prohibited management from increasing the gross rental rate for a tenancy for a mobilehome space by more than 3% plus the percentage change in the cost of living, as defined, or 5%, whichever is lower, of the lowest gross rental rate charged for a tenancy at any time during the 12 months prior to the effective date of the increase, as specified. AB 2778 would have also prohibited management from increasing the gross rental rate for a tenancy in more than 2 increments over a 12-month period after the tenant maintains the tenancy over a 12-month period.
This would effectively impose rent control state-wide and drastically impact the value of your mobilehome park and impose drastic economic burdens on the ongoing wellbeing of park owners and managers.
Further, under the MRL, owners of a mobilehome park entering into a written listing agreement with a licensed real estate broker for the sale of their park or who offers to sell the mobilehome park to any party to provide written notice of the owner’s 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. The MRL 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. Finally, the MRL prohibits an offer to sell a park from being construed as an offer unless it is initiated by the park owner or their agent. There are 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.
AB 2539 would have required the owner to provide the above-described notice if they accepted an offer from any buyer. The bill would have also required 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.
More importantly, AB 2539 would have granted the resident organization a right of first refusal to the mobilehome park and given them 6 months 120 days from the time they received the above-described notice to make an offer. The bill would have required 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.
This would in effect drastically reduce park owner’s right to alienate their property as they see fit and hand over that right to the residents of the park with limited exceptions.
Despite facing a legislature with a strong progressive inclination, diligent efforts and strategic engagement prevailed. This success underscores the credibility and influence our advocates hold within the State Capitol. It also demonstrates that the manufactured housing industry must be ever-vigilant to meet bills seeking to limit, dilute, or terminate MHC property rights.
We owe tremendous gratitude to WMA’s legislative lobbyists and CMPA’s legislative advocates. Their unwavering dedication and thorough approach were instrumental in achieving these significant victories.
These wins demonstrate the critical impact of unified action and well-informed advocacy. We are proud of our MHC team’s achievements and their unwavering commitment to safeguarding MHC property rights in California.