Tag Archives: Legislation

Mobilehome Park Owners Forbidden from Renting Their Own Mobiles?

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Das Williams, a member of the California State Assembly, asked Attorney General Kamala D. Harris for an opinion on the following question: “If the management of a mobilehome park has enacted rules and regulations generally prohibiting mobilehome owners from renting their mobilehomes, is park management bound by these same rules and regulations?”  Opinion No. 11-703, available here.

The attorney general’s answer, somewhat surprisingly, is YES.

Why does this matter?  Because mobilehome park owners often have difficulty filling their parks with mobilehome owners.  On occasion, they have resorted to buying mobiles themselves and placing them in vacant park spaces, and then selling or renting them to potential residents.

In recent years, selling mobiles to residents has gotten much more complicated, as the state legislature is deliberating whether to adopt laws prohibiting park owners from financing the sale of park-owned mobiles to residents unless the mobile home park owner/manager is a licensed mortgage loan originator.   (See SB 376 from the 2011-12 legislative session.  It is still showing as “active,” although no hearings are scheduled as of the time of this writing.  The current status of the bill can be seen here.)  Federal laws may already require this, so the state of the law is a bit unclear.

Many mobilehome park owners have gone the easier route of purchasing mobiles to fill the vacant spaces and renting out those spaces to residents.  But now, based on the Attorney General’s opinion, park owners are prohibited from doing that if they have a park rule that prohibits tenants from renting their homes to third parties.

Many mobilehome parks have rules in place that prohibit mobilehome owners within the park from renting out or subletting their mobiles to others.  The policy behind the rule is that it is generally very difficult for mobilehome park management to enforce the park rules against those subtenants/sublessees, because there is no privity of contract between the park management and the resident.

However, Civil Code Section 798.23(a) states that the owners of the park and all employees of the park are subject to all of the same rules and regulations.  If the rules state that a mobile home owner cannot lease his or her mobilehome to a third party, then the rules also require that the mobilehome park owners are bound by the same restriction, even though the policy behind the no-subletting rule doesn’t apply when the mobilehome park owner is renting out a park-owned mobilehome.

So far, we have been unable to find any litigation that supports the attorney general’s new opinion, and that opinion is not binding law.  However, mobilehome park owners may want to play it safe by amending their park rules (giving the appropriate notice to the tenants, of course) to allow subleases only if the sublessee signs a contract with park management agreeing to abide by the community rules.

Author: Amy Howse

Update on the American Taxpayer Relief Act of 2012 (ATRA)

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Congress loves acronyms!  On January 1, Congress passed ATRA which extends (and makes permanent) the $5,000,000 + inheritance tax exclusion amount, the coupling of gift and estate tax, and the portability of the inheritance tax exclusion between spouses.

Under ATRA, the consequences of falling off the “fiscal cliff” were averted.  Also, many of the sunset provisions in our prior laws have been removed, making those laws permanent—at least until Congress passes a bill specifically changing them.

This is very good news for clients and others who resisted the temptation to jump on the year-end gift-giving bandwagon.  In our opinion, the 2012 year-end estate tax frenzy was good for a few, but done by many.  Those individuals who did not take the leap now have time for a deliberate, cautious approach to estate tax planning.

Here are some of the key provisions of the bill as it relates to estate taxes:

  • The $5 million exclusion amount, adjusted for inflation, was made permanent.  It does not expire. After adjusting for inflation, it is expected to be $5,250,000 in 2013.  This is the amount every individual may gift or bequest without the imposition of federal inheritance tax.  (California has no estate tax.)
  • The estate tax exclusion remains coupled with the gift tax exclusion.  It is a unified transfer tax exclusion.  In other words, the exclusion may be used to offset gifts during a person’s lifetime or bequests upon death, or any combination of gifts and bequests up to the amount of the exclusion, i.e., $5,250,000 for 2013.
  • The exclusion remains portable between spouses.  If a spouse has not utilized his or her entire exclusion upon death, the remaining exclusion is available for the surviving spouse, to be added to the surviving spouse’s exclusion.  For example, if a person dies in 2013 without utilizing any of his or her exclusion, the surviving spouse would have a $10,500,000 exclusion (or more, depending on the surviving spouse’s exclusion amount at the time of his or her death) to use during the surviving spouse’s life or upon his or her death.  Please note, however, that to obtain a spouse’s exclusion, an election must be made on a timely filed estate tax return for the deceased spouse.  It is not automatic.
  • The top transfer tax rate is now 40%, rather than the 35% provided in prior law.
  • The generation skipping transfer tax (“GST”) exemption is $5,000,000, adjusted for inflation.  The GST tax captures gifts and bequests where a generation is skipped (such as a gift from a grandparent to a grandchild).  As with prior law, the GST exemption is not portable.  With a married couple, traditional estate tax planning techniques, such as a credit shelter trust, may be utilized to preserve each spouse’s exemption.
  • As with prior law, state estate taxes are deductible on the federal estate tax return. (Again, California has no estate tax.)

Other provisions of ATRA may be discussed in future blogs.  Should you have any questions about the above content, please contact William L. Cates.

Please be advised that the information provided above is general in nature and is not intended to constitute tax, legal or other professional advice.  Each person’s particular situation is unique and requires specific review and analysis before advice can be provided.

Author: William L. Cates