SENATE BILL REPORT

SB 5602

BYSenators Warnke, Smitherman, Vognild, Bottiger, Gaspard and Bender

Establishing requirements for sale of mobile homes and mobile home parks.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):February 17, 1987; March 6, 1987

Majority Report:  That Substitute Senate Bill No. 5602 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Vognild, West, Williams, Wojahn.

Senate Staff:Dave Cheal (786-7576)

                  March 9, 1987

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR, MARCH 6, 1987

BACKGROUND:

Mobile home parks are often sold without any notice to the tenants.  Frequent change of ownership of particular parks appears to be a major driver of rent increases.  Tenant ownership and control of a park is seen by many mobile home park tenants as an antidote for the economic discomfort and uncertainty they face.  Obviously, the best time to buy a mobile home park is when the owner is desirous of selling.

SUMMARY:

A "qualified tenant organization" is defined as a formal organization created for the purpose of promoting tenants' rights, which has been in existence at least 30 days prior to the time an owner must give notice under this act.  Members must be tenants of the park in question. 

An owner of a mobile home park must give at least 90 days notice to a qualified tenant organization before the owner can transfer ownership in the park.

Mobile home tenants must give the park owner at least 45 days notice before they can sell their mobile home.

The term "sale" or "sold" is given a comprehensive definition patterned after the one used in the real estate excise tax chapter.

The express exclusions from the term "sale" or "sold" are taken largely from the same source.  Exclusions include transfers:  by gift or inheritance; in connection with foreclosure of a mortgage; resulting from a property settlement in a divorce; a mortgage given to secure a debt; and by appropriation or decree in condemnation proceedings.

"Notice" is defined as all the material terms of the anticipated sale including the asking price and availability of seller financing, if any.

If the tenants' organization meets the asking price the park owner must sell unless the park owner has previously received a more favorable offer from an unrelated buyer, or unless the owner chooses to remove the park from the market.  The same conditions apply to the sale of a mobile home located in a park.

A mobile home park owner or a mobile home owner may sell to anyone at any time on any terms if prior authorized notice is given that the tenants' organization or the park owner has no interest in purchasing the mobile home park or the mobile home.

The seller of a mobile home park or mobile home may demand evidence of financial ability to perform from the tenant organization or the park owner.  "Reasonable evidence" is defined to include a written or oral notice from a financial institution that they will finance the transaction.

EFFECT OF PROPOSED SUBSTITUTE:

A tenant organization may give notice to the park owner that they have a continuing interest in buying the park.  From that point, the park may not be sold without giving notice to the tenant organization.  When a park owner gives notice that an agreement has been reached to sell the park to someone else, the tenant organization must be given 48 hours to deposit 1 percent of the agreed purchase price with the owner.  The tenants then have 30 days to be ready to close.  If these conditions are met, the park must be sold to them.

Fiscal Note:      none requested

Senate Committee - Testified: John Jensen; Steve Kolcsey; Gary McFadden