Legislative Update - Jan 2015 - Unpaid Taxes on Homes - Habitability - In Park Sales Conflict - House Keeping

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The 2015 Oregon Legislative Session convened this month with House and Senate Committees beginning their work the first week in February.  There are a wide variety of issues the Oregon Legislature will be dealing with – many being repeats from previous sessions such as education funding and taxes that never seem to go away.

 

The Manufactured Housing Landlord-Tenant Coalition continues to work on possible legislation.  The group has been meeting since June 2014 – at least once a month to address a variety of issues.  The issues have been significantly narrowed down as we rapidly approach the end of these negotiations.  The odds are that there will either be a compromise bill (typically know as the coalition bill) or we could face some nasty political battles on some onerous legislation.  The coalition provides a venue for both landlords and tenants to work through selected issues.  In general the coalition’s work tends to be better thought out than most of the knee jerk legislative proposals we see from individual legislators. 

 

The biggest challenge of any negotiation process is the end – reaching a final compromise.   We all know, compromise is something that is not easily accomplished in today’s political environment.  Perhaps the best sign of a successful compromise is when both sides are unsatisfied with the final product.  Having worked on coalition bills since 1999 most times both sides grumble their way to agreement.  I suspect this year will be no different.

 

Over the last six months MHCO has posted updates on the issues we have been working. There are now four issues in the proposed 2015 Coalition Bill.  Many of these issues are complicated and consume pages of proposed legal language.  We will spare you that in this report but will try to convey the key substance of each issue.  The following is a summary of where those issues stand in very broad brushstrokes:

 

1. Unpaid Taxes on Abandoned Homes

 

The County Tax Collector and the Oregon Department of Revenue have agreed to cancel all unpaid property taxes and special assessments as provided under ORS 311.790.  There is no limit on the market value of the home or limit on the amount of tax to be canceled.

 

In general, in order to obtain the tax cancelation of unpaid taxes on an abandoned home the landlord will be required to file an affidavit with the county tax collector stating that the landlord will sell the property in an arms length transaction to an unrelated buyer who intends to occupy the property in that facility.  Once the home is sold by the landlord another affidavit or declaration with the county tax collector would have to be filed stating that the landlord has sold the property, the sale price and description of any costs incurred by the landlord to improve the property for sale.

 

MHCO will create these affidavits as new MHCO Forms for community owners or managers to utilize. 

 

This is an issue MHCO has wanted to address over the past ten years.  We are very happy that the issue is finally resolved and the unpaid taxes on an abandoned home will be completely eliminated.  This will impact nearly every community in the state of Oregon.  

 

In addition, on a separate issue there will also be and increase in the yearly fee paid by community owners paid to Oregon Housing and Community Services.  The department will charge $50 for communities with more than 20 spaces and $25 for those communities with less than 20 spaces.  Under ORS 446.525 the special assessment levied annual upon each manufactured dwelling will increase from $6 to $10.  This  $10 assessment is to be paid by the tenants.

 

2. Habitability – Ground Support, Natural Gas and Garbage Cans

 

This issue has been significantly altered since it was first introduced last summer. 

 

One of the main concerns the residents have is being able to cancel a rental agreement or lease if the foundation of their home is partially washed away.  The proposed language is: “For manufactured dwellings only, a surface or ground capable of supporting the dwelling approved under applicable law at the time of installation and maintained to support the dwelling in a safe manner so that it is suitable for occupancy, not including normal settling of land as under any structure.”

 

Additionally, this section will address national gas or propane gas supply and connection to the space …“approved under applicable laws at the time of installation and maintained in good working order to the extent that the gas supply system can be controlled by the landlord, if that utility service is provided within the park pursuant to the rental agreement.”

 

And finally, this section will also address garbage cans.  “Except as otherwise provided by local ordinance or by written agreement between the landlord and the tenant, an adequate number of appropriate receptacles for garbage and rubbish in clean condition and good repair at the time of commencement of the rental agreement, and for which the landlord shall provide and maintain appropriate serviceable receptacles thereafter and arrange for their removal.”  Note:  This only applies if you state it in your rental agreements or if there is a requirement in your local ordinance.

 

3. Conflict of Interest With In-Park Sales

 

This issue along with the cancelation of unpaid taxes on abandoned homes consumed most of the coalitions time.  At this time it is the last issue we are struggling to resolve to mutual agreement. 

 

The tenants have agreed to drop Unfair Trade Practices Act expansion to include violations of ORS 90.680 (6).  The tenants have also decided against a “budget note” directing Department of Consumer and Business Services to regulate the sale of homes inside a manufactured home community. 

 

Instead, there will be an increase in violations of ORS 90.680 from $200 to $500, and provide for a larger damages award where a landlord has exhibited a pattern or practice of violations of ORS 90.680.

 

There will also be a requirement that there be a written agreement between the landlord and tenant when a home is sold on consignment.  This agreement between the landlord and tenant would include the sale price, the division of any earnest money deposit, and the status of property tax payments and any liens or security interests in the home.  It will also require the landlord account in writing to the tenant for the sale proceeds and pays within 10 days after a sale to the tenant.  MHCO will provide members with a proposed contract/from to use when the landlord is selling a home on consignment.

 

Additional items to be included is the requirement that the landlord may not apply more stringent credit or conduct criteria for approving as a tenant a prospective purchase who seeks to buy a home from a tenant when compared to a purchaser who seeks to by a home from the landlord.  This does not prohibit better or different sales terms including space rent.  This also does not prohibit a landlord from requiring a purchaser to visit the park in person prior to purchase.

 

The final piece of this negotiation revolves around required repairs that are not disrepairs under ORS 90.632.   There is also disagreement of when and who should provide copies of the rental application, rental agreement, rules, and statement of policy to the prospective purchaser.  At this time there is no consensus or agreement of these two issues.  The coalition has scheduled one more meeting to resolve these remaining issues.

 

4. “House Keeping” on Right of First Refusal/Opportunity to Purchase

 

There are some technical changes that need to be made to the law on community purchase that passed out of the legislature in February 2014.  The main issue is the waiver of state capital gains taxes if the community owner sells his/her community to the residents.  Oregon Legislative Counsel left this out of the bill last year.  

 

The other change is closing a loophole in the “right of first refusal/opportunity to purchase” procedure that benefits landlords by preventing a tenant acting in bad faith from dragging out the timelines.  The specifically the underlined language is the proposed language: “Within 15 days after delivery of the financial information described in subsection (3) of this section, or within 15 days after the end of the 10-day period described in subsection … of this section when tenants do not request financial information under subsection … of this section, if the tenants choose to continue competing to purchase the park, the tenants committee ….”.  Closing this loophole is to the benefit of the landlord.

 

Summary

 

 There is one more meeting of the coalition in February to iron out remaining differences.  If there is agreement the proposals will be sent to Legislative Counsel and drafted into a legislative proposal for the Oregon Legislature to review and pass. The drafting of the agreed concepts will be another additional hurdle as we make sure the proposed legal language adequately reflects the intent of the coalition.  MHCO will be working with our legal counsel to make sure the legislation is accurate.  

 

In the meantime MHCO will continue to keep the membership advised.  And there are always the legislative proposals that individual legislators may have up their sleeve that we will have to address.  Those issues are much easier to address and defeat when there is a coalition bill working through the process.

 

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