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AN ACT Relating to the purchase of mobile home parks by tenant organizations; amending RCW 59.22.020; adding a new chapter to Title 59 RCW; and adding new sections to chapter 59.22 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that mobile home parks provide a significant source of homeownership for many Washington residents, but increasing rents and low vacancy rates, as well as the pressure to convert mobile home parks to other uses, increasingly make mobile home park living unaffordable or unavailable. The legislature also finds that many homeowners who reside in mobile home parks are also those residents most in need of affordable housing. It is the intent of the legislature to encourage and facilitate the conversion of mobile home parks to resident ownership in the event of a voluntary sale of the park.

NEW SECTION. Sec. 2. An obligation of good faith is imposed on the parties in the conduct of transactions affected by this chapter. Rights created by this chapter are forfeited by any party failing to act in good faith. Further obligations under this chapter on other parties are also discharged by a failure to act in good faith.

NEW SECTION. Sec. 3. If a qualified tenant organization gives written notice to the mobile home park owner where the tenants reside that they have a present and continuing desire to purchase the mobile home park, the park may then be sold only according to this chapter.

"Notice" for the purposes of this section means a writing signed by sixty percent of the tenants in the park indicating that they desire to participate in the purchase of the park, and that they are contractually bound to the other signators of the notice to participate by purchasing an ownership interest that will entitle them to occupy a mobile home space for the remainder of their life or for a term of at least fifteen years.

NEW SECTION. Sec. 4. (1) "Mobile home park" means the same as defined in RCW 59.20.030.

(2)(a) The terms "sold" or "sale" for the purposes of this chapter have their ordinary meaning and include: (i) A conveyance, grant, assignment, quitclaim, or transfer of ownership or title to real property and improvements that comprise the mobile home park, or mobile homes, for a valuable consideration; (ii) a contract for the conveyance, grant, assignment, quitclaim, or transfer; (iii) a lease with an option to purchase the real property and improvements, or mobile home, or any estate or interest therein; or (iv) other contract under which possession of the property is given to the purchaser, or any other person by his or her direction, where title is retained by the vendor as security for the payment of the purchase price. These terms also include any other transfer of the beneficial or equitable interest in the mobile home park such as a transfer of equity stock or other security evidencing ownership that results in a change in majority interest ownership.

(b) The terms "sale" or "sold" do not include: (i) A transfer by gift, devise, or inheritance; (ii) a transfer of a leasehold interest other than of the type described in this subsection; (iii) a cancellation or forfeiture of a vendee's interest in a contract for the sale of the mobile home park; (iv) a deed in lieu of foreclosure of a mortgage; (v) the assumption by a grantee of the balance owing on an obligation that is secured by a mortgage or deed in lieu of forfeiture of the vendee's interest in a contract of sale where no consideration passes otherwise; (vi) the partition of property by tenants in common by agreement or as the result of a court decree; (vii) a transfer, conveyance, or assignment of property or interest in property from one spouse to the other in accordance with the terms of a decree of divorce or dissolution or in fulfillment of a property settlement agreement incident thereto; (viii) the assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved; (ix) transfers by appropriation or decree in condemnation proceedings brought by the United States, the state or any political subdivision thereof, or a municipal corporation; (x) a mortgage or other transfer of an interest in real property or mobile home merely to secure a debt, or the assignment thereof; (xi) a transfer or conveyance made under an order of sale by the court in a mortgage or lien foreclosure proceeding or upon execution of a judgment; (xii) a deed in lieu of foreclosure to satisfy a mortgage; (xiii) a conveyance to the federal housing administration or veteran's administration by an authorized mortgagee made under a contract of insurance or guarantee with the federal housing administration or veteran's administration; (xiv) a transfer in compliance with the terms of any lease or contract upon which notice has already been given under this chapter, or where the lease or contract was entered into before the effective date of this act; or (xv) a transfer to a corporation or partnership the majority interest of which is wholly owned by the transferor.

(3) A "qualified tenant organization" means a formal organization of tenants in the park in question, organized for the purpose of purchasing the park, with membership made available to all tenants with the only requirements for membership being: (a) Payment of reasonable dues; and (b) being a tenant in the park.

NEW SECTION. Sec. 5. If notice of a desire to purchase has been given under section 3 of this act, a park owner shall notify the qualified tenant organization that an agreement to purchase and sell has been reached, the terms of the agreement, including the availability and terms of seller financing, before closing a sale with any other person or entity. If, within ninety days after the actual notice has been received, the qualified tenant organization tenders to the park owner an amount equal to one percent of the agreed purchase price, refundable only according to this chapter, together with a fully executed purchase and sale agreement at least as favorable to the park owner as the original agreement, the mobile home park owner must sell the mobile home park to the qualified tenant organization. The qualified tenant organization must perform under the agreement and stand ready to close the sale within one hundred twenty days from the date of execution of the purchase and sale agreement. This additional one hundred twenty-day period may be extended by mutual agreement between the park owner and qualified tenant organization. In the case of seller financing, a mobile home park owner may decline to sell the mobile home park to the qualified tenant organization if, based on reasonable and objective evidence, to do so would present a greater financial risk to the seller than would selling on the same terms to the original offeror.

Failure to perform under the terms of the agreement on the part of the qualified tenant organization shall result in the forfeiture of the one percent deposit and void the purchase and sale agreement. The mobile home park owner may then sell the mobile home park to any party at any time on any terms without regard to this section.

The rights of the qualified tenant organization under the purchase and sale agreement, including the deposit, are not forfeited if the transaction fails to close within the additional one hundred twenty days due to the failure of the park owner to perform or deliver good and marketable title.

NEW SECTION. Sec. 6. Failure on the part of a mobile home park owner to give notice as required by this chapter renders a sale of the mobile home park that occurs within sixty days of the time the qualified tenant organization knows or has reason to know that a violation of the notice provisions of section 5 of this act has occurred, voidable upon application to superior court after notice and hearing. If the court determines that the notice provisions of this chapter have been violated, the court shall issue an order setting aside the improper sale. In an action brought under this section, the court shall award the prevailing party attorneys' fees and costs. For the purposes of this section, a "prevailing party" includes any third-party purchaser who appears and successfully defends his or her interest.

Sec. 7. RCW 59.22.020 and 1991 c 327 s 2 are each amended to read as follows:

The following definitions shall apply throughout this chapter unless the context clearly requires otherwise:

(1) "Account" means the mobile home affairs account created under RCW 59.22.070.

(2) "Affordable" means that, where feasible, low-income residents should not pay more than thirty percent of their monthly income for housing costs.

(3) "Conversion costs" includes the cost of acquiring the mobile home park, the costs of planning and processing the conversion, the costs of any needed repairs or rehabilitation, and any expenditures required by a government agency or lender for the project.

(4) "Department" means the department of community development.

(5) "Fee" means the mobile home title transfer fee ((~~created~~)) imposed under RCW ((~~59.21.060~~)) 59.22.080.

(6) "Fund" or "park purchase account" means the mobile home park purchase ((~~fund~~)) account created pursuant to RCW 59.22.030.

(7) "Housing costs" means the total cost of owning, occupying, and maintaining a mobile home and a lot or space in a mobile home park.

(8) "Individual interest in a mobile home park" means any interest which is fee ownership or a lesser interest which entitles the holder to occupy a lot or space in a mobile home park for a period of not less than either fifteen years or the life of the holder. Individual interests in a mobile home park include, but are not limited to, the following:

(a) Ownership of a lot or space in a mobile home park or subdivision;

(b) A membership or shares in a stock cooperative, or a limited equity housing cooperative; or

(c) Membership in a nonprofit mutual benefit corporation which owns, operates, or owns and operates the mobile home park.

(9) "Low-income resident" means an individual or household who resided in the mobile home park prior to application for a loan pursuant to this chapter and with an annual income at or below eighty percent of the median income for the county of standard metropolitan statistical area of residence. Net worth shall be considered in the calculation of income with the exception of the resident's mobile/manufactured home which is used as their primary residence.

(10) "Low-income spaces" means those spaces in a mobile home park operated by a resident organization which are occupied by low-income residents.

(11) "Mobile home park" means a mobile home park, as defined in RCW 59.20.030(4), or a manufactured home park subdivision as defined by RCW 59.20.030(6) created by the conversion to resident ownership of a mobile home park.

(12) "Resident organization" means a group of mobile home park residents who have formed a nonprofit corporation, cooperative corporation, or other entity or organization for the purpose of acquiring the mobile home park in which they reside and converting the mobile home park to resident ownership. The membership of a resident organization shall include at least two-thirds of the households residing in the mobile home park at the time of application for assistance from the department.

(13) "Resident ownership" means, depending on the context, either the ownership, by a resident organization, as defined in this section, of an interest in a mobile home park which entitles the resident organization to control the operations of the mobile home park for a term of no less than fifteen years, or the ownership of individual interests in a mobile home park, or both.

(14) "Landlord" shall have the same meaning as it does in RCW 59.20.030.

(15) "Manufactured housing" means residences constructed on one or more chassis for transportation, and which bear an insignia issued by a state or federal regulatory agency indication compliance with all applicable construction standards of the United States department of housing and urban development.

(16) "Mobile home" shall have the same meaning as it does in RCW 46.04.302.

(17) "Mobile home lot" shall have the same meaning as it does in RCW 59.20.030.

(18) "Tenant" means a person who rents a mobile home lot for a term of one month or longer and owns the mobile home on the lot.

NEW SECTION. Sec. 8. (1) The department may make loans from the fund to resident organizations for the purpose of financing mobile home park conversion costs. The department may only make loans to resident organizations of mobile home parks where a significant portion of the residents are low-income or infirm.

(2) The department may make loans from the fund to low-income residents of mobile home parks converted to resident ownership or which plan to convert to resident ownership. The purpose of providing loans under this subsection is to reduce the monthly housing costs for low-income residents to an affordable level. The department may establish flexible repayment terms for loans provided under this subsection if the terms are necessary to reduce the monthly housing costs for low-income residents to an affordable level, and do not represent an unacceptable risk to the security of the fund. Flexible repayment terms may include, but are not limited to, graduated payment schedules with negative amortization.

NEW SECTION. Sec. 9. (1) Any loans granted under section 8 of this act shall be for a term of no more than thirty years.

(2) The department shall establish the rate of interest to be

paid on loans made from the fund.

(3) The department shall obtain security for loans made under this chapter. The security may be in the form of a note, deed of trust, assignment of lease, or other form of security on real or personal property which the department determines is adequate to protect the security of the fund and the interests of the state. To the extent applicable, the documents evidencing the security shall be recorded or referenced in a recorded document in the office of the county auditor of the county in which the mobile home park is located.

(4) The department may contract with private lenders, nonprofit organizations, or units of local government to provide program administration and to service loans made under this chapter.

NEW SECTION. Sec. 10. Before providing financing under this chapter, the department shall require:

(1) Verification that at least two-thirds of the households residing in the mobile home park support the plan for acquisition and conversion of the park;

(2) Verification that either no park residents will be involuntarily displaced as a result of the park conversion, or the impacts of displacement will be mitigated so as not to impose a hardship on the displaced resident;

(3) Projected costs and sources of funds for conversion activities;

(4) A projected operating budget for the park during and after conversion; and

(5) A management plan for the conversion and operation of the park.

NEW SECTION. Sec. 11. The department shall consider the following factors in determining the eligibility for, and the amount, of loans made under this chapter:

(1) The reasonableness of the conversion costs relating to repairs, rehabilitation, construction, or other costs;

(2) The number of available and affordable mobile home park spaces in the general area;

(3) The adequacy of the management plan for the conversion and operation of the park; and

(4) Other factors established by the department by rule.

NEW SECTION. Sec. 12. The department may provide technical assistance to resident organizations who wish to convert the mobile home park in which they reside to resident ownership. Technical assistance does not include details connected with the sale or conversion of a mobile home park which would require the department to act in a representative capacity, or the drafting of documents affecting legal or property rights of the parties by the department.

NEW SECTION. Sec. 13. Sections 1 through 6 of this act shall constitute a new chapter in Title 59 RCW. Sections 8 through 12 of this act are each added to chapter 59.22 RCW.