Williams
Zinman &
Parham P.C.
Blog--2016
Michael A. Parham

 

            

 

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INTRODUCTION     

All views expressed in this blog are mine alone and do not necessarily represent those of any client or other organization. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

Copyright (c) 2016 by Michael A. Parham. All rights reserved.


December 14, 2016

Manufactured Home Financing.I was contacted by the head of the FHFA rule making function yesterday and told that the final rule on maanufactured home financing and other "duty to serve" subjects had been published. He sent me an e-mail with links to the rule and a press release, and advised me that my comments on behalf of MHCA comments were basically incorporated in the rule and had been very helpful in FHFA's finalizing it.

FHFA regulates Fannie Mae and Freddie Mac which underwrite most residential financing in this country.

Essentially he advised that FHFA had changed its prior position and approved chattel financing for manufactured homes ON A PILOT OR TEST BASIS. He also advised that the pilot will not include pre-HUD homes but that the preamble to the rule will allow them to be incorporated in the future. We are hopeful that Arizona will be the location of this pilot program. Here is a link to the final rule \. It is 241 pages long. Here are the relevant points:
 
FHFA Comments on the New Rule:

a. Eligible Activities—§ 1282.33(b), page 35:

"As further discussed below, after extensive research and consideration of the comments received on chattel lending, FHFA has also included Enterprise support for chattel loans as a Regulatory Activity in the final rule."

Page 36:

"Some commenters favored Duty to Serve credit for Enterprise support for financing of pre-HUD Code manufactured homes (i.e., those built prior to June 15, 1976). A nonprofit organization focused on rural housing estimated that one-fifth of rural manufactured homes are pre-HUD Code mobile homes.20 In joint comment letters, two manufactured housing trade associations noted that in “55 and over” manufactured housing communities, some residents are low-, fixed-income seniors with no source of financing for their pre-HUD Code mobile homes. They further noted that in "all age communities," pre-HUD Code home occupants are often low-income and work “blue collar” jobs or depend on government assistance. . . FHFA acknowledges the financing needs for owners of pre-HUD Code homes and may reconsider the matter in a future rulemaking if appropriate methodologies can be found for assuring the structural integrity of the homes."

Page 39:

"After considering the comments, FHFA has decided to establish a new Regulatory Activity in § 1282.33(c)(2) of the final rule for Enterprise support for chattel loans. While FHFA expects the Enterprises to also serve manufactured homes titled as real estate, which include borrower protections and is discussed in greater detail in the next section, FHFA has also determined that the pursuing pilot initiatives, in safe and sound manner, that serve very low-, low-, and moderate-income households who live in manufactured homes titled as chattel, should be eligible for Duty to Serve credit."

Page 40:

"FHFA makes this change in the final rule having considered the feedback from many commenters in support of providing the Enterprises with Duty to Serve credit for chattel-titled lending. FHFA also makes this change having considered the potential for the Enterprises’ to improve liquidity and access to credit in the manufactured housing market generally and for very low-, low-, and moderate-income households. For example the percentage of new manufactured homes titled as chattel has increased from 67 percent in 2009 to 80 percent in 2015. Additionally, efforts to expand the real estate titled share of the market have faced some difficulties.  FHFA also makes this change having considered the potential for the Enterprises to improve the chattel lending market through standardization that includes borrower protections".

Page 41:

"Review of Enterprise Chattel Loan Pilot Initiatives. Initially, only approved chattel loan pilot initiatives included in an Enterprise’s Plan would be eligible for Duty to Serve credit".

Page 44:

"Financial Performance of Chattel Loans. . . . As the Enterprises develop information about chattel loan performance, FHFA expects that this would impact Enterprise decisions on how to appropriately price these loans. On this point, a trade association for the manufactured housing industry suggested charging appropriate loan level price adjustments and guarantee fees as possible conditions for chattel initiatives by the Enterprises".

Page 45:

"Risk Mitigants. In designing a chattel loan pilot initiative, FHFA would also expect the Enterprises to incorporate appropriate risk mitigants into the pilot design. In addition to limiting the volume or duration of the chattel loan pilot initiative, one type of risk mitigant could be to tighten underwriting requirements for credit scores, down payments, loan-to-value ratios (LTV), debt-to-income ratios, and borrower reserves". 

Page 46:

"Borrower and Tenant Protections. Before approving any chattel loan purchases by the Enterprises, FHFA would also expect the Enterprises to require meaningful borrower and tenant protections beyond those required under current law. . . . A number of manufactured housing trade associations commented in favor of adding these protections for chattel loan borrowers. . . . FHFA is also concerned about a lack of tenant protections in the pad leases for chattel borrowers whose homes are located on leased land". 

Page 48:

"Request for Information (RFI). In light of the many considerations that the Enterprises would need to make in designing and proposing a chattel pilot initiative, FHFA has determined to issue an RFI to the public on what an Enterprise should include in a chattel pilot initiative, if an Enterprise decides to pursue a pilot initiative. FHFA has determined that the RFI will conclude in time for the Enterprises to consider the input from the RFI in any chattel pilot initiative that may be included in an Enterprise’s draft Plan".

The New Rule:

Page 215:

§ 1282.33 Manufactured housing market. . . .

(a) Duty in general. Each Enterprise must develop loan products and flexible underwriting guidelines to facilitate a secondary market to preserve housing affordable to very low-, low-, and moderate-income families under eligible housing programs or activities. Enterprise activities under this section must serve each such income group in the year for which the Enterprise is evaluated and rated. 

(b) Eligible activities. Enterprise activities eligible to be included in an Underserved Markets Plan for the manufactured housing market are activities that facilitate a secondary market for mortgages on residential properties for very low-, low-, or moderate-income families consisting of manufactured homes titled as real property or personal property; and manufactured housing communities.

(c) Regulatory Activities. Enterprise activities related to the following are eligible to receive duty to serve credit under the manufactured housing market: 

     (1) Manufactured homes titled as real property. Mortgages on manufactured homes titled as real property; 

     (2) Chattel. Loans on manufactured homes titled as personal property, including both pilot and ongoing initiatives; . . . 


December 10, 2016

New Court Eviction Rule Update. This past Friday I conducted a continuing legal education seminar on new developments in court eviction rules of procedure for other attorneys. A number of attorneys from landlord-tenant firms in the Phoenix area attended as did a couple of judges.

A new rule set to go into effect January 1 on a one year test basis will allow parties in eviction cases to force a change of judge in individual cases without cause. It is feared that this will allow tenants to slow down eviction cases and buy time to continue living in rental properties rent free. It was for this reason that the rental housing industry opposed this change.

A pending new rule would force attorneys and landlords to use specific forms developed by the court administrative bureaucracy to give termination notices to tenants and to file eviction cases. The short term effect of this also will be to slow case processing down. In an industry where time is money, the harm it will cause is obvious.

In the bigger picture this proposed rule would constitute a power grab by the courts since preparation of these documents is now handled by private landlords and their lawyers.

These changes are being lobbied by special interest groups representing tenant and consumer interests, who seem to have accumulated a lot of influence within the judicial system.

I have been leading the fight against these changes for many years but it looks like other eviction lawyers and landlord groups may get more involved given where we now are.


December 1, 2016

Christmas Decorations. The holiday season is upon us. This used to be called the Christmas season. But with the broadening of religious discrimination laws and interpretations, the way we observe this happy time of year has changed--especially in the rental housing industry.

When decorating public areas of housing communities, be aware that some folks may claim that religious themed decorations make them feel unwelcome since their religion does not recognize Christmas.

A few years ago HUD determined that Christmas trees, Santa Claus and other such decorations are not of a religious nature. The use of these decorations should not be a violation of the Fair Housing Act, no matter how prevalent they are.

Nativity scenes, crosses, bibles, "happy birthday Jesus" signs, Stars of David, are all definitely religious in nature rather than secular, and should be avoided in public areas of a housing facility.

The appearance of a property to the public is the responsibility of management. If the residents decorate the lobby and front door, management should control the type of decorations used.

If decorations are permitted by management to be placed on individual resident homes, however, the resident should be able to choose the decorations to use, as long as those decorations are within management's rules. In other words, the concerns management should appropriately have over holiday decorations in common areas and the office generally do not apply to residents' homes.

In summary, have a good time during the holidays. Make the community festive and welcoming, but don’t make anyone feel unwelcome or uncomfortable due to religion.


November 28, 2016

Greentree and Other Lienholders.  Greentree finances more homes in parks than anyone since they bought up many other lenders over the years.  That means they have also got more repossessions than anyone else.

There are some major changes that seem to be taking place in their repossession operation locally.  The most significant is that they apparently are simply auctioning off homes instead of giving parks a chance to buy them directly.  What this means is that parks may find third party buyers showing up without warning to remove the home after agreeing to out bid the park.  Sometimes the buyer will just pull the home out; other times he will try to flip the home and extort a higher offer from the park.

Landlords need to be diligent about identifying abandoned homes and immediately contacting lienholders to see if they can make a direct purchase. Of course parks should already be giving abandonment notices to lienholders anyway.

If Greentree or any other lienholder wants to get a free ride on rent or defer paying it until the home is sold, and the park is interested in buying it to keep it there, before cutting them any slack, get a commitment from them to give you a chance to match the high bid in writing.  Otherwise cut them no slack and immediatedly initiate a landlord lien sale. If the lienholder is insistent on just auctioning the home, be sure (1) that the lienholder knows the amount of rent and utilities due and that the home cannot be removed until it is paid; and (2) that the park knows when and where the auction will be so that it can show up and bid.

Be aware that one infamous poacher is not only buying homes at these sales but is actually teaching classes for other poachers on this subject. Also be aware that like other auctions, when a group of regulars (such as poachers) see a newbie show up at a sale, they will often run up the bid in excess of the market value of the home to teach the newbie a lesson. before going to such a sale, be sure you have a maximum price in mind that you will bid up to and do not exceed it.

Dealers Violating 2012 Escrow Law. I last wrote about this in 2013. But the problem persists.

Some dealers who have failed to use title companies when they were required to do so by the third party escrow law that went into effect in 2012 have received Citations and Complaints from the OMH of the Housing Department. 

These cases are usually resolved through Consent Agreements and Orders where the dealer has been required to pay a fine and admit to the violations. 

The relevant statute authorizes the Department to charge up to $1,000.00 per violation. The OMH has offered Consent Agreements that usually require a fine of $250.00 per transaction or thereabouts.  Of course it is up to the dealer to decide whether to accept a proposed Consent Agreement.

The OMH policy is to set the matter for an administrative disciplinary hearing if the dealer does not enter into a Consent Agreement.  It is also standard procedure for it to ask for larger fines in administrative hearings. 

The OMH will not offer a Consent Agreement until the dealer's Answer to the Citation and Complaint is received.  Of course the Answer is expected to admit the violations.

I don’t have a lot of sympathy with dealers caught up in this. I have been writing about and teaching this for several years. Here are two articles dealing with it:

http://www.michaelparhamlaw.citymax.com/page/page/4695892.htm#10.11.3

http://www.michaelparhamlaw.citymax.com/2012-2013_Articles.html#8/12-2

Dealers have got to keep informed on this business and read this website once in a while.  Articles have also been published by MHCA.  And when the law first went into effect Donna Grant with the Department sent a memo to every dealer in the state explaining it. You can read her letter in my December 7, 2013 post at this link.

Tenants Not Making Home Payments. A number of parks finance the sale of mobile homes to tenants.  Occasionally a tenant will be current on paying space rent but fall behind on the home payments.  Parks cannot file eviction cases against tenants current on rent but delinquent on home payments.  So what are they to do?

The financing contract (normally an installment sale agreement) identifies what the lender can do if payments fall behind.  Normally it requires that a notice of default be given and provides that if the payments are not then brought current the Lender can repossess the home.

If the home is vacant it can be repossessed by simply changing the locks and taking actual possession.  An affidavit of repossession is filed with the MVD to get title transferred to the Lender and a notice is sent to the tenant/borrower explaining what will happen to the home (either it will be sold at a public sale or, if less than 60% of the purchase price has been paid, the Lender will elect to keep the home and release the debt).

If the home is still occupied, it cannot be repossessed in that manner.  In that case a court action seeking an order that the tenant/borrower turn the home over so that it can be repossessed and disposed of should be filed.  These cases normally need to be filed in Superior Court.

The cases move somewhat slower than evictions but there is no alternative unless the Lender just wants to see his investment go up in smoke.

We handle many such cases for both commercial lenders and parks.  Often a default notice from our office gets the tenant/borrower's attention and the payments are brought current.  But occasionally a suit is necessary.  Most such cases in Superior Court can be completed for about $1,000.  

A key is to not let payments get so far behind that the tenant/borrower simply can no longer come up with the money.

Finally a bankruptcy filing will stop any repossession activity and require the lender to apply to the Bankruptcy Court for a lifting of the automatic stay enabling the Lender to recover possession of the home.  That can get expensive.  Often prompt action when the loan first goes into default avoids such bankruptcy filings.

Tenants Dying and Owning Homes in Parks. Most of the time these estates will not be estates probated and instead the home will be cleaned out by relatives and simply left in the park.  In almost all cases the park will be forced to treat the home as abandoned and to pursue a landlord lien sale remedy. 

Many parks wait several months to give the family a chance to dispose of the home. In many cases they delay action based on promises the home is tied up in probate or similar stories. Those promises are usually false.

Any park with a home in the name of a deceased person where the rent is more than a month in arrears should initiate a landlord lien sale to get it disposed of.  There is a built in 72 day waiting period before the sale can be completed meaning it can always be canceled if the rent gets paid.  But if it doesn't (as is usually the case) the sale can be completed before too much rent accrues and is lost.


November 21, 2016

Lead Based Paint issues. The November-December issue of the MHCA newsletter reported on a case in California where a real estate seller was fined a substantial amount because he failed to comply with EPA regulations concerning lead based paint disclosures. 

We tend to think of these disclosures being required when an older site built house is being sold. But the scope of the requirement goes beyond site built houses.

Federal law requires that before being obligated under a contract to buy or lease housing built prior to 1978, buyers or prospective tenants must receive the following from the home seller or lessor:

1. An EPA-approved information pamphlet on identifying and controlling lead-based paint hazards titled Protect Your Family From Lead In Your Home.

2. Any known information concerning the presence of lead-based paint or lead-based paint hazards in the home or building.

3. Sample Seller’s or Lessor's Disclosure of Information.

4. An attachment to the contract, or language inserted in the contract, that includes a "Lead Warning Statement" and confirms that the seller has complied with all notification requirements.

​This applies to sales and rentals of mobile homes and park models manufactured prior to 1978. Samples of these forms and the brochure can be downloaded from the EPA website at this link.


November 15, 2016

Eviction Rules Comments. MHCA submitted formal comments on a proposed court rule making it more difficult for landlords to evict tenants on September 23. MHCA was joined in submitting comments by the AMA and the Arizona Association of Realtors among others. The backers of the proposal were given until November 4 to "tweak" it before it went to the state Supreme Court which will decide what to do with it.

But the proponents (a high profile committee composed of judges and legal aid affiliated lawyers) missed that deadline, instead waiting until November 14 to file a "Reply" to all comments received. This Reply didn't just respond to the comments received; it rewrote the proposed rule and the forms that accompanied it. It appears they did so in the hope that no further comments would be allowed criticizing their changes.

This is in effect a new rule proposal and new forms, and they should be subject to the same public comment as any other such proposal. So MHCA once again filed an objection, arguing that the reply rewrote the whole proposal and the entire process should start over.

It is disheartening to see Supreme Court committees trying to make end runs around the Court's own procedures for changing Court rules. The notion of winning at any cost seems to have taken hold at the highest levels of our justice system, at least in this area.

It seems the ony way to control these awful impulses is by way of legislation limiting the authority of the courts to act in these areas. Look for a bill doing that to be introduced in the upcoming legislative session.


November 9, 2016

2016 Election Results. Trump won the presidential election. This has a couple of consequences to the MHC industry.

     1. Immigration policies are going to change. We do not know how or when but change is undeniable. It would be a mistake to make any changes now in how fair housing laws are honored. Parks jumping the gun and changing their policies in anticipation of forthcoming changes could find themselves in a lot of trouble under current fair housing law interpretation.

        2. The Supreme Court will remain basically conservative and not veer further to the left. There is one vacancy on the Court now and will probably be a second and perhaps more in the next four years. In addition there are almost 100 district and court of appeals vacancies that will be filled by the Trump administration. It stands to reason that conservative appointees will be more industry friendly that Clinton appointees.

In addition, Obama Care is likely going to be completely changed. Healthcare insurance once again will be turned on its head and everyone including the MHC industry will be affected by it.

In Arizona, it looks like the state legislature will remain in Republican hands. That is generally good for business. But a few key seats are still up in the air. One of these is being sought by a friend of our industry who introduced and supported our legislative program last year.

The marijuana initiative failed. This would have enabled anyone over 21 to possess (but not publicly use) marijuana. Similar initiatives passed in other states including California. Under a Trump administration the feds may enforce current federal law criminalizing possession of any marijuana. At least we won’t be involved in any clashes with the Feds over this though we will be if medical marijuana that we now allow is challenged.

Arizona passed an initiative increasing the state minimum wage. This increases the the state's current $8.05 per hour minimum wage during the next several years to:

$10 per hour in January.

$10.50 in 2018.

$11 in 2019.

$12 in 2020. 

Starting in 2021, the minimum wage will be adjusted annually based on cost of living.


November 4, 2016

Polling Places and the ADA. Election Day is fast approaching and on Tuesday, November 8, 2016 people will be going to the polls. Most polling places are provided by private facility operators including churches, union halls, apartments and mobile home parks.

But no good deed goes unpunished and that may be the case with polling places in private facilities.

The Americans with Disabilities Act (ADA) applies to places of public accommodation and requires them to meet minimum federal requirements for access by those with disabilities. It also requires government entities to make voting locations accessible to people with disabilities.

Many polling places are on private property and the owner is making them available out of a sense of civic duty. But that does not alter the fact that they must meet these same accessibility standards.

Public entities may ensure Election Day accessibility of a polling place by using low-cost temporary measures, such as portable ramps or door stops, rather than necessarily making permanent modifications to a facility. If temporary measures will not fix a barrier, however and the facility operator is unable to make a permanent modification to fix the barrier, then the facility may not normally be used as a polling place.

Minimum standards for accessible polling places include requirements for:

1.    Parking Areas

2.    Paths of Travel to the Polling Place

3.    Doorways, Hallways and Entrances

4.    Voting Areas

5.    Signage

6.    Ramps, Curb-Ramps and Slopes

7.    Elevators and Lifts

8.    Restrooms (if they are made available to voters on Election Day)

The U.S. Department of Justice publishes detailed requirements on how these standards must be met.


October 31, 2016

Maricopa County Assessor Problems Assessing Park Owned Homes. Here is a message I received from a Maricopa Couhty park operator last week. All parks should be on the look out for these problems.

"I encountered something worth sharing with you about the county assessor.

When the tax bills came out, I noticed that several park owned homes (vacant and not rented as we do not allow rentals) were reclassified as legal class 1.13 – Commercial at 18% assessment ratio instead of either legal class 3 – owner occupied or class 4 for residential rentals both at 10%.  Class 3 benefiting from the owner occupied tax break.

I called the Assessor’s office and spoke to a lady in the Mobile Home division who indicated that she had been there since January of this year.  She had noticed that many homes were reclassified to legal class 1 – commercial.  The reason she gave for that reclassification was that the ownership name was a business name such as an LLC name or corporation, or simply a park name.  Was this sneaky?  A way to collect additional tax revenues from the unsuspecting?  Kind of like Wells Fargo?

She agreed that this was not right, but that apparently orders coming from above had caused the changes.  She asked for a list the homes I had which were reclassified and she said she would change them to 4.1 – residential rental even though I told her that all our homes are owner occupied unless on the market to be sold.

Another thing that is now happening is that when a home is classified as 4.1 – Residential rental, even after the homes are sold to new owners, it is the responsibility of the new owners to present themselves at the assessor’s office to change the legal class 4 to legal class 3.  In the alternative the new owners can file a Notice of Claim (personal property) requesting the change to legal class 3, and must include a copy of their driver’s license showing their address, hopefully at the park where their home is located, and a utility bill to prove that it is their primary residence and mail the form to the assessor.   Then wait six weeks for the change to happen.

Besides, the assessor is just processing changes of ownership from April 2016.  The lady I spoke to said that in January 2016, they were 18 months behind.

This is creating havoc.  Tax bills are still coming to us instead of the new owners of the homes.  Those tax bills affected by the change to legal class 1 are almost double what they should be".


October 27, 2016

Park Sales. For years we have been involved in financing and refinancing of MHC's, mainly in reviewing loan documentation and preparing opinion letters of borrower's counsel for lenders. Since financing is usually a major issue when a park sells, this gets us into the sales transaction.

Often both the buyer and seller of the park are clients (a problem when you represent most major park operators in the state). When one of the parties to the transaction wants us to represent him, we respond that we cannot get involved unless the other party who is also a client consents to waiving the conflict of interest and agreeing to our representing the party requesting it. We can usually obtain these consents since most folks recognize that we know this business and are motivated to get a sale closed provided there are no legal problems. We are not "Deal Killers."

Beyond financing we review Purchase and Sale Agreements (PSA's) on behalf of the party we represent. Occasionally we prepare the PSA but usually it has been prepared by one of the brokers involved in the transaction.

PSA's on MHC's are very different from those involving apartments and other commercial properties, because MHC's are so unique. There are things to be concerned about in the sale of a MHC that are simply inapplicable to other commercial properties.

As an example, park sales often involve transfer of title to park owned homes or in the case of those being financed by the park, transfer of the loans being paid by the tenants buying homes to the park owner. It is amazing how many PSA's overlook this important element of the sale and the buyer is left to figure out what to do about these things that are still in the seller's name after escrow closes.

An extremely important area to consider in MHC PSA's involves due diligence items. PSA's will typically have a due diligence period during which the buyer gets a chance to review the park and its documentation and cancel the sale if dissatisfied. The PSA will condition the start of the due diligence period on receipt of certain items from the seller such as copies of all tenant leases, zoning information, rent rolls, litigation records, and a large variety of other items.

Because MHC's are so unique, the due diligence items required by the PSA if properly drafted are going to be very different from those in transactions involving other commercial properties. Over the years we have come up with punchlists of items the parties need to consider including as due diligence items in the PSA covering a MHC.

Purchase and sale of parks is an ongoing feature of this business, especially now. Parks are selling like hotcakes. To ensure you get the best deal possible it is important that your PSA be reviewed by knowledgeable legal counsel, and we stand ready to help.


October 17, 2016

Age 55 Community Secondary Age. Melissa conducted an MHCA manager training class in Tucson this past Friday. It was well received by the many attendees. We enjoy getting out of Phoenix every once in a while to meet managers in other areas--though we do have a lot of business in Tucson since we handle evictions there.

During the class a question was raised whether an Age 55+ Community without a secondary age limit can exclude children. Fiar housing laws allow parks to qualify for age 55+ status if they meet certain criteria. Fair housing laws however do NOT require these communities to exclude children. They merely allow it if the park meets the criteria. The three criteria are (1) 80 % of the occupied spaces must have a 55 or older resident; (2) the community must show an intent to be an age 55+ community; and (3) it must have effective age verification procedures and take periodic surveys to show it meets the 80% requirement.

Nothing here requires that it exclude children.  Under fair housing laws it is possible to meet this criteria and still allow children in residence. That does not make a whole lot of sense but that is the case. I suppose a park that did not mind having children live there but wanted to restrict them in ways that family parks cannot might give this a try but I don't know of any that do.

If a park wants to prevent children from living there, it must declare a secondary age restriction. The place to do this is in the statements of policy, by saaying something like the park requires at least one person to be over age 55 on each space, anbd all other residents to be over ___ years of age. It is up to the park to fill in that blank. Some say 18, effectively banning only children. Most however fill in a higher age limit to try and exclude adults of normal child bearing age.

But if there is no secondary age, there is no basis to refuse to rent to age 55+ applicants with children. Remember that ARS 33-1452 (F) provides:

F. A person who owns or operates a mobile home park shall not:

1. Deny rental unless the mobile home does not meet the requirements of the rules and regulations of the landlord and the statements of policy prescribed pursuant to section 33-1436 or the park resident or prospective resident cannot conform to park rules and regulations.

If the statements of policy do not have a secondary age restriction excluding children, then there is no basis under this statute to deny rental to an age 55 or over applicant who has children in the household. ARS 33-1436 says the park must declare whether it is an age 55+ community in the statements of policy so that is the place to identify the secondary age restriction.


October 12, 2016

Navy Day. Tomorrow is the birthday of the founding of the U.S. Navy, the branch in which I served many years ago. Go Navy!  

San Francisco Trump Poster. Here is a Trump poster now appearing in San Francisco. Note that the bite of the apple is actually a profile of the Donald.

                                   


October 4, 2016

Eviction Rules Comments. MHCA has submitted highly critical formal comments on a proposed court rule making it more difficult for landlords to evict tenants. MHCA was joined in submitting comments by the AMA and the Arizona Association of Realtors among others. Now the backers of the proposal get to "tweak" it before it goes to the state Supreme Court which will decide what to do with it.

Park Documentation. We are being buried in requests by park operators that want their rental documents revised and updated. I am not sure why this is happening, but judging from the age of what we are seeing, in most cases the documents we are reviewing have become obsolete over the years.

Evictions, Repossessions and Abandonments. Our firm is setting a new record for the number of evictions filed this year compared to past years. Evictions are up in large part because we have been attracting new large operator clients.

Meanwhile abandonments keep on coming as tenants abandon their homes, lose them to repossesions or die. Repossessions are a line of work we have tried to stay away from in the past, but given the lack of attorneys knowledgeable in the law governing MH repossessions, we have begun handling more and more of these.

This in turn means we have been looking at paperwork used by parks to sell and finance homes and we have found that much of it is either obsolete or simply deficient.


September 16, 2016

MHCA Comments Opposing Proposal for Supreme Court to Require Mandatory Eviction Forms. Here is a link to the unabridged comments of MHCA on this proposal. An abridged 20 page version was filed with the Court.


September 12, 2016

Website Temporarily Down. This site was temporarily down the last ten days and I was unable to post updates. Fortunately the host was able to fix the problem and I am now up and running.

Eviction Rules. The deadline for submission of comments on the proposal by the Courts to take over publishing notice to tenant forms is September 23. MHCA has me preparing comments and the AMA is also publishing its own. We hope to get other interested organizations to join in support of our position. I am working with the lobbyists for both organizations in an effort to get this coordinated. We also intentd to seek a legislative change to reel in what is rapidly becoming a rogue court system. I have drafted a bill that I think will get this done, though like most bills it will change a lot before passage if it gets passed.

Firearms.Many parks are complaining about tenants being intimidated by neighbors carrying guns in parks. This can be prevented, but the park must first adopt a rule prohibiting open carry of firearms. Otherwise it is okay since opencarry is generally legal in Arizona.

Buying Parks. Parks get bought and sold all of the time. But one thing that gets overlooked a lot is the transfer of titles to the Buyer when the sale includes park owned homes. And if it includes homes being paid fo by tenants over time, the security agreement giving rise to the lien on the home must also be transferred.

This is fairly easy to do before escrow on the park sale closes. But if it is overlooked it gets complicated and expensive, especially if the seller is not in a mood to be cooperative.


August 24, 2016

Water Damage. Monsoon season has arrived with a vengeance. Almost every day the Phoenix area is deluged with heavy rain as are Flagstaff and Tucson. But there can be special problems in desert areas.

In manufactured home communities, parks have been designed with county approved drainage plans. But tenants often install homes in violation of the drainage plan (either too high or too low). Or they may fail to grade the lot away from the home. Or they may not install skirting properly.

Whatever the reason, interference with drainage plans allows water to flow under the home and this throws everything out of level and support piers sink into what is now mud. Unchecked this can severely damage or even destroy a mobile home.

Or after homes are set up tenants may plant bushes or pour concrete patios or shed pads, setting them too high and these can divert water under their homes.

Despite the fact that they caused the problem, many of these tenants claim that the park is responsible for allowing water to flow under their homes. This is the season for drainage claims and parks must be alert to these and looking into the true cause of the problem.

Apartments and single family homes have their own problems. After sitting under the hot desert sun for 11 months, their properties are suddenly exposed to a great deal of rain. Roofs have been baking in the sun and things can dry out and crack.

Many times the problem is not apparent. The shingles or tile may look okay. But under that is an underlayment (roofing felt or tarpaper) that among other things is supposed to act as a water barrier. Like everything else there are various grades of these. Cheap ones will dry out in the sun and crack faster than better quality ones.

But whatever the grade, none will last forever. Drying and cracking will open the roof to water and as it seeps in a great deal of hidden damage can be caused. Eventually this will results in leaks into the rental unit and possibly mold problems that are expensive to fix.

Landlords need to take these complaints seriously and check on what is going on. Any water problem is just going to get worse over time if it is not promptly taken care of.


August 21, 2016

Doing the Right Thing. In late 1988 the Arizona Court of Appeals issued a decision that when a mobile home space lease expired and converted to a month to month tenancy, that new tenancy could be terminated or non-renewed without any cause at all. Among other things the decision stated that if good cause was needed to end a month to month tenancy, the tenant would in effect have a perpetual lease. The case was Lindquist v. Silver Saddle MHP, and the park's attorney was a local lawyer in Flagstaff.

We (MHCA) knew this decision was in error because we helped draft these statutes in 1987, what the intent was, and what the joint understanding of their meaning between AAMHO and MHCA was. Still, this decision would have been a great help to landlords in getting rid of problem tenants and generally in managing their parks.  

We were approached by Legal Aid and the tenants' attorney to help them get this decision set aside. We had the choice of taking advantage of an ill founded decision that really benefitted the industry and defending it, or acknowledging that it was wrong despite, being helpful and working to set it aside. This was an issue of morality and integrity versus opportunism.

For years MHCA had prided itself on its reputation of honor and integrity as well as effective representation of the MHC industry. But this was a tough call. However we finally decided to do the right thing. We joined with the tenants and Legal Aid to petition the Court of Appeals to de-publish the opinion and then to set it aside and rule that even month to month tenancies require good cause to terminate.

There is an old saying that no good deed goes unpunished and that is certainly true here. In the ensuing 18 years, relationships with Legal Aid have soured and I believe they regard MHCA and us as their enemy. Even the lead Legal Aid attorney on the case has turned on us and loses no opportunity to take advantage of every tactical opening to do the industry harm. No doubt this end justifies the means attitude is justified in their minds by a belief in the moral superiority of what they do.

Nevertheless, there is another old saying that truth makes the best pillow. Honestly and doing the right thing makes it a whole lot easier to sleep at night. Despite the consequences, I am glad we did the right thing. 


August 17, 2016

New Firm Newsletter. A new edition of our newsletter is out.  If you did not get it and want it, here is a link If you want to subscribe (no charge) just click the green "Join Email List" button at the top.

Court System Proposes to Take Over Eviction Forms. In a remarkable power play, a Commission of the Arizona Supreme Court has proposed to standardize court forms used in eviction cases and the termination notice forms sent by landlords to their tenants.

This seems to have been spearheded by Arizona legal aid attorneys who for years have been looking for ways to game the system and create advantages for their clients.

The forms developed so far are filled with errors and were obviously drafted by a group that has no idea what it is doing. If adopted these forms would greatly increase the costs of eviction and create unlimited confusion in the Courts, all rebounding to the interests of dead beat tenants who would use the confusion to continue living rent free.

I still do special projects for our firm and MHCA and this is one I am handling. I am investigating the sordid background of this proposal and will prepare comments for submission by September 23, the cut off date. We are working closely with AMA and other affected organizations in the development of these comments. It is possible this will take legislation to prevent so we will also probably be preparing a legislative propodal to deal with it.


August 10, 2016

Poachers. Poachers are still at it. Due to some changes in the law, some of them have changed tactics.

To begin with, some of them seem to be focusing on parks that do not have rights of first refusal in their rental agreements. If a park does not want to lose homes to poachers it is imperative that their current rental agreements contain a right of first refusal.

In addition the clean up language dealing with the condition of the space should require removal of all concrete unless Management consents in writing that it can stay. This ensures the space is rentable and makes it far more expensive for a poacher to turn a profit.

Finally some poachers are sending postcards to tenants in parks soliciting listings or sales of their homes. As long as the poacher is a licensed dealer and there is nothing in the postcard seeking to induce a violation of a right of first refusal, this is just a form of advertising and is legitimate.

Jeffrey's Law. This became effective August 6 and can be a valuable tool to deal with poachers. It makes it a criminal trespass for a poacher or one working for him to refuse to leave the park if the home is being prepared for removal but a clearance for removal has not been issued. It also makes it a disciplinary offense for a dealer or sales person to attempt to induce a tenant to violate his lease including a right of first refusal. Read about it here: http://www.michaelparhamlaw.citymax.com/2012-2016_Articles.html#05.16-1


July 21, 2016

Evictions. We handled a record number of evictions in 2015. Figures through June 30, 2016 show us running ahead of 2015 by more than 11%.

Landlord law firms tend to be graded on the number of evictions they handle. We handle about 10% of Arizona evictions. A couple of firms do more but we try and be more selective in who we represent and in the quality of our work.

In addition, we represent most mobile home park operators and their evictions are far more complex than normal residential evictions since tenants own the dwelling units and are just being evicted from the rental lots.

Because of this we pull those cases out and process them through our mobile home specialists (all of our staff understands mobile home park law but this way we ensure these cases are not being inadvertently mixed up with others).

We must be doing something right because while evictions in Arizona overall have been falling since 2010, and there are more law firms competing for the business, we have experienced sustained growth.

We like to think it is because we are more responsive to clients and just do a better job for the same price as the competition.

Eviction Rules. Ever since the court rules of procedure for evictions were adopted in 2009, legal aid lawyers and other tenant advocates have been trying to change them to make it more difficult for landlords to evict. For the past several years they have been trying to get a rule adopted allowing them to force removal of judges they do not like from cases even though there is no legal cause. The latest such proposal is still pending.

Now a new proposal has been made by the Arizona Commission on Access to Justice. Ostensibly a Commission appointed by the Supreme Court to ensure everyone entangled in the legal system gets treated fairly, it has evolved into a legal aid/consumer advocate dominated special interest group.

One of its main purposes over the years has become watering the eviction rules down to make them more tenant friendly. It has just come out with a proposal to have the rules mandate exactly what forms of termination notices landlords must use when tenants are in default and to require the use of court prepared forms in eviction cases.

Of course the authors of these forms obviously don't know much about landlord tenant law and both the proposed rule and forms have many fatal defects. MHCA and the AMA will be providing comments objecting to this proposal. You can see the proposal here.


July 11, 2016

Constables Enforcing Eviction Judgments. Constables enforce eviction judgments. They are elected officers of the court who are also quasi peace officers.

In evictions their job is to remove the occupants of the premises, return possession of it to the landlord, but also ensure the safety and protection of the tenant's belongings left on the premises when the tenant vacates ad provided by law.

This is not an easy job. Sometimes it can get violent if the tenant refuses to leave peacefully, especially if the tenant is armed and belligerent.

In mobile home parks it is even more difficult since the tenant owns the home itself but is being removed from the park, and since the law doesn't say what happens to his personal property when he is removed.

Constables have long worried about doing the right thing when enforcing eviction judgments. For years I have conducted constable training classes and tried to answer these questions.

Recently a Deputy Maricopa County Attorney I have worked with in the past contacted me. She has just been appointed as the Maricopa County Constables legal advisor and had been asked to provide guidance in this area.

I explained my interpretation of how the various laws in this area work. After doing her own independent research, the Deputy County Attorney advised that she agreed and would be advising Constables to continue past practices.


June 30, 2016

New Articles Posted.  I just posted five articles on the 2012-2016 Articles page and one on the Fair Housing Articles page.


June 28, 2016

                                     

On October 13. 2013 I posted an entry about how illegal mobile home rent to own contracts are. Yet I keep seeing instances where parks are doing this to avoid all of the expense associated with government regulation.

But some parks are so stupid and so cheap that they do these even for homes that have been abandoned which they are not bothering to get titles to. In other words they are stealing abandoned homes and then doing rent to own contracts on them.

In the hope that at least some of these operators still have a modicum of good sense, I am re-posting that entry with a few updates.

Lease Purchase Agreement.  In October 2013 I gave a presentation at the Tucson MHCA Conference on this subject.  It was set for a Friday afternoon and there was a competing presentation. I was speaking to a virtually empty room.  My purpose was to dispel some of the inaccuracies and misleading impressions received by many attendees of a couple of presentations on this subject at the June 2013 Phoenix Conference.   

The usual “lease purchase” agreement is when a tenant signs a lease of a park owned home that includes an “option” to buy the home for a pre-set nominal price (like $10) at the end of the lease term.  The tenant pays money up front for the purchase of the option that is non-refundable.  During the course of the lease the tenant pays rent on the combined home/lot with a portion being applied to the ultimate purchase of the home.  Sometimes this will actually be explained in the lease.

     Disguised Credit Transactions. “Lease purchase” agreements of the sort described above almost always constitute “disguised credit transactions”.  Under the federal Truth in Lending Act (TILA), if the tenant under a “lease purchase” agreement obtains title to the home from the landlord for either nothing or for a nominal price, the agreement constitutes a disguised credit transaction, not a true lease and purchase arrangement.  There are serious penalties under federal and state laws, and civil liability as well for using “lease purchase” agreements to evade the requirements of those laws if they are determined to be disguised credit transactions.

     Other Problems.

Arizona Dealer Licensing Laws.  These state: “A lease or rental agreement by which the user acquired ownership of the unit with or without additional remuneration is considered a sale under this chapter.”  ARS §41-2142 (9).  In effect, landlords engaging in the sort of lease purchase agreements described above are engaged in sales.  They must be licensed and the monies received attributable to the purchase of the home must be handled in accord with trust and escrow requirements.

Title and Registration Laws.  The MVD code says an ownership change occurs:  “If a vehicle is the subject of an agreement for the conditional sale or lease with the right of purchase on performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee, the conditional vendee or lessee.”  ARS § 28-101 (40).  The code requires manufactured homes to be registered and titled in the name of the “owner”.   

Tax Implications.  If the payments on the option contract are above fair market rent, the IRS may treat it as an installment sale, in which case it becomes a sale instead of a lease. This also applies for a large advance payment for the option.  

Equitable Conversion.  Tenants who default on a “lease purchase” agreement may defend an eviction action claiming to have an “equitable interest” in the home.  In effect, this is a claim that the “lease purchase” is not a true landlord-tenant relationship. The court may re-characterize the transaction as an installment sale. This in turn would require the landlord repossess the home, not evict the tenant.  

Tenant Bankruptcy Implications.  A tenant in bankruptcy can make the same argument.  Bankruptcy courts can declare these to be sales, not leases meaning the tenant is found to own the home.  The debt owed to the landlord for the purchase of the home could be characterized as an unsecured debt and discharged.

Landlord Tenant Law.  The rental of a dwelling is subject the Arizona Residential Landlord and Tenant Act.  Under that, the landlord is responsible for maintaining the home.  Most of that responsibility cannot be shifted to the tenant.  ARS §33-1324.

     SAFE Act.  Implementing regulations were released a couple of years ago by the federal government and are being reworked and broadened now.  Comments released with the current regulations included this passage:  “… the fact that the seller holds title to the property until the contract has been paid in full is the practical equivalent of a lien for purposes of the SAFE Act and its purposes and is comparable to the status of a mortgage in a state that follows title theory under mortgage law.”  Engaging in transactions subject to the SAFE Act without complying with it exposes the violator to major government imposed financial penalties.   

     Dodd-Frank Act.  A small part of this law deals with the federal Consumer Leasing Act (CLA) that applies to the leasing of personal property used primarily for family or household purchases.  A manufactured home lease satisfies that criteria.   The CLA and its implementing regulations (called Reg. M) exclude leases that do not have an option to purchase the property at the end of the lease term.  So a simple lease or rental of a park owned home not involving a purchase option is not subject to this law.  But if a lease involving an option to purchase that is not a disguised credit transaction subject to TILA is entered into, the CLA and Reg. M would apply. 

For example, a lease with an option to buy the home at its fair market value when the option to purchase is exercised would probably not constitute a disguised credit transaction since the final price is the fair market value, not a nominal sum.  So the CLA, not TILA would apply.  But the requirements of both are similar.  However if the price when the option is exercised is financed by the landlord and secured against the home, at that point the SAFE Act and TILA would need to be complied with.   

Park Mortgage Documents.  Many parks are refinancing their mortgage loans and others are subject to older loans.  Newer versions of Fannie Mae financing documents have a restriction in them prohibiting the Borrower from buying, selling or financing homes.


June 25, 2016

MHCA Legal Counsel. I served as MHCA legal counsel from 1987 until taking senior status with the firm last May. At that time Melissa took over my workload and let MHCA know she was interested in also taking over as its legal counsel.

There are a number of other attorneys affiliated as associates with MHCA and the Board decided to take a look al all of them and see if a change was in order. Although we weren't thrilled with that attitude, it was prudent for the Board to do so.

Yesterday, June 24 the Board at a special meeting unanimously decided to retain its relationship with the firm and recognized Melissa as its new MHCA legal counsel.


June 23, 2016

Elimination of FBLS Department; Transfer of Functions. here is a notice posted on the Department's website and sent to its licensees. It is self explanatory.

                                                   IMPORTANT NOTICE

The Arizona Department of Fire, Building and Life Safety (DFBLS) sunsets on June 30, 2016. The Office of Manufactured Housing (OMH), a division within DFBLS, will become a division of the Arizona Department of Housing (ADOH) on July 1, 2016.

On June 24, 2016, OMH will be joining ADOH at 1110 West Washington, Suite 280, Phoenix, Arizona 85007.

Effective July 1, 2016, all checks are to be made payable to Arizona Department of Housing (instead of to the Department of Fire, Building and Life Safety) and sent to:

                                                  Arizona Department of Housing

 

 

                                                  P.O. Box 6280

 

                                                  Phoenix, AZ 85005-6280

 

All licensees with surety bonds are required to provide original surety bond riders by August 1, 2016. The surety bond riders must be effective July 1, 2016and must state that the surety company acknowledges that the obligee, effective July 1, 2016, is the Arizona Department of Housing, 1110 W. Washington, Suite 280, Phoenix, AZ 85007.

Please be sure to check the website, azhousing.gov for updated forms and licensing packets.

An important change has been made with regards to the fingerprinting instructions. Applicants must now take unexpired photo identification, the Fingerprint Verification Form, and a 9x12 brown mailing envelope to the person or official taking their fingerprints. The fingerprint technician must complete the Fingerprint Verification Form and place it and the completed fingerprint card in the envelope before returning the envelope to the applicant.

Donna Grant

Licensing/Investigation Section Manager

DEPARTMENT OF FIRE, BUILDING AND LIFE SAFETY

Office of Manufactured Housing

State of Arizona

Email: Donna.Grant@dfbls.az.gov

 

 

Phone: (602) 364-1094


June 22, 2016

Deficiency Balances Following Repossession Sales. Usually when a home financed by a park goes into default the park will seek to get it vacated and then repossess it without court action. Parks are usually not interested in chasing after inslovent tenants for money due on the home even in rare instances when the home's value is less than what is left due on the financing debt.

But some parks do not feel this way. Either out of anger, a sense of betrayal, or simply a policy of chasing after every collectible Dollar, some parks want to repossess the home, conduct a repossession sale, bid in less than the amount of what remains owed, and in the process create a deficiency of the excess debt over the net sale price at the repossession sale.

The problem here is that there is a lot of consumer protection law that gets in the way of creating such deficiencies.

Manufactured homes are personal property and defaults in paying loans secured against them are covered by Article 6, Chapter 9 of the Arizona Uniform Commercial Code. Specifically, ARS sections 47-9608, 9610, and 9615 cover these repossession sales.

In summary they require that any repossession sale be a commercially reasonable sale (usually meaning at least five bona fide bidders other than the park be in attendance), and the price paid must be comparable to the fair value of the collateral. If the secured party (the park) is the successful bidder at the sale and the sale results in a deficiency, the sale price can be adjusted by determining what an interested bidder at a commercially reasonably sale would have paid has these statutes been complied with.

Finally ARS 44-5501 specifically requires that the deficiency must be the difference between the fair market value (not the high bid) and the balance remaining on the debt, and also says that if the fair market value exceeds the unpaid balance of the debt, the secured party (the park) must pay that excess to the debtor. Section B says:

If the fair market value of retaken goods exceeds the unpaid balance, the buyer shall be entitled to the difference between the unpaid balance, after first deducting all unearned finance charges, and the fair market value of the goods at the time of retaking, less the seller's or assignee's reasonable costs and expenses as provided in title 47, chapter 9, article 6.

Only when the fair market value is less that the balance of the debt does it make sense to create a deficiency and try and collect on it. These cases usually occur when the tenant has trashed the home impairing its value. This is why we always recommend against trying to create deficiency balances in normal repossessions. The only time that makes sense is when the tenant/debtor has damaged the home.

Otherwise the best course is to simply get title to the home back as quickly and cheaply as possible.


June 17, 2016

Orlando. This was an awful massacre by a terrorist. But so much of the national reaction is navel gazing, trying to figure out ways to blame ourselves, and politicizing it. This nation is really dissolving before our eyes.

But then along comes some folks more affected than most with a clear eyed common sense idea for dealing with future mass killings of this sort. We have a Second Amendment and the lawful right to defend ourselves (though bureaucrats erect barriers here including bans on guns in clubs like the one in Orlando). But in the Second Amendment is the solution and a number of Gay groups around the country and especially in Southern California are embracing it.

I have known and worked with many Gays. I don't know of any that would just take this crap and not fight back. That is the spirit motivating the groups posting these signs in Southern California.

                                 


June 16, 2016

MHC Evictions. With my taking senior status and Melissa taking over the MHC program at our firm, A change has been made that will improve service in the eviction area.

MHC evictions are similar in appearance to apartment evictions. The court forms are the same but the substance is very different. It is easy for a busy staff member to overlook a significant MHC eviction difference, judge it by apartment eviction criteria, and process it for filing when maybe it should have been held or new documentation required. Everything involving MHC's is (or should be) highly specialized.

Anyway Melissa has reviewed this area with Vanessa and the decision has been made that MHC evictions will henceforth be processed by Vanessa. She has over 10 years experience in processing all kinds of evictions and for the past 18 months has been specializing in MH abandonments. So she brings together a combination of expertise in evictions and unique knowledge in manufactured homes and MHC's. We expect this will improve our already superior handling of MHC matters.

Vanessa has shown tremendous motivation and aptitude to learn and manage these difficult tasks and we certainly intend to take advantage of this valuable resource, and everyone will benefit. Vanessa will continue to manage the MH abandonment program as well.


June 13, 2016

CenturyLink. In the recent rush of events invloving me and the MHCA Conference, I lost track of a recent accomplishment we had regarding CenturyLink. In the past decade, CenturyLink has insisted that all work on its infrastructure in MHC's are the responsibliity of the landlord. This is despite the fact that they have easements enabling them to do whatever work is necessary to service their customers.

When CenturyLink contacts parks or customers (park tenants) their position is always the same--they will not do anything unless the park covers most of the infrastructure expenses. In a recent ALJ case MHCA and a park obtained a ruling that the MHP LTA does not require landlords to do this. And of course there are no documents in the typical case requiring to park to do that sort of work either.

One of the biggest frustrations here is that CenturyLink refuses to give contact information out. In dealing with parks it has used stationary that does not contain any addresses, phone numbers or e-mail addresses. Correspondence to its local statutory agent and its Denver headquarters usually goes unanswered. Complaints to the Corporation Commission are not acknowledged.

In late April a hazardous situation involving CenturyLink equipment in a park arose. We identified the local regional vice president through an internet search including office address and phone number and wrote him concerning that issue. Surprisingly that letter produced a result. It's a small victory but with CenturyLink you take victories where you find them.

Reproduced below is the response from CenturyLink in that case.


June 8, 2016

New Firm Newsletter. A new Special MHCA Conference edition of our newsletter is out.  If you did not get it and want it, here is a link.  If you want to subscribe (no charge) just click the green "Join Email List" button at the top.

            


June 2, 2016

MHCA Conference. The last of our major rental housing conferences starts June 7, and in a way it is the most emotionally engaging for me.

The MHCA Conference will be held June 7-9 at the Wild Horse Pass & Casino in Chandler, jointly with MHIA (another manufactured housing organization representing manufacturers, retailers and installers of manufactured homes). For 30 years I have been a participant and presenter at MHCA Conferences.

This year was going to be no different. I was scheduled to speak on several subjects including efforts to get the federal government (Fannie Mae and Freddie Mac) to start financing manufactured homes with chattel loans.

But fate intervened and I was suddenly faced with a health crises. I was forced to stop working and immediately announced retirement since bigger more existential issues now confronted me.

The MHCA Conference will go forward, without me for the first time in rnearly 30 years. Fortunately Scott has over 25 years practicing in MHC law (and has himself been an MHCA member for that long). And Melissa has dedicated the past five years of her life to becoming proficient in this field as well.

At my age we have always had a retirement plan in place, so were not caught entirely by surprise. But we all would have liked a little more notice.

Melissa and Scott will cover my presentations as well as those Melissa was already scheduled to make herself. This is going to be a challenge.

If you want to attend but have not registered you can contact MHCA at (480) 345-4202 to do so.

MH Chattel Financing.  This industry is not well represented at the national level. In fact I cannot think of a more poorly represented industry that this one.

There are two national associations vying for the leadership role as inductry lobbying and trade representation groups. Neither has in my opinion produced any positive results. Failure greets them at every turn, followed by whining about how unfair things are and how government stacks the deck against them. I find whining contemptable and despise excuse making.

These two groups (MHI and MHARR) have spent more time trash-mouthing one another than on producing accomplishments for the industry.

Then there the shills and hangers on--trying to profit and maintain "consulting" businesses and profit from advertising in so called industry related publications. These shills are generally associated with one or the other of the two national associations.

Finally there are groups like current lending institutions financing manufactured homes that would just as soon maintain the status quo and their current profitability instead of opening up more avenues of MH financing.

Which brings me to the current matter of the FHFA (regulator of Fannie Mae and Freddie Mac--the GSE's) announcing they are open to the idea of a pilot program to see if the GSE's can once again start making sound and secure chattel loans that can be securitized and sold on the open market to investors.

All of the organizations I have mentioned have made noises over the years about this being vital to the best interests of the MHC industry. But when presented with this proposal it seems that every organization, consultant, and player in this business simply trash mouthed it and in effect tried to kill it.

One so-called expert wrote an article in one of our so-called trade publications with an especially negative slant on the proposal. Since MHCA and MHIA have embraced it and proposed Arizona as a pilot program site, this article in particular rankled me. Here is the response I wrote that was actually posted on that site:

Any 2270 word column containing the word "I" some 31 times, the word "me" three times, and the word "we" eight times usually strikes me as more of an article about the writer than the subject.

As an Arizona MHC attorney for over 40 years I dealt first hand on the front lines with past lending abuses and corruption of chattel lenders from the 1980's on. I dealt with thousands of abandoned homes, and threatened and sued lenders and repossession agents to cover MHC space rent being run up by their on-site inventories.

I drafted the Arizona statues allowing affidavits of affixture for homes on leased spaces with terns over 25 years in a failed effort to attract Fannie Mae financing for this housing stock, and dealt with the consequences of virtually every such loan being screwed up by the lender, often a successor to the failed bank originally making the loan.

I have worked with current lenders needing repossessions/replevins of homes in default. I have seen them place loans on homes on Indian Reservations not under state law jurisdiction and on raw unimproved desert land with no value whatsoever. I have seen many of their recent loans being made to people who should not be able to qualify for a used car loan. I have seen their loan documentation that often fails to satisfy State law requirements.

I was thrilled to read FHFA's original notice of proposed rule making. I submitted two sets of comments on behalf of the two Arizona MH and MHC organizations outlining how Arizona had taken steps to safeguard tenant rights and thus potential lender security in its MHC legal framework. Since FHFA said it will consider a pilot program I offered Arizona as a test site. Our Executive Director attended the FHFA roundtable In late April.

I have had several discussions with the FHFA program manager on this proposal. I believe FHFA understands exactly what it is doing and what the GSE's would be getting into. I believe they are trying to come up with a way of working around past problems and coming up with a sound chattel-lending program. Maybe they will be successful and maybe not.

But criticizing them at this stage is not helpful. The unrelenting attacks on their integrity, honesty and transparency by national organizations supposedly representing the interests of this industry at the national level helps nothing and is bewildering.

48 years in this business including hundreds of suits with lenders and thousands of abandoned home situations makes me jaded. Nevertheless I am convinced that FHFA is serious about considering trying to activate a chattel-lending program. The self-serving universal criticism by the national organizations and the overwhelming negativity in columns such as this is not helpful.

I don't know the author and judging from the article his background is extensive. But the negative viewpoint and inability to accept the possibility of something positive coming from this process is certainly not helpful.

The word "I" appears 13 times in this comment, the word "me" three times. But negativity about FHFA's proposals does not appear at all and that is my point in this process.

Better to light a candle than to curse the darkness.


May 28, 2016

Memorial Day 2016

                                  


May 23, 2016

New Articles Posted. I have posted several new articles on the 2012-2016 Articles Page.

Eviction Court Rules. In 2008 the Arizona Supreme Court published rules of procedure to be followed by courts in Arizona in processing eviction cases. I was on the committee that drafted the rules. One of his goals was the make the rules short, fair and understandable to ordinary folks.

As legal rules go, this was successful. These are the shortest and easy to understand of any of the Arizona court rules. And there are plenty of court rules.

In most kinds of cases in Arizona courts each party has the right to require an assigned judge be replaced without giving a reason. This slows cases down and allows parties to engage in "judge shopping". That's fine if you are a party to a case assigned to a judge that you do not like. You can get rid of him.

But its not so good if your case is assigned to a really good judge but the other party exercises this right and gets him replaced. Judge shopping like this in evictions can really slow the case down, especially in places where there is no replacement judge readily available.

Eviction cases are supposed to move fast. But it often serves the interests of a tenant looking for more time to move to slow the case down and one good way is to get the assigned judge replaced.

Because of this I have always opposed the idea of having a provision like this in the eviction rules, and until now he and others with the same view have been successful. The 2008 rules did not have such a provision. In 2013 tenant advocates tried to get the Supreme Court to adopt such a rule but that was rejected. In 2015 they tried again and were again rebuffed.

Now in 2016 they are trying again. I have filed a brief opposing this proposal. Its funny how hypocrisy works. Any litigant repeatedly filing for the same relief and repeatedly getting rejected would run the risk of getting treated as a vexatious litigant and barred from further filings by the Court. But when the elites of the State Bar engage in this  loathsome conduct, different rules apply to them, no doubt because their goals are lofty and their intentions are beyond criticism.

We should know in a month or two if this is successful. You can view all filings on the proposal at the Court Rules website

MHCA Conference. Unfortunately I will be unable to attend the MHCA Conference next month. Although I am scheduled to make several presentations, Melissa and Scott will be filling in for me this year and our firm will have a table and be actively involved in it. We think it is going to be another successful Conference and encourage all clients, especially those needing specialized manager training hours this year to attend.


May 10, 2016

All Relevant Bills Pass. The bills we are interested in have all passed the legislature and been sent to the Governor for signature.  Unless the Governor vetoes any of them within ten days after they are sent to him, they will go into effect.  The general effective date for these bills will be August 6, 2016.

The Bills. See my May 6 post below.

In addition to those two bills there is a third, SB 1362 targeted at a single park in this state. This applies to MHC's and RV Parks with long term space rentals. It says that a rental agreement and park rules or regulations under the Mobile Home Parks Act and RV Act cannot require a tenant to place another person’s name on the title or pay a fee for failing to place a person’s name on the title of a mobile home or RV as a condition of approving that person as a co-occupant. This does not mean parks cannot still require TENANTS to own homes, but if a mother in law or child wants, the park cannot force the tenant to add that person's name on the title to the home.


May 6, 2016

MHC Related Bills.  HB 2259, the bill we have been lobbying through the legislature, and HB 2304, the AAMHO bill are finally set for final legislative approval. Assuming they are approved--a fairly routine matter, they would be sent to the Governor for signature which also seems likely. If that happens, they will be effective around August 15.

HB 2259. This is the Poacher Bill. It 1. Prohibits a person from beginning the removal of a mobile home in a mobile home park without first satisfying clearance requirements; 2. Designates, as a class 3 misdemeanor for criminal trespass, the refusal to leave at the request of the landlord for noncompliance with clearance requirements; 3. Stipulates that the criminal trespass charges do not apply if the landlord refuses to provide authorization for removal after clearance requirements have been satisfied; and 4. Authorizes the Deputy Director of the Office of Manufactured Housing to impose a penalty or suspend a license for a wrongful or fraudulent act in the sale, transfer or relocation of a mobile home.

HB 2304. This is AAMHO's Tree Maintenance Bill. It 1. Requires mobile home park landlords to disclose to new tenants, in a written rental agreement executed or adopted after December 31, 2016, any requirement that the tenant maintain existing trees on the mobile home space; 2. Classifies, as a substantial modification of the rental agreement, any change to the tenant’s obligation to maintain trees located on the mobile home space; 3. Designates as unenforceable, retroactive to May 31, 2016, a rule adopted after the execution of an initial rental agreement, if it imposes a "reoccurring financial obligation" to the tenant.

We recently sent out an e-mail blast special newsletter on this bill and have assisted a number of parks in getting their rules and rental agreement forms updated to reflect the requirements of this bill.


April 29, 2016

FHFA Chattel Lending--MH Finance Programs. MHCA was one of the few chosen state associations invited to meet in Washington D.C. with staffers from the Federal Housing Finance Agency (FHFA) to discuss the agency and its participation in manufactured housing related lending with the Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac.

The meeting came after FHFA recently published for comment new rules on GSE eligibility for MH related loans, including what types of loans the GSEs would buy or securitize and how these loans would fit into FHFA federally mandated requirements under its Duty to Serve the manufactured housing lending space.

I filed two sets of comments with FHFA on behalf of MHCA and MHIA, the second at its request and I was invited to the meeting. I could not be there due to schedule conflicts but MHCA Executive Director Susan Brenton was in Washington anyway and she attended the meeting that was held April 26.

The proposed rules address real property manufactured home consumer loans, as well as commercial loans to manufactured home communities. In the proposed rule chattel MH consumer loans were excluded from GSE eligibility.

The meeting addressed all aspects of the proposed rule, but focused on the importance that FHFA not prohibit chattel MH consumer loans from its programs.

MHCA offered Arizona as a site for a pilot chattel-lending program for these GSE’s, and Susan explained how our landlord tenant and consumer protection laws make us an ideal pilot program site. The Florida association also offered its state for a pilot program and we are trying to work with Florida to have Arizona and Florida operate a bi-coastal pilot program.

We expect the final rule and pilot program decision to be made around mid-summer.


April 28, 2016

Elimination of FBLS Department. A number of bills we are interested in and helped draft have been in a state of suspense while the legislature tries to get a budget passed. The budget is in the final stages now so our bills should move on towards enactment.

Part of the budget process involves budget reconciliation bills. The Arizona Constitution prohibits substantive law from being included in appropriations bills. However, it is often necessary to make statutory and session law changes to put the budget into effect.

Thus, separate bills called budget reconciliation bills are introduced to enact these provisions.

S.B. 1530 contains the budget reconciliation provisions for changes relating to agency consolidation. Since the budget is going to give all of the appropriations for Fire, Building and Life Safety Department functions to the Department of Housing, this bill effectively abolishes the former agency. It also transfers all of its functions.

In effect the Office of Manufactured Housing and all of its functions are transferred to the Department of Housing by this bill. You can read it here.


April 23, 2016

Criminal Background Criteria. We have been making a lot of use of Constant Contact recently. Of course we now use it for normal newsletters. But with the legislature winding down and a couple of bills with short fuse deadlines on the horizon affecting mobile home parks we needed to notify that industry of what was necessary before the end of April.

We have written before about the HUD policy on criminal backgrounds. This week we got wind that there were testers calling housing providers to ask about their criminal background requirements--obviously trying to set them up for complaints they were not complying with the new HUD policy.

We also saw some statements being made by other law firms about what the HUD policy requires, and at least one actually published a proposed criminal background criteria it recommended that we disagree with.

So yesterday we sent a blast out to 2449 recipients covering the subject. You can see it at this link: http://conta.cc/1VP38gH. If you did not get it and want to be on the distribution list, link to it and then click the green button at the top and enter your e-mail address.

                          


April 22, 2016

Tree Maintenance. After our April 18 newsletter went out, MHCA issued a bulletin to its membership, alerting them like we did to the need to (1) cover tenant tree manitenance responsibilities in new rental agreements going forward; and (2) changing rules if necessary to make it clear that trees on tenant spaces must be maintained by tenants. This assumes parks want tenants to maintain trees on their spaces. This also applies only to MH space rentals.  

The reason for all of this is HB 2304 that we expect to be enacted into law shortly. The bill prohibits certain changes to park rules having a "reoccurring" financial impact on tenants after May 30, 2016. To avoid problems here, we suggest any necessary clarifying rule be effective by then. To do that takes a 30 day notice, and adding five days to the notice period means the notice must be out by Monday, April 28, 2016.  

There is a chance that parks which do not have rules imposing tree maintenance responsibility on tenants in place by May 30 will never be able to do so.  Those that do must use rental agreements requiring this starting January 1, 2017 to keep the policy in force.

For the last three days we have been swamped with requests to prepare the necessary rule and lease provisions for parks. Exactly how the provisions are worded depends on how these documents read at present meaning we must look them over first.  


April 20, 2016

Newsletter. Our April 18 newsletter went out yesterday focusing on legislative developments this year and the HUD criminal background criteria. If you did not get it and want it, here is a link.  If you want to subscribe (no charge) just click the green "Join Email List" button at the top.

                         


April 18, 2016

RV Parks Association Convention. April 27 is the Arizona Association of RV Parks and Campgrounds Convention. It will be held at Rawhide Western Town in Chandler. Mike and Melissa will be there conducting "cracker barrel" sessions on legal developments involving this industry.

They include the new HUD definition of park models and its implications for the industry; the influx of ADA lawsuits and especially those involving failure to install pool lifts; new state legislation; the new HUD criminal background criteria; and of course the old standbys of landlord tenant law, fair housing law, evictions and abandonments.

Vanessa will also be there to explain our abandonment program, oversee our table, and sell MHCA RV Park forms books and training guides. MHCA allows us to sell these at MHCA member prices at this event for AZ ARVC members.

This is an interesting industry with similarities to mobile home parks and the hotel/motel industry. But it is really unique and is growing as more people retire and "hit the road". RV Resorts are growing, have become an important park of Arizona's lodging industry and are increasingly important to the Arizona economy.

To register contact Jo-Ann at ArizonaARVC@aol.com.  

Age 55 Parks Possible Testing.  We believe that a 51 year old woman with a disabled daughter who is disables may be testing age 55+ patks in eastern Maricopa County. She wants parks to make exception to the age restrictions tl let her move in even though no one is over 55 and her daughter is usually under the minimum age allowed.  She claims fair housing laws require parks to let her in since the daughter is disabled.  We do not agree that the law requires that.


April 9, 2016

Flagstaff Training. I conducted an MHCA manager training class in Flagstaff yesterday. One of the subjects I spent a lot of time on was the new criminal background policy that came out from HUD on April 4. I think it is safe to say that the overwhelming reaction of the audience was one of horror. Criminal background screening and the use of criminal background criteria is used to keep communities safe. Moreover basic property rights principles should enable property owners to say who gets to live on their land.

Dealing with the New HUD PolicyOf course no one disputes that landlords engaged in the residential rental business should not unlawfully discriminate and the purpose of fair housing laws is to prevent that. But to say that excluding convicted criminals amounts to unlawful discrimination because so many of them are minorities is really stretching things. 

I do not happen to believe that the criminal justice system in this country is racially biased. There was a time when I was living in the South in my youth when I would have agreed that it was biased--minorities received a far harsher brand of "justice" than Whites did. But I believe that has largely ended and I do not agree that the imbalance of minorities convicted of serious crimes is because they are minorities.

What I believe of course does not mean anything. But I think it probably is representative of what many in the residential rental housing industry believe and I think it is going to be hard for landlords to "adjust" their criminal screening criteria to satisfy the new HUD standards. Essentially the only way to be safe under the HUD policy is to simply ignore criminal backgrounds altogether. But the result would be increasingly unsafe communities and increased landlord liability for renting to convicted violent criminals or sexual predators.

So landlords are going to need to try and walk the line and create new criteria that takes into account seriousness of the crime, time since last conviction, tenancy history since last conviction, and abandons consideration of arrests without conviction and "zero tolerance" policies such as "no convictions of a felony, ever". It will also need to take into consideration any evidence of rehabilitation the applicant wishes to offer.

Perhaps the tenant screening services doing these background checks will cone up with some recommended criteria.


April 4, 2016

Criminal Background Criteria Under Fair Housing Laws.  Today HUD released a policy paper on the use of criminal background criteria to screen applicants for tenancy.  After finding that minorities, especially Blacks and Hispanics have disproportioanately greater conviction rates than others, it found the use of criminal background criteria could be discriminatory under Disparate Impact theory.

It then came up with an analysis of the permissabile use of criminal background criteria.  Basically it said that older minor convictions should be disregarded while more recent or more serious convictions could be used. It also acknowledged that there is a statutory exception for drug crimes.

Felony convictions for drug offenses can be disqualifying under that exception except for simple possession or use of narcotic drugs, so long as evidence of current enrollment in or completion of a drug treatment program is provided.

Landlords need to come up with clear criminal background criteria in light of this new policy statement. Read the full 10 page statement here.

NOTE: never use arrest records that do not result in convictions to disqualify applicants.


April 1, 2016

Bankruptcy Work. We often get asked why we do not do bankruptcy work.

At one time in my law practice I did a lot of bankruptcy work and was one of the regulars at creditor meetings and cattle calls at the Bankruptcy Court. But then two extensive revisions of the Bankruptcy Code and changes in the Bankruptcy Court's procedures having to do with electronic filings drove me away.  

Bankruptcy work is highly specialized. Everything is different from normal court practice. Even things that are simple to begin with (like seeking lift stay orders) can get enormously complex when other attorneys appear in a case and start asserting matters unique to bankruptcy practice.  

I know enough about bankruptcy from my prior experience to believe I am no longer qualified to do it. So we refer our bankruptcy work out to another lawyer who (1) is very skilled and knowledgeable; (2) is very fast in getting things done; and (3) is reasonable in his charges.  

Other landlord lawyers have a different philosophy. They assume they know enough to do the simple things like obtaining lift stay orders permitting evictions to go forward. And so they will do this and promote the fact that they are "full service" to landlord clients including landlord tenant related bankruptcy work.  

In our view however, while many of these people may be able to get a stay lifted in a simple case where no one contests it, they are often over their head when the case becomes complicated.

They will also do this work "on the cheap" hoping to lure clients for routine and more profitable eviction work.

One major problem in mobile home parks is that many parks are not only owed rent at the time a tenant files bankruptcy, but also are owned money on the sale of the tenant's mobile home which the park finances. This twofold indebtedness problem is not familiar to the run of the mill landlord attorney and is even more alien when he files for a lift stay in Bankruptcy Court. For rent, the park is an unsecured creditor, but on the home payments the park is a secured creditor with a security interest in the tenant's mobile home.

We see instances where the landlord attorney mixes these things up and that has the potential for major problems in the future.

A client recently found another landlord attorney to handle bankruptcy lift stay filings cheaper than the attorney we referred him to. The other landlord attorney also convinced him to transfer his eviction work.  We discovered this when a manager called with a complicated problem involving an eviction but then said another attorney would be actually filing it.

Since we are not a charity and do not provide free service to clients using other attorneys for landlord related work, we cut the client off. Seeing his mistake the client returned to us except for bankruptcy work.

Park Closures. Pony Acres Mobile Home Park and Tempe Travel Trailer Villa on the south side of Apache Boulevard near McClintock Road in Tempe are being closed to make way for a new 423-unit apartment complex. These communities were first opened in 1969.

Our experience in mobile home park closures, disposing of abandoned mobile homes, and multi-family development made us a natural choice to assist with this project.

We helped with a plan to work with residents to find alternative living arrangements and identify government relocation assistance. Everyone's goal here was to ease resident relocations and avoid involuntary court evictions. We were 100% successful in this.

As a result of the property being vacated about 70 mobile homes were abandoned. It fell to us to process landlord lien sale or bonded title transactions to get titles in the name of the developer enabling dismantling and removal of the homes. This is in the final stages now.

The apartment project brings Tempe closer to fulfilling its goal of building up the area along the light-rail line. But it is at the expense of an affordable housing option that are in short supply in Tempe. It also represents another loss in the dwindling number of mobile home parks in urban areas.  

Other closures are in process including a fairly large park in Tucson that is goping very smoothly.

Political Signs in Parks. Tenants sometimes want to post political signs during election season. Should landlords permit that?

The law allows a landlord to adopt rules and regulations regarding the tenant’s use and occupancy of the premises. A reasonable rule regarding signs would be to prohibit all signs with the exception in mobile home parks of the “for sale” and “open house” signs required by the mobile home parks landlord tenant act.

Tenants may claim that they have a Constitutional right to post political signs, or that the laws governing HOAs allow them to post political signs.  Since a mobile home park is private property, the landlord is allowed to prohibit political signs and does not violate the law in doing so.  Laws regarding HOAs do not apply to mobile home parks.

In the current political climate, landlords would be wise to enforce sign rules against tenants posting political signs in order to avoid tenant conflicts, not to mention their unsightly appearance.


March 25, 2016

Next MHC Manager Class. My next class will be in Flagstaff on April 8 at Westglen MHP. My last 2016 class will be in Pima County in October. Contact MHCA to register at 1 (800) 351-3350 or (480) 345-4202.  

Legislation.  Several bills are moving through the legislature and it looks like most will pass. Some will have a significant effect on MHC's.  The one legalizing potlucks has already been signed into law and will be effective 90 days after the legislature adjourns. Others about to pass involve tree maintenance, poachers and residents on titles to homes. I will write on more detail about these bills once they get through the legislative gauntlet.

I have worked closely with Susan Brenton, MHCA executive director, and Janna Day, MHCA lobbyist and this session has been a continuous battle. But I think we will have some worthwhile results.

Home Title Transfers. A certificate of title cannot be relied on by a buyer of a home as evidencing good title. Among the reasons are:

1. The seller could have obtained a duplicate title and is selling the home and giving the buyer the original title. When a duplicate is issued the original is voided out on the MVD records. Giving the buyer the original when a duplicate has been issued may be an innocent mistake, or it could be a fraud. If a fraud, the seller can immediately turn around and sell the home again, transferring the duplicate title which is the valid one. Either way, a buyer who gives money in exchange for a voided out original title actually has gotten nothing.

2.  Even if the title is valid there are certain liens which never show up on the certificate of title and come into existence after it has been transferred. But they will show up on the MVD computer records. These includes criminal restitution liens, child support liens, tax liens, judgment liens, and even landlord liens if the home is in a rental MHC. A buyer will not be able to get title transferred into his name without getting those liens removed and often that entails payment of a lot of money.

It is for these reasons that the FBLS Department requires dealers handling MH escrows not to release money to the seller until after the title has been transferred into the name of the buyer. This is a major focus of Department audits of dealer trust and escrow accounts.

Remember, if you are in any way involved in the sale of homes and transfers of titles, NEVER, NEVER, NEVER release the buyer's funds to the seller until the title has been transferred into the buyer's name. If you do you may be liable to the buyer for the cost of fixing the problem or for compensating him the full price he paid for the home as well as other damages he suffered as a result of your error.

In addition if you hold a dealer's license, you will be subject to discipline by the Department that may include license suspension and fines.


March 22, 2016

Consolidation of Arizona MHC's Continues.  Sun Communities which bought American Land Lease a couple of years ago has just announced plans to acquire Carefree Communities Inc. with closing set for July. Carefree has a park in Tucson--Verde Plaza.

                                      


March 17, 2016

Pot Lucks. The Bill legalizing pot lucks in non commercial settings is on its way to the Governor who will hopefully sign it. Once he does it will become effective 90 days after the legislature adjourns (around August 1). Read about it here.


March 15, 2016

MH Chattel Financing (Continued). My supplemental comments were posted March 14 on the FHFA website. You can get to them at this link..

New Firm Newsletter. We are using a new Newsletter format and distribution system. Our new Newsletter utilizes the Constant Contact system. Newsletters are designed to be clear and easily displayed on cell phones and portable tablets.

Our new MHC and RV Park newsletter (pictured below) went out yesterday and can be seen at this link if you did not get it: http://conta.cc/1Wnft8R

If you want to start getting this just click on the green button at the top of it to join the e-mail list.

                             


March 12, 2016

New Firm Newsletter. We are changiong the firm's newsletter format to use a template from Constant Contact and will be using it as well to distribute the newsletter via e-mail. We have a 500 name distribution list for it. The first of the new format newsletters will go out on Monday.

If you do not get one and want to be on the distribution list, contact me. Our only requirement for this MHC version is that recipients be affiliated in some fashion with the MHC industry.

We also publish a separate newsletter using this same process for residential landlords (e.g., apartment and single family home landlords).

MH Chattel Financing (Continued).  I filed a set of supplemental comments to the proposed "Duty to Serve" regulation of the FHFA yesterday. In these I explain the Arizona program for upgrading pre-HUD homes to state standards and give specifics on how a pilot program for Fannie and Freddie backed chattel loans on manufactured and certified pre-HUD mobile homes would work. This supplement will be posted on the FHFA website in a couple of days and I will give a link to it at that time.

Articles Appear in National Publication. My first FHFA comments and an article I wrote on park closures for MHCA have been published in the March 12, 2016 edition of MHProNewsa national on-line industry publication. Go to the link and scroll down to the bottom half for a changing menu of articles. My two are next to each other on one of those rotating pages.


March 9, 2016

MH Chattel Financing. With the burst housing bubble and economic crash in 2008, residential home loans dried up for a while. A number of federal programs were created to tighten lending standards and increase regulation of mortgage lenders. As a result it became harder to get a mortgage on a normal home.

In the manufactured housing business, loans on homes in rental communities became even more difficult to get. The coupling of high regulatory costs of getting a loan coupled with the relatively small loans necessary to finance manufactured homes meant that lending in this area virtually came to a halt.

Manufactured home loans are called chattel loans because they only cover the cost of purchase of the home itself. The land is not included since the home is on a lot in a rental mobile home park.

Fannie Mae and Freddie Mac purchase mortgages from lenders. The ability to sell mortgages to them makes loans more available and keeps interest rates low. But they will not buy chattel loans.

The Federal Housing Finance Administration (FHFA) supervises Fannie Mae and Freddie Mac. In December it floated a proposal indicating it might open chattel loans up to repurchase by Fannie Mae and Freddie Mac.

On behalf of MHCA and the Manufactured Housing Industry of Arizona Association (representing manufactured home retailers, manufacturers and lenders), I submitted comments on this proposal and offered Arizona as a test market for a pilot program opening chattel loans up to this kind of lending.

I was contacted this week by FHFA and asked to supplement his comments by fleshing out how a pilot program would work. I am at at work on the supplement now.


March 4, 2016

More Parks Sold. Caddis Capital Investments LLC has acquired Mesa Village and El San Juan mobile home parks. The parks had been operated by Inspire Communities. Previously Caddis purchased Chaparral Ranch in Apache Junction. The Caddis parks are being managed by Valley Vistas Management Co. Caddis is a new entrant in the MHC industry in Arizona, one of many to come into this market the last two years.

Caddis Capital Investments is an actively managed private equity firm headquartered in the Denver area with an office in Scottsdale.

Obsolete Publications. A park manager the other day told me that the owner told her not to spend money on new MHCA publications but to use the 2012 versions they bought a few years ago. This is an RV park. I have revised the Orange and Turquoise Books (that cover RV park forms and laws) twice since then, most recently this year.

I don't revise these books for the fun of it. I do it because laws and interpretations of them change over time. I asked the manager what year vehicle the owner drives and her response was a 2016 GMC truck. I told her to ask the owner if he would have a problem with the mechanic using a 2012 manual in maintaining the truck.

Use of old forms in particular can get a park in a lot of trouble. When laws change forms become obsolete and their use can even be illegal under the revised laws. This is such a false economy--saving money by not buying current manuals and forms--that it calls into question the competence of such an owner.

Mobile Home Titles. Recently a package of five mobile home/RV parks was purchased by one of our clients. Included in the sale were 150 landlord owned mobile homes and RV's. Another 35 homes were being financed by the landlord and the installment loans were also included in the sale.

The title company handling the sale closed escrow and recorded the necessary documents transferring ownership of the parks. But it found that it did not know how to transfer the 150 mobile home/RV titles and was not prepared to transfer the financing contracts in a way that the assignments would be honored by the Arizona MVD when homebuyers paid off their loans.

The parties turned to us since we do so much title work in conjunction with our mobile home abandonment program.

We developed an individual mobile home loan assignment form and obtained execution of 35 of them to be attached to the individual titles so when loans are paid, the MVD will honor lien releases by our client.

The bigger problem was in getting titles transferred. Vanessa had 150 powers of attorney executed by the buyer, one for each home, allowing her to transfer title. She ensured the old titles were properly endorsed by the seller. She completed the transfer section on each title showing the new owner. And she then prepared 150 individual applications for title and registration to be filed with the MVD.

Finally, because this is a bulk order, and because the MVD limits the number of transactions we can make each visit, Vanessa arranged with a local MVD contractor to handle the entire package on an expedited basis, avoiding the delays in dealing direct with the MVD.

We did all of this while covering our normal, heavy workload in day to day abandonments, a workload that has expanded due to the many additional abandoned homes in three parks now being closed by their owners.


February 27, 2016

Parks Continue to Sell. Cal Am just closed on Cimmaron Trails in Queen Creek. Sun Home Communities (the local Arizona operator, not the national operator) just closed on Palm West in Avondale. Many others are currently in escrow. I have never seen anything like the intensity of sales going on the past year. Independent operators are gradually disappearing from the scene with regional and national operators buying them out.

Legislative Program. Both MHCA and AAMHO have ambitious legislative programs this year. It is amazing to me how many special interest groups have sprung up over the years who want to be heard on bills that have no apparent impact on them. Legislators like to force compromise but it is hard to strike deals with a table literally full of people with no real stake in the matter, no understanding of what is involved, and at odds with other so-called stakeholders. Rather than strike deals that make things worse we have pulled many of our proposals. 

I am optimistic that some things will get through. I am especially hopeful that one bill giving us some ammunition to deal with dishonest, fraudulent poachers will make it. But there is still a tough road to travel.

The bill allowing potlucks at MHC's and in other non-commercial settings without having to satisfy County Health Department food handling licensing and regulatory requirements passed the House and is now in the State Senate. I am really hopeful it will get through and be signed by the Governor.


February 19, 2016

ADA Suits Against RV Parks & MHC's With RV Sections. Arizona has become a target for lawsuits arising under the Public Accommodations section of the Americans with Disabilities Act (ADA). As the name implies, this section applies to “public accommodations” as defined in the ADA. There are twelve categories of these including places of transient lodging but not including residential communities. Many of the lawsuits have been filed by Theresa Brooke, a wheelchair bound woman who has sued more than 150 Arizona hotel owners for failing to provide wheelchair accessible pool lifts. She is not the only such plaintiff.

Parks have repeatedly asked if they need to bring their pools into compliance with the accessibility standards issued under the ADA. Specifically these standards have expensive pool lift requirements to enable wheelchair bound users to get into and out of the pool.  I have said for years that as long as the pool is in a MHC and is limited to being used by residents and their guests and is not open to the public, the ADA and the pool lift requirements do not apply.

Here is an excerpt from a U.S. Department of Justice advisory issued in 1993 involving Title III of the ADA which covers this area of Public Accommodations:

In a mobilehome facility, common areas, such as recreational facilities, for example, that are restricted to the exclusive use of residents and their guests would be considered part of the residential facility and not a place of public accommodation even though places of recreation are listed among the categories of public accommodations under title III. However, where such facilities are available for use by persons other than residents and their guests, they are places of public accommodations within the meaning of title III. 

You can see the entire letter at the DOJ website.  

Although 23 years old, this policy remains accurate. As long as the public is not allowed use of the pool the ADA accessibility standards do not apply to it in an MHC.

The same logic would seem to apply to RV Parks and Resorts that are limited to long-term residence and not transient rentals. But those renting spaces overnight or for only a few days may qualify as public accommodations and may be subject to the ADA and one of these lawsuits if they do not have qualifying pool lifts.

Pleadings in some of these cases indicate that the suit is filed on the basis of a phone call by the plaintiff to the community office asking if there is a pool or spa and if so, whether it has a wheelchair lift. If the answer is “no”, the suit is filed.

Any park getting such a call should answer that the park only rents spaces to long-term residents (if that is true) and not get into the details of its facilities over the phone. If someone asks about the minimum stay requirement, respond with the truth. This goes not only for RV space rentals but for park owned home rentals as well. It would be wise to have a minimum one-month stay requirement since that would appear to clearly make the use residential and not transient.

Parks with short-term rentals and no pool lifts should immediately contact an ADA qualified contractor for the purpose of getting the pool and spa brought into compliance.

These plaintiffs seem to target small mom and pop operations who can ill afford the expense of litigation in the hopes of getting a quick settlement of a few thousand dollars (which will all go to the attorney filing the suit) and an agreement to install the pool lift.

I am hopeful that parks targeted for these suits that do not fall under the ADA will fight back. But that will be up to the park operator and perhaps its insurance carrier if it has coverage for ADA litigation.


February 13, 2016

Manufactured Home Financing. Fannie Mae and Freddie Mac have indicated they will consider financing manufactured homes in MHC's as chattels. Up until now they have only been willing to do so if the home is legally affixed to land and considered part of the real estste. The FHFA, the umbrella agency for these lending entities has solicited comments on this proposal as well as other proposals. I have submitted comments on behalf of MHCA and MHIA, and they have been publically posted by FHFA. You can see my comments as well as others here.

Chicanos Por La Causa. This group recently closed on the acquisition of an affordable housing complex that will provide supportive services to a needy population. I was involved in this acquisition and in obtining the financing from United Healthcare for it. You can read about it here.


February 12, 2016

Potlucks in MHC's. Potlucks are a tradition in MHC's, usually sponsored by tenant associations. But in recent years state and local health departments have enforced food safety laws having the effect of outlawing these unless the facilities are inspected, approved, and licensed by health departments, and unless all persons involved are trained and licensed as food handlers. In other words they are held to the standards of restaurants.

I originally drafted a proposal to exempt potlucks from these requirements in MHC's but then we discovered that a bill had already been drafted having this effect. The bill is HB 2341 and you can read it at that link. It seems to be moving towards passage with the strong support of MHCA.

A snide and snarky article appeared about it in the Arizona Republic which also took a condescending shot at "trailer parks" which house several hundred thousand Arizona residents. 

You can read the article here if you can stomach smug, conceited, condescending prose.


February 11, 2016

Proposed HUD Re-Definition of Park Model. HUD has published a proposed rule revision on the definition of manufactured homes and park model's.  The proposed rule seeks to revise the exemption for RVs that are not self-propelled.

The RV industry has sought for HUD to define an RV as a unit built on a vehicular structure, not certified as a manufactured home, designed only for recreational use and not as a primary residence or for permanent occupancy, and built and certified by the manufacturer in accordance with either the National Fire Protection Association (NFPA) or American National Standards Institute (ANSI) consensus standards for recreational vehicles. 

HUD is proposing to adopt the industry recommendation but to require certification with the updated ANSI standard, A119.5-15, and to include a requirement that units claiming this exemption prominently display a notice stating the unit is designed only for recreational use and not as a permanent dwelling until the completion of the sale of the park model.

Read the proposed rule here.


February 8, 2016

City of Mesa Non Conforming Uses. Historically the City of Mesa has attempted to get MHC's and RV Parks to gradually come into compliance with its current zoning requirements, especially with set-back requirements. Many of these parks were established before the zoning ordinance went into effect or before current set-backs were amended into them.

About 20 years ago there was a "global settlement" with many parks whereby they would gradually come into compliance with current set-back requirements. Recently some parks that were not party to that agreement have begun having problems getting permits for work when violations of current requirements were in existence.

The City did not seem to be recognizing that the Stagecoach Trails case concluded that the entire park, not individual spaces are to be considered a non-conforming use when it predates the zoning ordinance or amendments imposing current set-back requirments.

Late last month in a case involving these issues in an older park pre-dating the zoning ordinance, where the park was not a party to the "global settlement", the City Attorney's office informally agreed that Stagecoach Trails controlled and that the zoning in force when the park first opened would as a general rule control.

There will be exceptions. Parks that have entered into settlement agreements may have waived these protections. And provisions of new zoning ordinances grounded in safety concerns can often be enforced anyway. But this is still a significant accomplishment.


February 5, 2016

Legislative Session. The legislature is in session and the final deadline for bills being introduced has passed.

I have drafted three bills for MHCA, one on abandoned homes, one on mobile home dealer licensing and discipline, and one making several changes to the MHP landlord tenant act.

The state tenants' association has submitted two bills that MHCA and I oppose without major changes, and a Scottsdale councilman has engineered introduction of one expanding tenant relocation benefits when parks close which we also object to.

One of the AAMHO bills is another attempt to shift tree maintenance responsibility from tenants to landlords when trees are on tenant spaces.

There is no telling how these bills will do. The odds are against any bill actually getting enacted but some do so it is important to be vigilant about what the legislature is doing.

Negotiations with various stakeholders are going on simultaneously on all of these bills and the horse-trading in the halls of the legislative buildings is intense.

It is remarkable how such a frantic process results in the enactment of laws that make sense, but it does.


January 29, 2016

New Articles Posted. I just posted seven new articles on the 2012-2016 Articles page.


January 27, 2016

Training. I conducted my last Maricopa County training class of 2016 last Friday in Glendale. It was well attended by an alert and energetic audience. I will be handling two more later in the year in Flagstaff and Tucson and of course will be at the MHCA Conference in June.

MHCA Publications. New Orange and Turquoise Books are available from MHCA. These are RV space and home rental publications. Orange is a forms book and Turquoise is a manual describing how the landlord tenant laws work. Both were updated and expanded to cover park owner park mpdel and RV rentals.

Drones. Drones are popular and affordable. A high performance drone with zoom lens camera costs less than $1,000 on Amazon. But drones can be irritating and invasive of people's privacy.

Some drones have powerful cameras mounted on them. They can be used to snoop into private affairs, and photos taken without the knowledge of the subject can become humiliating if posted on line. They can also be equipped with video cameras.

Drones generally cannot be flown without FAA approval. But there is an exception. Individuals flying for hobby or recreation can do so if they:

Fly below 400 feet and remain clear of surrounding obstacles;
Keep the aircraft within visual line of sight at all times;
Do not interfere with manned aircraft operations;
Don't fly near an airport, people or stadiums;
Don't fly an aircraft that weighs more than 55 lbs;
Are not careless or reckless.

Landlords should consider restricting or forbidding operation of drones in or over the community. They can be unsafe if operated negligently, and can be used for grossly improper purposes. Sample rules in new MHCA forms manuals have “no drone” provisions incorporated.

Recently a man blasted a drone out of the sky with a shotgun for flying too close to his property. The drone owner is suing him and that may become a test case for exactly what the law allows and prohibits when it comes to recreational drone use.


January 16, 2016

Elimination of Fire, Building and Life Safety DepartmentThe Governor's Executive Budget was made public on Friday, January 15. There is language in it advising of changes to the Department of Fire, Building and Life Safety. The funcfions of the agency will be parceled out and "consolidated" with other state agencies.

The Office of Manufactured Housing will become a division under Arizona Department of Housing.  The Office of the State Fire Marshal will become a division under Arizona State Forestry. The current regulatory responsibilities of those Offices will not change.

The future of certain functions is unclear under the proposed budget plan, mainly the landlord tenant responsibilities and oversight of the ALJ process. It is likely they will wind up at the Department of Housing but that is not specified in the Budget.

The target date for completion of the "consolidation" is January 2017 and the Department will be transitioning throughout 2016. They promise to keep everyone informed as changes occur. Read the budget proposal here, starting at page 171.

I am not happy with this since the industry will wind up with a smaller profile than at present and its regulatory functions will be in a Department having no knowledge or interest in manufactured housing. But there was no outpouring of opposition to this plan nor is there likely to be given how management of this agency has been conducted over the past several years. I am sorry to say but agency top management (most of whom are now gone) contributed greatly to this situation.


January 14, 2016

Tricon Lifestyles Acquires New Parks. On January 11, 2016, Tricon Lifestyles purchased a portfolio of five age-restricted manufactured housing communities located in Mesa and Apache Junction.

This transaction increases Tricon Lifestyle's portfolio size to 2,474 residential pads in ten communities with approximately $85 million of assets under management. By our calculation this makes Tricon Lifestyles one of the top four MHC operators in the state. Not bad for an operator that has only been doing business in Arizona for less than two years.


January 8, 2016

January 22, 2016 MHC Manager Class. My next class will be in Glendale in January at Palm Shadows. The rest of my 2016 classes will be outside of Maricopa County. Contact MHCA to register at 1 (800) 351-3350 or (480) 345-4202.

Drones in Parks. Drones can be expected to bother neighbors in MHC’s, as well as to alarm privacy buffs and the FAA. Drones have become an annoying hobby and their use will increase over the foreseeable future.  Parks, especially family parks may want to ban or restrict them in their rules and regulations.

MHCA template rules in the Blue and Orange Books are being revised to address this growing problem.

Park Purchase and Sale Agreements. As parks continue to sell I get more and more requests from non-clients to review purchase and sale agreements (PSA's). We do this for clients and focus on the unique aspects of transactions involving RV Parks and MHC's as well as such problem areas as septic systems and the state of rental documentation.

We also focus on whether the park is renting, selling and/or financing homes since those activities are generally restricted by lenders who will be financing the new buyer's purchase. Of course we also can review and provide necessary opinion letters on the new buyer's loan documents.

Sometimes the seller is a client and before we can assist the buyer we need to get a conflicts waiver from the seller. Some of them balk at that fearing we will reveal irrelevant confidential information (we won't), but most agree since they know our involvement will normally help the deal close. Before we can do anything for a non-client buyer we need to get a retainer agreement signed and if the buyer is unknown to us, will require a cash retainer deposit. 

We charge an hourly rate for these services. Often we are asked what the charge will be. That is impossible to quote exactly since it depends on the park, the location, the utilities, the state of tenant documentation, the local zoning, the seller, how sophisticated the buyer is, and many other things. While we will try and estimate total charges, all of these variables make it impossible to be exact on the amount up front. 

Serving Notices for Clients. We serve five and seven day notices for some of our larger clients and for one we serve all of the rent increase notices each year. We do this through our computer system, and send out around 1,000 non payment notices each month for clients.

We charge for this but it takes some of the headache out of day to day management chores, and ensures (1) notices are correctly served, and (2) that evictions can be timely and promptly filed. Charges depend on the volume of notices wich is why the service is generally used by larger clients with high volumes of these.


January 1, 2016

Happy New Year.  Last year we experienced a great deal of growth in our firm.  As our business expanded we were forced to bring additional personnel on board. We are still pretty lean staff-wise but we needed enough people to get the work done. Evictions and abandonments each were up by nearly 20% over the prior year.

Last year was dramatic on many fronts for us and I hope we can just catch our breath this year. Melissa having triplets led the list of significant events followed by Chris leaving and Vanessa taking over abandonments seamlessly.

Website. I have made a number of changes to this site to freshen it up. Feel free to browse.

2015 Park Closures and SalesPark closures were really up last year resulting in more work for us not only in advising and helping out with the procedures but in handling a number of abandonment situations as well.

Park sales were through the roof and another major out of state operator--Zeman Homes--entered the Arizona market. In two years Sun Communities, Tricon Lifestyles and Zeman have moved in. I believe Sun and Tricon Lifestyles are two of the top four operators in numbers of parks in the state (far behind ELS and Cal-Am) despite their recent entry into the market.

FBLS Department. This agency has been operating for about a year with only an interim acting director. My guess is that the reason a permanent director has not been appointed is that the agency is slated for elimination with its functions being distributed to other agencies. I would like to see some of those functions eliminated but that is unlikely.

I hate to see the agency eliminated in this fashion but small limited purpose government organizations often have dim prospects of survival when faced with an administration looking to slim down and streamline the bureaucracy. The Weights and Measures Department was eliminated last year and is coming to the end of a one year transition period to complete parceling its functions out to other agencies.

2016 Training.  I have updated the Seminars and Appearances page to show currently scheduled MHCA training classes I am set up to conduct.


The information contained on this site is not legal advice and does not create an attorney-client relationship with the user. Landlord-tenant and fair housing laws are always changing and are subject to interpretation. You should always consult an attorney before taking any action.

This is an attempt to collect a debt. Any information obtained will be used for that purpose.


Michael A. Parham
Williams, Zinman & Parham, P.C.
7701 E. Indian School Rd., Suite J
Scottsdale, AZ 85251
Phone: (480) 994-4732
Fax:      (480) 946-1211