Unit 14 Specialization

Transforming a Mobilehome to Real Property

1.A building permit must be acquired.2.The mobilehome must be set on a permanent foundation.3.A recorded document must be filed stating that the mobilehome has been placed on a foundation. This typically is done by the local building department.4.A certificate of occupancy must be obtained

resale certificate

A business owner who purchases tangible personal property for resale should obtain a resale certificate, so that any property purchased for resale is not subject to sales or use tax.

tax clearance receipt

Before assuming the ownership of a business, a buyer should obtain a copy of the seller's permit and a tax clearance receipt stating that the business is current on sales taxes from the State Board of Equalization.

clearance of tax liability

If the mobilehome is real property, a clearance of tax liability must be signed by the county tax collector.A mobilehome is considered real property when it is attached to a permanent foundation.

Mobilehome Sales by Real Estate Agents

Only licensed mobilehome dealers can sell new mobilehomes. real estate broker or sales license may sell mobilehomes, which have been registered with HCD and placed in an established mobilehome park or have been installed on a foundation system.sell or lease a mobilehome if it is on a lot uninterrupted period of at least one year

promissory note

When money is borrowed, a promissory note is signed, just as in the financing of non-business property. The note is the evidence of the debt. At the same time, the borrower executes a security agreement

Uniform Commercial Code (UCC)

Whenever money has been borrowed for the sale of a business opportunity, it follows that someone has a security interest in the personal property belonging to the business. These transactions are regulated by theUniform Commercial Code (UCC) Divisions 6 and 9.

houseboat

a barge that is designed and equipped for use as a dwelling.

mobilehome

a factory-built home manufactured prior to June 15, 1976, constructed on a chassis and wheels, and designed for permanent or semi-permanent attachment to land.

Manufactured homes

are homes built in a factory after June 15, 1976 and must conform to the federal Manufactured Home Construction and Safety Standards (HUD code). The federal standards regulate manufactured housing design and construction, strength and durability, transportability, fire resistance, energy efficiency, and quality

Livestock

includes domestic animals (cattle, horses, sheep, etc.) that are used for food, breeding, or draft purposes.

Use tax

is a tax imposed on the buyer who purchases goods from an out-of-state supplier for use in state.

mobilehome park

is any area or tract of land where two or more mobile-home lots are rented or leased or held out for rent or lease to accommodate manufactured homes or mobilehomes used for human habitation

business opportunity

is any type of business that is for lease or sale. It also includes the intangible but salable asset of goodwill, which is the expectation of the continued patronage of an existing business.

protects a buyer from liability for unpaid sales tax owed by the seller.

is collected as a percentage of the retail sale of a product by a retailer.

bulk transfer law

is considered valid between the buyer and seller but fraudulent and void against creditors.

Agricultural property

is defined as property zoned for use in farming, including the raising of crops and livestock.

ranch

is land that is used for grazing livestock.

financing statement

is merely the document used to record the debt; it is not actual evidence of the debt.

security agreement

is the document commonly used to secure a loan on personal property, much as a trust deed secures a loan on real property. The security agreement creates a lien on personal property, including fixtures.

Department of Alcoholic Beverage Control (ABC)

issues liquor licenses and regulates the transfer of a liquor license from a seller to a buyer. A buyer must apply for the license and may be turned down for various reasons (e.g., criminal record).

Bulk sales

or the sale of a substantial part of the inventory of a business, are regulated by Division 6 of the UCC.

seller's permit

owner of a retail business must obtain a seller's permit to collect the proper sales tax from customers and pay it to the State Board of Equalization, usually quarterly.

farm

produces plant and animal products like grains, milk, eggs, and meat.

Sales and Use Tax Law

protects a buyer from liability for unpaid sales tax owed by the seller.

carrying capacity

refers to the number of animal units or tonnage of crops per acre that the land can support.

timeshare

the common ownership of a single piece of property by an association of people with each owner having the exclusive right to occupy a unit for a specified period each year.

certificate of title

transfers ownership of a mobilehome owned as personal property.

Steps in a Business Opportunity Sale

• The business is listed .•deposit receipt is completed when a buyer is found. • offer is presented to the seller by the broker for approval. • Escrow is opened if offer is acceptable. • Creditors are notified of the sale and a notice of intended bulk sale is published, according to the requirements of the Bulk Sales Act. • A financing statement (a written notice of a creditor's interest in personal property) is filed with the secretary of state and/or the recorder's office, according to the requirements of the Uniform Commercial Code (UCC). • If a liquor license is part of the sale, the required forms are filed with the Department of Alcoholic Beverage Control (ABC). • Arrangements for the assignment or transfer of the lease are made with the landlord. • Copies of the seller's permit and a tax clearance receipt are obtained from the Board of Equalization, according to the Sales and Use Tax Law. The buyer then is protected from liability from any unpaid sales tax that the seller might owe. • Information about employee's salaries, benefits, and unemployment insurance tax is noted. • An inventory is taken of stock, fixtures, and any other personal property that will be transferred by the sale and the seller executes a bill of sale, which transfers ownership of all personal property belonging to the business. • At the close of escrow, buyer and seller receive closing statements.

Review - Elements of the Sale of a Business

•Lease or Real Property•Inventory•GoodwillSome buyers are looking for working farms, others for recreational ranches or horse property.

Review - Approved Activities for Licensees

•Sales of new mobilehomes are restricted to specially licensed dealers. •A real estate agent may sell any mobilehome that has been classified as real property. It may be listed and sold in the same manner as any other residence. •A real estate agent may sell any mobilehome that has been registered with HCD and placed in an established mobilehome park. •All sales must be reported by the licensee to the Department of Housing and Community Development (HCD) within 10 days.

Review - Codes and Laws Involved in the Sale of a Business

•Uniform Commercial Code•Bulk Transfer Act•California Sales and Use Tax Law•Alcoholic Beverage Control Act