The following information pertains to
leases and the Mobilehome Residency Laws of California, and
as such, may or may not relate to similar situations in other
states.
Over the last number of years, there have been growing concerns
over short-term virus long-term leases. This article is therefore
presented to answer the questions of many mobile home owners.
A frequent complaint of mobile/manufactured home owners is that
their park management has dictated that they may only remain
in their present mobile/manufactured home space by signing a
long-term lease of more than one year in duration. However,
mobile/manufactured home owners have an absolute right under
the California Mobilehome Residency Law, Civil Code #798.18
and 798.17(c)., to demand a short-term lease of up to twelve
months with the same terms as that being offered in the long-term
lease, or they may remain in the park on a month-to-month basis
without any new lease at all. Despite the law being on their
side, home owners, nevertheless, oftentimes still yield to park
management's threats and sign such leases without great regard
as to the consequences.
The
fact is that there are very few advantages that the homeowner
gets out of signing a long-term lease. The greatest anticipated
advantage is the oftentimes mistaken belief that future rental
increases will be clearly defined and that the mobile/manufactured
home owner can plan his or her future rental costs accordingly.
The unfortunate fact is that mobile/manufactured home leases
most often contain many hidden factors, which enter into future
rental increase calculations. Thus, the home owner has not real
way of knowing what his future rent is likely to be during the
remaining term of the lease.
Almost
all mobile/manufactured home leases contain provisions for pass-throughs.
As many of you are already aware, pass-throughs have been, and
continue to be, the hotly contested subject in the mobile/manufactured
home industry. Nevertheless, in the Karen versus Ocean Aire
decision, it was clearly established that local ordinances which
contain provisions allowing pass-throughs have been deemed to
be unconstitutional. [Since that time,
only the wording of pass-throughs has changed. It is now called
something to the nature of additional rent, but the procedure
and practice is exactly the same - it is still a pass-through.]
In
addition, future rental increases are often dependent upon costs-of-living
adjustments called CPI (Consumer Price Index) increases. Such
CPI increases are usually in addition to pass-throughs. There
are also various other means by which park owners try to extract
additional rents. Regardless of what label is put on them, however,
they add to the home owner's future monthly costs.
The
main reason why many home owners sign a lease is because, in
the alternative, the Mobilehome Residency Law allows a park
owner to increase rents by merely giving ninety days notice
to that effect. Thus, theoretically at least, a mobile/manufactured
home owner can be faced with continuous increases, so long as
such notice is given. When asked to sign a long-term lease,
perhaps the solution is, therefore, to demand, pursuant to your
rights under the Mobilehome Residency Law, that the lease be
for a term of twelve months or less. At least the rent is then
locked in for a period of that short-term lease.
Park
owners, of course, push very hard to have their residents sign
long-term leases of more than one year. For one thing, in rent
controlled areas, the mobile/manufactured home owner loses the
protection of any local or county rent control ordinance by
doing so. Of equal importance to the park owner is that he is
thereby assured of stable income over the foreseeable future.
Such stability, provided by a continuing stream of income, results
in higher appraisal values, which in turn creates a higher purchase
price for the park or better refinancing.
The
important thing to remember, is that when signing a long-term
lease, the home owner is signing a contract which commits him
or her to make rental payments over a period of the term of
the lease. It behooves the home owner, before signing such a
lease to determine exactly what he or she is committing him
or herself to. Sometimes this can easily be done by simply projecting
the presumed CPI increases over the term of the lease to determine
what future rent increase will be made. Most often, however,
such leases contain a great many subletics which may have different
meanings depending upon how an "i" is dotted or a "t" is crossed.
When a home owner understands that the lease is likely to be
the biggest single financing commitment that he or she may make
in his entire lifetime, then he or she may finally understand
the importance of that seemingly small act of signing a lease.
The
best thing you can do, is to have a knowledgeable attorney review
any lease that is offered to you. Under the Mobilehome Residency
Law, you must be provided thirty days to review a lease, or
hire an attorney to do so, before you have to sign it. This
can often be done by merely having a group of home owner's band
together to collectively retain an attorney to review the lease.
Although no one is eager to pay attorney's fees, hiring a lawyer
to review the lease is probably the best insurance you could
obtain to prevent the financial disaster which may result from
signing a bad lease.
Telling
a judge months or years after you have signed such a lease that
you did not understand some of its provisions just will not
wash. Judges have little patience or sympathy for anyone foolish
enough to sign a lease or contract without reading and understanding
it provisions. The first question that you will likely be asked
is whether you retained anyone to advise you before having signed
the lease. In the even that the answer is "no", a judge will
most likely tell you that it was your privilege to do so and
that by failing to obtain such council and advice, you have
no one to blame but yourself. The net result is that you may
be compelled to live with a bad lease. Thus, when it comes to
leases, an ounce of prevention is certainly worth many pounds
of cure.
Any
lease over twelve (12) months is considered by law to be a long-term
lease. However, there is nothing in the law that says you have
to sign a lease at all! Check the Civil Code for yourself. (Your
park owner is required by law to give you an updated copy of
the Civil Code the first of each year.) See Sections 798.15,
798.17 (a. though h.), and 798.18 (a. through c.).
All
leases must, also by law, give you the option of a "one year
or less" provision and even a "month-to-month" tendency. If
a lease is presented to you that does not have these options,
it is illegal! If you do sign a lease for more than one year,
you also lose the protection of any current or possible future
rent stabilization ordinances.
(This
article addresses lease problems for informational purposes
and renders no legal advice. Its comments and opinions are those
of the author only - Kurt Delsack. If you have a legal problem,
it is strongly recommended you seek out and get advice from
attorneys that are experienced in the mobile home laws and leases.
Special appreciation naturally goes to Kurt Delsack, Attorney
at Law, for this version of his contributed information, along
with his help.)
Comments by John Sisker: Keep in mind that many times, long-term
leases will also be adverse to Resident Park Purchase plans.
Also, when reference is made to having a "knowledgeable" attorney
review such a lease, it should be noted that "knowledgeable"
in this case also refers to an attorney well versed with the
California Mobilehome Residency Law, and not simply contract
law. Having experienced council review a lease from the perspective
of mobile/manufactured home ownership, will afford you beneficial
advice far beyond whether such a contract is simply legal. And
finally, even though reference has been made to short-term leases
and month-to-month tendencies, as well as long-term leases,
which one is actually best for you is based on many factors;
including your current and past rent structure, park ownership/management,
city zoning/ordinances, etc. Hence the advice of a knowledgeable
attorney is highly recommended. For each option does have its
own particular pros and cons and will certainly have long range
effects.
Disclosure...
