18070. (a) The Legislature finds and declares all of the following:
(1) The financial hardship endured by someone who is buying or
selling a manufactured home for the purpose of using it for a primary
residence is more profound than the hardship of someone who is
selling or purchasing a manufactured home for investment purposes.
(2) It is, therefore, the intent of the Legislature in enacting
this chapter that any claims for primary residences submitted,
pursuant to this chapter, by a claimant for payment from the fund
shall be given priority over claims submitted for investment
purposes.
(3) The distinctions made in this chapter between claims made for
personal residential purposes and claims made for investment purposes
shall reflect the priorities set forth in this paragraph.
(4) The costs of seeking and obtaining civil judgments and related
collection efforts to support claims for compensation often exceed
the ability of claimants and the amounts received.
(5) The costs and efforts of public entities obtaining criminal or
administrative restitution orders could provide further benefits if
these orders could be used as the basis for compensation claims.
(b) The following definitions shall apply for the purposes of this
chapter:
(1) "Actual and direct loss" includes the following:
(A) The amount of the actual and direct loss, interest at the
statutory rate from the date of loss, plus court costs and reasonable
attorney's fees incurred in pursuit of the judgment, not to exceed
25 percent of the amount of the judgment, if the claim is based on a
judgment obtained by a private attorney or an attorney employed by a
nonprofit corporation, and not to exceed 35 percent of the amount of
the judgment if the claim is based on a judgment obtained by an
attorney employed by a public agency.
(B) The amount of the actual and direct loss, if the claim is not
based on a judgment. However, the claimant may collect actual and
reasonable costs incurred in pursuit of compensation including
attorney's fees not exceeding 15 percent of the amount of the claim
and court costs, if any.
"Actual and direct loss" does not include any punitive damages or
damages awarded for negligent or intentional infliction of emotional
distress.
(2) "Claimant" does not include a person holding a lien on, or a
person possessing a secondary interest in, a manufactured home.
(3) "Conversion" means the unlawful appropriation of the property
of another.
(4) "Judgment" means any of the following:
(A) A final judgment in a court of competent jurisdiction, other
than a court in another state, including, but not limited to, a
criminal restitution order issued pursuant to subdivision (f) of
Section 1202.4 of the Penal Code or Section 3663 of Title 18 of the
United States Code.
(B) An order of the director, including an order for restitution,
based on an accusation filed pursuant to Article 3 (commencing with
Section 18058) of Chapter 7, after an opportunity for a hearing.
(5) "Complaint" means the facts of the underlying transaction upon
which the criminal restitution order or administrative order is
based.
(6) "Judgment debtor" means any defendant who is the subject of
the criminal restitution order or civil judgment, any respondent who
is the subject of an administrative accusation and order, or any
person responsible for any violation upon which payment is made, as
determined by the department.
(c) There is hereby created in the State Treasury the Manufactured
Home Recovery Fund. The money in the fund shall be used only for the
purposes of this chapter, including payment of the department's
administrative costs incurred pursuant to this chapter. The
department's costs may include any investigative costs incurred under
this chapter, costs incurred to render a decision pursuant to
Section 18070.3, and costs incurred in defending a decision on
appeal.
(d) The moneys in the fund may be invested pursuant to Chapter 3
(commencing with Section 16430) of Part 2 of Division 4 of Title 2 of
the Government Code. All income derived from investments of the fund
shall be returned to the fund by the Treasurer as the income is
earned.
(e) Notwithstanding Section 13340 of the Government Code, the
moneys in the fund are hereby continuously appropriated to make the
payments and distributions required by this chapter.
18070.1. (a) On and after January 1, 1985, before a dealer's
license is issued or renewed, each applicant shall pay a fee of two
hundred fifty dollars ($250).
(b) (1) The fee required by subdivision (a) shall not be collected
more than once. In addition, each dealer shall pay a fee of one
hundred dollars ($100) for each additional business location operated
by the dealer and for each new business location.
(2) In addition, before a salesperson's license is issued or
renewed, each applicant shall pay a fee of twenty-five dollars ($25).
This fee shall not be collected more than once.
(c) For each sale of a manufactured home reported to the
department, a fee not to exceed ten dollars ($10) shall be collected
by the department for deposit in the Manufactured Home Recovery Fund
prior to the issuance of a new registration.
18070.2. (a) Fees for the establishment and operation of the
Manufactured Home Recovery Fund shall be collected on or after
January 1, 1985. Claims against the fund arising from sales which
occur after January 1, 1985, may not be submitted to the department
before January 1, 1986. For purposes of this section, the date of
sale shall be either of the following:
(1) The date escrow closes for sales by dealers that are subject
to Section 18035 or 18035.2.
(2) For all other sales, including sales by dealers in which
escrow does not close, the date when the purchaser has paid the
purchase price or, in lieu thereof, has signed a security agreement,
option to purchase, or purchase contract and has taken physical
possession or delivery of the manufactured home.
(b) Notwithstanding any other provision of law, whenever the
balance in the Manufactured Home Recovery Fund exceeds one million
dollars ($1,000,000) on January 1 of any year, the department may
reduce the fee provided for in subdivision (c) of Section 18070.1.
The department may again increase the fee up to a maximum of ten
dollars ($10) whenever the balance in the fund falls below one
million dollars ($1,000,000).
18070.3. (a) When any person (1) who has purchased a manufactured
home for a personal or family residential or investment purpose or
(2) who has sold a manufactured home for a personal or family
residential or investment purpose, obtains a final judgment against
any manufactured home manufacturer, manufactured home dealer or
salesperson, or other seller or purchaser, and the judgment is based
on the grounds of (1) failure to honor warranties or guarantees, (2)
fraud or willful misrepresentation related to any financial
provision, (3) fraud or willful misrepresentation of the kind or
quality of the product sold or purchased, (4) conversion, (5) any
willful violation of any other provision of this part, including the
provisions regulating escrow accounts, or regulations adopted
pursuant to this part, or (6) violation of Chapter 3 (commencing with
Section 1797) of Title 1.7 of Part 4 of Division 3 of the Civil
Code, resulting in an actual and direct loss directly arising out of
any transaction that occurs on or after January 1, 1985, the person,
upon termination of all proceedings, including appeals, may file a
claim with the department for an order directing payment out of the
fund for the amount of actual and direct loss in the transaction.
(b) If any person either purchases a manufactured home used for a
personal or family residential or investment purpose from, or sells a
manufactured home used for a personal or family residential or
investment purpose to, a person or entity who is or has been the
subject of a bankruptcy proceeding, the person may file a claim with
the department for an order directing payment out of the fund for the
actual and direct loss in the transaction based on (1) the failure
to honor warranties or guarantees, (2) fraud or willful
misrepresentation related to any financial provision, (3) fraud or
willful misrepresentation of the kind or quality of product purchased
or sold, (4) conversion, (5) willful violation of any other
provision in this part, including the provisions regulating escrow
accounts, or (6) violation of Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
resulting in an actual and direct loss directly arising out of any
transaction that occurs on or after January 1, 1985.
(c) (1) The total amount of the claim shall not exceed the amount
of actual and direct loss that remains unreimbursed from any source.
(2) The maximum payment ordered under this section, with respect
to any one sales transaction on a new or used manufactured home,
shall be the amount of the actual and direct loss, as determined by
the department based on information in the possession of the
department and information provided by the claimant or claimants. In
no event shall the actual payment relating to a single transaction
exceed seventy-five thousand dollars ($75,000).
(3) Notwithstanding any other provision of this chapter, a person
who purchases or sells a manufactured home for an investment purpose
may receive payment from the fund for that purpose only once. A
person who has received payment from the fund for the purchase or
sale of a manufactured home for an investment purpose shall
henceforth be ineligible to make a claim under this chapter, either
as a natural person or as a member of a partnership, as an officer or
director of a corporation, as a member of a marital community, or in
any other capacity.
(d) Prior to payment of any claim against the fund, the claimant
or claimants shall have first:
(1) If the claim is based on a final judgment, diligently pursued
collection efforts against all the assets of the judgment debtor, or
presented evidence satisfactory to the department that the debtor is
judgment proof, or demonstrated evidence satisfactory to the
department that the costs of collection are likely to be in excess of
the amounts that could be collected. This evidence may include, but
is not limited to, a description of the searches and inquiries
conducted by or on behalf of the claimant with respect to the
judgment debtor's assets liable to be sold or applied to the
satisfaction of the judgment, an itemized valuation of the assets
discovered, and the results of actions by the claimant to have assets
applied to satisfy the judgment.
(2) If the claim is not based on a final judgment, presented
evidence satisfactory to the department of either of the following:
(A) That the person or entity is or has been the subject of
bankruptcy proceedings and, for purposes of any civil litigation or
claims in bankruptcy proceedings, has assigned to the department any
interest in the actual and direct loss described in subdivision (c)
in the amount that the claimant or claimants recover from the fund.
(B) That the claimant's claim is consistent with this chapter and
the claimant had presented evidence satisfactory to the department
that the debtor is judgment proof, or demonstrated evidence
satisfactory to the department that the costs of collection are
likely to be in excess of the amounts that could be collected. This
evidence may include, but not be limited to, a description of
searches and inquiries conducted by or on behalf of the claimant with
respect to the judgment debtor's assets eligible to be sold or
applied to the satisfaction of the judgment, an itemized valuation of
the assets discovered, and the results of actions by the claimant to
have the assets applied to satisfaction of the judgment.
(3) If the claim is based upon a violation of a provision within a
warranty provided pursuant to Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
demonstrated evidence satisfactory to the department that the
claimant has been denied full compensation or correction under the
warranty after the claimant has attempted to exercise his or her
rights pursuant to the warranty.
(e) A claim against the fund shall be filed with the department
within the following time periods:
(1) If the claim is based on a final judgment, within two years
from the date of the judgment.
(2) If the claim is not based on a final judgment, within two
years from the termination of bankruptcy proceedings or two years
from the date of sale as determined by subdivision (a) of Section
18070.2, or within two years of discovery of the violations causing
actual and direct losses pursuant to this article but no longer than
five years after the date of sale as determined by subdivision (a) of
Section 18070.2, whichever event occurs later.
(f) When any person files a claim for an order directing payment
from the fund, the claimant shall mail, by first-class mail, a copy
of that claim to the last known address of the judgment debtor. The
department shall conduct a review of the application and other
pertinent information in its possession, and it may issue an order
directing payment out of the fund as provided in subdivisions (a) to
(e), inclusive, subject to the limitations of subdivisions (a) to
(e), inclusive, if the claimant or claimants show all of the
following:
(1) That he or she is not a spouse of the judgment debtor, the
bankrupt person or entity, or a person representing the spouse.
(2) That he or she is making an application within the time
specified in subdivision (e).
(3) That the claimant has satisfied the applicable requirements of
subdivision (d).
(4) That, if the claimant is a seller of a manufactured home used
by the seller for personal, family, or household purposes, the
claimant made a good faith effort to adequately secure the debt
resulting from the sale of the manufactured home and with respect to
which the claim is made. For purposes of this paragraph, a good faith
effort to secure the debt may be demonstrated by, but shall not be
limited to, providing the department with a promissory note signed by
the debtor and which, pursuant to the terms thereof, is secured by
collateral with a reasonable value at least equal to the debt
evidenced by the promissory note.
(g) Upon an order of the department directing that payment be made
out of the fund, the Controller is authorized to draw a warrant for
the payment of the amount of the claim approved by the department
pursuant to this section.
(h) In dispersing moneys from the fund, the department is
authorized to give priority to claimants who have attempted to
purchase or sell a manufactured home for a personal or family
residential purpose.
(i) All claims to the fund that are received on or after January
1, 1993, shall be processed, and a determination made, within one
year of submission of a properly completed application.
(j) The department, upon request by a Member of the Legislature,
shall provide the following information: the number of claims to the
fund, number of claims processed and decided within one year of their
application date and submission of a properly completed application,
the amount of fund money paid to claimants, and the amount of fund
money allocated for the department's costs.
18070.4. The judgment debtor shall be liable for repayment in full
for the amount arising from claims against the debtor which are paid
from the fund, with interest at the prevailing prime rate. A
discharge in bankruptcy shall not relieve a person from the
disabilities and penalties of this section.
18070.5. When the department has caused payment to be made from the
fund to any person, the department shall be subrogated to the rights
of that person.
18070.6. (a) To the extent that department personnel and resources
are available, in any administrative action brought by the department
pursuant to Article 3 (commencing with Section 18058) of Chapter 7,
the department shall make reasonable efforts to plead and prove facts
and allegations and request findings and conclusions necessary to
support an order of restitution that may be deemed a final judgment.
(b) A person for whose benefit an order of restitution or other
financial award has been granted by the director pursuant to this
section may waive his or her rights to any additional compensation
from the fund arising out of a transaction and submit a claim based
on that administrative order to the fund after demonstrating efforts
to collect pursuant to subdivision (d) of Section 18070.3.
(c) An order for restitution by the director pursuant to this
section shall not exceed the amount of restitution ordered or
approved by an administrative law judge in an administrative action
brought by the department.
18070.7. The amendments to this chapter by the act adding
additional grounds or procedures for recovery from the fund shall
apply to any transaction for which the statute of limitation
established by subdivision (e) of Section 18070.3 has not expired on
January 1, 2004.
18070. (a) The Legislature finds and declares all of the following:
(1) The financial hardship endured by someone who is buying or
selling a manufactured home for the purpose of using it for a primary
residence is more profound than the hardship of someone who is
selling or purchasing a manufactured home for investment purposes.
(2) It is, therefore, the intent of the Legislature in enacting
this chapter that any claims for primary residences submitted,
pursuant to this chapter, by a claimant for payment from the fund
shall be given priority over claims submitted for investment
purposes.
(3) The distinctions made in this chapter between claims made for
personal residential purposes and claims made for investment purposes
shall reflect the priorities set forth in this paragraph.
(4) The costs of seeking and obtaining civil judgments and related
collection efforts to support claims for compensation often exceed
the ability of claimants and the amounts received.
(5) The costs and efforts of public entities obtaining criminal or
administrative restitution orders could provide further benefits if
these orders could be used as the basis for compensation claims.
(b) The following definitions shall apply for the purposes of this
chapter:
(1) "Actual and direct loss" includes the following:
(A) The amount of the actual and direct loss, interest at the
statutory rate from the date of loss, plus court costs and reasonable
attorney's fees incurred in pursuit of the judgment, not to exceed
25 percent of the amount of the judgment, if the claim is based on a
judgment obtained by a private attorney or an attorney employed by a
nonprofit corporation, and not to exceed 35 percent of the amount of
the judgment if the claim is based on a judgment obtained by an
attorney employed by a public agency.
(B) The amount of the actual and direct loss, if the claim is not
based on a judgment. However, the claimant may collect actual and
reasonable costs incurred in pursuit of compensation including
attorney's fees not exceeding 15 percent of the amount of the claim
and court costs, if any.
"Actual and direct loss" does not include any punitive damages or
damages awarded for negligent or intentional infliction of emotional
distress.
(2) "Claimant" does not include a person holding a lien on, or a
person possessing a secondary interest in, a manufactured home.
(3) "Conversion" means the unlawful appropriation of the property
of another.
(4) "Judgment" means any of the following:
(A) A final judgment in a court of competent jurisdiction, other
than a court in another state, including, but not limited to, a
criminal restitution order issued pursuant to subdivision (f) of
Section 1202.4 of the Penal Code or Section 3663 of Title 18 of the
United States Code.
(B) An order of the director, including an order for restitution,
based on an accusation filed pursuant to Article 3 (commencing with
Section 18058) of Chapter 7, after an opportunity for a hearing.
(5) "Complaint" means the facts of the underlying transaction upon
which the criminal restitution order or administrative order is
based.
(6) "Judgment debtor" means any defendant who is the subject of
the criminal restitution order or civil judgment, any respondent who
is the subject of an administrative accusation and order, or any
person responsible for any violation upon which payment is made, as
determined by the department.
(c) There is hereby created in the State Treasury the Manufactured
Home Recovery Fund. The money in the fund shall be used only for the
purposes of this chapter, including payment of the department's
administrative costs incurred pursuant to this chapter. The
department's costs may include any investigative costs incurred under
this chapter, costs incurred to render a decision pursuant to
Section 18070.3, and costs incurred in defending a decision on
appeal.
(d) The moneys in the fund may be invested pursuant to Chapter 3
(commencing with Section 16430) of Part 2 of Division 4 of Title 2 of
the Government Code. All income derived from investments of the fund
shall be returned to the fund by the Treasurer as the income is
earned.
(e) Notwithstanding Section 13340 of the Government Code, the
moneys in the fund are hereby continuously appropriated to make the
payments and distributions required by this chapter.
18070.1. (a) On and after January 1, 1985, before a dealer's
license is issued or renewed, each applicant shall pay a fee of two
hundred fifty dollars ($250).
(b) (1) The fee required by subdivision (a) shall not be collected
more than once. In addition, each dealer shall pay a fee of one
hundred dollars ($100) for each additional business location operated
by the dealer and for each new business location.
(2) In addition, before a salesperson's license is issued or
renewed, each applicant shall pay a fee of twenty-five dollars ($25).
This fee shall not be collected more than once.
(c) For each sale of a manufactured home reported to the
department, a fee not to exceed ten dollars ($10) shall be collected
by the department for deposit in the Manufactured Home Recovery Fund
prior to the issuance of a new registration.
18070.2. (a) Fees for the establishment and operation of the
Manufactured Home Recovery Fund shall be collected on or after
January 1, 1985. Claims against the fund arising from sales which
occur after January 1, 1985, may not be submitted to the department
before January 1, 1986. For purposes of this section, the date of
sale shall be either of the following:
(1) The date escrow closes for sales by dealers that are subject
to Section 18035 or 18035.2.
(2) For all other sales, including sales by dealers in which
escrow does not close, the date when the purchaser has paid the
purchase price or, in lieu thereof, has signed a security agreement,
option to purchase, or purchase contract and has taken physical
possession or delivery of the manufactured home.
(b) Notwithstanding any other provision of law, whenever the
balance in the Manufactured Home Recovery Fund exceeds one million
dollars ($1,000,000) on January 1 of any year, the department may
reduce the fee provided for in subdivision (c) of Section 18070.1.
The department may again increase the fee up to a maximum of ten
dollars ($10) whenever the balance in the fund falls below one
million dollars ($1,000,000).
18070.3. (a) When any person (1) who has purchased a manufactured
home for a personal or family residential or investment purpose or
(2) who has sold a manufactured home for a personal or family
residential or investment purpose, obtains a final judgment against
any manufactured home manufacturer, manufactured home dealer or
salesperson, or other seller or purchaser, and the judgment is based
on the grounds of (1) failure to honor warranties or guarantees, (2)
fraud or willful misrepresentation related to any financial
provision, (3) fraud or willful misrepresentation of the kind or
quality of the product sold or purchased, (4) conversion, (5) any
willful violation of any other provision of this part, including the
provisions regulating escrow accounts, or regulations adopted
pursuant to this part, or (6) violation of Chapter 3 (commencing with
Section 1797) of Title 1.7 of Part 4 of Division 3 of the Civil
Code, resulting in an actual and direct loss directly arising out of
any transaction that occurs on or after January 1, 1985, the person,
upon termination of all proceedings, including appeals, may file a
claim with the department for an order directing payment out of the
fund for the amount of actual and direct loss in the transaction.
(b) If any person either purchases a manufactured home used for a
personal or family residential or investment purpose from, or sells a
manufactured home used for a personal or family residential or
investment purpose to, a person or entity who is or has been the
subject of a bankruptcy proceeding, the person may file a claim with
the department for an order directing payment out of the fund for the
actual and direct loss in the transaction based on (1) the failure
to honor warranties or guarantees, (2) fraud or willful
misrepresentation related to any financial provision, (3) fraud or
willful misrepresentation of the kind or quality of product purchased
or sold, (4) conversion, (5) willful violation of any other
provision in this part, including the provisions regulating escrow
accounts, or (6) violation of Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
resulting in an actual and direct loss directly arising out of any
transaction that occurs on or after January 1, 1985.
(c) (1) The total amount of the claim shall not exceed the amount
of actual and direct loss that remains unreimbursed from any source.
(2) The maximum payment ordered under this section, with respect
to any one sales transaction on a new or used manufactured home,
shall be the amount of the actual and direct loss, as determined by
the department based on information in the possession of the
department and information provided by the claimant or claimants. In
no event shall the actual payment relating to a single transaction
exceed seventy-five thousand dollars ($75,000).
(3) Notwithstanding any other provision of this chapter, a person
who purchases or sells a manufactured home for an investment purpose
may receive payment from the fund for that purpose only once. A
person who has received payment from the fund for the purchase or
sale of a manufactured home for an investment purpose shall
henceforth be ineligible to make a claim under this chapter, either
as a natural person or as a member of a partnership, as an officer or
director of a corporation, as a member of a marital community, or in
any other capacity.
(d) Prior to payment of any claim against the fund, the claimant
or claimants shall have first:
(1) If the claim is based on a final judgment, diligently pursued
collection efforts against all the assets of the judgment debtor, or
presented evidence satisfactory to the department that the debtor is
judgment proof, or demonstrated evidence satisfactory to the
department that the costs of collection are likely to be in excess of
the amounts that could be collected. This evidence may include, but
is not limited to, a description of the searches and inquiries
conducted by or on behalf of the claimant with respect to the
judgment debtor's assets liable to be sold or applied to the
satisfaction of the judgment, an itemized valuation of the assets
discovered, and the results of actions by the claimant to have assets
applied to satisfy the judgment.
(2) If the claim is not based on a final judgment, presented
evidence satisfactory to the department of either of the following:
(A) That the person or entity is or has been the subject of
bankruptcy proceedings and, for purposes of any civil litigation or
claims in bankruptcy proceedings, has assigned to the department any
interest in the actual and direct loss described in subdivision (c)
in the amount that the claimant or claimants recover from the fund.
(B) That the claimant's claim is consistent with this chapter and
the claimant had presented evidence satisfactory to the department
that the debtor is judgment proof, or demonstrated evidence
satisfactory to the department that the costs of collection are
likely to be in excess of the amounts that could be collected. This
evidence may include, but not be limited to, a description of
searches and inquiries conducted by or on behalf of the claimant with
respect to the judgment debtor's assets eligible to be sold or
applied to the satisfaction of the judgment, an itemized valuation of
the assets discovered, and the results of actions by the claimant to
have the assets applied to satisfaction of the judgment.
(3) If the claim is based upon a violation of a provision within a
warranty provided pursuant to Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
demonstrated evidence satisfactory to the department that the
claimant has been denied full compensation or correction under the
warranty after the claimant has attempted to exercise his or her
rights pursuant to the warranty.
(e) A claim against the fund shall be filed with the department
within the following time periods:
(1) If the claim is based on a final judgment, within two years
from the date of the judgment.
(2) If the claim is not based on a final judgment, within two
years from the termination of bankruptcy proceedings or two years
from the date of sale as determined by subdivision (a) of Section
18070.2, or within two years of discovery of the violations causing
actual and direct losses pursuant to this article but no longer than
five years after the date of sale as determined by subdivision (a) of
Section 18070.2, whichever event occurs later.
(f) When any person files a claim for an order directing payment
from the fund, the claimant shall mail, by first-class mail, a copy
of that claim to the last known address of the judgment debtor. The
department shall conduct a review of the application and other
pertinent information in its possession, and it may issue an order
directing payment out of the fund as provided in subdivisions (a) to
(e), inclusive, subject to the limitations of subdivisions (a) to
(e), inclusive, if the claimant or claimants show all of the
following:
(1) That he or she is not a spouse of the judgment debtor, the
bankrupt person or entity, or a person representing the spouse.
(2) That he or she is making an application within the time
specified in subdivision (e).
(3) That the claimant has satisfied the applicable requirements of
subdivision (d).
(4) That, if the claimant is a seller of a manufactured home used
by the seller for personal, family, or household purposes, the
claimant made a good faith effort to adequately secure the debt
resulting from the sale of the manufactured home and with respect to
which the claim is made. For purposes of this paragraph, a good faith
effort to secure the debt may be demonstrated by, but shall not be
limited to, providing the department with a promissory note signed by
the debtor and which, pursuant to the terms thereof, is secured by
collateral with a reasonable value at least equal to the debt
evidenced by the promissory note.
(g) Upon an order of the department directing that payment be made
out of the fund, the Controller is authorized to draw a warrant for
the payment of the amount of the claim approved by the department
pursuant to this section.
(h) In dispersing moneys from the fund, the department is
authorized to give priority to claimants who have attempted to
purchase or sell a manufactured home for a personal or family
residential purpose.
(i) All claims to the fund that are received on or after January
1, 1993, shall be processed, and a determination made, within one
year of submission of a properly completed application.
(j) The department, upon request by a Member of the Legislature,
shall provide the following information: the number of claims to the
fund, number of claims processed and decided within one year of their
application date and submission of a properly completed application,
the amount of fund money paid to claimants, and the amount of fund
money allocated for the department's costs.
18070.4. The judgment debtor shall be liable for repayment in full
for the amount arising from claims against the debtor which are paid
from the fund, with interest at the prevailing prime rate. A
discharge in bankruptcy shall not relieve a person from the
disabilities and penalties of this section.
18070.5. When the department has caused payment to be made from the
fund to any person, the department shall be subrogated to the rights
of that person.
18070.6. (a) To the extent that department personnel and resources
are available, in any administrative action brought by the department
pursuant to Article 3 (commencing with Section 18058) of Chapter 7,
the department shall make reasonable efforts to plead and prove facts
and allegations and request findings and conclusions necessary to
support an order of restitution that may be deemed a final judgment.
(b) A person for whose benefit an order of restitution or other
financial award has been granted by the director pursuant to this
section may waive his or her rights to any additional compensation
from the fund arising out of a transaction and submit a claim based
on that administrative order to the fund after demonstrating efforts
to collect pursuant to subdivision (d) of Section 18070.3.
(c) An order for restitution by the director pursuant to this
section shall not exceed the amount of restitution ordered or
approved by an administrative law judge in an administrative action
brought by the department.
18070.7. The amendments to this chapter by the act adding
additional grounds or procedures for recovery from the fund shall
apply to any transaction for which the statute of limitation
established by subdivision (e) of Section 18070.3 has not expired on
January 1, 2004.
18070. (a) The Legislature finds and declares all of the following:
(1) The financial hardship endured by someone who is buying or
selling a manufactured home for the purpose of using it for a primary
residence is more profound than the hardship of someone who is
selling or purchasing a manufactured home for investment purposes.
(2) It is, therefore, the intent of the Legislature in enacting
this chapter that any claims for primary residences submitted,
pursuant to this chapter, by a claimant for payment from the fund
shall be given priority over claims submitted for investment
purposes.
(3) The distinctions made in this chapter between claims made for
personal residential purposes and claims made for investment purposes
shall reflect the priorities set forth in this paragraph.
(4) The costs of seeking and obtaining civil judgments and related
collection efforts to support claims for compensation often exceed
the ability of claimants and the amounts received.
(5) The costs and efforts of public entities obtaining criminal or
administrative restitution orders could provide further benefits if
these orders could be used as the basis for compensation claims.
(b) The following definitions shall apply for the purposes of this
chapter:
(1) "Actual and direct loss" includes the following:
(A) The amount of the actual and direct loss, interest at the
statutory rate from the date of loss, plus court costs and reasonable
attorney's fees incurred in pursuit of the judgment, not to exceed
25 percent of the amount of the judgment, if the claim is based on a
judgment obtained by a private attorney or an attorney employed by a
nonprofit corporation, and not to exceed 35 percent of the amount of
the judgment if the claim is based on a judgment obtained by an
attorney employed by a public agency.
(B) The amount of the actual and direct loss, if the claim is not
based on a judgment. However, the claimant may collect actual and
reasonable costs incurred in pursuit of compensation including
attorney's fees not exceeding 15 percent of the amount of the claim
and court costs, if any.
"Actual and direct loss" does not include any punitive damages or
damages awarded for negligent or intentional infliction of emotional
distress.
(2) "Claimant" does not include a person holding a lien on, or a
person possessing a secondary interest in, a manufactured home.
(3) "Conversion" means the unlawful appropriation of the property
of another.
(4) "Judgment" means any of the following:
(A) A final judgment in a court of competent jurisdiction, other
than a court in another state, including, but not limited to, a
criminal restitution order issued pursuant to subdivision (f) of
Section 1202.4 of the Penal Code or Section 3663 of Title 18 of the
United States Code.
(B) An order of the director, including an order for restitution,
based on an accusation filed pursuant to Article 3 (commencing with
Section 18058) of Chapter 7, after an opportunity for a hearing.
(5) "Complaint" means the facts of the underlying transaction upon
which the criminal restitution order or administrative order is
based.
(6) "Judgment debtor" means any defendant who is the subject of
the criminal restitution order or civil judgment, any respondent who
is the subject of an administrative accusation and order, or any
person responsible for any violation upon which payment is made, as
determined by the department.
(c) There is hereby created in the State Treasury the Manufactured
Home Recovery Fund. The money in the fund shall be used only for the
purposes of this chapter, including payment of the department's
administrative costs incurred pursuant to this chapter. The
department's costs may include any investigative costs incurred under
this chapter, costs incurred to render a decision pursuant to
Section 18070.3, and costs incurred in defending a decision on
appeal.
(d) The moneys in the fund may be invested pursuant to Chapter 3
(commencing with Section 16430) of Part 2 of Division 4 of Title 2 of
the Government Code. All income derived from investments of the fund
shall be returned to the fund by the Treasurer as the income is
earned.
(e) Notwithstanding Section 13340 of the Government Code, the
moneys in the fund are hereby continuously appropriated to make the
payments and distributions required by this chapter.
18070.1. (a) On and after January 1, 1985, before a dealer's
license is issued or renewed, each applicant shall pay a fee of two
hundred fifty dollars ($250).
(b) (1) The fee required by subdivision (a) shall not be collected
more than once. In addition, each dealer shall pay a fee of one
hundred dollars ($100) for each additional business location operated
by the dealer and for each new business location.
(2) In addition, before a salesperson's license is issued or
renewed, each applicant shall pay a fee of twenty-five dollars ($25).
This fee shall not be collected more than once.
(c) For each sale of a manufactured home reported to the
department, a fee not to exceed ten dollars ($10) shall be collected
by the department for deposit in the Manufactured Home Recovery Fund
prior to the issuance of a new registration.
18070.2. (a) Fees for the establishment and operation of the
Manufactured Home Recovery Fund shall be collected on or after
January 1, 1985. Claims against the fund arising from sales which
occur after January 1, 1985, may not be submitted to the department
before January 1, 1986. For purposes of this section, the date of
sale shall be either of the following:
(1) The date escrow closes for sales by dealers that are subject
to Section 18035 or 18035.2.
(2) For all other sales, including sales by dealers in which
escrow does not close, the date when the purchaser has paid the
purchase price or, in lieu thereof, has signed a security agreement,
option to purchase, or purchase contract and has taken physical
possession or delivery of the manufactured home.
(b) Notwithstanding any other provision of law, whenever the
balance in the Manufactured Home Recovery Fund exceeds one million
dollars ($1,000,000) on January 1 of any year, the department may
reduce the fee provided for in subdivision (c) of Section 18070.1.
The department may again increase the fee up to a maximum of ten
dollars ($10) whenever the balance in the fund falls below one
million dollars ($1,000,000).
18070.3. (a) When any person (1) who has purchased a manufactured
home for a personal or family residential or investment purpose or
(2) who has sold a manufactured home for a personal or family
residential or investment purpose, obtains a final judgment against
any manufactured home manufacturer, manufactured home dealer or
salesperson, or other seller or purchaser, and the judgment is based
on the grounds of (1) failure to honor warranties or guarantees, (2)
fraud or willful misrepresentation related to any financial
provision, (3) fraud or willful misrepresentation of the kind or
quality of the product sold or purchased, (4) conversion, (5) any
willful violation of any other provision of this part, including the
provisions regulating escrow accounts, or regulations adopted
pursuant to this part, or (6) violation of Chapter 3 (commencing with
Section 1797) of Title 1.7 of Part 4 of Division 3 of the Civil
Code, resulting in an actual and direct loss directly arising out of
any transaction that occurs on or after January 1, 1985, the person,
upon termination of all proceedings, including appeals, may file a
claim with the department for an order directing payment out of the
fund for the amount of actual and direct loss in the transaction.
(b) If any person either purchases a manufactured home used for a
personal or family residential or investment purpose from, or sells a
manufactured home used for a personal or family residential or
investment purpose to, a person or entity who is or has been the
subject of a bankruptcy proceeding, the person may file a claim with
the department for an order directing payment out of the fund for the
actual and direct loss in the transaction based on (1) the failure
to honor warranties or guarantees, (2) fraud or willful
misrepresentation related to any financial provision, (3) fraud or
willful misrepresentation of the kind or quality of product purchased
or sold, (4) conversion, (5) willful violation of any other
provision in this part, including the provisions regulating escrow
accounts, or (6) violation of Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
resulting in an actual and direct loss directly arising out of any
transaction that occurs on or after January 1, 1985.
(c) (1) The total amount of the claim shall not exceed the amount
of actual and direct loss that remains unreimbursed from any source.
(2) The maximum payment ordered under this section, with respect
to any one sales transaction on a new or used manufactured home,
shall be the amount of the actual and direct loss, as determined by
the department based on information in the possession of the
department and information provided by the claimant or claimants. In
no event shall the actual payment relating to a single transaction
exceed seventy-five thousand dollars ($75,000).
(3) Notwithstanding any other provision of this chapter, a person
who purchases or sells a manufactured home for an investment purpose
may receive payment from the fund for that purpose only once. A
person who has received payment from the fund for the purchase or
sale of a manufactured home for an investment purpose shall
henceforth be ineligible to make a claim under this chapter, either
as a natural person or as a member of a partnership, as an officer or
director of a corporation, as a member of a marital community, or in
any other capacity.
(d) Prior to payment of any claim against the fund, the claimant
or claimants shall have first:
(1) If the claim is based on a final judgment, diligently pursued
collection efforts against all the assets of the judgment debtor, or
presented evidence satisfactory to the department that the debtor is
judgment proof, or demonstrated evidence satisfactory to the
department that the costs of collection are likely to be in excess of
the amounts that could be collected. This evidence may include, but
is not limited to, a description of the searches and inquiries
conducted by or on behalf of the claimant with respect to the
judgment debtor's assets liable to be sold or applied to the
satisfaction of the judgment, an itemized valuation of the assets
discovered, and the results of actions by the claimant to have assets
applied to satisfy the judgment.
(2) If the claim is not based on a final judgment, presented
evidence satisfactory to the department of either of the following:
(A) That the person or entity is or has been the subject of
bankruptcy proceedings and, for purposes of any civil litigation or
claims in bankruptcy proceedings, has assigned to the department any
interest in the actual and direct loss described in subdivision (c)
in the amount that the claimant or claimants recover from the fund.
(B) That the claimant's claim is consistent with this chapter and
the claimant had presented evidence satisfactory to the department
that the debtor is judgment proof, or demonstrated evidence
satisfactory to the department that the costs of collection are
likely to be in excess of the amounts that could be collected. This
evidence may include, but not be limited to, a description of
searches and inquiries conducted by or on behalf of the claimant with
respect to the judgment debtor's assets eligible to be sold or
applied to the satisfaction of the judgment, an itemized valuation of
the assets discovered, and the results of actions by the claimant to
have the assets applied to satisfaction of the judgment.
(3) If the claim is based upon a violation of a provision within a
warranty provided pursuant to Chapter 3 (commencing with Section
1797) of Title 1.7 of Part 4 of Division 3 of the Civil Code,
demonstrated evidence satisfactory to the department that the
claimant has been denied full compensation or correction under the
warranty after the claimant has attempted to exercise his or her
rights pursuant to the warranty.
(e) A claim against the fund shall be filed with the department
within the following time periods:
(1) If the claim is based on a final judgment, within two years
from the date of the judgment.
(2) If the claim is not based on a final judgment, within two
years from the termination of bankruptcy proceedings or two years
from the date of sale as determined by subdivision (a) of Section
18070.2, or within two years of discovery of the violations causing
actual and direct losses pursuant to this article but no longer than
five years after the date of sale as determined by subdivision (a) of
Section 18070.2, whichever event occurs later.
(f) When any person files a claim for an order directing payment
from the fund, the claimant shall mail, by first-class mail, a copy
of that claim to the last known address of the judgment debtor. The
department shall conduct a review of the application and other
pertinent information in its possession, and it may issue an order
directing payment out of the fund as provided in subdivisions (a) to
(e), inclusive, subject to the limitations of subdivisions (a) to
(e), inclusive, if the claimant or claimants show all of the
following:
(1) That he or she is not a spouse of the judgment debtor, the
bankrupt person or entity, or a person representing the spouse.
(2) That he or she is making an application within the time
specified in subdivision (e).
(3) That the claimant has satisfied the applicable requirements of
subdivision (d).
(4) That, if the claimant is a seller of a manufactured home used
by the seller for personal, family, or household purposes, the
claimant made a good faith effort to adequately secure the debt
resulting from the sale of the manufactured home and with respect to
which the claim is made. For purposes of this paragraph, a good faith
effort to secure the debt may be demonstrated by, but shall not be
limited to, providing the department with a promissory note signed by
the debtor and which, pursuant to the terms thereof, is secured by
collateral with a reasonable value at least equal to the debt
evidenced by the promissory note.
(g) Upon an order of the department directing that payment be made
out of the fund, the Controller is authorized to draw a warrant for
the payment of the amount of the claim approved by the department
pursuant to this section.
(h) In dispersing moneys from the fund, the department is
authorized to give priority to claimants who have attempted to
purchase or sell a manufactured home for a personal or family
residential purpose.
(i) All claims to the fund that are received on or after January
1, 1993, shall be processed, and a determination made, within one
year of submission of a properly completed application.
(j) The department, upon request by a Member of the Legislature,
shall provide the following information: the number of claims to the
fund, number of claims processed and decided within one year of their
application date and submission of a properly completed application,
the amount of fund money paid to claimants, and the amount of fund
money allocated for the department's costs.
18070.4. The judgment debtor shall be liable for repayment in full
for the amount arising from claims against the debtor which are paid
from the fund, with interest at the prevailing prime rate. A
discharge in bankruptcy shall not relieve a person from the
disabilities and penalties of this section.
18070.5. When the department has caused payment to be made from the
fund to any person, the department shall be subrogated to the rights
of that person.
18070.6. (a) To the extent that department personnel and resources
are available, in any administrative action brought by the department
pursuant to Article 3 (commencing with Section 18058) of Chapter 7,
the department shall make reasonable efforts to plead and prove facts
and allegations and request findings and conclusions necessary to
support an order of restitution that may be deemed a final judgment.
(b) A person for whose benefit an order of restitution or other
financial award has been granted by the director pursuant to this
section may waive his or her rights to any additional compensation
from the fund arising out of a transaction and submit a claim based
on that administrative order to the fund after demonstrating efforts
to collect pursuant to subdivision (d) of Section 18070.3.
(c) An order for restitution by the director pursuant to this
section shall not exceed the amount of restitution ordered or
approved by an administrative law judge in an administrative action
brought by the department.
18070.7. The amendments to this chapter by the act adding
additional grounds or procedures for recovery from the fund shall
apply to any transaction for which the statute of limitation
established by subdivision (e) of Section 18070.3 has not expired on
January 1, 2004.
