Why do park owners own mobile home parks? Let’s face reality, owning a park is a business. What is the goal of park owners? To maximize their profits by increasing income and decreasing expenses. It doesn’t take a nuclear scientist to figure out how to do this. In this article we will analyze how they increase income by a) Raising Rents, b) Circumventing Rent Control, c) “Upgrading the Park” and d) Eviction
- INCREASE RENTS in Parks Without Rent Control
Let’s first look at increasing rents in a park without rent control. No rent control means just that, the landowner CAN increase rents at will, without any justification. And this IS happening all across the state of California. Some landlords have raised the rents so high that residents have been forced out and had to leave their homes behind – WITHOUT ANY COMPENSATION. You might ask: “How can this happen?” It is simple. When a space rent is increased to a level “higher” than the market will bear, the mobile home on that space is essentially worthless. It has NO VALUE. This means the home owner CAN’T SELL IT. And the home owner is forced to pay the high rent. This often results in the home owner simply leaving the park and ownership of the home reverting to the park. By charging high rents, the park has essentially STOLEN the mobile home. So what does the park do with this windfall? They probably rent it out – some in my area are going for $1800.00 per month.
So how has the park owner benefited?
- The Park Owner has increased his rental income, i.e. more money in his pocket.
- In some cases he has gotten a residents mobile home, without having to pay for it – a “windfall profit.”
- This results in even more income when the park owner rents out the newly acquired mobile home.
- And he has increased the value of his investment, the park, by increasing profits. When a rent is increased by $100.00/month, the value of the park could increase by $10,000 or more.
If you question whether or not this is actually happening, just look at Blue Star Mobile Home Park in Sylmar. The 156 spaces in the County of L.A. are not under rent control and Sierra Corporate Management, Inc. has given them notice their rents will be raised by $129.00 by April 1, 2006. Another park here is charging rents up to $1200.00 per month, an average of about $600.00 per month higher than comparable spaces in the area. What happens? Residents are leaving and the park is getting their homes.
Where do these extra profits come from? They come from your pocket! And from mine!
You can lose your mobilehome. You will lose equity in your home. And you will pay higher rents.
INCREASE RENTS In Parks With Rent Control
Next, let’s look at the strategy to increase rents in a park with rent control. This is a little trickier for the park owner. In Los Angeles we have a rent control ordinance. A space IS under rent control until it is “decontrolled.” What does this mean? Simply that there are situations when a space is no longer under rent control and the landowner may increase the space rent to whatever level the market will bear or higher. This knowledge is important to the landowner’s strategy. So what are the situations?
#1 Strategy: Increase rents by getting around rent control – offer only long term rental agreements.
This approach is often used and there are several methods to get around rent control. For example, a buyer comes into a rental park to purchase a home. While the Mobilehome Residency Law protects homeowners,” it does not protect prospective tenants or buyers coming “off the street,” i.e. someone who does not yet have tenancy under a rental agreement. (798.9: Definition of Homeowner. “homeowner” is a person who has a tenancy in a mobilehome park under a rental agreement.)
So what does this mean? The buyer is only offered a long term rental agreement, which means he is NO LONGER under rent control (anything over 12 months is NOT under rent control). This does and is happening! And it means that the park CONTROLS rent increases, not the City under their rent control ordinance. This means the “buyer” will usually end up paying higher rents, resulting in more income for the park owner. (That’s why this is happening, that’s one goal of long term rental agreements).
#2 Strategy: Increase rents by “decontrolling” a space – Remove a mobilehome.
When the mobile home is moved off the space (except in the case where a resident is simply replacing his home with a newer home), the rent control ordinance does not apply. This means the space is decontrolled,” allowing the park owner to increase that space rent at will – to any level. Once the space rent is increased and a new manufactured home is installed, rent control is again active (but at the higher rent level).
So what are the strategies to remove a mobilehome?
- UPGRADE THE PARK – HIDE BEHIND THE MOBILEHOME RESIDENCY LAW:
One method is to send the park residents a newsletter explaining that the park is going to upgrade, i.e. remove the older mobile homes. For instance one park recently wrote “the whole look of the park is what keeps the value of our homes up. Yes, we are replacing homes in the Park which are older than 1971-1974 as they come up for sale as allowed per the MRL and Park Agreements.”
Likewise, when a home comes up for sale, tell the seller that he can’t sell and must remove his home. Or tell the seller he can sell, but the buyer can not and must remove the mobilehome.
Removal of a mobile home has several benefits for the park owner.
Space rent can be increased at will – again more money in the park owner’s pocket.
Working (cut a deal) with a Manufactured Home dealer or builder to bring in new mobile homes and charge preminum rates for their purchase. The park owner shares in the profit from the sale of a new mobile home.
The value of his investment is again increased by upgrading his park and increasing his profits.
- EVICTION – SOMETIMES BY ANY MEANS
- A) The park will try to evict a resident, especially if they are breaking a Rule or Regulation. Give the resident a seven day notice, followed by a very threatening 60 day notice from the park attorney (see below for an example) to terminate their tenancy. If the resident does not understand the law (and who does?) this probably will result in the resident being extremely agitated, fearful, and intimidated. And where is a resident to go to get help? Most of us have no clue who to turn to in this situation. (But now there is CoMO-LAC!). What if the resident is not breaking a R&R? Then the park can simply pick any R&R that may apply and ignore the residents attempts (letters, phone calls, and other pleas) to explain that rule isn’t being violated.
- B) Evict a resident for non-payment of rent. This is a slam dunk for parks. Remember the resident in Carson who lost his home when he failed to pay his rent, received a 3 day notice to pay or quit, didn’t pay in the three days, and eventually lost his home.
So how does eviction increase rents? The Rent Stabilization Ordinance in Los Angeles states (commonly asked questions #12) that “the rent on a mobilehome site is decontrolled when a tenant is evicted for non-payment of rent or for violating the terms of his or her rental agreement.” The park can raise the space rent at will, without regard to the Ordinance. Simple as that.
Other benefits: The park owner may benefit in other ways when a resident is evicted.
THE FOLLOWING NOTICE IS BEING GIVEN TO RESIDENTS ACROSS THE STATE
SEVEN DAY NOTICE—SIXTY DAY NOTICE TO TERMINATE
IF YOU DO NOT COMPLY, MY CIENT IS ENTILED TO SERVE YOU WITH A SIXTY (60) DAY NOTICE TERMINATING YOUR TENANY OR TO TAKE OTHER ACTION AS PERMITED BY THE MOBILEHOME RESIDENCY LAW.
In order to remove any questions or misunderstandings which you have relative to our intended action, I have included the following information regarding the basic effects of the Sixty (60) Day Notice in order to assist you in making an informed decision as to your future conduct.
Therefore, I must stress that your continuing course of nonconforming conduct and behavior must immediately cease. My client shall not tolerate any further violations either now or at any time in the future. If any further such violations of the provisions occur, my client will be left with no alternative but to terminate your tenancy in accordance with the applicable provisions of the California Civil Code and your Rental Agreement and Rules and Regulations.
The basic effects of the Sixty (60) day notice are as follows:
Your tenancy in the Park is terminated on the date this Notice is served on you, not sixty (60) days later. In other words, the sixty (60) days are provided for the purpose of giving you a reasonable time in which to relocate or sell your coach, subject to the Civil Code Section 798.73, and not to make up your mind as to whether you wish to remedy these violations.
Both the California Civil Code section relating to mobilehome parks and the Park’s Rental Agreement provide that you will be obligated to pay all legal fees and costs incurred by my client in terminating your tenancy. Typically, such fees and costs are very substantial; therefore, as I am confident my client will prevail, I urge you to begin now to put aside sufficient monies in order that you can pay these sums to my client. In this regard, I would estimate that the legal fees and costs will amount to several thousands of dollars. As you can understand, this is a high price to pay for these continued violations.
Accordingly the Management of this park hereby gives you notice of the above-referenced-to violations. You have seven (7) days after receipt of this Notice to remedy the above-specified violations. If you do not comply and remedy the above-specified violations within that time, the notice of termination of your tenancy in the park may be issued to you, and you will be required within sixty (60) days thereafter, as described above, to move from the space you presently occupy.
WHAT WOULD YOU DO?
What would you do if you received such a letter from the park attorney? I’d be scared to death at the prospect of losing of my mobilehome or at the very least “thousands of dollars” in legal fees and costs. In some cases the resident simply gives up, does nothing, takes no action, and eventually is evicted from the park. The park may offer some compensation, perhaps a few thousand dollars, if the resident walks away. In other cases the resident hires an attorney and fights for their rights.
In any case, the park wins. At least the park will have shown you that IT IS THE BOSS. That you are at the park’s mercy. And this helps keep you and other residents “in line.” This contributes to the fear and intimidation felt by residents. When the park knows you have, in fact, violated no rule, they will usually withdraw and leave you alone. They will not want to incur additional attorneys fees, especially when they know they do not have a case for eviction. But you MUST stand up to them, especially if you have broken no rule.
How else does the park benefit from such action? The park may in fact get you to leave, without any compensation for your home. Because you were “evicted” the park can then raise the space rent at will. The park could rent out your mobilehome, or remove it and put in a new manufactured home, again reaping the benefits.
WHAT CAN YOU DO TO PROTECT YOURSELF?
Believe that this can happen to you. Just ask Lucy Fried in Tradewinds (Edwards Air Force Base) or Anna Mathis in Fairway Estates (North Highlands, near Sacramento).
Do not believe everything the park tells you. Question, Question, Question!
Get assistance, whether from GSMOL, CoMO-LAC, another advocate organization or an attorney. Know that when you get a seven (7) day notice, the park may not just want you to conform to the Rules and Regulations, this may be their strategy to evict you and get your home.
Do not DO NOTHING. Notices are legal documents, with legal consequences. When in doubt, get the advice from a trusted attorney. CoMO-LAC can help you find one. Spend the $15.00 to join CoMO-LAC if you are not already a member. Where else can you get such important information – not in any publication we know. We are here for you, but we can only help you if you help yourself first and join.
MORE STRATEGIES USED BY PARKS TO GET YOUR MONEY
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