Legislature(2011 - 2012)CAPITOL 106
04/10/2012 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SCR17 | |
| HB355 | |
| SCR19 | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SCR 19 | TELECONFERENCED | |
| *+ | HB 355 | TELECONFERENCED | |
| += | SCR 17 | TELECONFERENCED | |
| + | SB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 104-MANUFACT'D HOMES AS REAL PROP.;MUNI TAXES
8:32:17 AM
CHAIR LYNN announced that the final order of business was CS FOR
SENATE BILL NO. 104(JUD), "An Act relating to manufactured
homes, including manufactured homes permanently affixed to land,
to the conversion of manufactured homes to real property, to the
severance of manufactured homes from real property, to the
titling, conveyance, and encumbrance of manufactured homes, and
to manufacturers' certificates of origin for vehicles; and
providing for an effective date."
8:32:20 AM
SENATOR HOLLIS FRENCH, Alaska State Legislature, as sponsor,
presented SB 104. He said the proposed legislation would allow
motor home owners convert their property to real property, which
would help those owners get lower interest rates and more easily
sell their homes when the time comes to do so. He said he was
approached about the legislation by the banking industry. He
said the bill, although complex, is about a simple idea. The
owners would have to prove that they fixed their property to a
piece of land that they own. He said the process is voluntary.
SENATOR FRENCH stated that the heart of the bill is on page 14,
which sets out a manufactured property Act and shows how the
person would qualify. In response to Chair Lynn, he said
currently manufactured homes are considered personal property,
although he said there are different views on that.
8:34:29 AM
SENATOR FRENCH said there are letters from bankers in the
committee packet, which point out that currently there is not a
good process for converting these homes to real property. He
said there are bankers ready to testify. He listed the
following supporters of SB 104: Alaska Land Title Association,
First American Title, Wells Fargo, the Alaska Bankers
Association, the latter of which is comprised of Alaska Pacific
Bank, Denali State Bank, First Bank of Ketchikan, First National
Bank of Alaska, KeyBank, Mt. McKinley Bank, Northrim Bank, and
Wells Fargo Bank.
8:35:14 AM
CHAIR LYNN relayed that he holds a current Alaska real estate
broker's license, and he said he knows how difficult it is for
mobile home owners to get financing.
8:35:48 AM
SENATOR FRENCH, in response to Representative P. Wilson, said
that to qualify, the manufactured home owner would have to own
the land underneath it or have a 20-year lease. In response to
Chair Lynn, he related that he moved up to Alaska with a mobile
home during the oil boom. In response to a question, he offered
his understanding that there is no language in the proposed
legislation regarding the age of the mobile home.
8:38:17 AM
SENATOR FRENCH, in response to Representative Gruenberg,
confirmed that most other states have similar laws, but said he
does not know how many.
REPRESENTATIVE GRUENBERG noted that there is a short title on
page 20, lines 22-23, and he asked if SB 104 was based on a
model act. He asked about an industry standard.
SENATOR FRENCH surmised that it is not a model uniform act, but
is similar to many acts in other states.
8:39:43 AM
REPRESENTATIVE GRUENBERG said that for tax purposes,
depreciation of personal property is typically shorter than a
depreciation of real property. He questioned whether a person's
decision to change to real property status under HB 104 would
result in a change in his/her depreciation schedule.
SENATOR FRENCH said he does not know the answer.
8:40:33 AM
GEORGE GINSBURG, Attorney at Law, McGlinchey Stafford PLLC, said
his firm is outside counsel to Wells Fargo. He stated that SB
104 is not a uniform act in the sense that the Uniform
Commercial Code or some other statute that went through the
Uniform Conference of Commissioners on Consumer State Laws is,
but much of the language is very common and has been passed in
many other states, at least through similar language. He
confirmed Senator French's statement that Alaska is in the
minority of states that have not yet passed similar legislation.
MR. GINSBURG said one reason people have difficulty getting
financing of manufactured homes is because these days the
private securitization market and the private secondary market
for real estate loans has essentially evaporated, and just about
everything is sold to Fannie Mae or Freddie Mac. He said in
purchasing a real estate home involving a manufactured home,
Fannie Mae and Freddie Mac require there has to be some state
law mechanism that makes clear that a manufactured home
permanently affixed to real estate is real estate, in fact, for
purposes of state law. He said that is one of things that SB
104 is trying to accomplish.
MR. GINSBURG stated that when the process is concluded the way
the proposed bill sets forth, two things happen: a manufactured
home, which prior to that is most likely personal property is
converted to real estate and there is a consistent public record
both in the real estate recorder's office and the DMV where
either a purchaser or lender can go check whether the home is
personal or real property. Currently, in Alaska, home owners
may have a home without a title and be in a position where they
cannot sell the home, and if the home has been permanently
affixed, they cannot get a title, because the DMV will not issue
one to a home that is permanently affixed. Furthermore the
owner is not able to encumber the home and use it to get a loan,
because they don't have a title to protect the security
interest, and since the property is not clearly real estate, it
may not be covered by a deed or a mortgage. He said there is no
consumer opposition to SB 104, because consumers realize that
the proposed legislation is in their best interest.
8:45:13 AM
MR. GINSBURG, regarding Representative Gruenberg's question
about taxes, said SB 104 does not expressly address any tax
issues, but once the conversion procedure has been completed,
until such time as the home is removed from the property, the
home would be considered real estate for all purposes, as if it
were built from ordinary building materials on site. He said he
does not know Alaska tax laws, but stated his assumption that
from that point forward, whatever tax laws would otherwise
apply, including depreciation, would apply to a home that has
been converted to real estate.
8:46:10 AM
CHAIR LYNN talked about someone who had purchased a brand new
mobile home, but had to put on a new roof in order to get proper
financing. He asked whether the U.S. Department of Housing and
Urban Development (HUD) standards eliminate some of the older
mobile homes because, for example, they may not have the kind of
roof of a newer model.
8:46:52 AM
CHAIR LYNN handed the gavel to Vice Chair Keller.
8:47:22 AM
MR. GINSBURG said he thinks that older manufactured homes may
not qualify, in part because people are now concerned about
safety standards. He said manufactured homes for these purposes
are given the meaning as defined in Uniform Commercial Code 2.
He said he does not have that information in front of him, but
could get back to the committee when he has found an answer.
8:48:24 AM
VICE CHAIR KELLER stated his assumption that "liability for the
construction would belong to the bank and to the owner," not to
the state.
MR. GINSBURG said the home would have to be permanently affixed.
He said if Alaska is like most states, the home would have to be
installed by a licensed installer, and somebody - an assessor,
an appraiser, or someone in the context of a loan if the bank
was making a loan - would have to examine the home to ensure it
was permanently affixed. He stated, "I don't know that the bank
would incur any liability, but certainly there would be no
liability to the state." He said the DMV would be relying on
the affidavit of affixation; there would be no obligation on the
division or any other state agency to confirm to its own
satisfaction that permanent affixation occurred correctly. He
said the title insurance companies also have a say in that.
8:50:15 AM
VICE CHAIR KELLER remarked that the fiscal note states that SB
104 would have only a small fiscal impact on the DMV, which
would absorb implementation costs in its operating budget.
8:52:33 AM
REPRESENTATIVE GRUENBERG noted that there is a definition of
manufactured home in AS 45.29.102.
MR. GINSBURG responded, "That is in Article 9 of the Uniform
Commercial Code." He directed attention to page 2, Section 2,
and he stated, "We have done our best in a number of instances
to try and conform various definitions of manufactured home or
real property to refer to manufactured home as defined in the
section that you just mentioned." He said it is in the Uniform
Commercial Code and in Article 9.
8:54:49 AM
MR. GINSBURG, in response to Representative Gruenberg, explained
that in 2001, a new version of Article 9 of the Uniform
Commercial Code took effect in every state, including Alaska.
8:56:41 AM
REPRESENTATIVE GRUENBERG said SB 104 looks like a good bill that
could favorably affect his constituents; however, he offered his
understanding that since most people living in manufactured
homes in Anchorage do not own the land beneath the homes, they
would not be able to take advantage of SB 104.
SENATOR FRENCH confirmed that is correct.
REPRESENTATIVE GRUENBERG asked if there are any plans to "make
this sort of thing available" to people who don't have a 20-year
lease or own the property beneath their manufactured homes.
SENATOR FRENCH replied that that may be possible, but not under
SB 104.
REPRESENTATIVE GRUENBERG asked if there is legislation in any
other state that accomplishes that.
8:58:52 AM
MR. GINSBURG answered not to his knowledge. He said, "Remember
that the idea is legally to convert property to real estate, and
we're talking about people who don't own the real estate. They
may own the home, but ... it's placed on real estate that's
owned by somebody else and which they occupy, as you say,
pursuant to a short-term lease." He said that in other states,
language was in included in the legislation to specify that it
would not apply to people who occupy homes in mobile home parks.
8:59:50 AM
SENATOR FRENCH, in response to Representative Petersen, offered
his understanding that a person registers his/her manufactured
home with the DMV once and subsequently pays annual taxes on the
home.
9:00:36 AM
SHELLY MELLOTT, Acting Director, Director's Office, Division of
Motor Vehicles (DMV), Department of Administration, in response
to a question from Representative Petersen, said there is a one-
time title fee of $100 for manufactured homes.
REPRESENTATIVE PETERSEN asked what affect SB 104 would have on
getting insurance for manufactured homes.
SENATOR FRENCH said he does not know, but pointed out that since
the conversion to real property under SB 104 would be voluntary,
the manufactured home owner could find that out.
9:01:52 AM
MR. GINSBURG offered his understanding that the American Land
Title Association has an amendment to its policy that would
ensure the manufactured home as real estate. He clarified that
that is title insurance. Regarding home owner's insurance, he
said he assumes that once the process is concluded, "somebody
may be able to get insurance not otherwise available."
9:03:16 AM
VICE CHAIR KELLER stated his assumption that the bank has
inspectors to verify that for which it loans money. Regarding a
permanently affixed manufactured home, he indicated there may be
considerations regarding the quality of the construction.
9:04:03 AM
REPRESENTATIVE SEATON noted that standards exist under 42
U.S.C., which is cited in AS 45.29.102. He asked if, under SB
104, untitled motor homes could be converted to real property.
He further questioned whether ownership records on the DMV's
database are publicly available.
9:06:22 AM
MS. MELLOTT said there is a process available if a title is
lost, which is to get a bond for 1.5 times the appraised value
of [the manufactured home] and bring the bond to the state, at
which point the DMV would title the home based on that bond.
She said, "At that point, we'd have to turn around and cancel
the title, if they had a fixation affidavit, and then give them
paperwork showing ... it's been recorded and the title's been
cancelled."
MS. MELLOTT, regarding Representative Seaton's second question,
stated that currently information on the DMV's database
pertaining to motor vehicles is not public information, and
[manufactured homes] are considered motor vehicles.
REPRESENTATIVE SEATON questioned if not having access to the
database would be problematic.
9:08:21 AM
MR. GINSBURG directed attention to language [in Section 16], on
page 8, [beginning on line 4], which would amend AS 28.10.264,
and said there is a slightly different procedure from the one
Ms. Mellott described. He said rather than issuing a title and
then having the person surrender it, the DMV would note in its
records that an application had been accepted; therefore, the
records would show that there is no certificate of title on the
home because it has been converted to real property. He said,
"The bill does address a situation in which the ... homeowner
does not have a title, but the home is permanently affixed and
it is converted to real estate without the necessity of getting
title; although in that case a bond is required just to protect
other people who may have some kind of interest in the home."
MR. GINSBURG stated that there are certain details, which would
not be publicly searchable, but the fact that a home has been
converted to real property via the procedure he just mentioned
or the fact that the certificate of origin has been surrendered
or the certificate of title has been surrendered would be
publicly searchable in the DMV's records. He concluded, "That's
part of the whole idea of the bill that you could look at both
the division's records and the recorder's office [records] and
see whether, in fact, the home has been converted to real
estate, so you don't have to guess."
9:11:34 AM
MS. MELLOTT, in response to Representative Seaton, offered her
understanding that there is no provision to make that
information publicly available, although the information can be
given to the owner of record, who can turn it over to whomever
he/she chooses.
REPRESENTATIVE SEATON asked Ms. Mellott to confirm that through
a bond a person could become the owner of record and the DMV
could "supply that to the real estate issuer."
MS. MELLOTT responded yes.
9:12:45 AM
REPRESENTATIVE GRUENBERG stated that under Alaska law, a law
adopted from another state is taken with the interpretation put
upon it by the highest court of record that has reviewed that
law. He said provisions on the same law enacted after the date
of enactment in Alaska are not binding, but are persuasive. He
asked Mr. Ginsburg "if this law was taken from the law of any
other jurisdiction."
9:14:09 AM
MR. GINSBURG stated that he is unaware of any decisions of which
Alaska would be burdened. He relayed that it is not a uniform
law; in some states, for example, the law does not include the
confirmation of conversion procedure. He said he thinks the
idea of being bound by the laws of other states is not an issue
regarding SB 104.
REPRESENTATIVE GRUENBERG asked if Wells Fargo or the banking
industry has the ability to get a list of the states that have
substantially similar laws so that courts construing this issue
in the future could look at precedent.
9:16:53 AM
SENATOR FRENCH said he has a January 2009 National Consumer Law
Center document entitled, "Titling Homes As Real Property." He
said the publication covers the dozens of states that currently
have conversion statutes and gives a synopsis of those statutes.
He offered to make that publication available to the committee.
REPRESENTATIVE GRUENBERG suggested that assuming SB 104 passes,
it may be sufficient to send that reference to the bill
archives.
9:18:12 AM
PATRICK GREEN, Director, State Government Relations, Wells Fargo
& Company, stated that SB 104 would affect only those
manufactured home owners whose homes are on a permanent
foundation and who own the land underneath. He said currently
the banks are only able to give consideration to real estate
loans based on the value of the land underneath the home. He
said a vast majority of other states have the conversion
process, which meets the guidelines of HUD and the government
sponsored Fannie Mae and Freddie Mac, and it allows financing to
borrowers in this situation at a much reduced cost. He said SB
104 is "a good piece of legislation" that benefits both the
banking industry and consumers.
9:19:20 AM
MR. GREEN, in response to Vice Chair Keller, confirmed that the
proposed legislation would not change the normal appraisal
process. In response to another question, he confirmed that the
banks would guide the borrower through the entire process. He
deferred to Mr. Ginsburg to supply any further details.
9:21:17 AM
REPRESENTATIVE SEATON asked if "this" is necessary in order for
manufactured homes to qualify for state energy rebate and
weatherization programs.
9:21:56 AM
SENATOR FRENCH said he does not know the answer to the question,
but said he does not believe "this would have any material
effect on the way the situation exists today." He noted that
those programs are available for apartment dwellers, but said
most people do not want to invest money into property that they
do not own.
9:22:53 AM
REPRESENTATIVE PETERSEN asked what affect the conversion from
personal property to real property would have on insurance.
9:23:30 AM
MR. GREEN answered that he is not an insurance professional, but
he said he thinks generally speaking the homeowner's insurance
would be lower.
9:24:10 AM
VICE CHAIR KELLER closed public testimony.
9:24:52 AM
VICE CHAIR KELLER reopened public testimony.
9:25:03 AM
MR. GINSBURG directed attention to language in Section 8, on
page 4, which provides that the Department of Administration
"shall file, maintain, and appropriately maintain index records"
as listed in the ensuing language in Section 8. He stated that
the whole point of SB 104 is that a prospective purchaser and
prospective lender can look at DMV's records to confirm that the
item is now real estate and can be purchased by deed or be
financed by a mortgage.
9:26:31 AM
VICE CHAIR KELLER stated his presumption that the DMV is aware
of that and the small financial impact to the division.
9:26:51 AM
MS. MELLOTT reiterated that the DMV's records, by statute, are
not public. She directed attention to language on page 11,
lines 6-9, which states the DMV would not only give
acknowledgement of the title surrender to the applicant, but
would also allow the person receiving that information to give
the division the name and address of one other person to which
the DMV also would send the information. She stated her
assumption that a person could go through the recorder's office
to obtain the information that the conversion from personal to
real property had occurred.
9:27:59 AM
REPRESENTATIVE SEATON said he would like it clear on the record
that the intent of SB 104 is not to end up with the unintended
consequence of making DMV's records public.
9:28:55 AM
REPRESENTATIVE GRUENBERG directed attention to Section 7, on
page 4, lines 14-19, which references a chapter in the Code of
Civil Procedure entitled, "Actions Relating to Real Property".
He said Section 7 would provide a definitional section
pertaining to the definition of "manufactured home" and "real
property". He said he wonders if someone has looked at Chapter
45 of Title 9 to see if there would have to be any other
conforming amendments. He said he does not want to hold up the
proposed legislation, but would like this issue brought to
Legislative Legal and Research Services during the interim.
9:31:43 AM
SENATOR FRENCH said he would be happy to ask Legislative Legal
and Research Services to address the issue, but he said he would
not pledge his own resources to following up that concern. He
pointed to the strong letters of support from various
professionals in the banking industry.
9:33:43 AM
MR. GINSBURG, in response to Representative Petersen, explained
that SB 104 provides for a bond, not for the purpose of
obtaining a title to the manufactured home, but for the purpose
of converting the home to real property in the event there is no
title. The bond is designed to protect people in the future who
have an interest in the home. He offered his understanding that
if someone does not have a title and wants one, there is a
procedure under Alaska law to get a title by posting a bond;
however, he said that is a different issue.
9:35:08 AM
MS. MELLOTT confirmed Mr. Ginsburg's statement about obtaining a
title through a bond when a person does not have proper
ownership document of a vehicle or mobile home.
9:35:37 AM
VICE CHAIR KELLER closed public testimony.
9:35:43 AM
REPRESENTATIVE P. WILSON moved to report CSSB 104(JUD) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSB 104(JUD) was
reported out of the House State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 10 SCR 17 Girl Scouts Statement.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 17 |
| 11 SCR 17- NFCYM Statement.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 17 |
| 12 SCR 17- FAQ- Girl Scouts- Planned Parenthood.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 17 |
| 01 CSHB 355 (STA) version I.pdf |
HJUD 4/12/2012 1:00:00 PM HSTA 4/10/2012 8:00:00 AM |
HB 355 |
| 02 HB 355 Sponsor Statement -- FINAL.pdf |
HJUD 4/12/2012 1:00:00 PM HSTA 4/10/2012 8:00:00 AM |
HB 355 |
| 03 HB 355 - Sectional Analysis -- FINAL.pdf |
HJUD 4/12/2012 1:00:00 PM HSTA 4/10/2012 8:00:00 AM |
HB 355 |
| 04 HB 355 explanation of changes to CSHB 355.pdf |
HJUD 4/12/2012 1:00:00 PM HSTA 4/10/2012 8:00:00 AM |
HB 355 |
| 05 HB355-DOA-APOC-4-9-12.pdf |
HJUD 4/12/2012 1:00:00 PM HSTA 4/10/2012 8:00:00 AM |
HB 355 |
| 01 SCR019A.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 02 SCR 19 SPONSOR STATEMENT.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 03 SCR 19 Brief History of the United States Marshals Service in Alaska.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 04 SCR 19 DPS USMS Letter.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 05 SCR 19 APOA Letter of Support.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 06 SCR 19 Fiscal Note.pdf |
HSTA 4/10/2012 8:00:00 AM |
SCR 19 |
| 01 SB104 ver E.PDF |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |
| 02 SB104 Sponsor Statement.pdf |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |
| 03 SB104 Summary of Changes.pdf |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |
| 04 SB104 Sectional Analysis.pdf |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |
| 05 SB 104 Letters of Support (combined).pdf |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |
| 06 SB104CS(JUD)-DOA-DMV-4-6-12.pdf |
HSTA 4/10/2012 8:00:00 AM |
SB 104 |