Q: “What are the advantages of residents owning their park?”
A: There are two main advantages:
When mobilehome owners buy their park, they take charge of their futures. They protect their investment in an important asset: their homes. They protect themselves from rising rents. Their monthly payments become more stable. They no longer rely on local governments to manage their rents through rent control laws.
Another important advantage is control. When residents own their park, they control its management and rules. They decide which capital improvements are necessary. They no longer rely on a landlord, whose main concern may be profit rather than the welfare of those who live in the park.
Some other important advantages:
Increase in home values: Mobilehomes located in “resident-owned” parks are worth more than those in “space-rent” parks. Homebuyers are willing to pay more for a mobilehome when they get an ownership interest in the park.
Homes in the park become more marketable: Mobilehome buyers today would prefer to buy in a park where they can get an ownership interest in the park. So, a resident-owned park is a more attractive place for homebuyers to invest.
Stabilized monthly payments: “Investor” park owners are interested in seeing rents increase, so that their profits increase. When the residents own the park, monthly payments remain stable and affordable over the long-term.
Control of the park is in the hands of the residents, not an outside investor: You have a vested interest in how your park is run. Through an elected Board of Directors, the residents would control the park. They would decide how to maintain and repair park facilities. Homeowners choose park rules and regulations, and decide how these should be enforced.
“For Profit” operation changes to “non-profit” operation: Since the park is owned and operated by the residents, any “profits” are put back into the park for repairs and improvements to park grounds and facilities.
No increase in property taxes at time of purchase: When residents buy their park as a non-profit corporation, the existing tax basis “carries over.” Their property taxes remain the same as the current owners. If a private investor buys the park from its current owner, property taxes will go up. In most cities and counties, the new owner can pass 100% of these increased taxes on to the residents.
Increased sense of “community:” When a park is resident-owned, all the homeowners have a stake in keeping the park beautiful and functional. The security of ownership motivates residents to maintain and improve their homes.
Q: “What are the risks if residents don’t buy their park?”
A: The owner could sell the park to another “private” investor. This might be an individual or a corporation. If this happens, the park will most likely not be offered for sale for at least another 5 years – perhaps even 7 to 10 years. At that point, it might be so valuable residents would not be able to buy it. Appreciation in the park’s value could put it economically out of reach.
There is the risk that a new owner might not be as satisfactory as your current one. The worst case would be a large corporate buyer, interested only in maximizing profits and not in maintaining the park.
Q: “What is the most common form of “resident park” ownership?”
A: There are various forms of ownership found in California mobilehome parks. The most common is ownership by a non-profit corporation, made up entirely of homeowners in the park.
In a “non-profit mutual benefit corporation,” the park residents incorporate their homeowner association under California Law, and then obtain permission from the Department of Corporations to issue shares. The members own an interest (one share) in the association, while the association holds title to the park. Members occupy a space in the park, and pay their association a monthly homeowner’s fee. Those who do not purchase a membership can continue to rent their space in the park.
Because of its relative simplicity and shorter time frames, this is the most popular type of conversion in California. More than 80% of the resident-owned parks in California use “co-op” ownership.
A “subdivision” is different from the “co-op” described above. In a subdivision, homeowners have a separate interest in their lot and an undivided interest in the “common areas” of the property. These projects must comply with California Subdivision Law. They can take a year or more to complete. Often, buyers and sellers want a quicker conversion process (e.g., the “co-op method”). The up-front costs of subdivision are generally quite high. Ideally, each homeowner would have the cash to buy their lot, or qualify to finance buying their lot. This can be a problem for senior or low-income residents. Subdividing tends to divide parks into the “haves” and the “have nots.” It can force lower-income residents to leave the park. In many cases, it is simply a method park owners use to circumvent rent control laws.
Q: Tell us who we can contact for assistance purchasing our park.
- Actually there are many individuals and groups across the State of California who provide such services. Some are attorneys who assist park owners or park residents, some are attorneys who work for both. Others are financiers. If you are interested in purchasing your park, we suggest you form a small group of perhaps six residents. Then call us and we will provide additional information.
Purchasing your park does take time and effort. DO NOT RUSH. Do your homework. There is no one proven method that is best when purchasing your park. Beware of those who make promises that seem to good to be true—they probably are.
CoMO-CAL has written about a park in Aptos that was recently purchased by it’s residents. This is an example how a purchase can benefit residents. We can give you contact information for those involved so you can check it out for yourself.