On September 27, 1999, Governor Gray Davis signed Senate Bill 534. This new law becomes effective January 1, 2000. It requires lengthy and detailed disclosures about a manufactured home community and its infrastructure every time a manufactured home is sold in place by a tenant or a new tenancy is created.
SB 534 amends portions of the Civil Code that address "disclosure" forms and adds a provision to the Mobilehome Residency Law. It also amends portions of the Health and Safety Code.
The new provision added to the Mobilehome Residency Law is Civil Code $ 798.75.5. It requires the owner or manager of a manufactured home community to "provide a prospective homeowner with a completed written disclosure form concerning the park". The written disclosure form must be provided three days prior to execution of any new rental agreement or statement by park management and prospective homeowner that they have agreed to the terms and conditions of a new rental agreement. The new disclosure form must be updated annually or ". . . in the event of a material change in the condition of the mobilehome park, at the time of the material change in that condition." Thus, the manufactured home community owner must now provide a disclosure form, speaking to the conditions of the entire community, to any prospective resident who plans to purchase a home in the park.
The new provision to the Mobilehome Residency Law has substantial implications for almost every manufactured home community in California. First, the provisions concerning disclosure cannot be waived. Second, the disclosure form must be created on at least an annual basis. The completion of the form, while appearing to be a simple "yes" or "no" check the box proposition can, in fact, be much more difficult and time consuming. Additionally, a number of the issues that must be addressed call for difficult factual and legal analysis. For example, the park is asked to advise whether there are any "non-conforming use" or "violation of setback" requirements. Furthermore, the required common area facilities "disclosures" have far reaching implications.
The potential impact of this disclosure statement form with reference to disputes with tenants or a city about any allegation of "failure to maintain" or "breach of lease" is mind boggling. The requirement (opportunity?) to explain any "yes" answer on the disclosure form concerning defects, citations, damage and the like will require careful drafting. In that regard, while we view this disclosure form as onerous, unnecessary and costly, there are opportunities to advise and/or lobby for future capital improvement projects. Thus, the form can be utilized as an opportunity to position the park to explain anticipated capital improvement projects, especially in locales with mobilehome rent control ordinances.
There are specific exemptions in the new statute when the disclosure statement is not required. However, those exceptions, on the whole, will not apply to the majority of mobilehome transfers taking place inside a community. Each transfer, until park managers become familiar with the exemptions, may require an initial analysis of whether or not the disclosure form is needed.
We would urge each and every California Manufactured Housing Community Owner to commence preparation of the required disclosure statement ( and required "explanations") so it may be utilized effective January 1, 2000. The consequences and implications of the new form being ignored or underestimated is done at the community owner's peril.