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) 2017 by Michael A. Parham. All rights reserved.
June 24, 2017
MHCA Conference and Fannie Mae. Last week's MHCA Annual Conference wrapped up the 2017 trade show season. We participated in a big way. Melissa conducted five training classes and with Scott Williams, in a panel of Q & A's for lawyers. Scott helped out with the training classes as well. Vanessa covered our display table and spent a lot of time answering questions.
The success of the Conference was largely due to the interest Fannie Mae has shown in using Arizona as a pilot location for its new national efforts to finance manufactured homes.
That interest started out with a single cold phone call I made about a year ago to the residential program manager at Fannie. As it turned out Fannie had been considering getting into this business due to a Congressionally mandated "duty to serve" underserved populations with new residential lending programs.
Fannie's regulatory agency, the FHFA (appointed to oversee them and Freddie Mac after the 2008 housing crash) for the past year has been posting proposals asking for comments on a progression of plans to honor this duty to serve obligation. MHCA has had me post a number of comments and they have been well received by the agencies. Our comments have also triggered a lot of response from Fannie. Last winter a number of Fannie representatives came to Arizona where we had the chance to show them around a number of parks. This re-intensified their interest.
Lending against manufactured homes in rental parks is complex, far more than single family home loans. The Fannie Mae people and I have been getting deeper into this as the last year progressed.
The most recent upshot is that Fannie flew about 13 top managers from Washington out for this Conference including its number two executive. When big national park operators heard about this many decided to send their top management as well. The two national manufactured home trade associations also sent some of their Washington people.
This made for a large Conference. On Thursday night Melissa, top MHCA officers, the Fannie Mae people and I had a lengthy dinner meeting about moving ahead with the pilot program. Fannie's biggest problem is learning the industry and gathering data. We intend to help in this.
We are all happy with these developments. Both Fannie and MHCA top management praised us during their presentations for our efforts and we took a lot of pride from that.
June 13, 2017
Whack Job Lawsuits. These kinds of abusive but expensive to defend lawsuits are fairly common but can be expensive to defend. Typically they are filed by tenants themselves as a device for inflicting pain on their landlords. Since the law protects the basic assets of most ordinary folks, it is virtually impossible to recover a judgment for the community's legal fees for having to defend them.
But just ignoring an abusive lawsuit can expose the landlord to a big default judgment that will be even more expensive to defend, clear off the record, and then be required to defend the lawsuit itself. Tenants often get cheap advice from non-lawyer paralegals on how to structure the suit so it looks authentic. But a careful reading will show that it is full of holes and often misrepresentations.
The cost of dealing with one of these is that in addition to legal fees spent on figuring out what the tenant s trying to say, and legal research to come up with a motion to dismiss the case, the court filing fees are significant.
Courts are usually reluctant to simply throw tenant suits out and will usually give the tenant additional time after dismissal to file an amended complaint. This in turn requires additional attorney's fees to again seek a dismissal.
We see these most often in Maricopa and Pima Counties since that is where the populations are. Right now we are defending cases in both counties. But they can be filed in any of our 15 counties as well as in federal court.
Court cases are not the only abusive litigation going on. We find that almost all ALJ complaints fall into this category. They attract more of them that do the courts simply because they are simple to draft and file and the filing fee is only $50.00. On the other hand they move pretty fast and are usually over with in a few months at mush lower legal fees.
Similarly consumer complaints with the Attorney General's office under fair housing laws, the state ADA and consumer protection laws are also common. These too take less time and expense to deal with and are over with pretty quickly.
The key in all of these is to not ignore them. File the required answer right away. And it is usually a mistake to try and do it yourself. We have seen far too many parks do so, either settle or lose a case they should win, and later regret not having just fought it.
We hate these cases, almost more than anything else. On the one hand we are researching difficult issues since tenant claims are not really based on the law. We then have to write up difficult motions and go to court and argue them before a disinterested judge with an irrational person on the other side. Then when the client gets our bill he occasionally goes a little crazy with us over big fees for silly irrational cases. Who can blame the client? We feel the same way.
Sometimes the community's liability insurance will cover these cases and we will recommend they be contacted to provide the defense. Actually sometimes buried in all of the B.S. in the pleadings there is the element of a legitimate claim. This would be a good time to get an insurance settlement of what could later turn out to be a significant problem.
The best way to minimize these kinds of claims is to treat tenants right and be responsive to their complaints internally. And be careful to screen incoming tenant applicants carefully.
June 9, 2017
RV Parks Magazine Article. Here is another lengthy article about me that appears in this month's issue of Woodall's Campground Management. That is a national publication serving the U.S. RV parks industry.
June 2, 2017
Fannie and Freddie Pilot Programs. Fannie Mae and Freddie Mac are two government supported enterprises (GSE's) that underwrite lending in this country. Most of their activities are focused on residential home loans, but for the last several years they have also been involved in commercial loans secured by multi housing and manufactured housing communities.
Several years ago Congress imposed on the FHFA, the agency that oversees these GSE's, a "duty to serve" many areas of the housing market not well served by them. One area is manufactured housing loans to individuals including "chattel mortgages", loans to people buying manufactured homes but not the land they are on.
Since then they have been trying come up with ways to do this at minimal risk to the investors who buy securities backed by these loans. MHCA has had me file a number of comments over the last 15 months on how the GSE's can safely get into these markets. Our comments have had significant effect and the latest FHFA proposal calls for the GSE's to establish pilot programs that will start the chattel mortgage lending activities on a test basis in selected markets.
We have been in contact with various officials of these entities and about nine of them will be at the MHCA Conference that takes place June 21-23. Fannie Mae officials will make two presentations at the Conference covering what is happening and possibly how its pilot program will work.
We want Arizona to be a pilot program location and are trying to work with the GSE's to get them approved here. If approved we will also work on getting them operational.
GSE backed loans will make it easier for tenants/homeowners get financing on their homes, for dealers and manufacturers to sell homes, and for rental communities to fill vacancies. But the industry must do everything possible to make this safe for investors.
MHCA Conference App. MHCA has added a mobile app for its upcoming conference on June 21-23. The app is called “2017 AZ MH” and is available now for Android and Apple phones. With this app you will be able to download all conference information to your mobile device, whether it’s your phone, iPad, or tablet.
This app will contain everything needed for the conference including a list of all of the classes, including the instructors, and a copy of their handouts. It will also allow attendees to rate classes and speakers quickly and easily.
Melissa will be conducting four classes and participating in a fifth along with Scott Williams. As pointed out above, Fannie Mae people will be putting on two presentations. And there will be lots more.
It’s available for download now in your application store on your device and will be updated regularly as more information becomes available. To register for the conference call Call Nancy at MHCA at (480) 345-4202 or (800) 351-3350. For more information, here is a link to the conference flyer.
May 23, 2017
CenturyLink Problems Continued. MHC's have been in conflict for years with CenturyLink over its right to force them to pay for trench work to enable it to maintain and repair its underground cables for customers who live in the park. CenturyLink's legal staff has now "clarified" its position.
On May 7, 2017 Melissa wrote CenturyLink on behalf of a client. Shown above are the first two paragraphs of its legal counsel's response. These acknowledge that the MHP LTA does not require MHC's to make telephone or internet service available to tenants.
It goes on to say that landlords are AUTHORIZED to provide those services in the park if they wish, and to do what CenturyLink requires in its tariffs, IF THEY SO CHOOSE.
A CenturyLink letter widely distributed in the past by it to MHC's say:
"As CenturyLink has explained to mobile home parks in Arizona, the CenturyLink rules, which are embodied in service tariffs approved by the Arizona Corporation Commission, require that the customer or the property owner perform the excavation necessary to uncover CenturyLink cables on private property that are in need of repair, or to provide the trench or underground conduit needed for replacement of cable".
This has been promoted by CenturyLink maintenance techs as REQUIRING parks to do this work. As the Legal Counsel makes clear, parks only need to do so if they CHOOSE to keep land line phone service working for individual tenants. But there is no obligation on them to do so.
With so many 21st Century telecommunications methods now available, tenants would be well advised to find an alternative service like competing cable, satellite television, microwave systems, SKYPE er even just cell phone to keep in touch with the world.
May 15, 2017
Dealers Violating 2012 Escrow Law. I last wrote about this in 2016. But the problem continues to persist. Last week I handled a complaint against a large dealer for this exact violation.
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:
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.
May 11, 2017
Effective Date of New Laws. The legislature adjourned on May 10 meaning they will become effective 90 days thereafter, or on August 8, 2017 by my calculation. The MHC industry had a good year and a lot of thanks should go to Susan Brenton, MHCA Executive Director and Janna Day, MHCA's lobbyist.
May 2, 2017
More on Fair Housing Laws. The Supreme Court has ruled that cities can use Fair Housing laws to sue banks, but the decision wasn't a total win for the government.
In Bank of America Corp. v. City of Miami, Miami alleged that banks during the subprime crisis intentionally lent to minority borrowers that led to foreclosures. These caused lower property tax revenue while increasing demand for city services. Lower courts agreed and allowed the suit to go forward.
The Court's opinion held that a city is an "aggrieved person" under Fair Housing laws. But it went on to say it wasn't clear the city had shown the direct injury needed to the suit to proceed.
A Fair Housing suit "is akin to a 'tort action' ... and is thus subject to the common-law requirement that loss is attributable 'to the proximate cause, and not any remote cause,'" the opinion said. Proximate cause under Fair Housing laws requires “some direct relation between the injury asserted and the injurious conduct alleged”
"The Court declined to draw the precise boundaries of proximate cause under these laws.
"Instead, the lower courts should define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the city's claims for lost property-tax revenue and increased municipal expenses."
The case was returned to the lower courts to deal with that issue.
The upshot here is that courts cannot just presume damage and hence a violation from the fact that a discriminatory act may have occurred. Damage as a direct result of the act must also be proven. This may impair the ability of plaintiffs to recover damages in disparate impact cases.
April 30, 2017
Rent Increases and Fair Housing Laws. Suppose a park gave a rent increase notice and some disabled tenants challenged it as being discriminatory under Fair Housing laws. The claim would be that their incomes compared with others are lower and that the increase has a disparate impact on them which violated the law since disabled people are a protected class.
Something similar happened a few years ago in California when the City of Thousand Oaks allowed an increase in rents in a rent controlled park to go into effect. Tenants sued the City for housing discrimination since the increase it allowed would have such a disparate impact. Last month the California Court of Appeals ruled against such a claim.
In rejecting the claim, the court stated: "There is no housing discrimination or equal protection violation because disabled tenants are treated the same as non-disabled tenants." In other words even though they believed they were subject to a hardship that stemmed from the low incomes they receive due to their disabilities, the increase treated them no differently than anyone else and thus there was no discrimination.
This case is unpublished which means it cannot be cited as precedent. But it is still instructive and can be read here.
April 27, 2017
AZ ARVC Award. The Arizona Association of RV Parks & Campgrounds presented its Jack Denton Memorial Award to me at the AZ ARVC 2017 Conference on April 26. This award is given to recognize people whose contributions to the Arizona RV industry merit recognition and who have demonstrated sustained service to the industry.
In making the presentation, AZ ARVC Chief Executive Officer Jo Ann Mickelson expressed appreciation for my work on behalf of both the RV parks and manufactured housing communities industries in Arizona.
I am honored by the thoughtfulness of this group in selecting me to receive this award. I admire the members of this important industry and appreciate that my feelings are reciprocated.
Newsletter. We put out a newsletter yesterday covering many of the legislative changes that are happening. If you did not get it and want one, go to http://conta.cc/2pmxU6f. You can also sign up to get on the list there (I think).
ADA Mitigation Bill. SB1406 has been signed into law by the Governor. This new law will give relief to small businesses and others targeted over the last few years by ADA lawsuits.
The bill specifies that only an aggrieved person who is subjected to discrimination may file a civil action for relief.
It prohibits the filing of a civil action for a building, facility or parking lot violation before providing written notice to the private entity in order to allow the entity to identify and cure the violation or comply with the law.
It prohibits the filing of a civil action for a building, facility or parking lot violation before providing written notice to the private entity in order to allow the entity to identify and cure the violation or comply with the law.
It states that if the entity is required to obtain a building permit or similar form of government approval in order to make the changes necessary to comply or cure the violation, the entity must complete the following within 30 days of receiving the notice of violation:
a) Provide a corrective action plan to the aggrieved person or the person's attorney; and
b) Submit the completed application for the permit or other form of approval to the appropriate governmental entity.
It prohibits the filing of a civil action for 60 days after the entity provides the corrective action plan to the aggrieved person or the person's attorney, if government approval is required to comply or cure the violation.
It requires the aggrieved person to file an affidavit under penalty of perjury when filing a civil action. The affidavit must state that the aggrieved person:
a) Read the entire complaint;
b) Agrees with the facts/allegations in the complaint; and
c) Is not receiving and has not been promised anything of value in exchange for filing the civil action (unless authorized by either statute or rule).
Finally it permits the court to additionally impose a sanction on a plaintiff or plaintiff's attorney if the court finds the action was brought for the primary purpose of obtaining a payment from the defendant due to the costs of defending the action in court.
April 23, 2017
Relocation Fund Accountability. A number of years ago the Fire, Building and Life Safety Department was discovered to have been using Relocation Fund monies to support a grandiose lifestyle including equipment and payroll not related to the fund's functions. A state audit of the fund confirmed this and recommended stricter supervision. Several years afterwards that Department was abolished and its functions were transferred to the Housing Department.
But the fund remained under the control of that Department and no third party supervision existed. However a provision in the park model relocation fund bill HB2176 now requires at ARS 41-4004 (B)(11) that the Department provide an accounting on the fund every six months to the Board of Manufactured Housing. Hopefully by shining a light on the fund, past abuses of its money will not be repeated.
Real Estate Agents Selling Homes. HB2072 has been signed into law and is effective later this summer. It will allow real estate personnel to sell homes in rental communities without having to get a Dealer’s license through the Department of Housing.
If a community owner is a licensed Dealer and the real estate agent is selling homes on his behalf, the Dealer is responsible for reporting the sale and paying into the Manufactured Housing Recovery Fund
If a real estate agent is selling a home located in a rental community on behalf of a private individual, then real estate licensing laws apply to the sale of the home. MHCA intends to develop a family of forms for use in these circumstances. A tricky part of this new law involves park models.
The law refers to the MHP LTA in regards to rental communities. But it is less than clear what definition of "mobile or manufactured home" is referred to. The MHP LTA specifically excludes park models and other RV's from its definition. But the tax and titling laws do cover park models and travel trailers if used as residences, and the MVD will title them as "MH's".
So what happens under this new law if a real estate agent lists a park model in a MH park? Likely the MHP LTA applies meaning park models are not covered by the Housing Department dealer licensing laws. Those laws do not apply and park models may be sold by anyone as a broker.
Presumably real estate agents likewise need no license to sell park models. But the Department of Real Estate that generally regulates real estate brokers and agents is not familiar with this terminology and may take the position this law applies, especially given the fact that park models may be titled as "MH's".
In a perfect world the bill would have been clear on this, but it is not a perfect world.
April 18, 2017
AZ RV Park Operators Conference. This takes place at Rawhide in Chandler on April 25-26. We will be making presentations on the new laws affecting RV Parks, mainly the park model relocation fund bill.
Park Models Covered by Relocation Fund Statutes. A bill set to go into effect in early summer makes major changes in the RV Space Long Term Rental Space Act (RVRSA).
Under the 2017 changes to the law, park model space tenants are now eligible for certain relocation benefits when parks are closed due to a change in use or the subject of age restriction changes. The program and benefits are derived from current laws applicable to mobile home parks.
These provisions only cover park models subject to the RVRSA. They only apply to tenants under rental agreements of 180 days or more so tenants without such agreements are not covered no matter how long they have been there.
When the law becomes effective, the following benefits will become available to tenants:
Relocations: Actual expenses up to $4,000 for a park model. This includes take down, moving, and set up costs, provided the unit is moved to a new location within a 50 mile radius. At the discretion of the Housing Department, up to $2500 more is available if the unit is ground set.
Abandonments: 25% cash payment where a tenant abandons a unit in a park involved in a change in use (but not in an age restriction change). The tenant must be eligible to relocate the unit. If he chooses not to, he can get the 25% cash payment upon surrendering a valid, signed and notarized title together with lien releases and proof of payment of all property taxes on the unit.
Reimbursement of Fund: If there is a change in use of the park, the landlord must reimburse the fund $250 for each Park Model moved. This does not apply if the change is in the park's age restrictions or if the unit is abandoned.
The landlord must give a minimum 180-day notice of the intended change in use to all tenants under A.R.S. §33-2149. The notice must also advise of the relocation fund and a copy must be sent to the Arizona Department of Housing.
In the case of a change in the park's age restrictions, the initial notice must be a minimum of 60 days. It must also advise of the fund and that tenants wanting to move as a result of the change will have 180 days to do so after the date of the 60 day notice. A copy also must be sent to the Department of Housing. The effect is that the change in age restrictions may take place as soon as 60 days after the notice is given, but tenants have another 120 days after that to relocate at the expense of the fund.
Notices should be given by certified mail or hand delivered.
The new MHCA Orange and Turquoise Books cover these provisions and contain necessary forms.
April 9, 2017
New Articles. I just posted five new articles on the 2017 Articles Page.
April 5, 2017
MHCA Handbooks. With all the new changes in the laws coming our of the legislature this year, Melissa and I have been busy updating many MHCA handbooks.
The Orange Book RV Parks Forms Book has been updated to reflect Park models being covered by the Relocation fund starting late in the summer. So has the Turquoise Book that explains how RV park landlord tenant laws work. We have completed the Orange Book and MHCA is getting it printed. The Turquoise Book will be ready around this time next week. We have put them on the front burner to have them ready for the RV park conference on April 26.
The Blue Book MH Space forms book is being revised to cover changes in the way homes owned by deceased tenants are handled. Until now the law has been silent on what to do with such homes if a tenant dies and no one comes forward to assume responsibility. And the law does not explain what the obligations of such people are to bring the deceased tenant's rent current. This new law will do these things beginning in late summer. these will be ready well before the MHCA Conference in late June.
Both sets of publications will contain a number of other improvements and updates. They can be obtained from MHCA when ready. Call Nancy at MHCA at (480) 345-4202 or (800) 351-3350.
Vexatious Litigants. According to Wikipedia, "Vexatious litigation is legal action which is brought, regardless of its merits, solely to harass or subdue an adversary. It may take the form of a primary frivolous lawsuit or may be the repetitive, burdensome, and unwarranted filing of meritless motions in a matter which is otherwise a meritorious cause of action."
We find ourselves defending many vexatious lawsuits, mostly brought by tenants seeking revenge against landlords. They are so obsessed with what they think is the rotten way they were treated that they lose sight of exactly what they are doing. Vexatious lawsuits are really common in Tucson.
Lawyers like the one that filed thousands of ADA suits over technical violations against small defendants unable to afford the cost of a legal defense bring sometimes vexatious lawsuits. Other examples involve lawyers so convinced that foreclosures are the work of the Devil that they file frivolous defenses to legitimate post foreclosure evictions challenging the foreclosure.
But most frivolous litigation we see are suits filed by tenants and ex-tenants over how they were mistreated by their landlords. These suits usually go away but it takes a lot of legal work in the form of pre-trial motions to make them do so. This is expensive. Landlords usually get an award of their attorneys’ fees when the suits are dismissed but these are rarely collectible.
The law allows judges to declare a plaintiff as a vexatious litigant and bar him from further litigation without prior court approval. But judges rarely apply this. In addition judges usually give people representing themselves a lot of leeway in pursuing the case that makes it more expensive for the landlord's attorney.
If you are a landlord you will eventually be hit with a frivolous lawsuit by a vexatious litigant. Don't ignore it. Get it to your attorney immediately because if you ignore it you may wind up with a judgment against you.
March 25, 2017
Law Enacted to Stop Courts from Regulating Landlords. The Arizona court bureaucracy has been attempting to regulate landlords in an indirect fashion for the last year by trying to impose mandatory notice and eviction forms on them. These forms include matters going beyond what the relevant statutes require. If successful the mandatory nature of the forms with these new requirements would be a round about way of the courts legislating from the bench.
In our system of government, legislation and the setting of public policy is the responsibility of the legislature and separation of powers principles require that the judicial branch stay out of it.
Our firm has taken the lead in opposing these efforts. But every time we have pointed out the defects in what the courts are trying to do, the bureaucracy changes the forms and continues to press the issue. The revised forms are every bit as bad as the former versions and the fight has seemed to become endless.
Out of a sense of frustration, a bill was proposed this legislative session to try and stop the courts. AMA and MHCA were the primary supporters of the bill. Melissa and I helped draft it and Mark Zinman was the star witness testifying before legislative committees in favor of it. The bill, HB2237, would amend every landlord tenant and eviction law to specifically prohibit the courts from mandating the use of forms when other forms work equally well.
The bill sailed through both houses of the legislature on a bipartisan basis. In the senate only two democrats and one republican did not vote for it. On March 21, 2017 the Governor signed it and it will go into effect around August 1.
It is tragic to see this attempted power grab by the court bureaucracy. We hope this will put a stop to these efforts. But frankly given the tenacity of the bureaucracy, it would not be surprising to see it try and get the new law struck down by those very same courts. If they try we will be there fighting them.
Janna Day, the MHCA lobbyist was instrumental in getting this bill through and the efforts of AMA and the AAR were also important. This is an important example of why it is so important to support MHCA in its legislative efforts.
March 17, 2017.
This wretched company and its rotten business practices has raised its head again. They have begun once again their campaign to get parks to do their underground line repairs at the parks' expense while they continue to collect internet and telephone fees from their customers who are tenants of the park.
Common sense would indicate that one selling a service would cover the cost of providing the service. But not in the world of CenturyLink. They bamboozle parks into accepting this cost and liability by telling them the Arizona Corporation Commission requires it, but the Commission has no authority to order parks to do anything.
They also fail to disclose that the tariffs they point to were actually written by CenturyLink and merely approved by the Commission. And they refuse to recognize that the MHPLTA does NOT require parks to provide telephone infrastructure. A 2014 ALJ case confirmed that.
MHCA put out a blast e-mail to members about this. If you did not get it you can read it at this link.
Stipulated Judgments. The court bureaucracy is attempting to forbid eviction judgments where tenants agree. They would prefer a system where tenants get every opportunity to live in housing without doing what their leases require. It has proposed a new rule prohibiting such judgments. MHCA had Melissa and me file strong objections to the proposed rule. You can read them here.
HB2237. This bill will stop courts from regulating the landlord business by imposing court published notice forms on landlords and eviction forms on attorneys. The Bill got through both houses of the legislature on a bipartisan basis and has been sent to the Governor for signature. This is a huge victory over a powerful court bureaucracy. The bill was sponsored by MHCA, the AMA and the AAR. Janna Day, the MHCA lobbyist and Courtney Levinus the AMA lobbyist worked hard to get this through and we owe them a debt of gratitude.
March 11, 2017
Legislation. I have not written about HB2017 but it looks like it will be going to the Governor for signature so now is the time.
This bill was sponsored by MHCA and supported by AAMHO and acquiesced in by MHIA. It will allow licensed real estate agents to sell new MH's in MHC's if licensed to a Department of Housing licensed Retailer. It will also allow brokers licensed by the Department of Real Estate to list used MH's in MHC's and sell them if listed by private parties (tenants).
It is hoped that by opening this market up to real estate brokers and agents, MH sales will pick up and that these units will make their way into MLS listings to gain additional publicity. The practice seems to have been successful in Utah and hopefully it will be here as well.
March 7, 2017
Legislation. We are on track to having a very successful legislative session. In addition the the bill restricting court interference in landlord tenant affairs that I wrote about on March 3, a couple of other bills are moving along.
HB2176. A bill that is important to the MHC and RV parks industries is going through the legislature and looks like it will become law. The primary purpose of the bill is to add park models covered by the Long Term RV Rental Space Act to homes eligible for assistance from the mobile home relocation fund. Essentially they will be treated like mobile homes when parks close, there are rent increases over 10% plus CPI, or there is a change in the park's age restrictions.
The bill will also make the Housing Department accountable to the Board of Manufactured Housing thus hopefully reducing the risk of improper use of fund monies like we saw several years ago.
Of perhaps greater importance to landlords, the bill also would add a new section, ARS 33-1419 to the MHP LTA dealing with what happens when a tenant dies. It will allow the heirs to sell the home provided that the buyer is park qualified and approved; provided all rent and other charges are paid; and provided the buyer signs all standard park documentation.
SB1255. This bill will revise the Residential LTA (that applies to park owned rentals) and will permit the eviction of a guest who has overstayed without evicting the tenant. It has passed the senate and awaits action in the house. We believe this bill will pass and become law.
March 3, 2017
Legislation. HB2237 is the bill that would stop courts from regulating the landlord business by imposing court published notice forms on landlords and eviction forms on attorneys. The Bill got through a very important hearing last in the House Judiciary Committee by a 7 top 2 vote. It was then sent to the Arizona Senate.
The Supreme Court's lobbyist appeared in opposition to the Bill. Mark Zinman of our firm and one other landlord attorney testified in favor of it.
Yesterday the Senate Judiciary Committee conducted a hearing on the Bill. Mark Zinman testified in support of this joint AMA/MHCA/AAR Bill.
We are now close to getting this bill enacted into law. The Committee approved the Bill by a 5 to 2 vote. Now it moves onto the Rules Committee where it should pass unopposed, and then hopefully to the Governor.
This Bill is a very big deal and it is one of MHCA's top legislative priorities to get it enacted. The last thing we need is for court bureaucrats to take over regulation of the Arizona rental housing industry.
March 1, 2017
Federal Financing of Manufactured Homes. For the last decade or so, since the start of the Great Recession, buyers of manufactured homes have had a difficult, in many cases impossible task of getting financing for their purchases.
Conventional lenders which specialized in this either went under or becams so inundated in repossessions that they got out of the lending business. Parks that previously bought and then sold and financed homes became covered by federal laws and regulations including the SAFE Act and Dodd Frank which essentially shut their seller financing activities down. A few conventional lenders like Clayton Bank and 21st Mortgage continued making loans but generally only on newer homes to the most qualified of buyers.
In the past Fannie Mae had made manufactured home loans but were forced out of that business by the high volume of repossessions and foreclosures. Ultimately Fannie Mae and its sister Freddie Mac became inslovent and went into federally supervised receivership under the new Federal Home Finance Agency (FHFA).
After languishing for many years, interest groups representing manufactured home manufacturers and dealers got Congress to enact legislation imposing a "Duty to Serve" obligation on Fannie and Freddie. FHFA was mandated to come up with plans to assist housing providers serving underserved people. For the last 18 months FHFA has been trying to come up with plans to assist underserved populations including manufactured home buyers.
MHCA has been in the forefront of trying to help FHFA in this area. It has submitted comments to FHFA outlining how Fannie and Freddie could get back into the manufactured home finance business without jeopardizing their financial status. Not only that. MHCA has actually met with FHFA and affiliated people to educate them in how this business works and how MHC's can support Fannie and Freddie manufactured home financing.
This week FHFA asked for additional comments assisting them in coming up with programs responding to their "Duty to Serve" obligations. On behalf of MHCA we have responded with a seven page letter. The letter has been posted on line by FHFA and can be seen here.
February 25, 2017
Safe Houses. A recent report on CNN revealed that there is a movement afoot in certain parts of the country including Southern California to establish safe houses to allow undocumented immigrants to stay in to avoid arrest and deportation.
This is a modern day offshoot of the old sanctuary movement intended to give these folks protection against deportation. It started off with churches in Tucson and other areas.
Years ago mobile home parks and single-family house landlords had problems with coyotes using their homes to warehouse these folks while they waited to go elsewhere in the country. Often times these rental properties were badly damaged and often they became the center of criminal activity.
Under certain circumstances this sort of action can violate federal "harboring laws". 8 U.S. Code § 1324 - "Bringing in and harboring certain aliens", provides that a person (including a group of persons, business, organization or local government) commits a federal felony when he:
Assists an alien whom he should reasonably know is illegally in the U.S. or who lacks employment authorization, by transporting, sheltering, or assisting him to obtain employment;
Encourages that alien to remain in the U.S., by referring him to an employer, by acting as employer or agent for an employer in any way; or
Knowingly assists illegal aliens due to personal convictions.
Fair housing laws prohibit landlords from inquiring into immigration status of applicants and as long as the landlord does not have legal cause to KNOW about the undocumented immigrant's illegal status there is generally no harboring violation.
Landlords should keep an eye out for safe houses and act when they discover one. If there is ANY DOUBT what to do, contact your attorney.
Read the CNN report here.
February 23, 2017
Court Mandated Forms. The final deadline for commenting on proposed mandatory use forms was February 17. These are forms being proposed for use by all landlords and landlord attorneys by a Commission of the courts dominated by tenant and consumer advocates. So far they are limited to Residential Act forms but they will thus cover park owned rentals. Under the proposal more forms will then be developed applicable to MHC and RV park space rentals. That is scary because these people really don't know what they are doing.
On behalf of MHCA, Mike and Melissa filed comments with the Court strongly criticizing the proposed forms and objecting to their adoption. Similar objections were filed by other landlord organizations, judges and private tenant attorneys. These comments can all be reviewed at the following site, towards the end: http://www.azcourts.gov/Rules-Forum/aft/625
This power grab by the courts has resulted in a bill at the legislature, HB 2237 co-sponsored by AMA and MHCA and written in part by us. The bill would prohibit courts from doing this sort of thing.
The Commission, chaired by a court of appeals judge (but dominated by activists) has reached out to the AMA to see if some sort of compromise can be worked out. AMA representatives including Mark have met with the judge and selected members of the Commission twice now.
Both sides of this issue realize they are in a big fight. We believe our side holds the winning hand despite the fact that the other side is actually part of the court system (a Supreme Court appointed Commission).
Unless some sort of miracle happens it is our intent and that of AMA and MHCA to continue fighting this proposal.
Our Bill has passed the House and been sent over to the Senate where it has been assigned to the Judiciary Committee for consideration. We intend to keep pushing on this.
February 16, 2017
Assistive Animal Complaint. Landlords refusing to waive a pet deposit for a combat veteran with an emotional support dog have been charged with discrimination and violating the Fair Housing laws by HUD.
The veteran rented a single-family home in Oklahoma, and asked that the $250 pet deposit be waived because his dog was an emotional support animal needed to assist him with his disability. The veteran provided the landlord a letter from his doctor, according to the complaint.
According to the charge, the veteran is diagnosed with PTSD. This substantially limits his personal, work, and social life. In the letter to the landlords, the doctor stated that the veteran was diagnosed with PTSD following a combat tour of deployment and he was being treated at a VA Medical Center. The letter further stated that dogs often provide support when PTSD symptoms escalate, and that veteran’s dog often keeps his PTSD symptoms in check.
The tenant complained that the landlord, refused to waive the pet deposit fee. The leasing agent told the veteran, according to the complaint, " ... Unfortunately my broker said only service dogs are waived. I'm sorry I tried.”
After the landlord refused, the veteran paid the deposit and moved in. He then filed a complaint. The management company has since refunded the deposit. HUD is asking for $16,000 in civil penalties for discrimination and violation of the Fair Housing Act.
If in doubt about how to handle a request such as this, consult your legal counsel.
HB2176. This makes changes to the Relocation fund statutes. The most significant change is that patk model owners including in RV parks under the Long Term RV Rental Space Act become eligible for assistance but must also start paying the annual assessment to the Fund. It also increases the size of the Fund and the amounts payable for relocations. This bill also amends the MHP LTA to allow parks to more effectively deal with home in parks after tenants die. This Bill has passed the House and been sent to the Senate.
February 12, 2017
Pointing the Finger. Sometimes park owners will find the cheapest manager they can, ignoring the fact that an ignorant and untrained person running a multi-million dollar operation can cost them a lot of money. In recent weeks, we have had a few instances where evictions were referred to us and we filed them on the basis of the paperwork provided.
When we learned in these cases that there were serious disputes by the tenants over what they had paid, we asked the manager to meet us at court so we could all understand what was being claimed. The manager failed to appear leaving our attorney no alternative but to reset the matters for trial at a later date. In these cases the managers once again failed to show up in court. One of the cases was dismissed but we convinced the judge to reset the other one a third time (two is supposed to be the maximum).
The manager failed to show up at the third appearance so that case was also dismissed. What is amazing is that the managers had the gall to blame us for the cases being dismissed. And the owners actually confronted us about it. The manager's incompetence and laziness is largely due to the owner's cheapness. When we wind up being blamed for this inepititude, we must make a decision whether to continue working for the client or to withdraw.
Many times for a relatively new, small or difficult client the decision is easy. It just isn't worth the hassle of putting up with false accusations from clients and managers who create these problems, and we withdraw.
Really Stupid People. Recently a new small park owner called us with a bunch of questions. He was not a client but was a stranger to us. We told him that before we could talk to or advise him we needed to have a signed reteiner agreement. He said okay and we sent him a standard agreement. He did not sign or return is but started calling with questions.
We tried to be polite but told him that without the signed agreement we could not advise him. Finally one day he just showed up at our office demanding a "free consultation". Again it is our policy to be nice to people, even overbearing demanding ones, but nothing seemed to work and he kept demanding his "free consultation". Finally after telling him we don't work for free we threw him out of our office and thought we might need to call the police.
Free consultations are something personal injury lawyers do to try and screen big dollar injury claims with insurance on the other side from nickle and dime injuries where liability is not clear.
February 7, 2017
HB2237. This is the bill that would stop courts from regulating the landlord business by imposing court published notice forms on landlords and eviction forms on attorneys. The Bill has been passed by the House and now goes to the senate where it will likely face more of a fight by opponents. Below is a sample form proposed by the Courts. This is a non payment of rent notice under the Residential Act. The yellow language is what the statutes require; the turquoise is stuff the Courts would add.
SB1218. This bill introduced in the Senate would integrate old FBLS Department statutes into the Department of Housing statutes. Most of it is straight forward but MHCA has a few problems with it including a description of the Department's role in regulating MHC's. A proposed amendment will resolve this and we can probably live with the Bill as amended.
February 1, 2017
Legislation. This is an example of why MHCA is so vital to our industry. Its primary purpose is to protect property rights, especially defeating attempts to impose rent control.
A really dumb bill has been introduced in the state Senate. It would allow local governments to impose rent control by adopting rent control ordinances for houses, apartments and mobile home spaces rented to people 62 and over.
It does not place any limits on the controls adopted meaning, I suppose, that a local government could put the rent at Zero. It does not create a process by which landlords could challenge the amount allowed as rent by a local rent control board.
It overlooks that rent control can constitute a "taking" of property of the landlord requiring the local government to compensate the landlord by the amount that the value of the rental property was damaged. It overlooks the fact that age is not a protected class under fair housing laws and that landlords could just stop renting to older persons.
It overlooks the fact that decreased revenues means landlords would not be able to afford to maintain and improve their properties. It overlooks that rent controlled properties are not a good investment and that it will result in the value of rental properties going down thus harming the Arizona economy.
Finally it overlooks the fact that probably a majority of people over 62 are quite affluent especially compared to working families with children. Why should they get special treatment.
It is unlikely this bill will get anywhere but it illustrates the lunacy of some of the things that make their way into bills.
Read the bill, SB 1358 here.
January 27, 2017
HB2237. This is the bill that would stop courts from regulating the landlord business by imposing court published notice forms on landlords and eviction forms on attorneys. The Bill got through a very important hearing this week in the House Judiciary Committee by a 7 top 2 vote. It now goes to another Committee in the House and ultimately (we hope) to the Senate. The Supreme Court's lobbyist appeared in opposition to the Bill. Mark Zinman of our firm and one other landlord attorney testified in favor of it.
SB1218. This bill introduced in the Senate would integrate old FBLS Department statutes into the Department of Housing statutes. Most of it is straight forward but MHCA has a few problems with it including a definition of what constitutes a "consummation of sale" and a description of the Department's role in regulating MHC's. We are trying to work those difficulties out.
Park Model Bill. AAMHO is going to introduce a bill to put park models under the Relocation Fund statutes. MHCA is probably going to go along with this. Details are being negotiated. MHCA also has a couple of fairly minor bills to introduce this session but it is possible we will just include them in the Park Model Bill.
Court Rules. A virtual war is raging between the Supreme Court's Access to Justice Committee (controlled by legal aid lawyers) and landlord attorneys and Justice Court judges over the Committee's attempts to force landlords and tenants to use specific notice and eviction forms developed by the Supreme Court's administrative bureaucracy. I will be filing additional comments opposing this proposal in mid February. It is this power play that inspired MHCA, AMA and the AAR to sponsor HB2237. It is a shame our industries are at such odds with the Court system. The damage to the Court's reputation will be significant and long lasting.
January 21, 2017
Legislation. I have been writing for months about efforts by Court bureaucrats to start regulating the rental housing industry by mandating notice forms to be used by landlords and eviction forms used by lawyers. The proposed Court requirements would exceed what the law requires.
HB2237 has been introduced in the legislature to stop this. It is supported by the AAR, AMA and MHCA. We had a hand in drafting it. It will be opposed by advocates, lawyers and the Courts.
Read the bill here.
January 20, 2017
Inaugeration Day. I make no secret of my conservative leanings, and my pleasure in the election of Trump. But he is no conservative. I am hopeful that he will in fact "drain the swamp". Since I left Washington in 1975, the bureaucracy has grown exponentially.
I go back pretty often and have a brother in law who sells real estate there. The real estate business is always booming because government is a growth industry and the parasites (lobbyists, trade associations, lawyers, etc.) that feed off of government have likewise grown. Government was too big when I left and is simply out of control now.
Big government creates bureaucracies filled with people of moderate abilities looking for something to justify their existence and all too often that means imposing regulation on private industry. The rental housing industry has paid a price for big government. The SAFE Act, Dodd Frank, limitations on use of criminal records to screen applicants, and regulations creating a whole new protected class of "assistive animals" under fair housing laws are just a few examples. The list is endless.
Trump is no conservative and barely a Republican, but I hope he is a ruthless manager. Thomas Jefferson said it best: "I hold it, that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical".
KISS Principle. Wikipedia defines the KISS principle thusly: KISS is an acronym for "Keep it simple, stupid". The KISS principle states that most systems work best if they are kept simple rather than made complicated; therefore simplicity should be a key goal in design and unnecessary complexity should be avoided.
We believe this. That is why our rental document and notice forms often may look surprisingly short, simple and understandable.
Recently we had a couple of clients actually complain that our lease forms were too simple and our notice forms simply did not "look official". These clients operate communities in California and were judging Arizona practices by California standards.
We explained that we are not California, that the rental housing industry has strived for years at the legislature to keep things fair, simple and straight forward, and that our forms reflect the results of those efforts.
Wikipedia also has this to say about "legalese": Legalese is characterized by long sentences, many modifying clauses, complex vocabulary, high abstraction, and insensitivity to the layman's need to understand the document's gist.
We try to avoid legalese as much as possible in our communications and forms.
One fringe benefit of this approach to draftsmanship is that people can actually understand what they are reading. Another is that it allows us to keep our fees as low as possible. We have not had many complaints about that.
January 12, 2017
Real Estate Brokers/Agents Selling Homes in Parks. A bill has beern intorduced in the Legislature that would allow licensed real estate agents and brokers to sell homes in MHC's without being licensed by the Manufactured Housing Division of the Department of Housing. It is hoped that by opening this market up to resl estate agents, it will be easier to sell homes in parks. Read the bill, HB2072 here.
January 8, 2017
Evictions. For the second year running we have set a new firm record for eviction case filings. Our filings were up more than 12% over 2015.
We believe that overall filings in Arizona were flat meaning our increase is not the result of some economic trend whose coattails we rode. We attracted a number of new clients in 2016 that probably accounts for this increase. We always welcome new quality clients and our reputation for prompt knowledgeable legal support seems to attract them.
We look forward to 2017 though with all the changes the Courts are about to hit us with, there will be many challenges along the way.
The Courts. Landlords continue to be under siege from the court system.
Starting January 1, under a new rule parties in eviction cases have been able to force a change of the assigned judge for no reason. Supposedly this is a pilot program but there is little doubt it will become permanent. All this will do is slow cases down and increase landlord expenses.
A Supreme Court Commission continues to seek a rule change by the Court making the use of certain notice forms by landlords and court eviction forms by lawyers mandatory. The Commission has drafted the forms they want mandated. There are many problems here the biggest being the forms are legally defective--they were clearly drafted by people who do not know what they are doing. We continue to lead the fight against this proposal and will be filing new objections by mid February.
Many cases are resolved by having tenants who show up at court but do not dispute the rent owed sign stipulations agreeing to the numbers and to the eviction. This helps the courts process the heavy caseloads quickly and not waste time on cases where there are no disputes. Tenant and consumer advocates have been pressuring the courts to stop accepting stipulations with out the tenant appearing and acknowledging them. The Justice Courts are adopting this policy beginning next week. That defeats the purpose of stipulations and will slow cases down, again increasing landlord expense.
Advocates for these changes obviously have no concept of basic economics. The changes will slow cases down; make landlord expenses go up, and will ultimately force rents higher. Low rents are the ultimate consumer benefit of living in Arizona, but the advocacy groups have a hard job understanding this.
January 1, 2017
New Articles Posted. A new Articles page has been created for articles posted after January 1, 2017, and we have posted four new articles there. Most articles these days are written by Melissa though I still occasionally write one.
Challenges in 2017.
The Courts. Last year we discovered a new enemy. The Arizona court system and the State Bar have been gradually falling under the influence of advocacy groups representing consumers and tenants. These groups are hostile towards landlords, and some of their more influential members regard landlords as evil. The advocacy groups have not gotten far in the legislature and have turned to the courts' administrative and rule making processes to, in effect engineer back-door changes in the way the courts handle landlord tenant matters, especially evictions. Their goal is to slow the process down and create stumbling blocks up making even the most justified evictions difficult and costly. MHCA and other landlord organizations will be fighting off these attempts throughout 2017.
The Legislature. While pro tenant advocacy groups have not gotten far in the legislature recently, neither have landlord organizations. The last couple of years MHCA has had aggressive legislative proposals. But those same advocacy groups plus AAMHO show up in most cases to oppose these proposals even though many would clearly benefit tenants. Legislators are adverse to getting in the middle of these fights so when there is a hot contest over a proposed bill, it is normally tabled. Last year MHCA was successful in getting important legislation dealing with poachers, but failed with respect to many other bills. Over the last two years, bills improving the MH abandonment process have failed. The 2017 legislative agenda is going to be a lot more modest that in the last few years.
Diminished Presence of the Industry. Late last year the FBLS Department was abolished and its Manufactured Housing functions were moved into the Department of Housing. I was no fan of the FBLSD and was not unhappy to see it abolished. It had an astounding history of mismanagement and at the highest levels, incompetence. But it was still nice to see manufactured housing recognized as sufficiently important to merit its own department.
Aging Leadership. I include myself here. Industry leaders have done a good job over the years but time moves on and we all become older. We need to get new blood into positions of leadership. I practice what I preach which is a big reason Melissa has taken over so many of my responsibilities including acting as MHCA legal counsel.
Opportunities in 2017.
AAMHO Relations. AAMHO has new leadership and seems to have had a change in philosophy. I am hopeful they will not automatically oppose MHCA at every turn and will recognize that the two organizations in many respects face the same challenges. At least I am hopeful they will talk to us and be honest in working with us. Of course we must reciprocate.
MH Financing. This may be the greatest opportunity to present itself in 2017. The MHC industry has been hurt by the lack of financing available to tenants to buy homes. We have been working with the Federal Housing Finance Agency in Washington to get it to permit Fannie Mae and Freddie Mac to underwrite these loans even though the homes remain titled as personal property. Towards the end of 2016 the FHFA gave them the go-ahead to get into this line of work, and actually incorporated many of our proposals into its requlations authorizing this. We are hopeful that a MH financing pilot program will be set up for Arizona and are working towards this goal.
National Park Operators Buying Parks. It seems like the passing of an era, but a great many locally owned and operated parks have been bought up by big national operators the last two years, and they are constantly on the lookout for more parks in Arizona. We are attractive to them in large part because of a good legal environment and a better economy than most people realize. Park pricing is competitive compared to what they are used to in other states. We are losing many local old pros. But these big operators bring with them a degree of sophistication and professionalism that can't help but benefit the industry.
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.
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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