Vermont Legislature SmartTranscripts:

[Cameron Wood, Office of Legislative Counsel]: It's a wagon.

[Elizabeth Burrows (Member)]: Ladies and gentlemen, welcome to

[Marc Mihaly (Chair)]: the apparently chaotic committee on housing, which apparently is affected by the fact that it is Friday, February 26. We're now going to be working on H-seven 57, which is the bill that we've had before us and have been taking testimony on manufactured homes and limited equity co ops. And we, in a prior discussion, asked counsel, Emilie Krasnow, to make some changes to the bill. And that bill, as modified, is going to is is right now being reproduced and will be brought to us momentarily, and Cameron will also share his. But one of the things, Cameron, that I think would be helpful as you walk is to walk through the bill briefly, not just very in addition to whatever changes, to remind us what portions of the bill apply to manufactured homes in general, and what portions are just limited to limited equity co ops that are manufactured health communities. Okay? That just so we get a sense of what's about what.

[Cameron Wood, Office of Legislative Counsel]: May I share my screen and Please. Lift off. Okay.

[Marc Mihaly (Chair)]: Let me ask the committee, is it okay if Cameron starts knowing that we aren't going to get to hard copies for a few minutes?

[Thomas "Tom" Charlton (Member)]: Fine by me. Okay.

[Cameron Wood, Office of Legislative Counsel]: So for the record Cameron Wood, Office of Legislative Counsel, a little bigger, we have in front of you a draft amendment. It's draft 1.1. So this is a stricel amendment from this committee of page seven fifty seven as it was introduced. The changes are highlighted absent removal of one of the sections, which I will comment on when we get there. Just to begin walking through, you have section one, which is in title IX. This is related to the chapter governing, we're gonna use the current statutory terms, mobile homes and the transfer or sale of mobile homes. So if you all recall, this was the chapter where we talked about if you have a bill of sale, how do you transfer the bill of sale, what has to be done notifying the clerk's office in the town where it is, in the town where it's relocating to, notifying the property owner if it's on someone else's property, etcetera. It also has the sections related to transferring it via deed, if you're transferring it via a deed, if it has been finances, real estate, etcetera. So this section is still here, and we're changing the definition. There's nothing that I've amended in this section. Just as you recall this applies to mobile homes manufactured homes in general we're not talking about cooperatives we're just talking about any manufactured home that's being transferred or sold. You all amended the permanently cited definition to clarify that permanently cited means that it's a fix to the land and the factors that show that are one or more of the following, you don't need all of the following. So no changes to that section.

[Thomas "Tom" Charlton (Member)]: Just a question on that section. Is it because previously people read it as you

[Cameron Wood, Office of Legislative Counsel]: had to need all of those?

[Thomas "Tom" Charlton (Member)]: No. Some of those are very more sighted than others. Skirting a mobile home take two hours.

[Cameron Wood, Office of Legislative Counsel]: So I will say, currently, it's the language of factors that tend to show that it's permanently cited include as you know from our drafting, we don't use the words but not limited to in our drafting because statutorily it's implied. So this isn't saying that as I read this, it's saying factors that tend to show. So just by having one, the entities that are using the definition may not determine that one is sufficient.

[Thomas "Tom" Charlton (Member)]: Okay, I was just the other ones are

[Marc Mihaly (Chair)]: very intentional. The intent here was, I know, it was to let this is a matter of the lenders should be able to decide. And some lenders were acting like it's up to them. We just wanted to make really clear some connections. Okay. Yeah.

[Ashley Bartley (Vice Chair)]: So the skirting issue is also accepted in Yeah.

[Elizabeth Burrows (Member)]: That we have to have that skirting.

[Marc Mihaly (Chair)]: No, but he's saying that's alone, skirting alone is

[Thomas "Tom" Charlton (Member)]: exactly one. Could say, well, I had skirting, there's one of your in your list. That's not exactly a very

[Marc Mihaly (Chair)]: Don't you defer.

[Cameron Wood, Office of Legislative Counsel]: If it's a permanently cited means one

[Marc Mihaly (Chair)]: or more of the following,

[Cameron Wood, Office of Legislative Counsel]: I would absolutely follow legally that meaning skirting alone could sufficiently meet that definition, but it's saying factors that tend to show this as one or more of the following. That's our caveat up top. So an entity that's determining, a bank that's determining whether something is permanently cited, you're like, well, it's got skirting on it. Say you wouldn't be able to point to this and say, it meets one of them, I think a bank in that instance would say, yeah, and it's not a fixed utilities. It's not you know, it doesn't meet any sort

[Thomas "Tom" Charlton (Member)]: of the boundaries. Just okay.

[Cameron Wood, Office of Legislative Counsel]: Moving to the bottom of this page, section 2,604. So this is the section related to real estate deeds. And as you all recall, Subdivision A, mobile home purchased from a mobile home dealer on or after 07/01/2008 that is financed with residential real estate pursuant to Section 2603B shall be conveyed by a warranty deed, drafted in substantially the form provided in subsection C of this section. You're proposing to remove the form so that language is being struck. Why did I highlight the word shall? I highlighted the word shall because there is a proposal or there was a recommendation from one of your witnesses to change this language. I did not change it because I think this is something you all need to give me clear direction on what you're looking for. The proposal was to change this to May, among some other pieces. In a previous section, if you all recall, it talks about if the mobile home is on land that is owned by the individual, it shall be financed as real estate. And then the other piece, it says it may be financed as real estate if it's on land that is not owned by the individual.

[Thomas "Tom" Charlton (Member)]: Then you

[Cameron Wood, Office of Legislative Counsel]: have the question of how are these things conveyed. In theory, if they're being financed as real estate, they should be conveyed by deed. And so I would not recommend changing this. If you're wanting it, if it's real estate and you're wanting to treat it as real estate, then as my understanding of how the statutory construct is supposed to work, then it should be transferred as a deed. And that's what this section is saying. If you're a dealer and it's being financed as real estate, then you shall transfer it as a deed. And so there was a recommended change here that I didn't lose because I felt that you all should give me direction if that's what you want to happen.

[Marc Mihaly (Chair)]: Can you put up the change? I can discuss this, but it might be good if you have it electronically.

[Cameron Wood, Office of Legislative Counsel]: It's not pretty.

[Marc Mihaly (Chair)]: While he's doing that, let me explain. I was under the impression that if you want to do it as real estate rather than personal property, then there had to be a deed. And so that's the way it's drafted. Last weekend, East Rides came to me and said, actually, we would like to have the option of doing it with a bill of sale. And I wrote back saying, wait a minute, I thought you guys wanted to have everything be real estate? And they came back and said yes, but we'd like the option when because that's how they do it. They only do real estate, okay? We'd like the option to have it be a bill of sale. So I wrote back and I corresponded with their lawyer, Ed Fitzpatrick, and said, what gives here? Am I wrong? And what Ed explained to me was back and forth, was the following. But that's What's Her Name? Is that long oh, is it just the top?

[Cameron Wood, Office of Legislative Counsel]: This is the language that came over, and it's this is why so it's not pretty because it appears they've taken the documents that you have, which has all the numbers, etcetera, and

[Marc Mihaly (Chair)]: Oh, is that from Fitzpatrick?

[Cameron Wood, Office of Legislative Counsel]: This is yes. This is the the language that I was reviewing, so you

[Marc Mihaly (Chair)]: would That's okay.

[Cameron Wood, Office of Legislative Counsel]: Be looking at that

[Marc Mihaly (Chair)]: right there. Just that right there. Could you make it a little bigger? Yes. But anyway, let me tell you the rest of the story. So here's how they normally do business. This is important. If they if a deed is required, here's how they do it. Someone comes to them and they own, they bought, let's say they're about to buy an existing used residence, okay? Or they're about to buy a new one, and they have a deed of sale, excuse me, a bill of sale, because that's just the way it was done. They got a bill of sale, that's what they had. What East Rise does is they make them deed the thing to themselves using a warranty deed, and in other words, that's what they do now. It's how they kind of convert the bill of sale to a warranty deed, and what they said is, that's really awkward and it's an expense and it's unnecessary, we shouldn't have to do it, and then I said, but wait, I always thought that you need a deed when you're doing real estate, and they said, no, the only reason you need a deed is because the law requires it. If you change the law and allow us to do a bill of sale, when someone comes to us with a bill of sale, we might just choose to leave it as a bill of sale, that was what I understood and that was the reason for the change in this section that allowed them to go either way in a real estate deal. And my apologies, some of

[Cameron Wood, Office of Legislative Counsel]: that is included here. So I guess let me back up, let me walk through the whole change in this section and then I'm going to come back to A. So A stays the same for now from what was introduced. What I did change was in B. So A is about purchasing from a dealer. B is about selling or refinancing between parties. And it currently is an owner of a mobile home shall, upon financing or refinancing a mobile home as real estate or selling going to the top of page three selling a mobile home that has been financed as real estate issued to the grantee one, two, and three issued to the grantee either a warranty deed or a put claim deed. That's statute right now. If it's real estate, you sell it or you transfer it as a deed. And I think that brings in the circumstances, Mr. Chair, that you were just talking about. So what is here that I did take from their recommended changes is to change this to a may. So it's the owner of a mobile home. The proposal would be the owner of a mobile home that is permanently cited may on financing or refinancing or selling as real estate issue to the grantee either a warranty deed or a quick claim deed. So it's a may now instead of a shall. And then we have the warranty deed language here. And I'm gonna come back to the yellows. Then we're striking the form, which I will mention a comment to in a second. We're going to go all the way down to page six where I added this at their recommendation, which is a new subdivision e. It says nothing in this section shall prevent a mobile home owner from conveying a mobile home by a bill of sale pursuant to Section 2,602, which is the section dealing with bill of sale, or financing or refinancing a mobile home pursuant to Section 2,603, notwithstanding whether the mobile home was previously conveyed, financed, or refinanced as real estate. So this section is saying we've changed it to a a may and added this subsection E at their recommendation. What I did do at the very beginning is when you look at the proposed language, it's a mobile home, forgive me, this is up here, a mobile home purchase from a mobile home dealer maybe finances real estate pursuant to the subsection if the mobile home is permanently cited. Guess what, that's already in the other section. So it doesn't

[Marc Mihaly (Chair)]: make

[Cameron Wood, Office of Legislative Counsel]: sense

[Marc Mihaly (Chair)]: to We're okay with that.

[Cameron Wood, Office of Legislative Counsel]: If you're coming from a dealer and you're financing it as real estate, get the D, so then you don't have to deal with this conversion or changing. Right, yeah,

[Marc Mihaly (Chair)]: okay, so, we'll put it this way, if this is going to be in my view, I see this whole bill, what we're trying to do here is make it easier to buy, sell, transfer, it's this hyper technical bill, I see this as round one. You know, I'm sure next year as this goes into play and everybody lives with it for a while and a year or two will come back maybe with round

[Ashley Bartley (Vice Chair)]: to Ashley? Be able to come up with

[Marc Mihaly (Chair)]: just think that's

[Ashley Bartley (Vice Chair)]: Maybe it's too late to ask this, but we keep talking about these drives, all other banks are going to be able to do this, correct? We're not legislating for one specific bank, Right, exactly. Mean, Because there

[Elizabeth Burrows (Member)]: are few, well

[Ashley Bartley (Vice Chair)]: That's fine, I want them to have the ability. I guess that's been my biggest concern is I feel like we are just legislating for such a small, specific thing, which sometimes that's needed. I just want to make sure that other banks will have the ability, if this is we're changing the language, the statute, that other banks can use it if necessary.

[Marc Mihaly (Chair)]: The only two things I can say about that are, I did talk to the CEO of one of the other banks, and he indicated this was okay, and I also, that's one of the reasons we brought in Christy who is okay, because, you know, representing all the bankers, I think in an ideal world we might have had another banker in here. I

[Cameron Wood, Office of Legislative Counsel]: will highlight for you all my concern with this section is removing the forms, because, as I've heard testimony and discussion among the committee, if you are trying to ensure that individuals are able to follow the law and make these transfers in accordance with the statute, you're removing the template form that's built into the statute that informs those people who may not want to go to an attorney that this is what it can look like. So what do I mean by that is it says, a, you're getting it from a mobile home dealer, finances real estate, they're conveying it via d. You're getting it from somebody else, you're changing it to may be transferred to VAT. Any we're adding in, it could be a bill of sale. So we're going backwards to what the change was made in 2007, which legally, don't that this is a decision that you will make. But then you're saying that C and D are saying, if you're giving it via warranty deed or you're giving it via a quick claim deed, here are the protections that the individuals are getting when they're transferring it via such. And it should be in substantially this form. It doesn't say it has to be in this form. It said it shall be in substantially this form. And then it provides that template. So if I am a citizen and I'm trying to transfer the deed of my manufactured home and I go to the statute and I say that I can transfer it to you via a deed, I can understand that doing it in this form satisfies the requirements of the section. And you're removing it. And so I'm just acknowledging to you all that you are taking away information for the public as to how this can be done, whether that is good policy or not, I will leave to you. Oh, and Dan?

[Thomas "Tom" Charlton (Member)]: Yeah, was the purpose to I mean, it's a dozen times that nobody used it.

[Marc Mihaly (Chair)]: Right? Nobody uses it.

[Thomas "Tom" Charlton (Member)]: Is the purpose that it's not being used, so let's just get it out of the books? Or is the purpose it's confusing people because they think they have to fill out this exact identical form, and there's people that tell them that they're doing it wrong because the form doesn't look exactly like that? Is, like, the leading language up to that form, should it be changed?

[Elizabeth Burrows (Member)]: Or maybe saying may rather than shall.

[Marc Mihaly (Chair)]: There's two different options here. Yes to both. We heard that nobody uses this form that

[Elizabeth Burrows (Member)]: Not only from East Drives.

[Marc Mihaly (Chair)]: Yeah, not only from East Drives, but Well, East Drives, think you use that form. Dealers don't use in other words, when you either go to a dealer or you go to Those aren't the For your bank. It wasn't for those people. Right. It was never intended for that. Well, says substantially and well, first of all They're gonna make their own. They make their own,

[Thomas "Tom" Charlton (Member)]: but This is for me selling it, Tom. Then I go,

[Marc Mihaly (Chair)]: what the heck am I supposed to make my form look? Right.

[Cameron Wood, Office of Legislative Counsel]: Right. It has to be on it for information.

[Ashley Bartley (Vice Chair)]: That's like a I don't wanna

[Thomas "Tom" Charlton (Member)]: make sure it's somewhere good.

[Elizabeth Burrows (Member)]: If they even use it at all, which they don't, many people don't even recognize they think that they can sell their home to somebody who knocks on the door and wants to buy it without even getting attorneys. That actually happens. So I don't know about the form if it's not being used, but rather than saying shall, because doesn't that mean it has to be used?

[Marc Mihaly (Chair)]: I mean, wouldn't mind, We were told that it's just a nuisance, that it's in there because some people think they have to use it, but if the committee wants to leave it, then I would say that a form is included below for illustrative purposes or for something that makes it clear that it is not in any way required.

[Thomas "Tom" Charlton (Member)]: Yeah, think the leading language up to the form, I don't know what it would say.

[Marc Mihaly (Chair)]: So it's up to the committee. And, I mean, I don't

[Ashley Bartley (Vice Chair)]: I like that.

[Elizabeth Burrows (Member)]: Do too. I do too.

[Ashley Bartley (Vice Chair)]: Because I think we should have a way for people to be able to do it without using a lot.

[Marc Mihaly (Chair)]: That's fine.

[Thomas "Tom" Charlton (Member)]: That's something that you do.

[Ashley Bartley (Vice Chair)]: Camera looks like,

[Marc Mihaly (Chair)]: oh, you guys, I

[Leonora Dodge (Member)]: need like this one really

[Thomas "Tom" Charlton (Member)]: I generally don't know. I, until thirty seconds ago,

[Cameron Wood, Office of Legislative Counsel]: you want my recommendation, it's to leave it as it is.

[Marc Mihaly (Chair)]: Why? If we do not wish to imply that this is the form that must be used, or even one that looks like this is the one that must be used.

[Cameron Wood, Office of Legislative Counsel]: I don't think it says you have to use anything that looks like this. As I read the language it says, I'm looking at c, a warranty deed just don't worry about the strike through language. What does a warranty deed do? A warranty deed shall, when duly executed and delivered, have the enforcement effect of a deed and fee simple to the grantee their heir successors assigned, etcetera, etcetera, etcetera, that the grantor has good right to sell and convey it, and that the grantor and the grantor's heirs shall warrant and defend the same. That's what the deed is doing. And then it's saying that if you give a deed that is in this form,

[Marc Mihaly (Chair)]: you get those protections. It also says in the deed and only in the deed that the owner of the park has to I mean, there's stuff in here that isn't goes beyond that paragraph. There's something in there that says

[Cameron Wood, Office of Legislative Counsel]: There's one sentence that says that the mobile home, the owner of the land, can't unreasonably withhold consent.

[Marc Mihaly (Chair)]: No. No. But indeed, they have to sign it.

[Cameron Wood, Office of Legislative Counsel]: Well, correct. And my assumption here is I don't know if you've heard any testimony from people on this effect I own the land. I own the mobile home park. You're selling the home that's on my land. You may owe me money, you may there could

[Marc Mihaly (Chair)]: be reasons why But that is a policy issue, and what we're being told is that it generally makes it harder to sell and buy property in a unique way. In other words, that's all I'm saying is paragraph C that you outlined is one that provides consumer protection. It says here's what has to be in the warranty D, right?

[Cameron Wood, Office of Legislative Counsel]: It doesn't say that anything C doesn't say that anything has to be in the D. It does. It says It says if

[Marc Mihaly (Chair)]: It shall, when duly executed, have force and effect, etcetera, and, you know, it has to do these things.

[Cameron Wood, Office of Legislative Counsel]: No, it says by executing the deed that's in this form has this effect. It doesn't say that the deed has to include anything except if you go to the form, right?

[Marc Mihaly (Chair)]: Right, but if we strike that language as then it would all all those things would be required of the deed. Substantial. It says a warranty deed shall, if you strike the language, shall, when duly executed, have all of these things, and that provides consumer protection. The problem was this draft, which is very old, we're being told is outdated. It people don't want to use it, and in addition, it has provisions that go beyond that paragraph.

[Cameron Wood, Office of Legislative Counsel]: If you're saying having the landowner sign it goes beyond the paragraph, I was not here when it was drafted. I don't know what the purpose was. I can logically understand why we would want that because I

[Marc Mihaly (Chair)]: understand. I guess I would just say it's up to the committee. My feeling as a co author for what it's worth is we intended to eliminate that requirement. And that was our intention on advising lenders, and I'm happy to, if the people feel as a consumer protection device, we'd like or to serve consumers who wanna just, as you said, person A wants to sell to person B with no intervener, and they find this and want to use it, then I just think we should have language, it's just that something that the deed, this is my opinion, I'm expressing, speaking as my opinion, that a warrantied it should, we should leave it struck out that is substantially in the form of, and at the bottom, it's say the following deed may be used by the parties or something that's Yeah. Because I I just think back to, like, when I was young, I sold a motorcycle.

[Thomas "Tom" Charlton (Member)]: Like, what did I do? I was like, what's a boilerplate bill of sale that I can use? Because I don't know what the heck to put on it, like, VIN number, I guess, and some stuff. I don't know. And, like, if you're looking for a boilerplate form, there it is.

[Cameron Wood, Office of Legislative Counsel]: So I'm not trying to be uncooperative. What I'm trying to say is, C, when you convey the deed, it has an effect legally. All of those things in C legally happen. You as the grantor are defending the grantee against lawful claims and demands by doing it. So there are legal consequences of doing this thing. So you want to make sure when you transfer it, you're transferring it in the right way. Banks know how to do that. They do it all the time. Attorneys that work in this space know how to do that. They do it all the time. So if you're not going that route and you are doing it on your own, what this section is saying is if you follow our instructions here and you do what we've told you to do, then the consequences are going to legally happen. And what I'm trying to get across to the committee is if you change that and you say, it doesn't need to be in this form, it could be in this form, and somebody doesn't follow that form and they do their own thing without legal counsel advice, without financial institution advice, maybe it looks like that it doesn't. I wrote it on a piece of paper and I gave it to you. Now that has this legal effect. And I'm just making sure you're all aware of that.

[Leonora Dodge (Member)]: Isn't that what was that not your intent? Was to so that it would be so that I thought

[Marc Mihaly (Chair)]: I'm perfectly happy saying at the end of the paragraph, leaving it struck. Okay, strike substantially in the form of, at the end of the paragraph saying, an exemplar of such a deed that accomplishes the above purposes is, colon, and just do it. Yeah,

[Leonora Dodge (Member)]: Yeah, okay. I think that was what, yeah.

[Marc Mihaly (Chair)]: I think that would I carry, I think that would deal with consumer protection that he's

[Elizabeth Burrows (Member)]: The whole idea was to make it less cumbersome and consistent. They're not using the form an LEC has their own bylaws on how someone, just because these two people, someone could be purchasing and somebody who's selling, that doesn't mean it's a done deal. They have to go through other steps to be able to be accepted into the LEC. But this isn't just for LEC's, correct?

[Marc Mihaly (Chair)]: Right, it's not. And they

[Thomas "Tom" Charlton (Member)]: still, so don't worry about it.

[Marc Mihaly (Chair)]: Okay, as long as we make that clear, I'm

[Elizabeth Burrows (Member)]: Right, right. Okay, yes.

[Cameron Wood, Office of Legislative Counsel]: Alright, go ahead. That will happen in a quick, I'm just mentioning that will happen in

[Marc Mihaly (Chair)]: a quick Okay, claim deed

[Cameron Wood, Office of Legislative Counsel]: so one recommended inclusion here was specify that a quick claim deed shall, when it's duly executed, have the enforce of the deed be simple, subject to the encumbrances of record or the recommended position there, which I support. I think that's helpful. By the way,

[Marc Mihaly (Chair)]: just for the committee, to complete your acceptance of a degree in real estate law, a warranty bead, which is sort of the typical deed that's used in Vermont, a warranty deed is my opinion, a warranty deed is a serious deed, you know, it's what we think of as a real deed, I'm transferring to you my property, and it's a warranty deed, it means that I have the power to do it, and own it, I really own it, I own all of its attributes so that you can enjoy etcetera. A quitclaim deed is very different. A quitclaim deed just says, I don't know what I have, but whatever I have is yours. That's what a quitclaim deed is. So, it's less desirable, but it doesn't, in the real world, make a lot of difference, but that's what a classic quitclaim deed is. You know, I'm not making any assertions as to what I have, but whatever it is, now it's yours.

[Elizabeth Burrows (Member)]: Is that the same with the bill of sale?

[Marc Mihaly (Chair)]: No. A bill of sale is governed by the UCC, and I am ignorant on that subject.

[Elizabeth Burrows (Member)]: Because I have a bill of sale. I can't get a refinance. I purchased it. It was already a fix. It should have been a deed. I went to attorneys. I had a real closing, and all I have is a bill of sale. Yes. And that's typical.

[Marc Mihaly (Chair)]: Yes.

[Leonora Dodge (Member)]: I just wanna clarify. And so in doing so, in doing this, regardless of what the form looks like, if someone were to write out a deed, that would still hold the legal weight, is that?

[Cameron Wood, Office of Legislative Counsel]: Based on the changes that you've asked me to do, could write on a piece of paper that I'm selling you something via deed, sign my name to it and give it to you, and it would have the same effect. Okay.

[Ashley Bartley (Vice Chair)]: That's what I thought. Are

[Thomas "Tom" Charlton (Member)]: we we're getting rid of the look kinda like this, I thought, at the

[Cameron Wood, Office of Legislative Counsel]: end Yeah. Of

[Marc Mihaly (Chair)]: That's what we're doing. No. No. At the

[Thomas "Tom" Charlton (Member)]: end, you're, like, has to

[Ashley Bartley (Vice Chair)]: Yeah.

[Marc Mihaly (Chair)]: Same thing.

[Cameron Wood, Office of Legislative Counsel]: It's just not gonna require. Yeah.

[Leonora Dodge (Member)]: It's not gonna say it must look like this. It's gonna say It may. Here it is. And if people do that, then they do. And if they don't, then they don't.

[Elizabeth Burrows (Member)]: Yeah. In a 100 sales, I've seen this one come in seven years.

[Marc Mihaly (Chair)]: Okay, let's move The

[Cameron Wood, Office of Legislative Counsel]: next section is removing the conversion process in 2605. This is as introduced, so I haven't made any changes. Again, I flagged for you my concern with this, but I haven't changed it subsequent to its introduction. Moving to page eight. This is the next change. Now we're moving out of the mobile home universe, manufactured home universe. We're moving into the universe of limited equity cooperatives. In that chapter, so we're entitled 11, which is about corporations adding a definition of mobile home park. That's going to be relevant here in a second. So we're just adding the definition, pointing back to the definition in title 10, which is where the definition is. Then we get to section three here, where I'm scrolling all the way down to page 10. Currently, in the sub seven, it says that the Articles of Incorporation require that no sublease of a unit shall provide for monthly payments by the subleasee in excess of 110% of the proprietary lease payment, leaving that, but then adding this 8A and B. And as you can see, this was already in the introduced version. I've just slightly tweaked it a little bit to narrow the scope of it. For a mobile

[Marc Mihaly (Chair)]: home, we are organized

[Cameron Wood, Office of Legislative Counsel]: Only as applies to mobile home parks organized as a limited equity cooperative. Those organized prior to 07/01/2026, articles of incorporation require that subleasing of a unit can only be for fair market rent. I will just mention to you all that that is slightly different than the purpose of the limited equity cooperative, which is for low and moderate income people. Fair market rent is a different thing than that. And then it's B for a mobile owned park organized as a limited equity cooperative. The origins of incorporation shall prohibit the subleasing of a unit unless the member can demonstrate a hardship. Then I added here to just clarify that it would require an affirmative vote of a majority of the board of directors. Think previously it just said a vote. I ran into this sexually in a separate context. Just clarifying it needs to be an affirmative vote. Discussion on this? So there's two different things happening here. One is just cleaning up a definition. In other words, we want to make sure we're not messing around with limited equity co ops as a whole group. We're only messing around with limited equity co ops that are mobile home,

[Marc Mihaly (Chair)]: excuse me, manufactured housing parks. Okay? And the second thing it's doing is essentially for new limited equity co ops that are mobile home parks, it it says you can't sublet. I do accept for hardship, etcetera. Before we discuss this, I would ask my coauthor for why this is here. What is the policy reason against that would say don't allow subleasing? So first, it's homeownership,

[Elizabeth Burrows (Member)]: and in the LEC, you need to, whoever's on the bill of sale, warrantied, it needs to be living there. So the only way

[Marc Mihaly (Chair)]: Where is that set in the, is that a rule usually that's in the

[Cameron Wood, Office of Legislative Counsel]: Typical In the cooperative housing chapter as a whole, it says that I think it's only, I think there's a certain percentage of the units that are supposed to be lived in by members of the corporation. So it already limits the percentage of units that can be sublet. The concept here is and to turn back over to you, my understanding is the concept here is because these are organizations that are intended to serve the members of the organization. Does the cooperative agreement, what's it called?

[Elizabeth Burrows (Member)]: Articles Association. Do they deal

[Marc Mihaly (Chair)]: with this subject too? Okay, so go on.

[Elizabeth Burrows (Member)]: In reality what happens is, if someone goes before the board because they need to sublet, they're moving to Florida to take care of a loved one, or there's a death or a divorce, they come before the board and ask for special accommodations. So, if the board grants them that, what the statute says now is that you can only charge 110% above the lot rent. So if the lot rent is 500, that means they can only charge $5.50. They're not doing that, they're gouging, And there's no control with the board because you don't know it's between the sublease and the homeowner. And so the board will grant the special accommodation for a certain amount of time. And then if you need more, you can come back. It's the hardship where when I looked up the definition, it's not broad enough. There's so many different reasons why someone would need to sublet. And most of the time, we don't have a problem with subletting, but we have a problem with them charging 22 to $3,000 a month. Yes.

[Ashley Bartley (Vice Chair)]: I have a question. Yes. So you're saying currently right now for these LEC, these specific LEC's, there's language in there that says they can only charge 10% above.

[Marc Mihaly (Chair)]: Round rent. Okay. Which essentially means you're not charging anything for the box. Okay.

[Ashley Bartley (Vice Chair)]: This, but you're saying it's already hacked. It's already happening. So, my question is, do you why it is illegal?

[Marc Mihaly (Chair)]: People drink.

[Ashley Bartley (Vice Chair)]: People drink and drive. So what are we trying to do? Just maintain Well,

[Marc Mihaly (Chair)]: but she's raising an interesting issue. One issue is, if I may. Please. One issue, let's try to be clear about this. There are several different issues embedded in this. One issue is, if you're going to rent your unit, let's forget about under what circumstances. If you're going to rent your unit, current law says all you can rent it for is essentially what you pay for ground rent. It's almost as if you can't capture the value of the structure. Okay? You can just rent the if your lease so let's say it's $500 a month, can charge $5.50, but let's say it's HUD fair market rent, which is, by the way, lower than fair market rent, is $1,500 a month, you can't charge 1,500. You can't charge for the value of the house. So one thing that's happening here is to try to correct that and say, you get to sublease, you can charge a reasonable rent, which is below market. It's called Yeah, they can.

[Elizabeth Burrows (Member)]: The homeowner can

[Marc Mihaly (Chair)]: charge that, but they can't charge more. Okay, well, I'm getting there. That's one thing this is doing. Another thing this is doing is saying, okay, if you're an existing mobile home park, you can do it, and you can charge that much, but if it's a new mobile home park, newly organised, you just can't sublease unless there's a real hardship. Okay, another ish, so that's the second thing it's doing, it's just saying subleasing generally as a general matter is contrary to the intent of these limited equity. The third thing is the third issue that's all it's doing. The issues raised are if nobody's what she's saying is if no one's if people are disobeying this now and not going to their board of directors, won't they continue to do that? What are we accomplishing here? Right? That's a much No. It's not. It's just the same. It's not real. Don't give me that.

[Elizabeth Burrows (Member)]: So to answer that, is that because the board's hands are tied because of the way that the law, the 110% now, and not to be condescending, but most people think that 110% means double. Do you understand what I'm saying? Like, they think

[Marc Mihaly (Chair)]: that trying to

[Elizabeth Burrows (Member)]: do something illegal, they think that charging at 500 is that they can charge a thousand what? A thousand 50?

[Ashley Bartley (Vice Chair)]: What are we giving the board?

[Elizabeth Burrows (Member)]: Like, what The law. The board seeing the law that they can charge. But isn't it already the law? That's what I'm getting stuck on. In other words, if it's already the law that they can't charge more than

[Marc Mihaly (Chair)]: a 110% and everybody's disobeying the law, how is this any better?

[Ashley Bartley (Vice Chair)]: That thank you. Yeah. Thank you. I'm struggling.

[Elizabeth Burrows (Member)]: I understand what you're saying, but it's not you know?

[Marc Mihaly (Chair)]: They're I have two not

[Elizabeth Burrows (Member)]: gonna do the 110% for sure, because that's only $50 in their pocket that goes towards taxes and repair and whatever. So, of course, they're gonna be charging.

[Marc Mihaly (Chair)]: I guess the best answer I could give to your question, which I think is a valid one, is that when the law is unreasonable, it tends to be more likely to be just disobeyed, and that the law here is unreasonable, and so when people take a look at this and they just don't go to the board and they just rent it out, but that if they could get fair market rent, they would be more likely to go to the board. I'm trying, okay? That's about as when a law is better, it's more likely to be Carried out. Carried out. I think the flat proved, yeah.

[Ashley Bartley (Vice Chair)]: Can I just add, well, and if there's a really egregious abuse of that, then you have something that backs you? Wow, that's a lot. Yes, Elizabeth. In defining hardship, I haven't looked.

[Cameron Wood, Office of Legislative Counsel]: It's not defined.

[Ashley Bartley (Vice Chair)]: It's not defined. And does it say how long does an owner have to reapply Yes. For part of the

[Cameron Wood, Office of Legislative Counsel]: You can only sublease separately in the chapter, you can only sublease the unit for one year at a time. So now I'll double check. Yeah? I believe so.

[Marc Mihaly (Chair)]: Do you mean in the whole limited equity co op? While

[Cameron Wood, Office of Legislative Counsel]: you're all discussing, I'm going to

[Marc Mihaly (Chair)]: Okay, I will tell you, Elizabeth, that my only experience with this is that I think the word hardship is used in the statute that the Board of Adjustment, is it called, waive Board of Abatement. Board of Abatement waive property taxes For inability to pay. For inability to pay, and let me tell you, which is equally and I've been on the Board of Adjustment, and it's whatever you think it is, whatever the Board agrees it is, it is. I'd hate to try to define, I can

[Thomas "Tom" Charlton (Member)]: tell you. There's a whole lot of reasons.

[Marc Mihaly (Chair)]: There's a whole lot of reasons, and it depends. Are you, for example, what really important factor is? Are you sympathetic? Do we know you? No, that's not human.

[Cameron Wood, Office of Legislative Counsel]: So there is a section between 99.1 that says that the proprietary lease shall include a provision that no sublease in excess of one year, no amendment to the classification of such propriety without the prior written letter. Member who sublets does not relate to the rise of benefits of membership. I read that to say they cannot sublease in excess of one year.

[Elizabeth Burrows (Member)]: Typically, most of them, it doesn't go to one year, but they do come back and say often, we need another Well, this one goes, oh, right. It's realistic and legit

[Ashley Bartley (Vice Chair)]: You push the board. Well, that's the thing. Right? I guess the question is, are those the same people who are gouging others, because then it's opportunistic, or something that's supposed

[Elizabeth Burrows (Member)]: to be a hardship? The problem was that the board didn't know

[Marc Mihaly (Chair)]: what they

[Elizabeth Burrows (Member)]: were charging in rent. The board thought they were only charging 110%.

[Marc Mihaly (Chair)]: There's one other thing. Yeah, right. I don't think

[Ashley Bartley (Vice Chair)]: we can squeeze a vote. Do get that.

[Marc Mihaly (Chair)]: He's almost done, but we can't squeeze a vote.

[Ashley Bartley (Vice Chair)]: I'm just saying that there's a difference between hardship and turning the hardship into opportunity. Yes.

[Elizabeth Burrows (Member)]: I just felt when writing this that having that could have the boards be able to have something in writing that states that they can't overcharge. They're not undercharging, they're not using the 110%, but board had no way of knowing this. Now they have a way of knowing.

[Joseph Parsons (Member)]: Tom, it'd be it'd be solved. Two questions. One, the way that is phrased, does that remove renewing the lease every twelve months, or does that require the approval of the Board? It requires approval of the Board. Okay.

[Marc Mihaly (Chair)]: I have lot of discretion. C. Five, two, thirteen, thirteen.

[Joseph Parsons (Member)]: This 100% only applies to This one's important. The lot rent. Right? Are they renting their units separately? This.

[Marc Mihaly (Chair)]: And it's up to we

[Thomas "Tom" Charlton (Member)]: mean, this is I if I can

[Joseph Parsons (Member)]: so I can here's my unit. Here's my lot. I can pass on the of the lot rent at a 100 So

[Marc Mihaly (Chair)]: we could move all the things. Is

[Joseph Parsons (Member)]: it a separate agreement? Yes. Okay, so I'm supposed to be separate. Okay,

[Cameron Wood, Office of Legislative Counsel]: so let me take that

[Joseph Parsons (Member)]: out, because I'll take that.

[Marc Mihaly (Chair)]: Okay, So, here's what we're going do everybody. Okay. Go ahead, tell us what we're going to do. Madam Vice Chair.

[Ashley Bartley (Vice Chair)]: So, camera's available after one, so we were supposed to have bill introductions this afternoon. So we're having Cameron come instead. And then at 01:30, we do have somebody coming to testify who is a tenant on July, and then we have a committee discussion on Baba. So we'll have time this afternoon with Cameron.

[Marc Mihaly (Chair)]: So what we're going to do, everybody please try to be back here at one the airman will be back, and we will continue, he can wrap up pretty quickly, and then we can have discussions, and we'll just make sure that there's enough time for the discussion, and you know what, if there's not enough time, we'll deal with it.

[Leonora Dodge (Member)]: And I also just think we can't like, the discussion is like for us to get the final language and we come up with a final draft, we can't vote on anything that's not fully left out.

[Marc Mihaly (Chair)]: Right, he can make this one change and if there's more changes, you're right.

[Cameron Wood, Office of Legislative Counsel]: I'll see you

[Ashley Bartley (Vice Chair)]: all at one.

[Elizabeth Burrows (Member)]: Okay. Thank you. See you at one. Alright.