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The Articles on this page apply only in Arizona communities and deal only with the application of the Arizona landlord tenant laws.
All articles (c) 2007, 2008, 2009, 2010, 2011, 2012 "Today & Tomorrow", Manufactured Housing Communities of Arizona. Reprinted by permission.
FAIR HOUSING TRAINING
I periodically take my car into the shop for a checkup. It usually winds up costing me a lot of money. But the car never breaks down and runs well. So it may occur to me that since I don’t have any problems with it, I should save money and stop taking it in. Of course everyone knows that the reason it is running so well is that I do take it in for periodic maintenance.
Fair housing laws were expanded in 1988 and started being rigorously enforced at that time. The 1988 changes eliminated “adult parks” and for the first time prohibited discrimination in housing on account of handicap and familial status.
Because so many mobile home parks were directly affected by these changes, MHCA (then AMHA) introduced the Red Book covering fair housing laws, and sponsored a number of fair housing training classes around the state. These efforts were successful. When the 1988 laws went into force in early 1989, mobile home parks were largely in compliance and very few of them were the target of complaints.
Ever since, MHCA has emphasized fair housing in its training classes. Three hours are devoted to fair housing in every manager training class I conduct. But over time some folks have come to question why so much effort goes into this since there seem to be so few problems.
The answer is like the car answer. The reason there are so few parks targeted with fair housing complaints is that by and large, park managers are well trained in the area. They tend not to make the mistakes that other housing providers make that result in complaints.
A recent issue of this publication reported a settlement by an apartment operator of an Arizonacase filed in court for fair housing violations where the landlord was forced to pay nearly $250,000 to settle. On the national level there are plenty of such cases where the government has obtained judgments or settlement in the millions of Dollars. But you don’t read about such cases involving Arizonamobile home parks.
Despite the level of training in our industry, however, complaints do get filed against parks. Most of the time they are groundless because the park manager knew the law and didn’t make the mistakes that were claimed. If a park needs to defend against such a complaint it is much better to be able show that the manager did nothing wrong and have the complaint dismissed than to write out a check to make it go away.
Here is a brief synopsis of cases I have defended in recent months to demonstrate that complaints are still being made.
Soto case. Complaint was that the manager treated the tenant differently due to handicap. Dismissed.
Schaeffer case. Complaint was that the manager evicted a White tenant due to race. Dismissed.
Bates case. Complaint was that the manager refused to allow extra vehicles in the community as a handicap accommodation. Dismissed.
Broyles case. Complaint was that the manager refused to reassign parking spaces as a handicap accommodation. Dismissed.
Mancinas case. Complaint was that the manager selectively enforced park rules on the basis of race and national origin. Dismissed.
Castro case. Complaint was that the manager refused to allow extra parking for a caregiver as a reasonable accommodation. Conciliation agreement reached in which additional parking under restrictions were agreed to. No money paid.
Ybarra case. Complaint was that the manager enforced rules regarding painting of mobile homes more rigidly against Hispanic tenants. Dismissed.
Cooper case. Complaint was that the manager refused to waive pet fees for assistive animal kept by handicapped resident. Dismissed.
Burdette case. Complaint was that the manager required minority tenants to insure their homes but not other tenants. Dismissed.
Goins case. Complaint was that the landlord evicted a tenant because he was handicapped. Dismissed.
Kennett case. Complaint was that the manager treated a White tenant differently because his nonresident daughter was married to a Black husband and had mixed race children. Dismissed.
Robles case. Complaint was that the manager refused to let the handicapped tenant move to another location in the community as a reasonable accommodation. Dismissed.
These are just a few of the cases I have handled and are simply the most recent ones. The point is that despite all the training in the world, residents are going to complain. But the number of complaints filed when managers are well versed in this law is a lot less than if they don’t get trained. And good training will usually mean that nothing wrong was done and will result in the case being dismissed.
So the next time you start griping about being forced to endure a boring fair housing class, try to remember that there is a reason for it and that reason is to keep you out of trouble.
DEATH OF A TENANT
One of life's certainties is that it will end. When it ends for mobile home park tenants, their landlords are presented with a number of unusual problems. A variety of situations can arise. Many times a tenant’s death results in the home being abandoned that forces the park to resort to a landlord lien sale remedy. Probably ten percent of the landlord lien sales we handle result from a homeowner dying and no one assuming responsibility for the home.
Decedent Survived by Co-Tenant
When a husband, for example, dies but is survived by his wife who is a co-tenant, the law is pretty clear. ARS §33-1452(I) says the surviving co-tenant continues on as the sole tenant. But it also gives the survivor the additional right to terminate the tenancy by giving a 60-day notice of her intent to do so at any time within 60 days after the death of the decedent.
If the home was jointly owned or owned solely by the decedent, the survivor, if she is the legal heir or closest relative, should take a death certificate and the current title to the home to a local MVD office and arrange to have it transferred into her sole name.
No Surviving Co-Tenant
The major problems arise when a tenant living alone dies. Sometimes the tenant dies in the home but is not discovered for several days. The effects of a decomposing body in a mobile home can impair or the value of the home.
ARS §33-1452(J) addresses the death of a sole tenant. It says that his heirs or legal representatives have the right to cancel the lease by giving 30 days written notice to the landlord with the same rights as the original tenant. This is a badly written statute. Normally a lease is terminated automatically by the death of the sole tenant. But this statute implies that the lease continues in favor of the heirs or personal representatives since otherwise they would not need to give a notice to terminate it.
Assuming the lease remains in force, the first thing to do is find out who the heirs or personal representatives are. A personal representative is someone named in a will or designated by a probate court to handle the affairs of the decedent's estate. If someone claims to be a personal representative, require proof of his appointment. If you are unsure of what he provides you, check with the park's attorney.
Most mobile home park tenants do not have wills and their estates are too small to probate. The law provides a variety of ways by which a decedent’s next of kin (his heirs) can transfer his property to those entitled to inherit without a will or a probate.
If someone does not come forward to assume responsibility for the dead tenant's affairs within a couple of weeks, you need to try to locate them.
Keep an eye on the home. If people start going in and out of it, check with them to find out who they are. Review the tenant file. Contact whoever the tenant designated as an emergency contact.
When the rent statement is sent, check the file to see if it is returned by the post office. If it is not returned, it may be getting forwarded. Contact the post office to check on a forwarding address.
If all efforts fail and the home remains in the park with rent accruing, you will probably need to treat it as abandoned.
Sometimes the next of kin will come forward. If this happens, explain that the home can be sold on-site to a park-approved buyer provided it complies with park rules at closing. Also explain that the home can be removed if rent is current provided they give the park a 30 day written notice and comply with ARS §33-1485.01 concerning the condition of the space.
Often the heirs have no money and the decedent's estate doesn't have any either. They will ask you to let them defer the rent until the home is sold. You may want to agree to this. If you do, have an agreement signed that rent will be paid when the home sells; that they will exercise best efforts to sell it; and that if it is not sold within a certain time (perhaps 90 days), all rent will become due and, if not paid, the home will be deemed abandoned. A form of Storage Agreement under these circumstances appears in the MHCA Blue Book.
Frequently, the next of kin have no interest in dealing with the home. If that becomes apparent, treat it as abandoned.
For those heirs who assume responsibility, you should suggest they take a death certificate and the title to the home (if they can find it) to a local MVD office. If they do this more than 30 days after the decedent's death, they can obtain title to the home by filing an affidavit of heirship with the MVD.
Often a sole tenant will die and people will show up and start removing things from the home. Technically speaking, the park has no control over who goes into and out of a tenant home. But a landlord does have certain responsibilities not to acquiesce in unlawful conduct on the premises.
If you become aware of this, check with the people in the home and find out what their status is. If they credibly assert they are personal representatives or next of kin lawfully taking possession of the decedent's property, don't interfere. But if you have doubts and suspect they are people taking advantage of the situation and looting the decedent's home, call the police.
Occasionally the decedent will not have transferred title to the home into his name. An MVD record check can identify the name and address of the last owner of record but he may have moved or died in the meantime. A bonded title procedure will normally be required for the next of kin to get title in those circumstances.
If the home was titled to the decedent but the certificate of title was lost, the heirs can get a duplicate issued by the MVD and then transfer it to their name with an affidavit of heirship.
If there is a lien on the title and the loan is unpaid, it will likely need to be repaid or the lienholder will repossess the home. If you are aware of a lien at the time of death, send the lienholder a notice of abandonment when rent becomes delinquent in addition to trying to locate the heirs or personal representatives.
If a loan has been paid off but the lien is on the title and the lien release cannot be found, a duplicate lien release will need to be obtained in order to transfer title. If the lienholder no longer exists, a bonded title will need to be obtained by the heirs if they wish to get title in their names. If the home is abandoned the lien can be removed as part of the landlord lien sale process.
If no one assumes responsibility for rent and maintenance of the home, treat it as abandoned. The case should be referred to a lawyer skilled in handling abandoned home cases. Alternatively, if you want to do it yourself, abandonment procedures are described in the MHCA Purple Book but they are complicated.
REMOVAL OF HOMES FROM PARKS
In 2003 a statute was enacted as part of the Mobile Home Parks Landlord Tenant Act (MHPLTA). It is ARS § 33-1485.01 and deals with the removal of homes form parks by anyone including a tenant, a buyer, a dealer or a lienholder. Anyone wanting to pull a mobile home out of a park is subject to this statute.
I wrote about this statute shortly after enactment but over the years questions have continued to come into my office as removal situations arise.
Basically the statute says that a home cannot be removed from a park until the manager has provided a Clearance for Removal (form in the MHCA Blue Book). The statute imposes sanctions on anyone removing a home without a Clearance for Removal at Subsection C by making him liable for double the rent due at the time of removal. This is in addition to any other sums the person may be liable for under the MHPLTA.
Subsection A of the statute requires the tenant or any successor in interest to the tenant (including buyers from the tenant or lienholders repossessing the unit) to provide the park a written notice of intent to remove the home (form in MHCA Blue Book). That must identify the date of removal and identify the mover and the “responsible party” who will see to the restoration of the space after removal. If the “responsible party” is not licensed by the State, the park can require a special security deposit of $1,000 less any security deposits already being held, to cover restoration of the space if the “responsible party fails to do so.
Subsection B says the home “shall not be removed” by anyone until the park has provided a written Clearance for Removal stating that all charges due the park through the date of removal have been paid and identifying the condition the space must be restored to by the “responsible party” after removal.
Subsection C as mentioned above, imposes liability on anyone involved in removing a home without a Clearance for Removal.
Subsection D says the “responsible party” shall also remove accessory structures and clean up and restore the space. If this is not done, the park may serve a ten day notice specifying what needs to be done and serve it on the “responsible party”, the last tenant and any successor in interest (form in MHCA Blue Book). If the work is not completed within ten days (15 if sent by certified mail) the landlord can have the work done and sue all of those parties for the reasonable cost of doing so.
This statute must be read together with ARS § 33-1451 (B) that says a tenant shall not remove a home without a Clearance for Removal showing all sums due the landlord have been paid through the date of removal. This also says that the home can be removed even if there is a long term lease in force and only the rent through the date of removal can be required. That does not mean the tenant is off the hook for future rent under the lease. But the landlord must mitigate damages by trying to re-rent the space and can sue for rent accruing after removal only if those efforts are not successful.
The effect of these statutes and others is that the landlord has a possessory landlord lien on the home. This gives the park the right to prevent the home from being removed until all sums due the landlord as of that date have been paid as evidenced by the Clearance for Removal. In my view a park is within its rights to prevent a home from leaving if it is owed money and has not issued a Clearance for Removal.
But the park must be very careful not to require more than is owed under the law. If the removal is blocked because the park is demanding more than the statutes allow, the park can be sued for damages for wrongfully interfering with a lawful removal. The most common example is when a park tries to get future rents coming due under an unexpired lease. Future rents under a lease cannot be required as a condition of granting a Clearance for Removal.
Finally, the “responsible party” can only be required to restore the space to the condition specified in the rental agreement and park rules. All landlords should address these subjects in those documents. Sample language is in the rental agreement forms and sample rules and regulations in the MHCA Blue Book.
MOBILE HOME SALES ESCROW LAW GOES INTO EFFECT JULY 1, 2012
A law was enacted during the 2011 legislative session that does not become effective until July 1, 2012. It deals with handling mobile home sales through escrow and is complicated. Due to the complexities and the significant changes it makes to current sales closing practices, the industry was given a year to prepare for implementing it.
Summary of Law. ARS § 41-2180 is the new statute. It is part of the dealer licensing laws that are administered by the Department of Fire, Building and Life Safety (Department).
Subsection A requires licensed manufactured home Dealers and Brokers to establish independent escrow accounts with licensed independent financial institutions or escrow agents to handle closings. This applies to sales of new manufactured homes and sales of used homes where the purchase price is $50,000 or more.
Subsection B requires that the escrow agent selected be completely independent of the Dealer or Broker.
Subsection C creates an exception to the requirements of Subsection A for mobile home parks meeting certain conditions. I will address this below.
Subsection D allows licensed Dealers and Brokers to continue closing sales of used homes for less than $50,000 through their trust and escrow accounts the same as they have done previously. It also mandates account audits every two years. This subsection also allows a purchaser of a used home for under $50,000 to request the transaction be closed through an escrow agent, and also requires that the Dealer or Broker disclose to the Purchaser in writing that he has the right to require use of an escrow agent, and that if he fails to do so, the sale will close through the Dealer or Broker’s trust and escrow account.
Subsection E requires licensed Dealers and Brokers to notify the Department of the location of their trust and escrow accounts.
Subsection F requires Dealers and Brokers to authorize banks used for trust and escrow accounts to allow the Department to access information from them.
Subsection G sets forth requirements for earnest money receipt books.
Subsection H requires earnest monies to be deposited in the proper account within two banking days after receipt.
Subsection I deals with escrow instructions which are required to be included in purchase contract forms or addendums. The Dealer or Broker must sign the purchase contract or addendum and must notify parties to the contract of when the transaction escrow account is opened.
Subsection J sets forth minimum requirements that the escrow instructions must meet:
● Identity of escrow agent.
● Conditions to be met before deal closes and money is disbursed.
● Conditions applicable to disbursing funds before escrow closes.
● Requirements for additional funds to be deposited after escrow is opened.
Subsection K allows Dealers and Brokers to keep up to $200 of their own money in their trust and escrow accounts to cover bank fees.
Subsection L covers the mechanics of deposits into escrow accounts.
Subsection M sets forth earnest money records Dealers and Brokers must keep for each transaction.
Subsection N requires earnest money to be kept in escrow until either title is issued to the purchaser or the deal otherwise closes or terminates with a full accounting being provided.
Subsection O provides for disbursement of the earnest money once the deal is completed.
Subsection P requires Dealers and Brokers to retain all transaction records for three (3) years after the deal is completed.
Subsection Q restricts use of earnest monies to the transaction for which they were provided.
Subsection R contains special rules for units that are subject to special dealer financing/flooring relationships.
Subsection S authorizes the Department to adopt rules pertaining to Dealer and Broker trust and escrow accounts.
Subsection T excludes real estate brokers from these requirements.
The Park Exception. ARS § 41- 2180 (C) carves out an exception for NEW(but not used over-$50,000) homes for parks with Dealer or Broker licenses. The exception does not apply for used over $50,000 homes and parks still need to close these through independent escrow agents and their purchase contracts for those transactions will need to contain escrow instructions. Under $50,000 used homes can be closed through Dealer or Broker trust and escrow accounts unless buyers request third party escrows.
Mobile home parks must meet certain conditions. The statute exempts parks with Dealer or Broker licenses and parks which own controlling interests in separate entities with such licenses.
That's a pretty simplistic approach since so many parks are operated by umbrella organizations that have each park owned by a separate entity and perhaps a dealership that is yet another separate entity. The park owns no interest in the dealership yet all are run by the same controlling party. There are many REIT's operating parks in Arizona, some of which are publicly traded and some of which are not. There is no consistency in the way they are structured. However, MHCA was able to get the bill that was finally enacted changed to let the Office of Manufactured Housing (OMH) confirm that the dealership and the park share common control.
ARS § 41- 2180 (C) (1) limits this exception to homes sold in the park.
ARS § 41- 2180 (C) (2) addresses parks and dealers sharing common control. Since there are so many different ways to structure these arrangements, the arrangement is subject to the satisfaction of the OMH.
Under ARS § 41- 2180 (C) (3), a $100,000 bond is required. But rather than have every single park put up a $100,000 bond, the statute allows the Dealer or Broker to post it and have it apply to all parks sharing common control. So, for example, an operator with one dealership covering three parks only needs to post a single bond, not three.
Conclusion. All parks with dealerships need to get their purchase contract forms revised to contain the escrow provisions required by this new statute. They need to make arrangements with independent escrow agents to close sales they produce when the sale needs to be closed through an independent escrow agent. And they need to make sure all of their sales personnel become acquainted with the requirements of this law.
July 1, 2012 is not that far away. Parks engaged in sales need to get on this right away.
REASONABLE ACCOMMPDATIONS FOR HANDICAP ASSISTIVE ANIMALS
I have written several times on this subject but regulations keep getting refined, misinformation continues to be spread and selfish frauds continue to game the system for their own purposes.
Background. The Americans with Disabilities Act (ADA) applies to “places of public accommodation”. This includes such things as theaters, shopping establishments and hotels. Generally it does not apply to residential communities. However it may apply to portions of a residential community such as the rental office which is open to the public. As long as the rest of the residential community is limited in use to residents, visitors and guests, but excludes the general public, the ADA does not apply to it.
The Fair Housing Act applies to residential communities.
Both of these laws prohibit discrimination against persons on account of disability. Both of them require the targeted proprietors to make reasonable accommodations to their rules and restrictions for people with disabilities when the accommodation is necessary to enable them to make use of the facility.
Under both sets of laws, possession of animals by disabled persons needing an animal to enable use of the facility is a common type of accommodation requested when a rule or policy otherwise would prohibit the animal on the premises.
In recent years, the treatment of these assistive animals under the two laws has diverged with the ADA becoming more focused on “service animals”, a restrictive sub-category of “assistive animals”.
The ADA. Regulations implementing the ADA are published by the U.S. Department of Justice which also enforces the law. Effective July 23, 2010 those regulation were changed regarding “service animals”. The change became effective March 15, 2011. The new regulation says:
“Service animal means any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric, intellectual, or other mental disability. Other species of animals, whether wild or domestic, trained or untrained, are not service animals for the purposes of this definition. The work or tasks performed by a service animal must be directly related to the handler’s disability. Examples of work or tasks include, but are not limited to, assisting individuals who are blind or have low vision with navigation and other tasks, alerting individuals who are deaf or hard of hearing to the presence of people or sounds, providing non-violent protection or rescue work, pulling a wheelchair, assisting an individual during a seizure, alerting individuals to the presence of allergens, retrieving items such as medicine or the telephone, providing physical support and assistance with balance and stability to individuals with mobility disabilities, and helping persons with psychiatric and neurological disabilities by preventing or interrupting impulsive or destructive behaviors. The crime deterrent effects of an animal’s presence and the provision of emotional support, well-being, comfort, or companionship do not constitute work or tasks for the purposes of this definition.”
This is a comparatively restrictive definition of “service animal”. Under this only dogs will be recognized as service animals. Service animals are required to be leashed or harnessed except when performing work or tasks where such tethering would interfere with the dog's ability to perform. Finally, service animals are exempt from breed bans as well as size and weight limitations.
Though not considered service animals, businesses are also generally required to accommodate the use of miniature horses under specific conditions.
Certain pre-existing ADA policies remain in effect though some were clarified. Dogs whose sole function is “the provision of emotional support, well-being, comfort, or companionship” are not considered “service animals” under the ADA. The use of service animals for psychiatric and neurological disabilities however is specifically protected under the ADA.
“The crime deterrent effects of an animal's presence” do not qualify that animal as a service animal and “an animal individually trained to provide aggressive protection, such as an attack dog, is not appropriately considered a service animal.”
The Fair Housing Act. These ADA regulations do not apply under the Fair Housing Act which is the law generally applicable to residential communities including mobile home and RV parks. This is made clear in a memo from the General Counsel of HUD (which enforces fair housing laws) to all HUD fair housing enforcement authorities dated February 17, 2011. See http://www.fhco.org/pdfs/news/NEWS_HUDonADAanimalChanges02172011.pdf
The HUD memo notes that the definition of “service animal” under the ADA regulations is far more restrictive than what the Fair Housing Act calls for. It notes that the ADA definition does not apply under the Fair Housing Act. And it notes that animals other than dogs or service dogs are encompassed under the Fair Housing Act, including emotional support animals.
The memo acknowledges that unlike the ADA, there is no definition of the term “service animal”. It states that breeds other than dogs, with or without special training, including animals that provide emotional support have been recognized as “assistance animals” under the reasonable accommodation provisions of fair housing laws. The memo goes on to summarize the Fair Housing Act requirements.
So long as the individual involved actually has a disability, and so long as there is a relationship between the disability and the assistance the animal provides, it must be allowed as a reasonable accommodation unless the animal poses a danger that cannot be otherwise remedied, would cause an undue administrative or financial burden, or would fundamentally alter the nature of the housing provider’s business.
Conclusion. The new “service animal” regulations now in effect under the ADA have virtually no effect on landlords and the recent publicity and rumors saying they change what landlords must allow or may restrict should be disregarded.
Note on Phony Service Dogs. Many people are pretending to have disabilities and to need an assistive animal in order to have a pet despite a landlord's no pet rules. This has resulted in the creation of a cottage industry of businesses selling phony service animal certifications over the internet.
What is being sold is a "registration" of the animal, an animal ID card, an impressive looking certificate, and a document designed to intimidate a landlord or business proprietor into believing the law requires him to allow the animal on his private property.
For example one outfit sells such a package for about $150.00 plus shipping. All you need to do to get the package is check a box saying your dog does "Most" of the things the page says a real service animal does. Once you click the box you are transferred to the payment page where you put in your credit card information and shipping address so your “service dog certification package” can be sent to you.
Another one charges $40.00 for the basic registration but charges extra for all the other stuff ($40.00 for the animal photo ID card, and various sums for animal patches, badges, etc). Like the first site, this one only requires the customer to "certify" he is disabled and that the animal is necessary and qualified.
I suggest landlords print the list of organizations on that page and be on the lookout for residents demanding approval of house pets as service animals and presenting certifications from one of the organizations listed. Such a certification is meaningless. Any request for assistive animal needs to be handled in the same manner as other requests for reasonable accommodations.
CONVERTING AGE 55 TO ALL AGE PARKS
A law effective July 20, 2011 was enacted during the 2011 legislative session as a result of a cooperative effort by MHCA and AAMHO. It appears as a new section of the MHPLandlord Tenant Act, ARS § 33-1476.05.
Briefly, the 2011 law requires parks that intend to convert from Age 55 status to all age status to give all tenants and the Fire, Building and Life safety Department (FBLSD) of the change at least 60 days before the effective date. Tenants then become eligible for relocation assistance from the Mobile Home Relocation Fund if they meet certain criteria.
1. The tenant must live in a home in the park that he owns.
2. The landlord must be converting from Age 55 status to all age status.
The park must notify “affected” tenants at the time of announcing the change in writing that they are covered by this law. It is silent as to what the word “affected” means. For example we don’t know if non-age 55 households in the park are eligible or whether eligible households must have an over 55 member. It would seem that even non-age 55 households are eligible but the word “affected” calls that into question.
After the notice goes out, tenants have 180 days to make plans to relocate and to submit a relocation contract with a home mover to the FBLSD. Once the contract is approved, the tenant has 45 days from the date of approval to complete the relocation.
To qualify, the relocation needs to be to another Age 55 park within a 100 mile radius of the park being vacated. This would seem to make moot the question of whether non-age 55 households are covered by the law.
The law does not require landlords to reimburse the fund for any expenses it pays out which they must do if relocations are triggered by changes in use of the land. Also contrary to other relocation situations, tenants have no right to surrender the title and abandon the home in return for a 25% cash payout from the relocation fund as they have in other relocation situations.
The new statute does not change ARS § 33-1436. This section deals with Statements of Policy. It requires them to declare the park’s age status. ARS § 33-1436 (C) requires parks to give 60 days’ notice before changing Statements of Policy and provides that the effective date of the change cannot be before the expiration date of the current version. Normally Statements of Policy expire December 31 each year and renew for another year if not changed. That means parks deciding to change their age status should make the decision before mid October in order to announce the change effective the following January 1st thus making the change in compliance with ARS § 33-1436 (C).
One concern I have had with this new law concerns fair housing implications. I think there is a risk the statute could be found in violation of fair housing laws since it provides government funding to help people move out of a park because the park has decided not to discriminate against families with children (discrimination that is legal for Age 55 parks).
I seem to be a minority of one in this regard since every attorney knowledgeable about fair housing laws seems to think there is no problem with this.
Converting to all age status works real hardships on people who have relied on the fact that they are retirement communities in deciding to live there. An after the fact change in many respects is unfair to them, and this new law is intended to mitigate these hardships. Unfortunately many parks are forced to make the change due to the impossibility of attracting sufficient numbers of over 55 households to keep vacancies at acceptable levels.
MEDICAL MARIJUANA—A LANDLORD’S DILEMMA
Proposition 203 was approved by the voters last November, authorizing cultivation, use and sale of “medical marijuana” in Arizona. My partner Mark Zinman has written a couple of articles on this subject. We are devoting so much attention to this because we expect to see a lot of problems with people holding medical marijuana cards from the State wanting to use the stuff in the park.
Our concern stems from the fact that everyone acknowledges that this is just the first step in a plan to make marijuana a completely legal drug. A number of medical providers and others are already advertising themselves as the place for people to go to get certifications of need for marijuana that will be used to get the State to issue the medical marijuana card. And there is a lot of bad information floating around that the law prohibits landlords from restricting use of marijuana in rental communities.
Landlords need to make some important decisions on this subject soon and to do so need some basic information.
Proposition 203 says that possession and use of marijuana by one holding a permit from the Department of Health Services is a defense to a prosecution for a drug offense under Arizona law so long as the possession and use is consistent with the requirements of the Proposition. It also allows caregivers of cardholders to possess marijuana and provide it to the person they are caring for so long as they have a caregivers card and comply with the Proposition’s requirements.
The proposition prohibits landlords from refusing to rent to someone because he is a cardholder. It also prohibits an employer from hiring someone because he is a cardholder.
It does not say that a landlord or employer must allow use on his premises. Just that he can’t be refused rental or employment, or sanctioned because he is a cardholder.
The Proposition specifically states that a property owner cannot be required to allow marijuana use on his private property and an employer cannot be required to permit use of marijuana in the workplace. Also, it does not authorize people to work while impaired by medical marijuana.
The Controlled Substances Act makes it a federal felony to possess, sell or use any amount of marijuana. This federal law is not affected by the Arizona law (Proposition 203).
The U.S. Supreme Court has ruled in a case involving a similar medical marijuana law in California that the Federal law continues to apply despite the contradictory state law.
The U. S. Justice Department has announced that it will not prosecute marijuana offenses in states with medical marijuana laws by people whose offense is sanctioned by the state law. Nevertheless it remains a felony offense under the Controlled Substances Act; it just won’t be prosecuted for now.
Paragraph 1 of the standard Crime Free Addendum makes any violation of the federal Controlled Substances Act an eviction offense.
Fair Housing Laws.
These laws require landlords to make exceptions to their rules when reasonable to do so as a “reasonable accommodation” to the handicap of a resident. This has raised the question of whether a landlord must allow use by marijuana despite the Crime Free Addendum by a cardholder. The cardholder has proven to DHS that he has a handicap requiring treatment with medical marijuana.
HUD which enforces fair housing laws has received a memorandum from its General Counsel advising that such an accommodation is not reasonable since it requires a landlord to permit commission of a federal felony on the premises despite the state law permitting it.
So there does not appear to be a fair housing requirement that a landlord permit possession or use of marijuana on the premises.
Use in Public Areas.
It is my strong belief that all landlords should prohibit use of marijuana in public areas by everyone including cardholders. Proposition 203 only prohibits refusal to rent because one is a cardholder. It does not say use must be permitted on the premises. It specifically says that it does not authorize marijuana use in any public place and that it does not require the owner of private property to permit use on that property.
Use In Tenant Homes.
This is where it gets tricky. Historically landlords have prohibited all illegal drug use in the park including in tenant homes. While medical marijuana use by cardholders is now legal under state law it remains a felony under federal law. Each landlord needs to make a decision whether to not enforce the Crime Free Addendum against cardholders using marijuana as provided in state law, or whether to prohibit possession and use as a felony under federal law.
Some judges will be reluctant to evict cardholders for use in compliance with Proposition 203 despite the fact is remains a federal felony.
Any landlord electing to prohibit possession and use by residents in their homes despite being cardholders should send a notice to all tenants advising of that decision. A sample follows this article (Denise Holliday of Andy Hull’s Office actually drafted this).
A landlord deciding to turn a blind eye to use by residents in their own homes should still put out some kind of notice that any public use of marijuana even by cardholders is strictly prohibited.
I hate laws that do this—put landlords in a position where any decision is both the right and wrong decision. But we are in a position where a decision needs to be made. Either permit or prohibit use by residents in their own homes.
NOTIFICATION OF ENFORCEMENT OF CRIME FREE ADDENDUM TO RENTAL AGREEMENT
To: All Residents
Arizona recently passed a Medical Marijuana law that permits the limited use of Medical Marijuana in specific and limited circumstances. The State of Arizona has adopted rules that govern the use of medical marijuana.
Despite Arizona’s new law, the federal Controlled Substance Act categorizes marijuana as a Schedule 1 substance and the manufacture, distribution, or possession of marijuana is a federal criminal offense. See 21 U.S.C. § 801 et seq. Furthermore, the U.S. Department of Housing and Urban Development has sent out a Memorandum that specifically states that the use of marijuana for medical purposes violates federal law and that federal and state nondiscrimination laws do not require landlords to accommodate requests by current or prospective residents with disabilities to use medical marijuana. See Medical Use of Marijuana and Reasonable Accommodation in Federal Public and Assisted Housing dated January 20, 2011.
This property has determined that the use, possession, distribution or manufacture of marijuana will interfere with the health, safety, welfare and right to peaceful enjoyment of the premises by other residents. As such, the management hereby informs and reminds all tenants that they signed a Crime Free Addendum when they moved in and, pursuant to that addendum and the supporting federal laws, any use of marijuana (medical or otherwise) by the tenant or their guests will result in an immediate termination. This includes both public and private use.
If you have any questions or concerns about this policy, please speak to management
DATED THIS _______ day of _____________, 20_____
DISPOSING OF ABANDONED MOBILE HOMES
A Google search of “Abandoned Mobile Home” produced almost 10 Million hits. Looking at just a few of them shows this to be a huge but largely unreported problem in our industry. Many states have no established procedures for dealing with them. Others do. But the one consistent thing you can see looking at the many Google references is that ignoring an abandoned home will not make it go away. Someone with an abandoned unit on his land needs to take action to deal with it.
Santa Clause will not help. The Tooth Fairy will not help. The former tenant won’t help and neither will the Sheriff. Only the park operator can get the matter resolved.
In Arizona we have evolved a process based on a number of provisions in the Mobile Home Parks Landlord Tenant Act to take care of abandoned homes. Either the lienholder (if there is one) will repossess it, or the home can be sold by the landlord at a landlord lien sale, though occasionally a bonded title application will become necessary.
When lienholders repossess abandoned homes they are obligated to pay up to 60 days rent due when the park notifies them of the abandonment (which must be done within 10 days after discovery). The lienholder is then required to pay all future rent until the home is disposed of. Normally the lienholder will sell the home. Sometimes the landlord will buy the home. Most times a third party will purchase it and they occasionally pull them out.
But in a great majority of cases there is either no lienholder or the lienholder simply walks away from the lien and the home. In these cases a landlord lien sale typically follows.
The final stage of the landlord lien sale process is a public auction of the home following advertising the sale in a local newspaper. Those who have conducted these auctions know that in most cases no bidders show up. The typical result is that the landlord bids in the rent that is due. Since no one else is there, the landlord becomes the high bidder and is the purchaser at the sale.
In these situations, once the landlord presents a proper affidavit of landlord lien sale together with the required supporting documents, the park obtains a free and clear title to the home.
So then what? The home is still vacant and probably in pretty bad shape. Just getting the title transferred really doesn’t solve the problem.
That’s true but getting the title gives the landlord the opportunity to solve the problem since now the landlord owns the home and has the right to go in and take control of it.
If belongings having some value are found in the home, they must be separately disposed of and a second auction of the contents may need to be scheduled. But most times the home is empty or only contains worthless trash and junk.
Landlords should regard these situations as opportunities, not headaches.
The park could fix the home up and put it on the market for sale. Many parks will do this and sell it at a price to recover the costs of dealing with it. These parks find that pricing the home competitively allows them to get it sold quickly and get the space generating rent. It also results in an attractive home replacing the junker that it once was.
Some parks will give the home away to a prospective tenant who agrees to fix it up and bring it into compliance with park rules.
More and more parks are fixing the homes up and renting them. There are downsides to this, mainly the legal obligation of a landlord of a dwelling to maintain and keep it in compliance with codes. In addition, the home can be badly damaged by the tenant. It is especially important for parks to carefully screen park owned home tenants and require sufficient security deposits.
When landlords sell formerly abandoned homes or give them away it is extremely important to use transfer documents that clearly make the transfer on an “AS-IS” basis. That is not as easy as it sounds since a seller is still liable for damage resulting from hidden defects the transferor knew of but did not disclose. Even when the home is given away, it is important to ensure the transfer is effective as an “AS-IS” transfer.
Finally, some landlords may simply decide to demolish the home and haul it to the dump. Unfortunately that is not as simple as it sounds. First, many landfills will not take a demolished mobile home. Those that do will usually require all hazardous materials, propane tanks and appliances with refrigerants first be removed. And of course a fee will be charged by the landfill and the hauler will also need to be paid.
A much bigger problem is that the home may be subject to a county requirement for an asbestos inspection and be required to remove any asbestos based materials. A permit from the county may also be required. Both the inspection and the permit can be extremely expensive.
Before deciding to demolish the home a prudent landlord will contact the county environmental quality department for information on what is required. Most times it will make more sense to keep the unit, fix it up, and either rent or sell it.
Conclusion. Dealing with abandoned homes takes time (normally around 72 days after the process begins) and costs about $500. And that only results in the park getting a title. The bigger challenge is disposing of the home after title is obtained.
Landlords also need to be aware of laws applicable to dealer licensing, title and registration, and perhaps the SAFEAct if the landlord is going to finance the sale of homes.
These are tough situations but the smart park will get on the problem immediately, deal with it and either get the unit sold or rented and begin generating cash flow from the space.
ADMINISTRATIVE LAW JUDGE COMPLAINTS
When times get tough or AAMHO gets new leadership, park landlords see an increase in the filing of Administrative Law Judge (ALJ) Complaints by tenants against them. Both conditions exist today and I am seeing a huge increase in these filings.
The law permits tenants to file complaints with the Fire, Building & Life Safety Department (FBLSD) when they believe their landlord is either violating the terms of the rental agreement or is not complying with the MHP Landlord Tenant Act. The Department is supposed to screen complaints and refer those with merit to the Office of Administrative Hearings which will hold a hearing on the case.
The screening process includes the FBLSD making sure that the complaint makes reference to specific provisions in the MHP Landlord Tenant Act. Once the Complaint passes this hurdle it is sent to the landlord. The landlord must file a written response within twenty days after the FBLSD mails it. If the landlord fails to do so, it will be treated as a default meaning everyone will assume the landlord has admitted the violations. A hearing will still be set to determine the appropriate sanctions.
When the landlord files a timely written response the FBLSD will send a copy to the tenant and ask whether he is satisfied and wishes to drop the case. Sometimes he is satisfied. Sometimes the landlord will contact the tenant after getting the Complaint and get the problem worked out. In those cases the Complaint will be closed and that is the end of it.
In a majority of cases, however, the tenant is not satisfied with the response. Then the FBLSD will schedule a hearing at the Office of Administrative Hearings and the file will be sent there. A new Docket Number will be assigned to the case. All filings in the case after that must be made with the Office of Administrative Hearings.
All hearings are set in Phoenix, even for parks in remote parts of the State. They are normally set for a half day and most take less than that. At the time set for the hearing the tenant and landlord appear. Each will offer testimony and exhibits supporting their positions in the case and explain to the ALJ why they should prevail. At the end of the hearing the ALJ takes the case under advisement. About a month later a decision is published on the Office of Administrative Hearings web site and about a month after that a written copy is mailed to the parties.
If the ALJ finds no violations the case will be dismissed. If violations are found, the ALJ will order the landlord to comply with the statutes violated and specify what needs to be done to achieve compliance. If utilities were overcharged, the ALJ can order that the overcharges be refunded. Finally in an extreme case the ALJ can impose sanctions (fines) against the landlord of up to $500 per violation.
Reasons Filings Are Up
When times are tough and money is tight, tenants will become frustrated with rent increases or the general level of rents, and focus on their belief that they are not getting what they are paying for. Often they believe that their landlord is greedy. Out of anger and frustration, they may start looking around and decide the park is not being maintained in compliance with applicable standards. An ALJ Complaint alleging this will follow.
AAMHO is a state-wide tenant association with chapters in a number of parks. The organization is dependent on establishing and expanding chapters to generate revenue to support its activities. In a tight economy, tenant need to be convinced that their dues are a necessary expense. This can be done by convincing tenants that their landlord is bad and is taking advantage of them. Identifying deficiencies in how the landlord is doing business, filing a complaint against him and winning a case can be used to encourage tenants to join and support the park AAMHO chapter.
Finally, parks are getting older and more difficult to maintain. If management does not stay on top of their maintenance obligations, the park can fall into a state of disrepair justifying the ALJ Complaint.
Common complaints involve street maintenance (potholes and large cracks), common area tree trimming, non-functioning pools and spas, dangerous wiring and electrical distribution systems, inadequate outdoor lighting, poorly maintained landscaping, broken laundry room equipment, and the like.
The law requires landlords to maintain their common areas and facilities in compliance with applicable health and safety codes and to keep the park in a fit and habitable condition. That means in the case of streets that potholes and large cracks need to be filled in. But it does not mean that hairline cracks and faded pavement needs to be seal coated to make the streets look nice. The duty is to comply with codes and make them safe, not to make them look pretty.
The law also requires that facilities offered by the landlord need to be in operating condition and be kept maintained. If something breaks the landlord can’t just put an out of order sign on it and forget about it. It needs to either be fixed or permanently taken out of service and removed.
Some things tenants complain about are not the landlord’s responsibility. Utility connections to tenant homes for example may be the tenant’s responsibility or the utility company’s. Trees on occupied tenant spaces are the responsibilities of the tenants themselves, though many parks still maintain the larger ones. Lighting may or may not be necessary to satisfy codes or make the park suitably safe.
A new tactic is for tenants to file complaints with local code enforcement agencies and pressure them to issue violation notices against the park. Often this happens just before a hearing and the tenants then try to use this to prove the landlord is in violation of its maintenance responsibilities.
This is a problem since code compliance officers often cite landlords for tenant violations, utility company violations, or for conditions that really do not constitute violations at all. As these cases work their way through the code compliance systems these problems get worked out. But the landlord must be prepared to deal with premature code violation notices at the ALJ hearing if this comes up.
To defend these cases it is usually necessary for the landlord to produce photos of the park to show its real condition since the tenant photos will show it in its worst light. The park should also be prepared to show how much it has spent on maintenance in the areas of complaint with cancelled checks and contracts or work orders.
Utility Charge Complaints
The other main area of complaint is improper utility charges by parks. The MHP LTA limits landlord utility charges to the local utility provider’s single family residential rate. Landlords sometimes miscalculate this. If it is a metered utility there must be separate meters for each tenant and billings must be made based on meter readings. Parks charging for metered utilities that don’t have meters should not be doing so.
If the local utility provided allows service suspensions when customers are away, parks must do so as well. This is a common oversight by landlords.
Parks found to have overcharged for utilities of to have refused service suspension requests can be ordered to refund overcharged amounts.
Tenants typically do not get lawyers to represent them in these cases. But AAMHO has obtained approval from the Arizona Supreme Court to have AAMHO officials represent tenants in ALJ cases provided they do so without charge. A number of complaints now being filed have AAMHO officers representing tenants. As these officials gain experience in these cases they will develop some expertise, probably as much as the typical inexperienced lawyer.
ALJ cases can get quite complicated and a landlord ordinarily should be represented by a lawyer who knows the complexities of the MHP Landlord Tenant Act and industry practices.
A landlord should not try to handle the hearing himself and assume he can do it all over again in an appeal. Once a record is made at the ALJ hearing it will normally not be changed. The only thing an appeal can normally consider is whether the ALJ correctly applied the law, not whether he was wrong in his factual conclusions.
As parks look to try and minimize their expenses without unduly affecting tenants, they often consider unbundling utilities. With the advent of the new year I have received a number of inquiries on this subject so it seems to be a good time to review the rules.
“Unbundling” refers to separately charging for utility service that was previously included in base rent (i.e., utilities provided without additional charge). Typically the utilities involved are water, sewer and trash service.
The law permits a MHPand RV Park landlord to separately charge for utilities provided certain restrictions are complied with.
1. It the utility is metered (like water), separate meters need to be installed at each rental space. The meters need to be read each month with opening and closing readings taken.
2. The amount charged each month cannot exceed the single family residential rate of the local utility provider (normally the provider from which the park is obtaining the utility service). In the case of water produced from a park owned well or sewer service provided by a park septic system or package sanitary plant, it would be the single family residential rate of the nearest provider in the area where the park is located.
3. Each month the park must provide the tenant a utility bill formatted in a manner similar to the local utility provider’s bill showing how the charges were calculated. In the case of metered utilities the bill must show opening and closing meter readings. There are billing services that produce rent statements including utility bills monthly that do a good job of this.
4. In order to bill for sewer in most places, water needs to be metered. The reason is that after the first year, most (but not all) sewer utilities recalculate the monthly charge by determining water usage during the winter months. Without meters, determining water usage is impossible making the sewer recalculation impossible.
5. NOTE, in the case of RV parks, metered utilities can be charged with another method not available to MHP’s—the ratio allocation basis. I will not cover that in this article since very few parks elect to use it.
6. NOTE ALSO, that the rate to be charged is the single family residential rate of the providing utility, not the rate it charges the park which usually is a commercial rate even if described as a rate per space. In identifying the rate to be charged, be sure to check the single family residential rate.
When a park has been including utilities in base rent but wishes to begin separate charges, a number of things need to be taken into account.
First, no changes in the way things are charged can be made during the term of a rental agreement. So if there is a long term lease in effect, unbundling normally must wait for that particular tenant until the lease expires.
Second, unbundling is a change in the way rent is paid and normally results in an overall increase in the amount paid each month. Therefore MHP’s need to give a 90 day notice of rent increase and RV parks need to give a 60 day notice of rent increase. These notices will say that effective on a certain date (not less than 90 days in a MHPor 60 days in an RV park), separate charges will be imposed for specified utilities and thereafter they will be billed each month in addition to base rent at the same rate as charged by the local utility provider for its single family residential customers.
Third, if the park’s rental agreement form specified how utilities are charged, when the rent increase notices go out the rental agreement forms need to be revised to ensure they say those particular utilities are separately charged by the landlord.
Fourth, in the case of a MHP, a calculation needs to be made of the estimated separate utility charge that will be in effect for mobile home space tenants. Add to that all rental increases imposed by the park during the twelve month period going back from the effective date of the unbundling. If that total exceeds 10% of the rent in force one year earlier, the rent increase notice must be accompanied by a separate notice advising the tenant that he may be eligible for relocation assistance from the Mobile Home Relocation Fund should he choose to move out of the park as a result of the increase.
It would be a good idea, especially when separate meters are going to be installed, to alert tenant to what is coming. While it’s hard to sugar-coat separate trash and sewer charges, an explanation that basing water charges on metered usage allows tenants to partially control their bill each month by conserving water use may be helpful.
Finally, any park considering unbundling needs to take into account the potential cost of service furloughs. Some utility providers allow single family customers to temporarily suspend service and being charged for service during periods that are out of town. When this is permitted and the customer complies with the utility’s requirements as to notice and payment of any service disconnect or reconnect fees, the single family residential rate during that period for that customer becomes zero.
Many parks, especially those with large numbers of snowbirds who are gone much of the year, find that honoring service suspension (furlough) requests and receiving nothing for large parts of the year more than offsets the additional revenues received when that are in town as a result of the decision to unbundle.
Any park seriously considering unbundling must take into account the potential loss in revenues from partial year residents suspending service when out of town.
UNUSUAL IMMEDIATE EVICTION SITUATIONS
There are a couple of situations where a park can evict a tenant without giving advance notice and an opportunity to cure a default. They don't come up very often but once in a while they do.
Holdovers. When a rental agreement expires and the landlord asks the tenant to sign a renewal rental agreement but the tenant refuses, ARS § 33-1483 (B) allows the landlord to evict. The landlord must first wait for the current rental agreement to expire. Then he must offer a new written agreement and ask that it be signed. If it has a higher rent, the landlord must have given a 90 day rent increase notice. And the tenant must refuse to agree to sign the new agreement.
While most landlords will just live with the situation as long as the tenant pays rent, the law does give the option to evict. If you want to do this, don't accept rent for the month you demand the new rental agreement. It’s probably a good idea to tell the tenant in writing that you intend to evict if he refuses to sign the new rental agreement or vacate.
If you decide to just live with the situation, retain the last signed rental agreement in the tenant file. Put a copy of the new one the tenant refused to sign in the file also, with a note explaining the circumstances and the decision to allow the tenant to remain.
Unlawful Refusal to Allow Access to Space. ARS § 33-1484 (A) says if a tenant refuses to allow the landlord lawful access to the space, the landlord may terminate the tenancy. No prior notice or opportunity to cure is required. ARS § 33-1481 (A) says that once a rental agreement is terminated, the landlord has a claim for possession of the space (i.e., he can evict).
These situations normally occur when a tenant has a fence and gate he keeps locked and refuses to allow the landlord to enter to do maintenance work or read a utility meter. Another example is when a vicious dog is in the back yard preventing access and the tenant refuses to restrain the dog.
This does not involve access to the home--the landlord has no right of access to a tenant owned mobile home. But when a tenant repeatedly refuses to allow access to the space the landlord legitimately needs, the landlord can give a notice immediately terminating the tenancy and immediately file to evict.
Conclusion. It would be wise before terminating the tenancy and eviction, to try and talk to the tenant and explain the reason access is needed. Also explain that refusal to allow it can result in eviction. Finally, be sure that your request is reasonable and necessary. Be sure to document your file with an explanation of all attempts to get the tenant to be reasonable and allow the requested access.
REASONABLE ACCOMMODATIONS AND REASONABLE MODIFICATIONS
Fair housing laws say it constitutes unlawful discrimination against persons with handicaps to grant Reasonable Accommodations or to allow Reasonable Modifications when asked to do so. It is important to understand what these terms mean and what is required.
Housing providers, including park landlords, must make Reasonable Accommodations to rules, practices and procedures when necessary to enable a household with a handicapped resident an equal opportunity to reside on the premises. Normally this means making an exception to some rule that interferes with the handicapped person’s ability to live there without undue difficulty. Common examples are making exceptions to pet restrictions to permit assistive or comfort animals, exceptions to age restrictions or occupancy limits to permit necessary residential caregivers, changes to parking space assignments to allow closer parking to residences, and the like.
Typically there is no cost to the landlord associated with allowing these exceptions. Conceivably there might be like waiving a pet fee or extra occupant fee, but that cost will be nominal and the landlord must assume it.
People sometimes abuse the law by asking for exceptions when there is no disability related need for them. In these cases the law does permit the landlord to do certain things to try and ensure the exceptions are merited.
First, there must be a real handicap involved. Often the handicap will be apparent or already known to a landlord. A wheelchair bound or blind resident is obviously handicapped. Someone dependent on disability payments from the government clearly has been determined handicapped. But someone asserting some sort of emotional or mental handicap may not appear to have any impairment, and if there is no other evidence of the authenticity of the claim, the landlord has the right to confirm it.
In those cases the resident making the request can be asked to provide some evidence from a qualified medical provider that the household member at issue is in fact handicapped. But when that evidence is provided (normally in the form of a prescription pad note) the landlord normally must accept it at face value despite any misgivings he may have.
Second, the accommodation requested must be described. Either the resident or medical provider will normally explain that is being requested. As long as what is being asked for is clear, that requirement is satisfied.
Finally, there must be a “nexus” between the disability and the handicap, a connection between the handicap and the exception being requested. The nexus between blindness and a seeing eye dog exceeding a park’s size limits is clear. But it may not be clear when that same blind resident asks for a closer parking space. In those cases the resident or medical provider can be asked to explain the connection.
Once these three criteria are satisfied, the request must normally be granted without expense to the resident unless it would “unduly burden” the landlord or jeopardize safety in the park that cannot be avoided by other landlord actions.
An accommodation is unduly burdensome if it requires the landlord to change his business or subjects him to large expenses. For example a request that a landlord shuttle a resident to shopping areas or doctors’ appointments would force him into a business area he is not engaged in and would probably be unduly burdensome. A request that a convicted child molester or mass murderer be approved as a caregiver would endanger others and the danger probably could not otherwise be mitigated by the landlord.
When a request is denied for one of these reasons, the landlord must engage in an “interactive process” to see if there is not some alternative way to satisfy the resident’s needs. Refusal by a landlord to negotiate can itself amount to unlawful discrimination.
These are physical changes to the premises that a handicapped resident needs made in order to be able to live there. For example a wheelchair bound resident may need curb cuts made to enable his wheelchair to get from the parking area into the clubhouse. A blind person may need Braille signs posted at the clubhouse restrooms. An arthritic resident may need lever faucet knobs instead of the round ones on the sinks at the clubhouse.
Mobile home parks don’t get too many of these requests since the residents normally own their own homes and it is the clubhouse and other common areas that the landlord provides. But they are occasionally received.
Landlords must agree to Reasonable Modifications if there is a handicap, a description of what is requested, a nexus between them, and if they are not unduly burdensome or unsafe to others. But if approved, it is the resident, not the landlord who is required to pay for them. This is unlike the Americans with Disabilities Act (ADA) that has similar provisions applicable to “public accommodations” which require the proprietor to pay the costs. A residential community like a mobile home park is not a “public accommodation” and is not covered by the ADA (with one exception). So it is the Fair Housing Act, not the ADA that applies, and the Fair Housing Act says the modification is at the expense of the resident.
The exception is the rental office. That is considered a public accommodation within a residential community. Modifications to the rental office, if necessary, are at the landlord’s expense.
Also, if the park was built or renovated after 1993, there are supposed to be certain “accessibility features” designed into it. If the requested modification should already be in such a newer facility but was omitted, it would need to be added at the landlord’s expense.
Never blow off one of these requests. No matter how silly one may sound, take it seriously. Follow these principles and if in doubt check with a knowledgeable attorney before simply rejecting the request.
Bedbugs are tiny insects that infest living spaces and cause discomfort to people by biting. As far as is known they do not cause diseases but they cause a lot of discomfort since their bites itch.
Bedbugs have been around forever. But in recent years they have developed immunities to chemicals used to eradicate them. And the chemicals used have themselves gotten weaker thanks to environmental laws.
As a result, locations with climates friendly to bedbugs have begun experiencing major problems with widespread infestations of bedbugs resistant to extermination. Almost every day one can read of businesses forced to temporarily close in New York or Chicago while their premises are treated for bedbugs. Places where people sleep are especially prone to infestation such as hotels and apartments. Bedbugs seem to like to live in mattresses and box springs, and people staying in hotels or motels often bring the critters home with them. Visitors and guests staying with folks also may bring bedbugs into their hosts’ homes.
Over the past few years, some state legislatures have considered bills dealing with bedbugs in rental housing communities. To some extent, all of these proposals put at least some responsibility for bedbug eradication on landlords.
In the current session of the Arizona legislature, a bill is pending that would deal with bedbugs in apartment and rental housing communities. At this writing (early March 2011) the exact nature of the final bill is unclear. But it’s safe to say that landlords are going to have some responsibility for getting bedbugs out of vacant units and for preventing their spread from infested units to others.
Mobile home parks may not appear to be affected by all of this since homes are owned by tenants. But a closer look reveals that is not exactly true.
First, many parks are now renting park owned homes. They will be covered by any legislation that ultimately is enacted since it will be part of the residential landlord tenant act that applies to park owned homes.
Second, more and more parks are getting titles to abandoned homes as a result of landlord lien sales following abandonments, or by purchase from lienholders. When the park then sells or rents the home, it is making an implied warranty of habitability, meaning among other things that the home is free of vermin such as bedbugs.
Third, people with bedbugs in their homes can easily bring them into the community facilities and things like sofas and chairs can become infested. Others can then bring them from those facilities to their homes.
Bedbugs are hard to find since they mainly come out at night and hide during the day. They are tiny and can hide in very small spaces. Their presence most often becomes apparent when they bite people.
The first line of defense is close inspection and rigorous cleaning of areas they might infest. Any home acquired or owned by a park should be the subject of a cleaning and inspection before being sole or rented. The clubhouse and other community gathering spots should be periodically inspected and thoroughly cleaned..
If an infestation is found, do not try to eliminate it yourself. Killing these critters is extremely difficult and many kinds of chemicals don’t work on them. There are exterminators around with expertise in dealing with bedbugs. Spend the money necessary to get the job done right.
If you see tenants putting old bedding or soft furniture out for a pickup, suspect bedbug infestation. Get those items out of the park before other residents pick up and carry bedbugs to other places.
Keep up to date on changes coming to the residential landlord tenant act. It is likely that new requirements will be imposed on landlords renting dwelling units later this year.
Few things have been as controversial in recent years as tree maintenance responsibility in mobile home parks.
Trees are expensive to maintain. Mexican fan palms are common in parks and can grow to 100 feet. They get messy, need annual trimming, and climbing one takes the right equipment and a good dose of courage (or insanity). Maintaining one can be expensive.
Other trees can also be expensive to maintain. The bigger the tree, the more expensive it is to keep up.
Many parks require tenants to maintain trees on their rental spaces. While some parks still do it because they want to control tree appearance and are concerned over safety and liability problems, others require tenants to cover the expense under the theory that the tree is part of the space and the deal the tenant makes when moving in is to maintain the entire space.
The law has always been pretty clear on who is responsible for maintenance, or at least it was until 2007. Section 33-1434 of the MHPLandlord Tenant Act requires landlords to maintain the “premises”. Section 33-1409 defines “premises” as the entire park. But section 33-1451 of the Act requires tenants to maintain that part of the “premises” that they rent. In other words, tenants maintain their spaces; landlords maintain the rest of the park.
In 2007, an ALJ decision in a case involving a Tucson park said landlords are responsible for maintaining all trees in the park. In my view, that decision was wrong. The problem with the decision was that it didn’t even mention section 33-1451, the statute that says tenants are to maintain their spaces.
There were no lawyers involved in that case. The park decided to represent itself and did a lousy job of it. It was obvious that the judge had not been told of the existence of section 33-1451. It was equally obvious that the judge had not found that statute on his own.
For three years after that, AAMHO circulated the decision to local park chapters and in park after park tenants began demanding that landlords maintain trees on rental spaces. Many parks gave in. The decision was also published in the AAMHO newsletter that goes to its members.
Finally, in 2010, a new ALJ case was filed by tenants in another park in Tucson. That case boiled down to the single issue of whether the landlord or tenants were required to maintain trees on rental spaces. I represented the park in that case and argued the points made in this article. I asked for a clear ruling taking into account not only the 2007 decision but also the statute not mentioned in that decision, section 33-1451.
The new decision has been released. The case is Crouse v. Rincon MHP. The decision makes it crystal clear that tenants are to maintain trees on their spaces and the landlord is to do so in the rest of the park. The money quote appears at the bottom of page 3 of the decision:
9. The Petitioners in this matter failed to establish that the applicable law requires the mobile home park landlord to be responsible for the maintenance of the space once it has been rented to a tenant. To the contrary, the tenant has this responsibility, which includes the responsibility to trim the trees that grow on the rented space, regardless of who planted them.
Tenants may claim that they will simply cut the tree down rather than take care of it. Landlords should be aware that the duty to maintain means the duty to take care of something, not destroy it. Tenants have no more authority to destroy a tree than they do to destroy any other part of the rental space.
Many parks currently take care of all trees in the park. This decision does not mean they should stop doing so. Nothing in the law prevents a landlord from voluntarily caring for trees on rental spaces. There are many policy considerations supporting a landlord’s decision to maintain all trees. All this new ruling does is to confirm that such a decision is up to the landlord and is not compelled by the MHPLandlord Tenant Act.
ALJ decisions do not set legally binding precedent. Other judges in other cases are not required to follow them. But in this industry they are routinely used to give both landlords and tenants guidance in how our laws work and informally have some precedential value. In any event this new decision certainly refutes the 2007 decision which is referred to in it.
I do not expect that AAMHO will be publicizing this decision even though its President was present at the hearing.
STORAGE YARD SPACE RENTALS
Many parks rent spaces in their storage yards to tenants for an extra fee per month. A couple of months ago my partner Scott Williams wrote an article about how these arrangements may be covered by the Arizona Self Storage Act that begins at ARS §33-1701. We have been talking about this for some time and reluctantly concluded that this law probably applies.
This law has been around for a long time and was originally designed to apply to mini-warehouses and other facilities where a renter rents a unit to store personal property. But recent changes in the law have broadened its coverage. The last thing a mobile home park operator needs to hear is that yet another set of landlord tenant laws applies in the community.
The law defines “self service storage facility” as “any real property used for renting or leasing storage spaces in which the occupants themselves customarily store and remove their own personal property on a self-service basis”. That definition would seem to apply when a park landlord allows residents to use part of the storage yard to store a boat, RV or other property. If there is no charge for the use of the space, then the property is not being used for “renting or leasing” storage space. But when a fee is charged, it is being used for that purpose and the law appears to apply.
When the law applies, landlords are given possessory liens against the property in storage and a set of procedures applies that say how and when the lien can be enforced to ensure the proprietor gets paid rent due for use of the storage space. When storage space rent is not paid, certain notices must be given to the renter of the space and in the case of boats or vehicles, to lienholders as well. Procedures also cover how and when property in storage may be sold or otherwise disposed of when rent is unpaid, and how proceeds of sales are handled.
It is common for parks to find abandoned items in their storage yards, and deciding what to do with it can be difficult. Some of these questions are answered in this law.
The law is not terribly complicated. But it is very different from all the other landlord tenant laws that parks are used to dealing with, and the necessary forms are also unique. In addition the law requires operators covered by the law to post a Notice in the rental office.
Scott and I have prepared a new handbook for MHCA that contains forms, the Notice, and a discussion of how the law works. By the time this publication goes to press, the book should be available.
Parks separately charging tenants for use of the storage yard should get this new book
When residents of a community represent a threat to the well being of others, the landlord has a duty to mitigate that danger or it could be liable to others both on and off the property who are harmed by the resident.
In a 1993 Arizona Court of Appeals decision, Klimkowski v. DeLaTorre, a case involving a mobile home park, a tenant had a small child who liked to play with matches around car parts and partially full gasoline cans. A neighbor saw the children playing with matches and lighters around these flammable materials on a number of occasions. The neighbor was so concerned that he talked to the landlord, telling him how dangerous he believed the situation was.
Despite being aware of what was going on, the landlord continued to rent to the tenant and did not require any remedial action to eliminate the dangers. About a month after the neighbor alerted the landlord to the dangers, the tenant’s children set fire to a shed containing flammables, resulting in an explosion causing damage to the neighbor’s property and injuring him.
The neighbor sued the landlord for damages caused by the tenant’s children. The Court of Appeals’ opinion in this case ruled that the landlord was liable for the damage. The rule announced in this case is that a landlord may be liable for damage to third parties caused by his tenants if the landlord fails to eliminate a dangerous condition which he knows of when he has the ability to do so.
When a mobile home park landlord becomes aware of a dangerous situation, the Mobile Home Parks Landlord Tenant Act gives him a number of tools to use to deal with it. If the situation has already constituted a material and irreparable breach, the landlord can give a notice of immediate termination of tenancy and immediately file to evict. Examples are tenants making threats to kill or seriously harm another person on the premises; engaging in drug activity in the park; and actually harming people or damaging property on the premises.
If the situation has not risen to that level, but health and safety codes are being violated, a 10/20 notice may be appropriate. Examples are electrical code violations; spaces infested with vermin; the kind of situation in the Klimkowski case involving storage of flammables and children playing with them; and people speeding in the park.
The key here is that the park needs to do something to eliminate dangerous situations it becomes aware of. If it turns a blind eye to them and does nothing, people getting hurt as a result are probably going to be successful in a lawsuit for damages against the park.
Tenants making threats can be a problem. If a tenant threatens to kill someone on the premises, the threat may be real or it may just be someone blowing off steam. Deciding which can be a real challenge. If a landlord believes the threat was made in earnest and decides not to act, a victim of future violence by that resident in the park may have a good case against the landlord. On the other hand, evicting someone who really didn’t mean it can be a problem.
Landlords should resolve any doubts in favor of terminating and filing to evict the resident making threats of violence or death threats on the premises. “Threatening and intimidating” is an immediate and irreparable breach under the law and the crime free addendums most parks use. That means an immediate termination notice can be served and eviction proceedings immediately commenced. While eviction over mere words can seem harsh, actions have consequences, and the consequence of eviction is provided by the law for threatening and intimidating.
AGE 55+ CRITERIA
I get questions all the time on the criteria for Age 55+ communities. Such things as whether it can be waived, what the “other 20% is for, and the like are common.
There are three specific tests an Age 55+ community must pass in order to qualify for the designation. It is important that communities wishing to deny residency to children and to discriminate against children in the use of common facilities pass each test. Failing to do so means such a community is engaging in unlawful familial status discrimination in taking such actions against children.
The test are: (1) the 80% test: At least 80% of the occupied units in the community must have at least one person living there who is 55 years of age or older; (2) the verification test: The community must have effective age verification procedures and periodically survey its population to ensure continuing compliance with the 80% test; and (3) the intent test: The community must demonstrate an intent to be an age 55+ community. I will review each of these in the sections that follow.
1. The 80% Test
At least 80% of the occupied spaces in an age 55+ community must have at least one person over 55 actually living there. That means what it says. The community must have at least one person over 55 actually living on the space. Being on the lease or named as an owner of a home on the title is not relevant. The person must actually live there to be counted.
Only occupied spaces are counted in making the determination. Disregard abandoned and repossessed homes as well as vacant park owned homes. But occupied homes, whether space rentals or park owned home rentals, count. Also RV space rentals count unless rented only for a short time (tenants living there 30 days or less).
Spaces rented to snowbirds who are there only part of the year but pay rent year round do count.
Once you know how many spaces are to be counted, you must determine how many have an over 55 resident. If less that 80% of them do, you are not an age 55+ community and the law prohibits you from discriminating against families with children in the rental of housing or in the terms and conditions of occupancy.
So what is the other 20% for? The law originally intended this to cover situations beyond the control of the housing provider. The most common example is the under 55 widow whose over 55 husband has died. Other examples are communities furnishing residences to employees, homes inherited by under 55 relatives, etc. But it was not originally intended to allow landlords to knowingly rent to under 55 households.
Over the years this distinction has come to be disregarded. The law tends to focus on the numbers, not the reasons behind them. Of course that could change. Moreover there are problems in meeting the intent test when a landlord knowingly rents to younger households. And state landlord tenant law might regard the landlord as having waived the right to enforce the age restriction altogether in making exceptions for certain households to violate them. This could make it impossible for landlords to stay above 80% when tenants want to sell homes to under 55 households.
2. The Verification Test
The housing provider must have effective procedures in place to verify age when accepting applications for tenancy. Typically this means on seeing and reproducing a piece of government issued photo ID produced by the over 55 resident. That should be placed in the application file of the tenant. All such filed should be preserved for future surveys and in case the community must prove eligibility for age 55+ status.
In addition the community must periodically (every two years) verify compliance with the 80% test. This means going through tenant files and verifying that the age 55+ resident is still there. If he is gone, the landlord should obtain proof of age from another occupant. If that cannot be done, the space likely will go into the non complying 20%.
A survey form should be completed and kept on file until the next survey. A form is in the MHCA Blue Book.
3. The Intent Test
The community must demonstrate an intent to be an age 55+ housing community. That means it must establish that it really means to comply with all of these rules as opposed, for example, to simply being an adults only community concerned only with excluding children.
Intent is determined by looking at published rules, signs, advertising, etc., and reviewing the community’s actual practices. Does the landlords advertising materials show it is an age 55+ community or simply show it is restricted to adults only? Do the community’s statements of policy show it is an age 55+ community with a secondary age over 18? Is the age 55+ status disclosed on the rental documents? Does the landlord enforce age verification procedures? How are telephone inquiries about age restrictions handled? How are they explained to prospective applicants? Are exceptions routinely made for non age 55+ applicants without children?
This is a subjective determination based on the totality of the community’s practices. The test is meant to determine whether the use of the age 55+ exemption is really a pretext for operating illegal adults-only communities or whether the landlord is actually complying with the requirements of the law to restrict occupancy to over 55 households.
These are the basics. It is important to note that this is really a narrow exception to the general law prohibiting discrimination in housing on account of familial status. To take advantage of it, the community must comply with each of the criteria. Do not try to pretend compliance as a pretext for excluding children.
If you are going to be an age 55+ community, do so with the intent of fully complying with all of the criteria. And be aware there are downsides, most importantly that you will be restricting the demographic of potential tenants. As time goes by you may find it difficult to maintain decent vacancy rates since you will be excluding from eligibility a large majority of the country’s population, households without an age 55+ member.
MHCA represents the MHC industry in a number of ways. The most important, of course is being vigilant at the Legislature and preventing damaging laws from being enacted. It also lobbies regulatory agencies at the State and Federal level and municipal governments to prevent damaging ordinances and regulations from being adopted. Without MHCA we would look more like California than Arizona in terms of over-regulated, government controlled rental communities.
But sometimes government takes action that can only be dealt with by a lawsuit. In recent years, a number of suits have been filed against government agencies to stop wrongful government action.
This year, for example MHCA obtained a judgment declaring that the Fire, Building & Life Safety Department was wrong to say ALJ cases against parks could be filed on very old claims. A permanent injunction was obtained against the Department stopping it from enforcing such a rule against ALJ’s. Failure of MHCA to act would have exposed park operators to liability on very old claims they could no longer defend due to loss of witnesses and documents over the years.
In 2002, MHCA joined AAMHO in a case I filed to stop the State from sweeping the Relocation Fund for several million dollars in an effort to balance the budget. The State gave the money back as a result and no further efforts have been made to sweep that fund since. Sweeping the fund to a point it could not pay for tenant relocations would likely result in laws being proposed requiring landlords to pay those costs when parks close. This is the case in several States where there are no relocation funds.
Sometime around 2000 Apache Junction enacted an ordinance in effect making it impossible to locate or sell mobile homes within the City limits. MHCA against joined with AAMHO in a suit I prepared in Federal Court to stop enforcement of the ordinance. As a result the City repealed it.
Filing lawsuits when warranted makes the threat of a suit credible. Often MHCA will learn government bodies are about to act in a way destructive to the industry and will point out what is wrong with the proposed action. The threat of a suit if the action is taken most times will prevent it from happening. The most common example is when discriminatory zoning ordinances are proposed.
Sometimes MHCA learns that a case has gone to a Court of Appeals or Supreme Court in which an adverse decision will harm the industry. MHCA will file a “friend of the Court” brief pointing out why an adverse decision would be wrong and how it would affect parks.
Two MHCA “friend of the Court” briefs have been filed with the U.S. Supreme Court, in 1991 and 2005, involving rent control and State restrictions on landlord tenant relations.
In the Arizona appellate courts, a brief was filed in a case involving statutes of limitations in suits against landlords for violations of the mobile home parks landlord tenant act (resulting in a decision the one year statute of limitations applies to such cases). Other briefs were filed involving municipal restrictions on what parks can charge tenants for water; whether jury trial waivers in rental agreements are unconstitutional; and whether municipal governments are limited in changing zoning to restrict “undesirable” business. MHCA also financially supported a landlord in a case I handled involving whether parks can separately charge for sewer and trash service.
As this is being written MHCA is considering a suit against the Maricopa County Assessor to challenge its recent requirement for parks to register individual spaces as residential rental property at $10 apiece. Hopefully the Assessor can be convinced to change the policy without a lawsuit.
MHCA is not litigious. But Government is aggressive and sometimes the only way to keep unchecked government at bay is through the Courts.
Any time legal action is considered, a cost/benefit analysis is conducted. Sometimes the benefits are marginal and the decision is made to let the issue go. Recently, however, government agencies are becoming more and more assertive, paying less attention to their legal constraints. MHCA needs to continue being vigilant dealing with them, and membership income needs to be there to pay for the effort.
THE SAFE ACT
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the SAFEAct) requires several federal agencies to jointly develop and maintain a Federal registration system for individual employees of agency-regulated institutions and other people licensed by states, who engage in residential mortgage loan origination. The statute requires these individual mortgage loan originators to be registered with the Nationwide Mortgage Licensing System and Registry, a database established previously by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States.
A “loan originator” is generally defined as an individual who takes a residential loan application and assists the application in the paperwork and negotiations necessary to get the loan for compensation or in the expectation of compensation. Only natural born human beings can meet the definition (not business entities) and the person must be getting paid for what he does. It is an open question whether a salaried employee with other duties needs to be specially compensated for placing loans or whether his standard paycheck satisfies the compensation requirement. My belief is that as a general rule he need not be specially compensated to meet the definition.
Loan originators employed by organizations such as banks that are government regulated need to be listed in that data base by their employing agencies. Other loan originators (those not employed by banks and other organizations regulated by federal agencies) must, under the SAFEAct, be licensed as loan originators by a state agency. In Arizonathat agency is the Arizona Department of Financial Institutions. That in turn gets them into the data base.
All licensed loan originators, whether licensed by the states or the federal government, will receive a “unique identifier”, an identification number issued by the organization created to maintain the registration system.
The SAFEAct prohibits anyone from engaging in the business of a “loan originator” without being registered or licensed and without possessing a “unique identifier”.
The SAFEAct is intended to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators. The new standards, as well as the uniformity and consistency of such standards are supposed to increase integrity in the residential mortgage loan market, enhance consumer protections, and reduce fraud. The SAFEAct requires states to have in place, by law or regulation, a system for licensing and registering loan originators that meets the requirements of the Act. Those state standards should have been in place in all states by July 31, 2010.
Two national organizations prepared a model act and recommended to the states that they adopt it in order to qualify under the SAFEAct. A bill was introduced in the 2009 Arizona legislative session that was similar to the model act. The definition of “loan originator” was quite restrictive. Under the definition in the model act and the bill that was introduced, it was pretty clear that mobile home park landlords selling homes and financing part of the sales price with a “carry-back” loan were loan originators and would need to be licensed as such.
But an amendment was introduced as the bill moved through the Legislature. Among other things the amendment added this exclusion under the definition of “loan originator” in ARS § 6-991: “A person who makes five or fewer mortgage loans per calendar year”.
This version was ultimately passed and signed into law by the Governor.
So the Arizona law exempts from the definition of “loan originator” persons making five or fewer mortgage loans per calendar year. By “make”, it seems to mean that the person involved must be lending his own money. This would include carry-back financing. There is no such exemption in the federal SAFEAct.
There are a lot of questions on how this law applies to mobile home park landlords selling homes and financing them. Some seem to have been answered. For example the law seems to apply even though mobile homes are personal property and not real property like normal single family houses are. In addition, people employed by parks who are specially compensated by third party lenders for placing loans on homes bought by consumers are covered, regardless of how many transactions they engage in each year.
But one big question is unanswered. Does the law require individuals involved in carry-back financing of five or fewer homes per calendar year to be licensed?
The federal law seems to require it. But the Arizona law clearly excludes them. If that turns out to be a permanent situation, federal law would seem to require such people to get a state license even though the state law does not require they get that license. As of the date this article is written there is no federal mechanism in place to grant an alternative federal license or issue a “unique identifier” to people not employed by federally regulated organizations or licensed by states.
HUD is involved in the policing and enforcement of this law. It is exploring whether to recognize an exclusion such as Arizona’s. Specifically, Californiahas apparently obtained HUD’s temporary agreement not to enforce the federal requirement against mobile home park owners occasionally carrying back mobile home loans on units they sell for a few months while it reconsiders its policies. While Arizona is not a party to that agreement, hopefully it will receive the same treatment.
One important point is this. The five per year seller carry-back exemption and the law itself applies to “individuals” and “natural persons”. To argue the five per calendar year exemption applies, it appears that the person involved must be financing his own personal sales. If an individual is involved in carry-back financing provided by his employer, then he is not financing his own personal sale. The exemption would not seem to apply and he would thus be acting as a “loan originator”.
This view is reinforced by informal comments I have received from the Department of Financial Institutions making a distinction between the person originating the loan (a middle man between lender and borrower) and the person making the loan (the lender). Lenders making five or fewer residential mortgage loans per calendar year fall within the state law exemption. But since originators are not making loans but are assisting borrowers in getting loans from others, the exemption would not seem to apply to them.
So in a situation where a park is owned by a corporation or LLC and sells mobile homes, if the manager of the park, an employee, is involved in writing up the purchase contract providing for the landlord to carry back part of the sales price, the manager would appear to be acting as a loan originator and would appear to be required to be licensed. There is not a lot of logic supporting this result but it seems to be where the law is going to wind up.
A number of operators are not doing anything at present, preferring to let the dust settle and see what comes of the Discussions between HUD and California, among other things. But there is always the risk of getting sanctioned for originating loans in violation of the SAFEAct during this time.
But there seem to be a few things that are clear:
1. People taking mobile home loan applications and processing them for third party lenders with the expectation of payment in some form from the lender, are probably loan originators and should get an Arizonalicense. Employees merely processing paperwork without special compensation appear exempt when employed by parks selling homes, especially if the parks hold dealers licenses.
2. Park operators making more than five carry-back loans in a calendar year should consolidate all loan application responsibilities in one person and that person should get an Arizonaloan originator license.
3. Parks with separate affiliates that make mobile home loans and that pay park employees special compensation for placing such loans should get those employees licensed with the state. Employees merely processing paperwork without special compensation appear exempt when employed by parks selling homes.
4. Parks making five or fewer carry-back loans per calendar year and electing to wait to see what HUD does and how the law shakes out need to keep in touch with this subject. I will try to post updates on my website blog as developments occur.
I am using a lot of conditional language in this article because this law is difficult to understand and the regulatory agencies themselves are not clear on what their policies are going to be.
If you believe you need to be licensed as a loan originator, visit the Arizona Department of Financial Institutions website at http://www.azdfi.gov/Licensing/NMLSLO/nmlslo.html. There are educational, background check, application and testing requirements. It is a nightmare and multiple park operators would be well advised to consolidate their loan origination responsibilities into one location and person.
RED FLAGS RULE
If you Google this term the day I am writing this you will find 643,000 results. The Red Flags Rule is like the Internal Revenue Code. It has spawned an industry of firms that will, for a hefty fee, aid businesses covered by the rule comply with it. Much of what many of these firms provide is garbage.
Briefly, the Red Flags Rule is a regulation published by the Federal Trade Commission under its consumer protection authority to force businesses to develop written plans to combat identity theft. It applies to "credit providers" which the FTC seems to interpret as including landlords. You can read about it at this web site: http://www.ftc.gov/redflagsrule
The effective date of enforcement under the Rule has been pushed back to January 1, 2011. The Rule requires written plans saying what the business is doing to identify "red flags" indicating a possible identity theft problem, and to state what its plans are to prevent identity theft. The plan also needs to specifically say what steps the company has taken to protect and safeguard customer information, and what procedures are in place to ensure those steps remain effective.
For big banks and other big credit providers, these plans can be horrendously large and complex. Mobile home park landlords should have a much simpler task, but it is one that needs to be accomplished before January 1, 2011since there are serious sanctions for non-compliance.
There was a lot of talk at the May MHCA Conference on this subject that scared the dickens out of many people. I think the problems have been over-hyped in an effort to sell compliance consulting services by a number of the new businesses I referred to.
I have developed a template of a Compliance Plan for mobile home parks and a training program that will be offered at the MHCA Fall Conference this October in Tucson. I also hope it will be offered again in the Phoenixarea before the end of this year, perhaps as part of an advanced manager training class.
Parks should seek the assistance of knowledgeable legal counsel in developing their own unique Compliance Plans. By knowledgeable I mean familiar with the operations and information requirements of park landlords and the requirements of the Red Flags Rule. This should result in only a modest expense to the park in coming up with the plan, especially when compared to the charges of the so called experts that can be found on the Internet.
Park landlords are going to need to become disciplined about safeguarding and limiting access to sensitive personal information that can aid identity theft. That includes record protection, computer security and effective employee supervision.
Parks need to be aware that sloppy practices in filing and keeping documents containing sensitive resident information must change, and identity theft security measures are going to need to be put in place.
TERMINATING MOBILE HOME PARK TENANCIES
I keep getting questions over basic rules concerning termination notices for mobile home space tenants. So I am trying to clarify the rules.
Mobile Home Space Tenants
You cannot terminate or non-renew a mobile home space tenancy, even a verbal month to month rental, without good cause. Any time you want to terminate and evict, you must have good cause and serve the proper termination notice. There are no non-renewals without good cause. There is no simple 30 day notice to vacate without cause. Here are the only notices you can use to terminate and evict:
7 Day Non-Payment of Rent Notice. Can be given if rent is not paid on the first of the month. If tenant does not pay within seven days after service of the notice, eviction can be filed.
14/30 Notice. When there is a material non-compliance with a written rental agreement or park rules, this can be given. Tenant has 14 days after service to cure or 30 days after service to move out. If he is still there 30 days after service and the violation is not cured, eviction can be filed.
10/20 Notice. This is the same as the 14/30 except that it is given for a non-compliance involving health and safety. The respective periods are shortened to 10 and 20 days respectively.
Immediate. This is given when the tenant or a member of the household or guest under his control commits a serious criminal act on the premises. The instant this is served an eviction can be filed.
180 Day Change in Use Notice. This is given when the park or a portion liven in by the tenant is going to be closed.
Other Kinds of Tenancies
The rules and notice forms are different for other kinds of tenancies. Tenants in park owned homes can be given 30 day notices before their leases expire to vacate at the end of the term without good cause. But that is only the case when the park, not the tenant, owns the mobile home. Otherwise the tenancy can only be terminated for cause. The notice periods are shorter and the notice forms are different from the mobile home space tenancy forms.
For RV space tenancies, park model tenants with rental agreements over 180 days cannot be non- renewed without good cause. Other long term RV space tenants can be non-renewed without cause with a 90 day notice. Termination of long term RV space rentals otherwise require good cause. Notice forms are about the same as mobile home space forms, except the non-payment of rent form is a five, not seven day notice. Short term RV space rentals (less than 180 days) can be non-renewed with ten days' notice when the lease expires. They can also be terminated for cause on ten days notice.
WHAT TO DO WITH ABANDONED HOMES.
The volume of mobile homes abandoned in parks continues to grow. In part it is due to the economy. In part it is due to the age of the homes or the people living in them.
Newer abandoned homes often are subject to liens. Most will be repossessed and either resold or occasionally pulled out.
But older homes, especially pre-HUD homes are usually free and clear. Most, at the time of abandonment are in pretty bad shape. In family parks they tend to be abandoned because the tenants are required to leave due to loss of a job, or occasionally due to immigration status. In age 55 parks they become abandoned when the tenant dies, is institutionalized, or moves in with family members.
Whatever the cause of the abandonment, the homes parks have the most problems with are older, run down, mostly pre-HUD homes, that are in poor condition.
The first hurdle to overcome is getting in a position to legally be able to dispose of the home. Usually the park needs to follow a landlord lien sale procedure, though occasionally a bonded title application is required. Once in a while the owner will simply sign over the title.
Often, the problems are just beginning when the park gets title to the home. Usually, whatever is done with the home is going to cost money, and in this economy, that is a big problem.
Here are the alternatives usually available.
1. Demolish; Haul to the Dump
Until recently, this option was especially attractive when dealing with 40 or 50 year old run down homes. Unfortunately, government has made it far less attractive.
Attendees at the May MHCA Conference learned of the existence of government environmental regulations requiring county permits to be obtained before mobile homes are demolished. They also learned that prior to issuance of a permit, an environmental inspection of the home by a qualified firm is required to determine whether asbestos is present. The cost of the permit and the inspection is several thousand dollars. If asbestos is present in the home, the cost of removal is substantial and all of this gets added to the cost of actually tearing the home down and hauling it away.
Conference attendees also heard the horror story of a park that demolished a home without doing any of this because the operator was not aware of the environmental requirements. The initial fines assessed were in the tens of thousands of dollars.
This situation occurred in Maricopa County, and the County Environmental Services Department is actively enforcing these regulations. Other counties also should be doing this since the underlying requirements come from federal laws.
So lawful demolition can be expensive, and the penalties for an unlawful demolition can be catastrophic.
2. Fix Up and Sell Home
This avoids the problems with demolition. But this option has its own problems. These old run down homes often need a lot of fixing up. There may be electrical and plumbing code violations. The appliances may not work. The floors may be rotted out. There could be any number of problems with materials used in the original construction that may need replacement. These sorts of things would be necessary to make the unit habitable. Add this to the cosmetic work necessary to get the home in sellable condition, and the expense can be substantial.
In this market, getting the home sold for a price to get back the rehabilitation costs can be a real problem. Of course, there are not likely to be any lenders willing to finance purchase of an old mobile home.
So the park may be looking at financing its own sales. That could be profitable provided the buyer has decent credit, a reliable income, and can afford the combined PITI plus space rent payment.
3. Fix Up and Rent the Home
The costs are about the same, but instead of financing the purchase, the park simply rents the combined home and space as a package.
Once again this can be profitable provided tenants are creditworthy, have reliable income, and can afford the rent.
An additional problem when renting homes, is that the landlord will be responsible for ensuring all utility systems work and the unit meets codes.
Also, since the tenant is entrusted with custody of a valuable asset that can easily be wrecked, the landlord should get a substantial security deposit.
A number of parks are now renting homes with some success.
4. Sell Cheap or Give it Away "As-Is"
Some parks are doing this on the theory that by giving the home away they will begin collecting space rent again. The tenant benefits by getting a home for nothing that he can improve with "sweat equity".
The big problem here is legal liability. Even in an "as-is" transaction, if there are hidden defects that the transferee didn't know about that cause harm, the park can still be liable for the harm.
"As-is" transfers can be very dangerous to the park. Before doing this it should conduct an exhaustive inspection of every aspect of the home and its appliances, make a list of every possible defect, and make the transferee sign off acknowledging he understands and accepts the unit with full knowledge of all defects.
There are no good solutions here. Be careful.
WHAT HAPPENS TO TENANT HOMES AFTER EVICTION FROM THE PARK?
A tenant has been evicted from a mobile home park. The Sheriff or Constable has received and enforced the writ of restitution. The tenant has been forced to vacate. But the home still remains on the rental space.
Tenants often ask what happens to the mobile home. This will discuss that subject.
Tenant is Excluded From Rental Space
Once the Constable has enforced the writ and the tenant has vacated, he cannot return to the space without consent of the landlord. If the tenant sneaks back into the space or the home on it without permission, the manager can call the police. ARS §12-1178 (D) requires the tenant be arrested for criminal trespass in the third degree.
The eviction does not exclude the tenant from the park; only from the space that he rented. Other tenants can invite him to visit. As long as he is the visitor or guest of another tenant, he is not prevented from being in the park by the eviction.
But he cannot move in with another resident. That can result in that resident being evicted.
After a writ has been enforced and the tenant has vacated, utilities supplied by the park can be disconnected. Only park furnished utilities can be cut off, and only after a writ has been enforced.
Unlike the Residential Act that covers apartments, there are no provisions in the Mobile Home Parks Landlord Tenant Act covering tenant rights to get back into their homes to get their belongings. There is a statute that says the park has no right to keep their personal effects.
Constables ask landlords to follow the same rules as apartments and that is a good idea. That means letting the tenant go into the home to get his things for at least 21 days following his removal. It is actually a good idea to allow the tenant access to the home to get belongings as long as the home remains in his name.
The Mobile Home
ARS §33-1481 (B) says that after the Constable or Sheriff enforces the eviction judgment by removing the occupants, the home is deemed abandoned. It becomes subject to ARS §33-1478. That statute, in turn, requires the park to give a notice of abandonment to the lienholder, if any. At that point the lienholder becomes responsible for rent for the mobile home space. If there is no lienholder, of course, ARS §33-1478 does not apply.
There are a series of statutes that permit a landlord to seize and sell the mobile home at public auction to satisfy the rent arrearage. There is also an Arizona MVD procedure that enables a landlord to obtain title to the home by posting a bond. Both processes take about 60 to 90 days.
In the meantime the home continues to occupy the space and rent continues to accrue (even though the tenant can no longer live in it).
ARS §33-1481 (C) allows the evicted tenant to remove the mobile home from the park upon payment of all sums owed to the landlord. That means the amount in the eviction judgment plus any rent and utilities coming due after that.
The owner of the mobile home can sell it while it is still titled to him, but the buyer cannot remove it until all sums owed are paid. The buyer cannot live in it until he applies for tenancy and is approved. Approval will not occur until all sums owed are paid.
If the home is sold, the buyer should ensure that the debt to the park is paid out of the price he is paying for the home.
TENANT LIABILITY FOR PARK LEGAL FEES
This has become a major area of confusion in our industry. When a park turns a case involving a tenant default over to its lawyer, and the matter is resolved and never actually goes to court, can the park require the tenant to reimburse its legal fees? This depends on whether it is a non-payment of rent situation or some other kind of default.
Non-Payment of Rent
ARS §33-1476 (E) says that if a tenant fails to pay rent within seven days after receiving a seven-day notice, and the park refers the case to its lawyer, the park may insist on being reimbursed its attorney's fees before accepting the rent owed. It can do so even though an eviction action has not actually been filed.
If the tenant does not have enough cash, he can sign an agreement to pay the attorneys fees and any court costs at a later date.
But if the park accepts rent and cancels the eviction without either collecting its attorney's fees or getting an agreement to pay them, it could be found to have waived any claims to them.
Material non-compliances can involve a variety of notices, mostly 10/20's or 14/30's. The law says if the violation is cured within the proper period (10 days for 10/20 and 30 days for 14/30), the tenant must be released from the notice. Otherwise an eviction can be filed if the tenant has not vacated by the deadline date (20 days for a 10/20 and 30 days for a 14/30).
The law provides that if the non-compliance was material and not remedied in the cure period, the landlord is entitled to a judgment of eviction.
But most landlords would rather get the problem fixed, even if fixed late, rather than lose a paying tenant. So it is very common to see cases dropped after evictions are filed.
Unless the tenant signs an agreement to reimburse attorney fees and court costs before dropping the case, he is probably going to refuse to pay them is he is later billed, and once again the park may be found to have waived its claims to them.
Trying to Later Collect Fees
After cases are dropped, many parks will add their legal fees and court costs to the rent bill. If the tenant refuses to pay, the park may serve a seven-day notice and reject the rent as a partial payment since the attorney's fees are not included. If this leads to a new eviction action and the tenant contests it, the question before the judge becomes whether the tenant really owes the legal fees.
Most judges will conclude that if a prior eviction was dropped, there was no final decision on whether the park would have prevailed. Since the tenant did not agree in writing to pay them, most will determine there is simply no basis to make the tenant pay them.
Even when the rental agreement contains an attorney's fee provision, it will say that the prevailing party will recover attorney's fees in any dispute. The problem when the case is dropped before an eviction judgment is signed is that there is no prevailing party.
If you turn a case over to an attorney but drop it before a final eviction judgment is signed you are probably not going to be able to collect legal fees and court costs unless, before dropping it, you get a signed written agreement from the tenant to pay them.
DON'T BE A BURGLAR
Burglary is classically defined as breaking and entering another's dwelling house without the right to do so. It is a felony.
Mobile home parks are full of dwelling houses. But typically they are owned by tenants, not landlords. A park manager entering one without the tenant's consent may be committing a crime.
If the home is vacant and is owned by the park, the manager obviously has the right to enter. If the park owns it but has rented it to the tenant, the law permits entry with a minimum two-day advance notice to the tenant.
But if someone other than the park owns the home, and the park only rents the lot, the landlord is absolutely forbidden by the law from entering unless the tenant has given permission in writing for the home to be entered.
What happens when the home is abandoned?
Until the title has been transferred to the name of the park either by the tenant or lienholder surrendering it by signing over a valid certificate of title or as a result of a bonded title application or landlord lien sale, there is no right of entry. In other words, until the MVD has issued a new Certificate of Title showing the park to be the legal owner of the home, stay out.
Stay out even though you have the tenant's signed and notarized title. It may not be valid.
Stay out even if the park is listed as lienholder. That status does not give you right to go into the home.
Stay out even though potential bidders at a landlord lien sale want to look at the inside before bidding.
You need to have a title showing the home is owned by the park in order to enter it.
If you decide to go in anyway, you could wind up in jail.
WATER DAMAGE TO TENANT HOMES
Since the beginning of 2009 a number of ALJ complaints have been filed against landlords involving water damage to tenant homes. Typically the case will claim that the water runoff resulting from heavy rain storms is getting under the tenant's home. Of course once water gets under the home, all kinds of serious problems will develop that can be very expensive to fix.
The law seems to divide responsibility for protecting tenant homes from such problems. Two provisions in the mobile home parks landlord tenant act are relevant.
ARS §33-1434 (A) imposes certain obligations on landlords. It requires them to comply with applicable health and safety codes, to keep the park fit and habitable, and to keep all common areas safe.
Tenants filing these complaints will allege that water running under these homes after rainstorms are the result of landlords not maintaining the park properly in violation of that statute.
But ARS §33-1451 (A) requires the tenant to maintain his rental space in as good condition as when he rented it. It also requires the tenant to comply with applicable codes in using the rental space and to keep the space safe and in a state of repair.
Reading their complaints, it is evident that the tenants filing them are not paying much attention to ARS §33-1451 (A).
Rain runoff water running under tenant homes gets there because of problems in grading. Instead of being directed away from the tenant homes into streets, dry wells, retention basins, or other areas designed to hold the water, it is being allowed to run towards the homes. It is then able to get under them.
The grading problem may result from conditions on the space that are the tenant's responsibility; conditions elsewhere in the park that are probably the landlord's responsibility; or conditions on land adjoining the park.
When tenants bring these problems to the landlord's attention, they should be promptly investigated. Damage to tenant homes can quickly accumulate if the underlying cause is not immediately remedied. If it turns out to be the landlord's responsibility, the price of ignoring the complaint can get expensive.
First, find out how much water is getting under the home and find out where it is entering.
Then look around and see what may be diverting the water.
Remember, when the park was first designed and approved by local government authorities, a drainage plan was designed into it. This plan would typically have the land contoured in a manner to channel rainwater around homes into areas designed to hold it until disposed of.
If the home has recently been placed in the park, and if surrounding area grades have not been changed, check out how high the home sits, whether the ground around the home slopes away from it, whether the skirting is properly attached, and whether such things as concrete slabs or trees installed disrupt the intended drainage pattern and divert water towards the home. The conditions are typically the result of improper installation and set up by the contractors used by the tenant to place the home. The tenant should contact them to correct the situation.
If the home has been in the park a long time but has only recently started having these problems, check to see if any grading has taken place in the surrounding area. If other homes nearby have been set up in such a way as to disrupt the park drainage plan and divert water to the complaining tenant's home, the park needs to get that corrected.
If that is not the case, then look at the tenant's space. Natural settling may have occurred over time allowing water to get in. Trees growing on the space may have pushed up surrounding ground diverting water towards the home. New concrete may have been poured disrupting drainage and diverting runoff. New planting by the home may have resulted in ground no longer sloping away.
If these efforts do not reveal the cause of the problem and the tenant's space is near the park boundary line, check the neighboring properties to see if those owners did something on their land to divert water into the park. This sort of thing is normally illegal and action can be taken to get the owner to correct the problem.
If none of these efforts identifies the cause of the problem, it could be necessary to get a surveyor or a soils engineer in to check the area.
Once the cause is identified, responsible parties and corrective measures can also be identified. Normally if the cause is something the landlord did or a neighboring tenant was allowed to do, it is the park's responsibility to correct it.
But if the cause is something the tenant or a tenant's contractor did, correcting it is the tenant's responsibility. Likewise, if the cause is a natural occurrence on the tenant's space such as tree growth or normal settling of the home, that is normally a tenant responsibility.
If a neighboring property is diverting water, the mobile home park landlord tenant act does not seem to impose responsibility on the landlord. But as a practical matter, the park needs to take action to cause the adjoining landowner to correct the problem.
Don't ignore these complaints. Get to the bottom of the cause and then fix it if the park is at fault. Explain the situation to the tenant if it is not a park responsibility.
TAKING ADVANTAGE OF HARD TIMES
The United States is experiencing a very difficult period in its history. The immediate source of these problems is the housing and financial industries. People have been indoctrinated to believe their houses are their main investment, the source of future wealth and the enabler of their retirements.
They came to believe that the bigger and more expensive their houses, the richer they would become. So they bought the most expensive houses they could get, houses that in reality, many could not afford.
Lending institutions had access to literally unlimited amounts of money. They were under great pressures to loan it out. When there were no credit worthy borrowers left, they lent to people with bad credit or inadequate incomes to support loan payments.
More and more money was lent to more and more people with no real ability to pay it back. More and more houses were built for them to buy with this money, and the houses kept getting bigger and more elaborate.
The whole thing turned out to be a gigantic, multi-trillion dollar bubble, a monstrous house of cards that collapsed in mid-2008.
Arizona was at the forefront of this boom and ensuing collapse. Now those houses are worth less than half what was paid, and owners cannot sell at any price.
Because so much of Arizona's economy was dependent on housing and construction, the result of this has been wide scale loss of jobs. People living in these big houses do not have the incomes to pay their mortgages. Since they cannot sell them for what they owe, huge numbers are being foreclosed.
Where will they live?
A number of financial experts predict that one of the first areas to rebound in the stock market is going to be the rental-housing sector. Though they focus on apartment operators, the predictions are that millions of people who have lost their homes to foreclosure will be unable or unwilling to purchase replacement housing.
For lack of anything else, the prediction is that they are going to be renting housing. Predictions are that this will drive apartment vacancy rates down and make the companies that own apartments more valuable.
Manufactured Housing Communities
Actually we are an alternative to both owning a single-family home and renting an apartment. Displaced homeowners are accustomed to having their own place and being responsible for its upkeep.
They would seem a natural market for manufactured home communities to target. Many parks have empty homes and significant vacancy rates.
These communities should decide whether they want to attract people who have been foreclosed out of their homes. In deciding this consider a few points.
Adjusting Credit Criteria
All parks should have standard credit criteria they use for evaluating tenancy applications. Many have a minimum FICO or similar score that is required. A foreclosure will destroy a person's otherwise good credit rating and will probably drive it below a park's minimum requirement.
Landlords who want to target people displaced by foreclosures are going to need to adjust their credit criteria. Instead of simply establishing a minimum score, they are going to need to create an alternative overlooking a foreclosure and possible second mortgage home equity loan write-off. The alternative criteria would require current payments and no defaults on any credit lines other than mortgage loans.
Of course criminal background and prior eviction criteria would remain unchanged. Most importantly, household income must be sufficient to cover rent and home payments.
Manufactured home financing is becoming more difficult to obtain. A recent foreclosure may preclude a person from getting a manufactured home loan.
If your park has an inventory of park owned homes, consider financing them yourself. If you decide to, be sure to keep interest rates and amortization periods reasonable, and use appropriate financing paperwork containing necessary disclosures. Do not get into leases with purchase options or rent to own arrangements.
If you decide to go after this market, be sure whatever advertising you use makes clear that a foreclosure itself will not disqualify an applicant.
Regard This as an Opportunity
Whenever big changes happen and things look bad, there will always be a few people that will find new opportunities for success amid all the doom and gloom. Be smart and take advantage of this changing market.
PROBLEMS WITH ABANDONMENTS
For the last 18 months I have been seeing a huge increase in the number of abandoned homes I have been asked to deal with. I suspect this is just the tip of a very large iceberg.
Arizona has thousands of pre-HUD homes, built from the late 1950's through 1976. The vast majority of them and located in medium size and small mobile home parks, often in deteriorating parts of our cities or in rural areas.
Since these homes have little value, they become attractive to families of modest means looking for their first home. Often these families are newly arrived immigrants. In many parks, they are illegal immigrants.
A number of factors have conspired to drive people out of these homes. The Arizona Employer Sanctions Law that went into effect January 1, 2008 resulted in many illegal aliens losing their jobs and leaving the State.
Nine months later, the housing bubble burst and the economy went into the tank. Blue collar and service industry workers lost their jobs and suddenly could no longer afford space rent and home payments. They were forced to move to lower cost lodgings or become homeless.
In older age 55 parks, age continued to take its toll resulting in the institutionalization or death of residents. Their homes became abandoned when their families would not continue to pay rent after the tenants were gone.
Run down pre-HUD homes are hard to sell any time, and in this economy, it often becomes impossible.
Whatever the reasons, I believe the inventory of abandoned homes in Arizona is large and is growing larger. Not only are these homes not generating any space rent; they are also not being maintained. Over time they can become run down. This in turn hurts neighboring property values. All too often they also become magnets for crime.
For the last three years, North Carolina has been dealing with a similar problem.
Authorities there estimate there are some 40,000 abandoned mobile homes in the State. They have concluded these homes cause a variety of problems in the State such as hurting neighboring property values and attracting crime.
South Carolina, Pennsylvania and Illinois are some of the other States that have recognized this problem. All these States have taken some actions to try to deal with it, but none, in my view, have been very effective.
The problems dealing with these homes stem from their fractured ownership. A home located in a rental park involves three different property interests. The landlord owns the land; the tenant owns the home; and a lender may have a security interest and a lien on the home. Any law resulting in removal and destruction of an abandoned home is going to involve up to three sets of property rights.
Since there are laws and constitutional protections for property rights, States are obligated to ensure they are protected. These protections result in delays in getting rid of these homes.
The rental parks industry in Arizona has developed procedures for dealing with abandoned homes. Landlord lien sale and bonded title procedures work fairly well when dealing with abandoned homes that have some value. The expense of these proceedings can often be recovered when the home is fixed up and either rented or sold.
But with worthless junkers, including gutted and even burned out homes, the delays and expense of these procedures make the situation even worse. Allowing such a unit to stay in the park for 90 days while a landlord lien sale is pending, and making a landlord pay accrued property taxes on a worthless home just to remove a dangerous piece of junk serves no purpose.
When the slumlord laws were enacted, a law was included dealing with drug labs in mobile home parks. That statute, ARS §12-1000 (F) (5), allows a landlord being officially notified of a drug lab, to make a demand for removal and, after 30 days if the home is still there, to demolish and haul it to the dump.
Maybe this procedure ought to be expanded to cover burned out or gutted homes, or abandoned homes more than a certain age. That would take legislation.
Adding to the landlord problems is the fairly new requirement that County demolition permits preceded by environmental inspections be obtained. These are very expensive.
One of these days, Arizona is going to wake up to the fact that it has a big abandoned home problem. Maybe not as big as North Carolina. But big.
Park operators should be sure their communities are not part of that problem. Stay on top of your park and when a home is abandoned, take action. Contact the lienholder if there is one, or start a landlord lien sale procedure.
When the government discovers it has a problem in this area and decides to act, it would be a good idea not to be identified as part of the problem.
WHEN A MOBILE HOME IS NOT A MOBILE HOME
Landlord tenant laws define a mobile home in two ways: If built after June 15, 1976, a unit is a mobile home if it has a HUD decal. If built before that, the unit is a mobile home if larger than 8x30, designed as a dwelling, and not originally sold as an RV or travel trailer. The definition excludes RV's, travel trailers and park models. These definitions are in the Mobile Home Park Landlord Tenant Act at ARS §33-1409 (14), and in the Long Term RV Space Act at ARS §33-2102 (9) and (18).
But a different definition is used for assessment, property tax, and registration laws. They define a mobile home as a unit larger than 8x30 or any kind of unit actually used as a dwelling.
What this means is that many units are not mobile homes under landlord tenant laws, but they are mobile homes for other purposes. For example, parks are required to report park models, travel trailers and other RV's actually used as dwellings on assessors reports. Tenants who use park models, RV's or travel trailers as dwellings can obtain new titles showing those units as mobile homes.
While park models, RV's or travel trailers may be titled and taxed as mobile homes, that does not mean they are mobile homes for landlord tenant law purposes.
The Mobile Home Park Landlord Tenant Act excludes park models from the definition of a mobile home. The mere fact that a tenant using a park model as a dwelling obtains a title showing it to be a mobile home does not change this. Despite his title, that tenant is not entitled to the protections of the Mobile Home Park Landlord Tenant Act.
This can be an important issue in eviction cases. It is also an important issue in relocation cases since the Relocation Fund uses the definitions in the Mobile Home Park Landlord Tenant Act. The owner of a park model, travel trailer or RV is not entitled to relocation assistance from the Fund despite the fact that he has a title showing the unit is a mobile home.
A recurring problem in parks, especially older parks, concerns utility lines.
Generally speaking, utility lines are part of the "premises" as the term is defined in ARS §33-1409 (22). "Premises" means the park including its utilities.
ARS §33-1434 (A) requires the landlord to maintain the "premises" and keep it safe and in compliance with applicable codes.
But ARS §33-1451 (A) requires the tenant to maintain "that part of the premises which he has rented". That means the tenant, not the landlord, must maintain the rental space. That includes keeping it in compliance with relevant codes.
So what happens when a utility line needs maintenance or repair?
If the line simply runs across a number of spaces but serves the park generally, the tenant has not rented the part of the line running through his space. It is part of the premises and maintenance responsibility lies with the landlord.
But it's a different story when it comes to a line running from a main cable or pipe to the tenants home. That line serves only the tenant. Maintenance responsibility may be with the landlord the tenant, or both.
Here, a statute that is not part of the mobile home parks landlord tenant act comes into play.
ARS §41-2155 (E) imposes responsibility for maintaining utility lines on the tenant who owns a mobile home in a park when the line connects to his home and runs from the park furnished utility outlet to the home. So electric lines from park furnished pedestals are the tenant's responsibility. Gas and water lines from the park provided meters to the home are the tenant's responsibility. Sewer lines from the park furnished sewer connection to the home are the tenant's responsibility.
With respect to sewer, if the outlet connection is beneath where the home is installed, then the lateral line from there to the main line is the landlord's responsibility.
But there is an exception to all of this. If the park provided outlet is more than 25 feet from the tenant's home and the park provided outlet is outside the rental space, then the tenant is responsible for the first 25 feet and the landlord for the rest of it. Note that both conditions must be met for the landlord to have responsibility. The line must be more that 25 feet long and the outlet must be outside the space. If the outlet is on the space but the line is 50 feet, it is the tenant's responsibility. If the outlet is outside the space but the line is only 20 feet, it is the tenant's responsibility. Shared responsibility is triggered only if the line is over 25 feet and the outlet is outside the space.
Note that if a line that would normally be the landlord's responsibility needs work due to tenant abuse, the tenant would be responsible.
ARS §41-2155 (E) also prohibits local government agencies from holding landlord's responsible for violations of codes with respect to utility lines that tenants are responsible for under the statute.
REASONABLE ACCOMMODATIONS FOR THE DISABLED
Fair housing laws make it unlawful for housing providers to discriminate against people on account of their disabilities. The law also says it is discriminatory to refuse to make "reasonable accommodations" to enable disabled people an equal opportunity to reside on the premises.
Disabled people frequently ask landlords to make exceptions to rules and policies. The question then becomes one of whether the landlord must agree to it.
Most times the answer is obvious. A blind person with a seeing eye dog obviously needs an exception to a no-dog rule. A person in a wheelchair obviously needs an exception to a rule prohibiting additions including ramps to the home doorway.
But sometimes the answer is not so easy. Many of these cases involve assistive animals and residential caregivers. But the variety of requests is almost endless. They include requests for sign language interpreters to communicate with deaf residents; permission to park over-size vehicles on the space or to park on front porches for mobility impaired people; delaying rent due dates for people whose disability checks are received after the first of the month; allowing co-signers or guarantors for disabled people with low incomes, etc.
There are a couple of problem areas in dealing with requests where the need is not obvious.
What Proof Can You Ask For
If someone is in a wheelchair or is blind, the disability is obvious and no further proof should be requested.
But sometimes a disability is not obvious. When someone claims to be disabled and to need an exception to a park rule, but the disability is not apparent, the landlord has the right to request reasonable evidence of the disability. Medical privacy laws, however, restrict how much detail can be required. Normally something from a qualified medical provider such as a Doctor's note certifying that a person is disabled will suffice and it is not appropriate to inquire further. Even if you don't believe it, you need to accept it.
The Nexus of the Disability and the Accommodation
There must be a legitimate connection between the accommodation being requested and the disability. It is obvious that someone who is deaf does not need a seeing eye dog. But he may need another kind of animal to do things like waking him up if there is a fire or a break in.
Where the connection between what you are being asked to agree to and the disability is not apparent you are entitled to ask how the accommodation is going to help with the disability. But once you get an answer that makes the connection, the inquiry must end, even if you have doubts about it.
What Must You Agree To:
The accommodation being requested must be "reasonable". The way the law looks at it, a landlord can not be required to make fundamental alterations to his business or suffer undue burdens.
Once the disability is established, the requested accommodation is clear, and a nexus between the disability and the accommodation and the disability is established, it must normally be granted unless it would fundamentally alter the business or be unduly burdensome.
For example, asking a landlord to provide transportation services or medical care would fundamentally alter the business. Asking a landlord to allow a tenant to live in the park rent free due to inadequate income would be financially burdensome. Asking a landlord to leave spaces around the disabled tenant vacant to give her exercise room would also be unduly burdensome.
Other situations can be difficult. Asking for two over-size service animals, or a caregiver with small children in an age 55 park are fairly common borderline requests.
When granting a requested accommodation would create major problems for a landlord, an "interactive process" needs to be engaged in to try and find some acceptable compromise. In plain English that means meeting with the tenant to discuss the problem to see if something other than what was requested will work.
So, for example, you might meet to see why two dogs are requested. Maybe it can be agreed to on a temporary basis so the old dog can help train the new dog and then leave. Maybe the caregiver with the kids can visit during the day and an occasional night to provide needed care while the kids stay with their father. The idea is to meet in good faith and see if some middle ground can be found that will work for all parties.
Paper the File
Many of these cases wind up as formal fair housing complaints. Put as much as you can in writing in the tenant files so later you can prove what you did to comply with the law and try to satisfy the disabled resident's needs.
HOW THE ECONOMY AFFECTS YOU
Mobile home parks like all other businesses are being affected by the worsening economy. At this writing (early March 2009), the bottom is falling out of the stock market, home foreclosures are increasing, commercial properties including apartment complexes are being foreclosed, unemployment is increasing, state government programs are being cut, and the government plans tax increases. Federal spending is about to skyrocket. That may or may not help.
Parks are directly affected by much of this. Many tenants are losing their jobs. This results in homes being abandoned, and evictions increasing. Lenders that once financed mobile home purchases no longer are doing so. Faced with increasing vacancies, some parks are poaching tenants from other parks.
Superimposed on this is Arizona's Employer Sanctions Law. In parks that had a large number of Illegals living there, vacancy rates shot up last year when those folks got laid off and left the State.
Many parks are mortgaged. The mortgage documents on some require vacancies not exceed a certain percentage. Some mortgage interest rates are subject to adjustment.
No one has any idea when the economy will start to recover and when jobs will start being created again. It is likely the current situation is going to continue for a long time.
Here are some ideas of things that can be done to survive the downturn.
1. Your Current Tenants are a Precious Resource
This is your customer base--the source of your revenues. If you lose them, they will be hard to replace and your revenues will decline.
Emphasize good tenant relations. Recognize that other parks may try to steal them from you. Don't give them any reason to leave.
If a tenant has a temporary financial problem, contact him. Try to work with him to get him through the problem. If he was temporarily out of work and fell behind in rent but is working again, negotiate a payment plan to catch up on the arrearage while keeping future rent current. Consider waiving late charges when late or missed payments are due to reasons beyond his control.
Do not just send the seven-day notice and then evict him. At least try to see if the tenancy can be salvaged.
On the other hand, don't just do nothing and let the arrearage build up. All that will do is dig a financial hole so deep he can never get out of it.
Be pro-active. Contact the tenant and work with him.
2. Don't Offset Revenue Losses With Rent Increases
That's like the government dealing with a drop in revenues by increasing taxes. It is self-defeating and won't work.
If tenants are losing jobs and being evicted or forced to abandon their homes, the worst thing to do is increase rents on the tenants who remain. They also are likely having financial problems and your rent increase could force them out. Moreover, other parks with lower rents may poach them from you.
If revenues are down, try to cut expenses. Eliminate the frills. If you need to cut back on certain tenant amenities, however, explain why this is being done. Tell the tenants revenues are down and you are trying to avoid rent increases.
Do not cut back on essential things like park maintenance. You need to keep the park maintained and looking good to attract new tenants.
Be smart in how you spend money. Parks may need to cut back or suspend profit distributions to investors and owners.
Solicit input from tenants about how expenses can be cut. Involve them in keeping rent increases minimized.
3. Be Smart In Attracting New Tenants
I talk to managers all the time and ask how their vacancy rates are. Age 55 parks are usually pretty stable. When vacancy rates rise they do so gradually over time. Some age 55 parks that have reached intolerable high levels of vacancies should consider converting to all age status. A number have done so in recent years and it can be done successfully provided the current tenants are involved in the process and kept up to date on how and why it is being done.
In family parks, some have high vacancy rates but a number of them have low or even no vacancies. Among the things these parks are doing is revising their rental criteria to allow acceptance of applicants who have lost homes to foreclosures or been through a bankruptcy due to a foreclosure or a medical problem. Some who have acquired a large inventory of homes will sell them cheaply or even give them away to get qualified tenants. Some with higher priced homes in inventory will finance them on very attractive terms. A few parks with large numbers of park owned homes rent the homes, though this can be very tricky and choosing the wrong tenant can result in damage to the home. Some parks have gotten their zoning restrictions relaxed to allow RV's on mobile home spaces or vice versa.
Be creative and be smart in dealing with these problems. Those parks that do nothing will suffer. But those that recognize that problems this big bring opportunities for success will be fine.
SELF DESTRUCTIVE RENT INCREASES
Working people are losing jobs in this economy. People in construction trades and other businesses related to construction and real estate development are getting laid off or having their hours cut back. Illegals are being fired when lawful presence can't be established. Lower income seniors' pensions are not keeping up with inflation.
Some of these people wind up getting evicted; others just move out. Increased vacancies reduce rent revenues. But landlord costs keep increasing.
So what's the solution for the landlord? How about a rent increase?
Fine. So rents are increased. The remaining tenants now will pay more to offset revenues lost when vacancies occurred. But the financial problems of the remaining tenants have not gone away. To the contrary--your rent increase just made things worse. It is going to contribute to more vacancies and ultimately to another rent increase.
It’s a vicious circle.
Is there an alternative?
First, explore your costs. What are you spending that can be cut?
Take a look at how your employees are spending their time. Are they wasting it? Do maintenance people sit around between jobs? Are they productive when working? Do you have too much office help? Are they wasting time or sitting around with nothing to do?
If you are the park owner, are you creating unnecessary expense? Are you burdening your on-site managers with useless paperwork and reporting requirements? Do managers have to spend a lot of time filling out forms for you that really can be dispensed with? Do you have administrative employees who are tasking park managers with unnecessary reporting requirements and paperwork to justify their existence?
As an owner can you afford to reduce your profit margins on a temporary basis to avoid all or part of a rent increase until the current financial difficulties have passed?
If you are selling or financing mobile homes, is your interest rate so high that the tenant can not afford to make the monthly payments on the home?
Are you separately metering and charging for water? My experience is that park water bills sharply decline when they begin sub-metering and separately charging for water.
Are you wasting utilities? Do you check for leaks? Are your thermostats set too low in warm weather or too high in cool weather?
Are you doing everything possible to fill vacancies? Do you advertise where prospective tenants will see the ads? Do you have good relations with street dealers? Does the park show well? Do you and the office look professional and well run?
Have you talked to your tenants about where they think you may be able to save money and minimize rent increases?
Don’t just automatically implement rent increases when revenues fall off. First explore what you can do to minimize or even avoid the rent increase. Otherwise, you may just be contributing to the problem you are trying to solve.
NO ALJ JURISDICTION OVER PARKS ON TRIBAL LANDS
In the case of Ruben Montalvo v. Mission View Club Estates, an Administrative Law Judge ruled that a park on an Indian reservation is not subject to the jurisdiction of the Fire, Building and Life Safety Department. He dismissed a complaint filed against the park with the Department that claimed violations of the mobile home parks landlord tenant act.
Ruben Montalvo, a tenant of Mission View Club Estates, filed a complaint with the Department in 2007. The park is located on the San Xavier Indian Reservation in the Tucson area. The park landlord leases the ground the community is on from members of the Tribe under a ground lease approved by the Bureau of Indian Affairs.
There are a number of parks being operated on reservations around the State, notably in the Scottsdale area and along the Colorado River.
Historically, Indian Tribes entered into treaties with the United States prior to Arizona statehood, under which the Tribes were granted sovereignty to govern their land. The original idea, of course, was that members of the Tribe would have a sanctuary on which to live.
Over time, a doctrine of Tribal sovereignty evolved in the Federal Courts. Essentially, the law recognizes that Tribal governments have the right to govern their lands to the exclusion of State Governments.
This becomes confused in some areas because State and Tribal Governments will enter into agreements whereby State personnel can perform official duties on reservations such as police patrolling highways. Tribal Governments, of course, also enter into leases with developers for such things as operation of shopping centers and mobile home parks.
Finally, the degree of sovereignty is different when the rights of non-members of the Tribe are concerned as compared with Tribal members.
For example, non-Tribal members living on Tribal lands can still sue one another in State Courts. But usually a Tribal member must be sued in Tribal Court.
The power of the State to regulate business on Tribal land is almost non-existent unless the Tribe agrees to permit it. Absent such an agreement, it is up to the Tribe to regulate businesses on the reservation.
The ALJ process is the way by which the Fire, Building and Life Safety Department conducts its limited regulation of mobile home parks by ensuring compliance with the mobile home parks landlord tenant act. Essentially, that is the regulation of a business.
When that business is on an Indian reservation, the Department does not have the legal authority to regulate it. Thus an ALJ has no authority to decide any complaints for non-compliance from tenants of a park on a reservation.
That was the finding of the ALJ in Montalvo v. Mission View Club Estates when he dismissed Mr. Montalvo's complaint for lack of jurisdiction.
Similar logic would seem to also apply to parks operating under agreement with the Federal Government on BLM, National Park service, and other Federal land.
Any park located on Federal or Indian land that receives an ALJ complaint should have its attorney review the situation to see if it is appropriate to dismiss the case for lack of jurisdiction.
NEW COURT RULES FOR EVICTIONS
The Arizona Supreme Court has approved a new set of court rules creating detailed procedures for how evictions are to be handled. Although a few remaining changes are still up in the air, the new rules in all likelihood will go into effect January 1, 2009. They will apply to all eviction cases in Arizona Justice and Superior Courts beginning then.
The new rules dispense with the terms "forcible detainer" and "special detainer". Though these terms are still used in the relevant statutes, and although there are technical distinctions between them, the new rules will refer to all cases simply as "evictions".
A number of requirements appear in the rules that will increase the paperwork burden on eviction attorneys and, in all probability the legal expense to landlords. For example, the summons and complaint will need to appear on separate pieces of paper. Copies of termination notices must be attached to the complaint. And an information sheet will need to be served on the defendant when these other papers are served.
Except for the information sheet, I already do these things. But most eviction attorneys do not. They have been able to consolidate everything onto one page in the past which has enabled them to process these cases efficiently at great savings to their clients. This is no longer going to be true.
The rules recognize that eviction cases must move quickly, and if they are complied with, nothing in them should slow these cases down. But the rules also recognize that the concern with speed has occasionally resulted in unfair treatment of tenants. A number of provisions seek to correct that.
That is why the termination notice must be attached to the complaint. The complaint must also identify how and when the notice was served on the tenant. If a judge reviewing the complaint sees that the notice was not timely or properly served, the rules require him to dismiss the case.
The complaint, if for rent, must identify how the amount claimed was calculated, how late charges are calculated, and how any lease incentives sought were calculated. If the complaint is for non-compliance, details of the non-compliance must be given (they should appear in the termination notice).
The new rules also require that landlords be prepared to disclose certain matters to tenants upon request.
In non-payment of rent cases, the landlord needs to have a ledger showing charges and payments on the tenant's account for the preceding six months. In addition, the landlord must have a copy of the most recent written rental agreement, if there is one, at court and be prepared to point out to the judge where the attorneys fee and late charge provisions are.
In non-compliance cases, the landlord needs to provide documents supporting the claim. In the typical case, that includes a set of the park rules, photographs showing the condition of the space, written complaints from other residents, and anything else the landlord can use to prove the non-compliance.
In immediate evictions, documents should include police reports, photographs, and complaints and witness statements.
It has always been my policy to require managers to provide these materials when forwarding cases for eviction, except for the six month rent history. Beginning January 1, 2009 I will be requiring that for all rent evictions.
If these documents are not available at or even before the initial court appearance, the case will be delayed by the tenant simply asking for them. A judge will not permit the case to proceed without those documents being provided if requested.
Under the new rules it will be more important than ever to give accurate and clear termination notices; to ensure they are given in the proper manner; and to be sure that when you go to court, you have available copies of everything needed to prove your case and, for a rental eviction, a six month accounting.
LEGAL EFFECTS OF ALLOWING MOBILE HOMES IN RV PARKS
The City of Mesa has recently revised its zoning restrictions to permit placement of mobile homes in RV parks under certain circumstances. A number of RV Parks are located in Mesa, some of which are quite large. Several of these lobbied for the change and plan on allowing mobile homes to be placed in them.
The law of unintended consequences may apply here, and it would be well for landlords to be aware of certain complexities that could result from mixing these two types of units.
State Law is Not Affected
To begin with, landlord tenant law is set at the State level, and the Mobile Home Parks Landlord Tenant Act as well as the RV Long-Term Rental Space Act apply throughout the State. They apply in Mesa as well as other communities allowing these mixed parks the same way now as before the zoning restrictions were changed.
Neither of these Acts really envisions a mixed park, and this fact can create some of the unintended consequences referred to above.
One Park, Two Laws
A park with three or more RV spaces is subject to the Arizona RV Long-Term Rental Space Act. This Act applies to RV Space rental agreements that have a duration of more than 180 days.
A park with four or more mobile home spaces is subject to the Arizona Mobile Home Parks Residential Landlord and Tenant Act. This Act applies to all mobile home space rental agreements.
A single park can, and often will, qualify as both an RV park and a mobile home park.
Most mobile home parks with RV spaces already know this and have been operating in compliance with both sets of laws for years.
But many RV parks that traditionally have not had mobile homes in them are completely unfamiliar with the Mobile Home Parks Act. Any RV parks, and especially those in Mesa that will now begin allowing mobile homes to come in, need to learn this law and to comply with it.
How RV Parks Will Be Affected
To begin with, RV parks doing this need to understand that once they let four or more mobile homes in, they have become mobile home parks for purposes of State law. Here are a few ways that will affect them.
Mobile home park managers must receive six hours of qualifying training every two years. New mobile home park managers must receive six hours within six months after being hired. They must display their training certificates in a public area and are subject to large fines for failure to comply.
2. Statements of Policy
Since they are now mobile home parks, RV parks with four or more mobile homes must publish statements of policy applicable to mobile home space tenants.
3. Summaries of Act
Mobile home parks must provide new mobile home space tenants with State published summaries of the Mobile Home Parks Act with their initial rental agreement. In any year the Act changes, updated summaries must be made available to all mobile home space tenants by November 1.
Mobile home space tenants must be given at least a 90 day rent increase notice prior to expiration/renewal of their rental agreement when rents are going to change.
Long-term RV space tenants (those under rental agreements over 180 days) must receive a 60 day notice.
RV parks that open up to mobile homes are going to have to calendar the mobile home space tenants for 90 day notices if they want to increase their rents.
5. Rent Relocations
A mobile home space tenant receiving a rent increase of more than ten per cent plus CPI must also be given a notice of eligibility for relocation fund assistance due to a qualifying rent increase. Any such tenant then has the choice of renewing at the increased rent or removing his home from the park with financial assistance from the mobile home relocation fund.
Under the 2008 revisions to the RV Long-Term Rental Space Act, RV parks are limited in how much they can separately charge tenants for utility service.
Mobile home parks have been subject to such restrictions for many years.
RV parks, for metered utilities, have the option of either installing separate meters and charging tenants at the single-family service rate, or pro-rating their costs among their tenants. But mobile home parks do not have that option. If water, gas or electricity is separately charged, the space must be metered and the single-family service rate controls. Pro-rata charging of costs is not an option for mobile home space tenants.
A long-term RV space tenant (one with a rental agreement over 180 days) can be given a notice electing not to renew his tenancy at least 90 days before expiration without cause.
But mobile home space tenants cannot be non-renewed without cause. Non-renewals of all mobile home space tenancies can only be for cause, the same as terminations.
Any RV park considering rentals to tenants bringing mobile homes into their communities should first carefully consider the effect of the Mobile Home Parks Act on their operations. They are not going to have the same flexibility in dealing with mobile home space tenants that they have with their RV space tenants.
The differences in applicable laws are numerous. The foregoing examples are just a few of them.
CHANGE IS COMING
By the time you read this, the Obama Administration will be in office and the Arizona Legislature will be back in session. This is probably going to be a period of major change in our industry.
At the Federal level, you should expect to see changes in the way Fair Housing Laws and immigration policies are enforced. Federal policies will be reflected in State and local policies in the Arizona Attorney General's Office and the City of Phoenix.
The government will probably take an expansive approach in enforcing Fair Housing Laws. Crime free programs will likely be evaluated on whether they result in disproportionate rejections or evictions of handicapped persons. Zero tolerance crime free programs will probably invite enforcement actions.
The government will likely expand the it's definition of who is considered disabled and require more in the way of "reasonable accommodations" on their behalf. This will be especially apparent when it comes to people claiming to be handicapped by mental or emotional problems.
Racial and ethic discrimination will probably get more attention. Landlords may find themselves more and more restricted in administering policies having the effect of rejecting people of different nationalities, even if their immigration status is unlawful.
This will depend to some extent on what the government does about our immigration problems. Look for some kind of amnesty for Illegals sometime in the next couple of years. One effect of this will be increasing scrutiny of policies resulting in rejections of applications of new immigrants.
Enforcement may shift from a policy of encouraging compliance to a policy of harsh treatment and punishment of landlords who are believed to have violated the law--even in very close cases involving innocent mistakes.
When the Arizona Legislature goes into session, it will be dealing with huge budget deficits. Spending this year is on track to be over a billion dollars more than revenues. That will shut the State government down in the Spring unless spending is sharply cut and revenues are increased.
It is plain that State programs and agencies are going to need to be eliminated, and user fees are going to be increased. Whether taxes will be increased is an open question.
Any time we need to use a State service, our cost is going to increase. The quality and timeliness of the service will probably diminish.
Of special interest to our industry is the Fire, Building and Life Safety Department. There is really no reason for it to exist. Its legitimate functions of regulating mobile home sales, installation and manufacture could be transferred to other State agencies, and the rest of its functions eliminated.
It has excess staffing since the terrible economy has eliminated much of its workload. In an effort to survive and keep its current staff, it is looking for other areas to get into. There is nothing more dangerous to a government agency looking to increase its workload in order to survive.
Of all the changes we will be dealing with over the next year, fighting off the empire building efforts of a non-essential agency trying to survive in a time of government cut backs may well be the most difficult.
CHALLENGES FOR 2009
The New Year brings with it new challenges. Here are some things we will be dealing with in 2009.
New Eviction Rules
Courts are enforcing the new rules of procedure, and eviction filings that do not satisfy them will be thrown out. While most of the requirements apply to landlord lawyers, one part can only be satisfied by landlords themselves.
In order for the Court to award late fees in a rental eviction there must be a written rental agreement with a late fee provision. Any park filing to evict a tenant for non-payment of rent which does not have a written rental agreement allowing late fees will not be able to collect them.
The same applies to legal fees. If the tenant does not contest the eviction, legal fees cannot be included in the judgment unless there is a written rental agreement with an attorney's fee provision.
The mobile home parks landlord tenant act has required written rental agreements for all tenancies since 1987 so there really is no excuse for a park landlord not having them.
Age 55 Parks
Late last year I was told by the Attorney General's Office that they have been receiving a number of fair housing complaints against Age 55 Communities. Most are not mobile home parks but the same considerations apply.
These communities are having problems filling vacancies and many appear to be dealing with the problem by waiving age restrictions. This creates a variety of problems. The worst is that the community may fall below the minimum 80% threshold of Age 55 plus occupancy in which case it automatically ceases being an Age 55 Community.
These communities cannot cheat and get away with it indefinitely. If you are an Age 55 Community with vacancy problems, either change your marketing or consider converting to all age status. If you try to remain an Age 55 Community without enforcing the age restriction, you are going to get into trouble.
Another fair housing complaint that has been on the increase involves landlords slapping broad restrictions on what children can do in the community. Many times community managers get so frustrated at unsupervised children causing and getting into trouble on the property that they "ground" them. Some actions I have seen include requiring an adult to be with children at all times everywhere, prohibiting children in community facilities, etc.
Landlords can restrict children only when the restriction is for the safety of the child. An example is requiring children under 14 to have a responsible adult present when using the swimming pool. Landlords can also, normally require compliance with local curfew ordinances.
But restrictions or "groundings" that go beyond this normally constitute familial status discrimination.
The answer to these problems is better management and enforcement of rules against tenants for activities of all members of their households.
Trees on Tenant Spaces
AAMHO believes landlords are responsible for maintaining trees on tenant spaces. A 2007 ALJ decision in Tucson held a landlord responsible for removing dead trees and tree debris from tenant spaces.
But section 33-1451 (A) of the mobile home parks landlord tenant act requires tenants to maintain their spaces. The big tree on the space is part of the space.
This statute is not referred to in the ALJ decision and apparently the Judge was not made aware of it. Moreover, the landlord in that case did not appear to be enforcing a park rule requiring tenants to maintain their trees.
Expect to see challenges and ALJ filings against you if you require tenants to maintain their trees. While I think the law requires them to, I also think it is still the park's responsibility to remove a dead tree from a tenant space.
I also think it is better policy for the park to maintain all trees with the cost simply reflected in the rent.
Mixed Mobile Home Parks and RV Parks
A change in Mesa's zoning ordinance allows large park model parks to now rent to tenants with small mobile homes. Once an RV park has four or more mobile homes in it, it becomes a mobile home park as well as an RV park. All of these mobile home space rentals are covered by the mobile home parks landlord tenant act, and its rental documentation for those tenants (statements of policy, rental agreements, etc.) must satisfy the requirements of the act.
Mobile home parks with two or more RV spaces are also RV parks for purposes of the long-term RV space rental act. RV space rentals 180 days or longer are covered by that act.
The mobile home parks have adjusted over the years to being under two acts. Now the RV parks are going to need to make an even more difficult adjustment to the mobile home parks landlord tenant act for their mobile home space rentals.
It is going to be a challenging year. These are just a few things we will be dealing with. The change in political administrations nationally and the budget crises at the state level are going to create a lot of changes this year.
IT MAY BE TIME TO UPGRADE YOUR TECHNOLOGY
I was forced to change. It became impossible to practice law without using computers and being available at all times. The Internet became indispensable for keeping up-to-date on legal developments and for performing legal research. E-mail became the essential medium of communication.
Though I didn't like it, these tools made me infinitely more productive. I found I could get far more work done while improving its quality, in the same amount of time. This enabled me to keep expenses and hence client billings low (some of you may disagree with this latter point).
The Internet offered me the ability to set up a website. Although I don't use it for marketing, I do use it to publish information enabling clients and others in the industry to keep up to date on developments in the legal arena affecting them.
In the last seven years I have made a 180-degree change and am now a proponent of utilizing technology. I think many parks are currently where I was seven years ago--resisting change.
I sympathize with this. I am from the generation that preceded the Baby Boomers. Older people like those who manage a lot of parks, have a tough time learning how to use the new tools, and they can be overwhelming and frightening. But with the right equipment and a little training in how to use it, these fears will easily be overcome.
I think every park at a minimum should have a current generation, low cost version desktop computer. It should have current versions of Word and Adobe Reader installed in order to download and perhaps complete forms. If the computer is going to be used for accounting purposes, a simple accounting program should be installed.
The computer should be connected to a laser printer/fax machine. The office should always have a spare ink cartridge on hand. When it is put in the printer another one should be ordered.
The computer should be connected to the Internet by way of a high speed Internet connection. An e-mail account should be opened (Hotmail and Gmail are two examples of free e-mail account providers).
The Internet connection opens up a world of resources to parks. Legal questions can be answered by looking at statutes on-line. Information on legal developments can be obtained from my website. You can obtain forms on-line from your attorney by way of e-mail, instantly. If you want to get a dealer license you can download forms from the Fire, Building and Life Safety Department website. If you are involved in an ALJ case you can check the status of your case or file pleadings on-line with the Office of Administrative Hearing.
If you have a maintenance problem you can do an instantaneous search for repair firms in your area. You can check their records on-line with the Registrar of Contractors.
If you need to buy equipment or supplies you can instantly determine who will sell them to you for the lowest price with an on-line search, and you can then order them on-line.
You can network with colleagues in other parks in your area by e-mail. You can check tenancy applications on-line.
I am just scratching the surface, and all of this sounds ridiculously simple to people who have already moved into the 21st century.
But there are hundreds of parks that don't even have fax machines, much less the kind of tools I am talking about. My message to them is that its time to change. It is becoming impossible to do business without the right tools and in particular without being on-line.
Managers and owners that are where I was seven years ago need to bite the bullet. Buy the computer and take a class on how to use it. Once you get the basics down, you can teach yourself a lot of things by simple trial and error.
Those of you who continue to do things "the old fashioned way" are going to find that you cannot compete and, if in fact, cannot even stay in business as more and more essential tasks are required to be performed on-line.
Don't become a victim of technology. Learn how to use it to make you more productive and successful.
The main reason that MHCA exists and that parks belong to it, is the defense of the private property rights of its members. But what do we mean by "property rights"?
Ownership of property is one of the most important rights of citizens in a free society, and use of private property to generate income and wealth is essential to our economic well being.
The U.S. and Arizona Constitutions recognize and protect private property rights. Both prohibit the government from taking away property from private citizens without "just compensation", and both prohibit the government from depriving people of their property without "due process".
In sum, individuals have a basic right to own and enjoy property, and government interference with that right is constitutionally restricted.
Despite these protections, however, over the years, private property rights have been eroded. The main way this has taken place is by government regulation of how private owners may use their property.
When government wants to simply take a person's land away, it is apparent under our constitutions that it must first pay "just compensation" to the landowner. This sort of thing happens when private land is needed to build a highway, municipal stadium, public library or the like. These are called "physical takings". That is, the government is physically taking the person's land away.
But when government leaves ownership of the land with the private party and simply restricts the way in which it can be used, the situation is far more complicated and confused.
For example, most land falls under local zoning ordinances. If a person's land is zoned for residential use, it cannot be used to build a factory or open a hog farm. It can only be used for residential purposes. The government zoning ordinance regulates how the land can be used. Since it could have been used for a factory or hog farm before the ordinance was created but not after, it is clear the owner has lost certain rights as a result of the government regulation. While he still owns the land, the right to use it in the ways now prohibited by the zoning ordinance has been taken away.
These are called "regulatory takings". Ownership remains with the individual, but certain rights of usage of the land have been taken away by government regulation.
Over the past century, the Courts have interpreted the U.S. and Arizona Constitutions to allow most regulatory takings to take place without the need to pay "just compensation", and most are upheld as not violating the obligation to afford the landowner "due process".
It has gotten so bad in some areas of the country that the combination of zoning restrictions and environment regulations have rendered some private property unusable for any purpose. Yet the landowner has not been compensated for the loss of value in the land.
For the past 40 years, mobile home park operators have been deeply involved in resisting government efforts to engage in regulatory takings. Much of this results from pressures on government by tenants to impose restrictions on landlords that result in benefits to tenants.
Our landlord tenant laws are an example. These laws require park landlords to rent to tenants; to approve tenant sales of their homes to third parties; and to approve the buyers as new tenants. They prohibit landlords from terminating tenancies without good cause and only after certain notices are given. And they even restrict how and when a landlord can close a park and go out of business.
Each of these restrictions on a landlord takes away rights he had before the law was enacted, and consequently each is a "regulatory taking" with was uncompensated.
In this consumer friendly society, government regulation of landlords is unavoidable and exists in every state.
The principal reason MHCA exists is to ensure it doesn't go too far, and it has been remarkably successful compared to most states in resisting government over-regulation.
The worst possible example of an uncompensated regulatory taking that devalues private property is rent control. Many states impose rent control on landlords, meaning rents cannot be increased until approved by a government agency. Usually this means the landlord must prove that his unavoidable expenses have increased and he needs to increase rents to cover those expenses and still receive a reasonable profit. Most requests are opposed by tenants, and at the end of the process the landlord's income is barely adequate to stay in business.
Much of MHCA's activity each year is devoted to supporting bills upholding property rights, and fighting bills which would erode them during sessions of the Arizona Legislature. Rent control bills have been defeated in two different years, and a vast number of other proposals to weaken or destroy a park owner's rights to operate his property have been defeated.
Without MHCA, park landlords would not only be dealing with rent control, but would be unable to terminate tenancies on short notice for non-payment of rent, unable to get rid of abandoned homes, unable to force lienholders to pay rent, unable to prevent most criminals from moving into a park, unable to close a park without paying large penalties, unable to prevent tenants from forcing them to sell their parks, unable to recover their full utility costs, unable to restrict subleasing, etc.
A couple of years ago, Proposition 207 was enacted with MHCA's support. This citizens' initiative actually requires government to start compensating landowners for the decrease in value in their land resulting from regulatory takings. It has become an increasingly valuable tool in the constant battle against government efforts to restrict property rights.
So when you write that membership check out each year, treat it as an investment in maintaining the value of your park by preserving your right to operate it without oppressive government regulation.
I once had a judge throw a park manager out of the courtroom because she was dressed inappropriately. Since she was wearing tight shorts and a tank top, that was an appropriate action.
I frequently visit park management offices. Some are well organized, clean, efficient looking, and staffed by nicely dressed employees who behave in a professional manner. Unfortunately, all too often, I find others with junk, debris, trash, half eaten food, and tenant records scattered around. They are staffed with people wearing dirty clothes who are rude, but who are probably behaving better than normally because I am there.
I find a correlation between how the office looks and how the park is run. I associate messy offices with ill maintained parks and spaces overgrown with weeds and littered with junk. Unprofessional looking and acting staff translates to slovenly tenants, crime and conduct disturbing to others.
Management that does not look deserving of respect will not get any.
In order to be a successful business, a mobile home park needs to be run like one. That begins with the management office. Set an example for your tenants by operating your office like you want your tenants to conduct their affairs.
Start by looking in a mirror. Would you want to do business with someone who looks like you do? You don't need to be a beauty queen or wear a coat and tie. But is your personal grooming satisfactory? How are you dressed? Are you clothes at least clean and appropriate? Do you look like a professional?
Then look at your management office. Are the people working there also appropriately groomed and dressed?
How do people treat one another? Are discussions in a conversational tone or are people yelling at one another? Is profanity a part of normal conversation? How is the office staff treating your tenants? Although they can be difficult and demanding at times, they are your customers. Treat them like you want to be treated when you are a customer.
How is the office furnished? Is the furniture dirty or worn out? Is there a lot of obsolete junk on the walls? If you have dirty or stained sofas and chairs, broken or defaced desks and tables, worn out lamps, broken file cabinets, or worn out carpet on the floors, replace it. Yes--it costs some money to do this, but it is occasionally necessary for a business to replace assets if it wants to stay in business.
How clean are your offices, your hallways and your bathrooms? Do you have a regular cleaning schedule? Do you frequently check them?
Are your desks clear at the end of the day? Are your files kept under lock and key, inaccessible to people not entitled to get into them? Or will a visitor see files and records scattered all around?
Mobile home parks tend to be old--not many have been developed in recent years. Does your office area look like a throwback to the 1970's? Even if it is clean and neat, does it look like something from another era?
Your office and the areas serving it are your point of sale. When a potential customer appears, you should want to impress him in order to close the sale. That can be hard to do if the physical surroundings are unattractive and the people working there are repulsive.
Look your office area over. Make sure it is neat, clean, attractive and inviting. Be sure the people working there look and act professional. If it is necessary to "freshen it up" by replacing carpeting or furniture, or if it needs a fresh coat of paint, do it. The modest investment will be justified in the end.
It is a lot easier to enforce park rules when you are setting the kind of example you want your tenants to follow. And you will eventually find it is easier to attract and retain the kind of responsible residents you want in your community.
RECURRING QUESTIONS AND ISSUES
No matter how many times I talk to managers, write articles, teach seminars, and pray for divine intervention, some questions and problems keep coming up. Here are some of the frequent ones.
1. Posting Notices. Never post a notice. The law says it is not effective unless received. The only way to prove receipt when the tenant is not around or when he denies getting it, is personal delivery or certified mailing. It drives me crazy to get eviction notices that say "posted" on them.
2. Incorrect Lienholder Charges. A lienholder is not a party to the rental agreement. He is not responsible for charges in it that the tenant agreed to pay, especially late charges. When a home is abandoned the lienholder becomes responsible for certain charges under a statute (ARS 33-1478 (A)), not the rental agreement. The statute says the lienholder must pay rent (including utilities) from 60 days prior to a notice of abandonment until the home is disposed of. I don't mind the frequent calls I get on this, but it really drives me nuts when I learn that a lienholder payment was sent back because it did not include late charges.
3. Taking Rent from Squatter. A squatter is someone who moves in after the tenant moves out, but who either never sought landlord approval or moved in after being rejected. When you know a squatter is living there and with knowledge of that fact accept rent from him, you have probably created a tenancy. Under the mobile home park landlord tenant act a tenancy cannot be terminated without good cause. When you learn a squatter is in a home, refuse rent; serve a demand for possession; and if necessary file to evict.
4. Serving 30 Day No Cause Termination Notices. You can terminate a tenancy of a park owned home tenant with a 30-day notice without cause. But to terminate a tenancy of a mobile home space tenant, you must always have good cause.
5. "Trespassing" Park Approved Occupants. Once you approve someone as an occupant of a tenant's home, you cannot later just withdraw the approval and tell him to get out. If he does something constituting good cause you can give the tenant a proper termination notice and evict the tenant if he doesn't resolve the problem. But you cannot just tell approved members of the household to leave.
6. Making Up Rules As You Go. In order to enforce a rule it must be in writing, be part of the park rules and regulations, and if a change from a prior rule, it must be properly noticed out to tenants. Moreover it cannot be enforced against existing tenants if it substantially modifies their rental agreements. Before acting to enforce a rule, make sure it is really part of your rules and regulations.
7. Restricting Use of Park Facilities. When a tenant misbehaves, you cannot respond by "grounding" him. You cannot, for example, tell him he can't use the pool or the clubhouse or any other park facility. His rent payment entitles him to the use of all facilities. When he violates the rental agreement or park rules, your recourse is to follow the law. You can serve a termination notice and if need be evict him if he doesn't cure the violation.
8. Including Home Payments in Seven-Day Notices. A seven-day notice is a notice terminating a rental agreement for non-payment of rent. Some parks are also financing tenant homes and when the payments on the home are delinquent, they include the delinquent payments in the seven-day notice. Mobile home payments are not rent. Do not include those sums in seven-day notices.
9. Restrictions on Children. In a family park, restrictions on children violate fair housing laws unless the restriction is for the health or safety of the child. The restriction of age 14 to use the pool alone is usually okay, but restricting kids from the clubhouse is not. You can, however, usually enforce your local curfew ordinance.
10. Favoritism. Enforce your rules fairly against everyone. Do not selectively enforce them against some people but not others. Do not play favorites.
Times are getting tough in the residential rental industry. Age 55 parks, especially, are having a difficult time filling vacancies. This is due to a number of things mainly involving changing demographics. As attrition takes its course with the World War II generation, and Baby Boomers age, it seems that the Boomers are not as interested in living in our communities as their parents were.
Some of this is due to the "old fashioned" appearance of many parks. Both the homes and the facilities look like something out of the past. Freshening up the park with newer homes and rehabilitating facilities can cure some of this.
A number of parks have purchased new homes and put them on vacant spaces for resale. Other parks have bought older homes from tenants to avoid losing them, or have wound up owning them following abandonment. It turns out these homes often are difficult to sell meaning they simply remain vacant and no rent is being paid on the space.
Many of these parks are considering or have already decided to start renting these homes to generate cash flow. While that might be a sound decision, you should consider a number of factors.
1. Applicable Law. Park owned rentals are not covered by the mobile home parks landlord tenant act. They are covered by the residential landlord tenant act that also covers apartments. That law is much more favorable to landlords than the mobile home parks law. But it is considerably different as well. If you are going to rent homes, get an MHCA Green Book and read how the law works.
2. Rental Forms. Since the law is different, the forms required to rent are different. So are the various types of notice forms. Do not use mobile home parks landlord tenant act rental or notice forms for park owned home rentals. Use the forms in the MHCA Green Book.
3. Walk Throughs. The residential act requires landlord and tenant to do a walk through of the home before the tenant moves in. A move-in, move-out form is completed indicating the condition of the home. When the tenant moves out another walk through is conducted. The difference in condition is the basis for accounting for the tenant's security deposit. A form is in the Green Book.
4. Security Deposits. A mobile home can be badly damaged in a short time by a tenant. It is important to get a reasonable deposit to cover not only this potential damage but any rent and utilities owing at move-out. The residential act limits deposits to 1 1/2 months rent, but the tenant can voluntarily agree to more if appropriate.
5. Evictions. My experience is that park owned home tenants tend to get evicted for non-payment of rent at a far higher rate than space rental tenants. Part of this can be avoided by having rigid rental criteria and screening standards. Part can be avoided by not allowing rent arrearages to accrue. When rent is late serve a termination notice (5 day notice under the residential act) and promptly refer cases for eviction.
6. Abandoned Personal Property. If a tenant vacates a home but leaves property behind, the residential act has a detailed set of procedures for dealing with it. See the Green Book for a explanation and necessary forms.
7. Access. A landlord can enter a park owned home to inspect it or perform maintenance by serving a minimum two-day notice of intent to enter the home. This is different from the mobile home parks act which prohibits access without a signed written agreement allowing it.
8. Maintenance. The residential act requires the landlord to maintain the home and keep it fit, habitable, in compliance with codes, to keep utility systems operational, and to ensure hot and tap water as well as reasonable heating and cooling. That can be expensive.
This is just the tip of the iceberg. If you are thinking about park owned rentals, be aware of the additional responsibilities and expenses. Be sure your rent and security deposit requirements reflect this. And get an MHCA Green Book to learn what is involved and to obtain necessary forms.
CRIMINAL BACKGROUND CRITERIA
Most parks have criteria that must be satisfied by applicants before they are approved for residency in the community.
Typically, tenants (the individuals who must sign the lease and assume financial obligations to the landlord) must satisfy credit criteria. Tenants and all other residents will be expected to meet other suitability criteria such as a clean eviction history and a satisfactory criminal background.
An application form such as the one in the MHCA Blue Book, will require information that can be used to obtain information on the applicant. Once completed the application will be given to a tenant screening service which will then obtain credit and criminal background reports.
Once the reports are received, the landlord will compare the results to what its residency criteria is, and will make a decision whether to approve or deny the application.
It is the landlord who determines what the criteria for approval is. Since criminal background criteria has become controversial under fair housing laws, it is important that the standards selected by the landlord be effective without getting it in trouble under fair housing laws.
Fair Housing Law Implications
Many parks participate in local police department sponsored Crime Free Housing Programs. An essential element of these programs is the requirement that landlords enforce criteria designed to exclude people with criminal backgrounds.
Police departments tend to recommend all persons with any history of significant criminal activity be rejected. Some recommend a "zero tolerance" policy--any conviction of a significant offense at any time in the person's life will disqualify him. But police departments only recommend. It is the landlord who is responsible for actually setting the criteria.
Within the last couple of years, fair housing law enforcement agencies have attacked such policies as having certain unlawful discriminatory effects. In 2007 the Arizona Civil Rights Advisory Commission, part of the Attorney General's office, issued a strongly worded letter to the rental housing industry, asserting that some Crime Free policies were unlawful in certain respects.
The Commission indicated the problem was in the handicapped discrimination area. It claimed that many homeless people are homeless due to mental or emotional impairments and are forced by circumstance to commit "survival crimes" in order to exist. Such crimes may consist of shoplifting or even burglaries. The Commission believes that holding such crimes against these people amounts to discrimination.
Another area has to do with drug offenses. Fair housing laws define recovered addicts or people in a recovery program as handicapped. It can be argued that holding past convictions of certain "victimless" drug offenses against them such as simple possession or use, amounts to discrimination.
Other arguments can be implied from the Commission's position. Since a disproportionate percentage of convicted criminals are racial minorities for example, this same logic could mean that any criminal conviction has racial discrimination overtones.
The Civil Rights Division of the Attorney General's office has hinted that it will soon be filing complaints of discrimination against landlords with zero tolerance or similar restrictive criteria. They do not indicate they will challenge convictions of serious violent crime, but do indicate they will challenge criteria involving "survival crimes" or victimless crimes.
No one can be sure where they will draw the line or whether the courts will agree with their legal arguments that enforcement of this criteria violates fair housing laws.
Develop Your Criteria
All parks should have a written policy identifying their credit, suitability and criminal background criteria. The criteria should be available to applicants and should be uniformly enforced. This will help minimize claims of discriminatory enforcement.
Zero tolerance criteria should be avoided. In addition, the felony--misdemeanor distinction is not completely reliable since different states define these terms differently.
In developing your criteria consider something along these lines:
No convictions of sex crimes, crimes of violence, or crimes against children.
No convictions of crimes involving weapons such as aggravated assault, aggravated burglary, armed robbery.
No convictions of arson.
No convictions of crimes involving illegal drugs, except that simple possession or use convictions more than one year old will be disregarded for applicants demonstrating participation in or completion of a recovery program.
No misdemeanor convictions of property crimes within the past two years.
No felony convictions of property crimes not involving use of a weapon within the past five years.
No DUI conviction, within the last three years.
No open or pending charges at the time of application, excluding non-DUI traffic offenses.
These are just suggestions. The idea is to adopt criteria that will keep the park safe from fair housing complaints without going to the extremes that may create problems under fair housing laws.
Take a look at what your current criteria is in light of these suggestions, and see whether you should revise it.
The Mobile Home Parks Act contains certain provisions allowing a tenant to cure violations after being given a termination notice, enabling him to reinstate his tenancy and remain in the park. This article attempts to explain how they work.
ARS §33-1476 (E) provides that if rent is unpaid when due, the landlord can give a seven day termination notice and file to evict if payment is not received within the seven day period. But the cure period really runs beyond the seven-day period.
First, the default is failure to pay "rent". Rent is defined at ARS §33-1409 as payments to a landlord "in full consideration for the rented premises". That definition seems to include not only base rent but utilities, pet and extra person fees, late charges, and any other monetary obligation in the rental agreement.
If "rent" is not paid when due, the park can serve a seven-day notice. During that seven days the tenant has the right to cure by paying the rent, utilities, fees and late charges due as of the date of payment. The park cannot file for eviction until the seven-day period has expired.
After that, the eviction can be filed. But the right to cure continues. ARS §33-1476 (E) says that before the eviction judgment is signed by the judge, the tenant has the right to pay everything due including the park's court costs and attorneys fees. In that case the tenancy is reinstated and the eviction case must be dismissed.
There is no right of the tenant to cure and reinstate the tenancy after the judgment is signed. But the park can choose to enter into an agreement to allow the tenant to pay and reinstate the tenancy if it wants to. After the judgment is signed it cannot be forced to.
Never accept partial payments before the judgment, at least without a non-waiver agreement. Most judges will regard acceptance of a partial payment as a waiver of the right to evict without a non-waiver agreement.
If another month's rent has come due by the time the tenant wants to pay, that amount is also due. Acceptance of a payment without that rent included would amount to a partial payment. If the payment is offered before the judgment without the new month's rent included, the park would not need to take it since the new month's rent is also due. In order to cure prior to judgment the tenant must pay all sums due.
Be sure that all amounts you are requiring to be paid are actually provided for in your rental agreement. Also, be sure late charges are in the rental agreement and are accurately calculated.
These are non-rental violations, usually involving a breach of the park rules or the non-financial provisions of the rental agreement. They include such things as unapproved occupants, failure to maintain homes or spaces, or conduct violations.
Some of these violations also violate local health and safety codes, but most do not. When a violation materially affects health and safety the park can serve a 10/20-termination notice; material violations of rules not affecting health and safety require a 14/30 notice.
The first number is the cure period. For ten days after service of a 10/20, or 14 days after service of a 14/30, the tenant has the opportunity to cure the violations. If this happens, then the park is required to give the tenant a notice releasing him from the termination notice.
Technically the tenancy terminates if the violation is not cured in that 10 or 14 day period. In that case, the tenant is supposed to vacate by the second date (i.e., 20 days after service for a 10/20 or 30 days after service of a 14/30). The right to cure does not extend past the 10 or 14-day period.
But in the real world, parks do not file evictions if the violation is cured after the first but before the second date. Judges will not look kindly, as a general rule, on parks trying to evict tenants who cured but were late in doing so.
If you wait until the 20 or 30 day period and the violation is still not cured, then the eviction should be filed. There certainly is no right to cure after the eviction action is filed. While nothing prohibits a park from agreeing to accept a cure after the eviction is filed, nothing requires it.
Clarity of Notice
Since tenants have the right to cure violations under seven day notices and under 10/20 and 14/30 notices, it is important that they be clear and describe the violations so the tenant can know what he needs to do to cure.
Rent, late charges, and other sums due should accurately be shown in seven-day notices for non-payment.
10/20 and 14/30 notices should clearly describe the factual violations. Do not simply refer to the rules. Describe what the problem is and what needs to be done to correct it. For conduct violations, identify what was done and when it happened.
After you write the notice, read it and be sure that if you were receiving it from someone, you could figure out what the problem is and what you would need to do to fix it.
ZERO TOLERANCE CRIME FREE PROGRAMS
By now we have all probably heard the story about the 14 year old girl being thrown out of school because she was found with some Midol pills for her cramping. The school had a "zero tolerance" policy for students bringing drugs to school. Since Midol is a drug, the girl violated the policy and the punishment was suspension.
This illustrates the stupidity of automatic and mindless enforcement of "zero tolerance policies".
Residential landlords are under increasing pressures to guard against criminal activity in their communities. This comes in the form of Courts holding them liable for injuries suffered by residents at the hands of criminals; police departments wanting them to prevent anyone with a criminal background from living there; and tenants pressuring them to keep the bad guys out.
Crime Free Housing Programs are sponsored by many police departments across the state. These programs require participating landlords to enforce criteria to keep people with criminal backgrounds out. Even landlords which are not part of such programs usually have such criteria in place which they use to screen applicants.
All residential landlords should have criminal background criteria, and any applicant for residency, whether a prospective tenant or someone wanting to move in with a current tenant, should be screened under it.
Any such applicant should be required to complete a comprehensive application, and the application should be submitted to a tenant screening service. When the results come back, the landlord should evaluate them in light of its criteria for creditworthiness, prior residential history, and criminal background. The landlord, of course, needs to have criteria in all three areas that it applies to the applicant.
To complicate matters, fair housing laws must be considered. To avoid claims of discrimination, landlords need to apply their criteria in the same manner to all applicants. In addition, the criteria needs to be as objective as possible. When individual subjective value judgments are required, the likelihood that denied applicants will claim discrimination increases.
To respond to all these pressures and to minimize the possibility of claims of discrimination, some landlords have instituted "zero tolerance policies". Unfortunately these policies have problems of their own.
A "zero tolerance policy" says that if an applicant has ever been convicted of a crime, or of a certain kind of crime, he cannot be approved, regardless of how long ago it was, or what kind of crime was involved.
To be sure, "zero tolerance" is a good policy for certain kinds of criminal conduct. Homicide, crimes involving serious violence or use of dangerous weapons, serious sex crimes, crimes against children, and some property crimes like arson are examples. Likewise with serious drug crimes such as manufacturing, distributing and selling narcotics.
But it may not be appropriate for other kinds of crime.
A conviction for use or possession of small quantities of drugs if many years old, may not be a great concern. If the applicant has completed a drug recovery program, using the conviction to disqualify him could violate handicap discrimination laws since a recovered addict is considered as having been handicapped.
In the mind of the Arizona Civil Rights Advisory Board, certain kinds of "survival crimes" associated with mentally ill people such as shoplifting, vagrancy, drug use, etc. should not disqualify them in later years. The Board views this as discriminatory.
In some states, a man taking a leak on a tree in the woods can be charged with indecent exposure which is treated as a sex crime. A "zero tolerance policy" on all sex crimes would disqualify him.
Some landlords disqualify anyone with a felony conviction. But the definition of felony varies from state to state. Possession of a small amount of marijuana may be a felony in one state but a petty offense in another state.
The point of this is to suggest that you develop your criminal background criteria in such a way as to be as objective as possible. "Zero tolerance" is fine for crimes inherently dangerous and serious. But for lesser crimes, recognize that people can rehabilitate themselves. Put time limits on lesser crimes, and allow for convictions where there are mitigating circumstances to be disregarded. Establish your criteria by focusing on the nature of the crime, not whether the local jurisdiction classifies it as a felony.
This is hard to do. MHCA is trying to come up with a sample set of background criteria, and I am hopeful to have it available soon to give the industry some guidance on how to develop effective but thoughtful criteria.
One thing I am sure of, however, is that a total "zero tolerance policy" is not the answer to the problem.
RV UTILITY RATE BILL
The Governor has signed HB 2123. It will become effective some time in the late summer of 2008.
This new law is an attempt to establish controls over what RV parks charge their tenants for park-supplied utilities. The law is far more complicated than it first appears.
Who is Covered?
The Bill amends the Recreational Vehicle Long Term Rental Space Act by adding a new section 33-2107.
That Act applies to the rental of a space for a tenant-owned RV under a rental agreement for more than 180 consecutive days. The Act therefore does not apply to tenancies of 180 days or less, even if the tenant has been there for more than 180 days. For example, if a month-to-month tenant has been in the park for a year, the Act does not apply to him since each of his consecutive tenancies is only for one month, and he has not entered into any rental agreement for more than 180 days.
So technically, the utility rate regulations in HB2123 and ARS §33-2107 only apply to long-term renters (tenants with rental agreements in excess of 180 days). Nevertheless, the legislative history of the Bill shows that it was intended to cover all long-term residents in RV parks, regardless of the length of their individual rental agreements. It is entirely possible a court could reach this result.
RV parks would be well advised to comply with this law for all long-term tenants, whether they are under rental agreements over 180 days or not.
RV Spaces in Mobile Home Parks Not Covered by Rate Controls
Though the structure of the law is complicated, the net effect is that it does not apply to RV spaces in mobile home parks. Instead, it specifically states that mobile home parks must comply with the utility regulations in the Mobile Home Parks Landlord Tenant Act.
Those regulations appear in ARS §33-1413.01. Essentially, that says that a mobile home park cannot charge more than the single-family residential rate of the local utility provider. Moreover, in order to charge for water, gas and electricity, the park must install individual meters, take periodic readings, and provide monthly billings basing rates on those readings, formatted like the utility provider's bills.
There is no alternative to the single-family residential rate for RV spaces in mobile home parks. They are treated exactly the same as mobile home spaces.
Other aspects of this new law do apply, however. The provisions allowing a tenant to challenge overcharges and to sue if the dispute is not resolved within 30 days apply.
Non-metered utilities are sewer and trash removal service.
ARS §33-2107 (G) will allow a landlord to charge for these provided the charges do not exceed the "prevailing single-family or residential charge, fee or rate" of the local provider.
The single-family rate has nothing to do with what a park pays. For example, if a park pays $6 per month per space to a commercial company to collect trash, but the local municipal trash collection rate is $15 per month, the park can charge up to $15 per month under the new law.
If a park provides for sewer service with its own septic system, but the local municipal sewer charge is $15 per month, the park can separately charge up to $15 per month under this law.
Although this looks like a profit, the theory of the law is that part, if not all of the difference, covers the cost of maintaining and servicing the facilities used to provide the service with the park. The utility provider covers these expenses in the single-family neighborhoods it serves.
Moreover, single-family rates are usually subject to suspension at the request of customers. This can cut into park revenues.
The new law gives the park two options on how these may be separately charged. Metered utilities are water, gas and electricity.
Single-Family Rate. The park may charge up to the single-family residential rate. In this case, individual meters must be installed at each space; they must be read each month; and monthly billings must be prepared in the same general form as the utility company uses for single-family customers. What the park can charge has nothing to do with what it pays. Moreover, if the local single-family rate structure allows the customers to suspend service when they are gone, the park must do likewise. This can sharply reduce park revenues.
Ratio Utility Billing Method. Alternatively, the landlord can charge with the Ratio Utility Billing Method. This alternative is unique to RV Parks. Mobile home parks do not have this option.
1. It can only be elected for metered utilities (water, gas and electricity). It can not be elected for non-metered utilities (sewer and trash). They are always subject to the single-family rate.
2. A park electing the Ratio Utility Billing Method takes its bill for the utility service each month (or other billing period), and subtracts any charges for common area or park facility usage if those areas and facilities are separately metered.
3. It takes the net figure and divides it equally among its rented spaces. That figure becomes the tenant's bill for that month's utilities.
4. The park, in addition, can add an administrative fee to each month's utility bill. The administrative fee can either be a pro-ration of its actual reasonable expense including staff, time for preparing the bills. Or, if the park uses a third party billing service, the administrative fee can be that service's actual and reasonable charge each month. Administrative fees can be added only when the Ratio Utility Billing Method is used.
5. Since the single-family rate does not apply to metered utilities when the park elects the Ratio Utility Billing Method, utility charges are not subject to suspension when the tenant is going to be gone.
The new law requires landlords to give tenants reasonable advance notice when utility service is going to be interrupted, except in emergences.
The Rental Agreement must have a disclosure listing all separate utility charges and, for metered utilities charged under the Ratio Utility Billing Method, it must specify the Administrative fee.
The law allows tenants to challenge overcharges; requires parks to refund overcharges or credit them against future bills; and allows tenants to sue if disputed overcharges are not resolved within 30 days.
Parks charging metered utilities under the Ratio Utility Billing Method must post information on the bulletin board concerning current utility usage rates and fees it pay.
Many utility providers allow single-family customers to have utility service and charges suspended while they are away. If the local utility allows that, so must the park since the single-family rate under those circumstances is zero.
Parks in deciding whether to use the single-family residential rate or to adopt the Ratio Utility Billing Method should factor this in since service suspension requests do not need to be honored in the latter case. Parks with a large proportion of winter visitors can face a serious shortfall of revenues if tenants request service suspensions when they are gone. It may be better to elect the Ratio Utility Billing Method.
Note that even though there are individual meters on tenant spaces, a park can still choose the Ratio Utility Billling Method.
Coming Into Compliance
RV Parks now separately charging for utilities should send tenants a notice advising that effective October 1, 2008 they will begin charging in accord with newly enacted ARS §33-2107. The notice should go out no later than July 31, 2008. The notice should advise whether metered utilities will be charged under the single-family residential rate or the Ratio Utility Billing Method. If the latter, necessary disclosures should be posted on the bulletin board by July 31, 2008, and the administrative fee should be identified.
If the single-family rate is chosen for metered utilities, meters must be in and readings taken in time to allow for preparation of bills on the effective date of the new changes.
Parks should start using new rental agreement forms for long-term tenants (those with leases in excess of 180 days) that disclose utility charges and administrative fees.
There should be no need to use new rental agreements for current tenants under shorter-term rental agreements. Continue using the appropriate short-term rental agreement form, but ensure your utility charges conform to the new law.
MHCA has revised the Turquoise Book to include a description of how this law works, and the Orange Book rental agreement form has been revised to cover utility charges as the law requires.
4/17/08 UPDATE TO WRIT OF RESTITUTION ARTICLE
I have spoken to several Constable training classes over the last few years about enforcing writs of restitution in mobile home park evictions. The question often comes up about how the tenant is excluded from the home after removal. In an apartment eviction the answer is fairly simple--change the locks.
Its not so simple in a MHP where the tenant, not the landlord owns the dwelling unit that he is being removed from.
Since the landlord does not own the dwelling, he cannot have the locks changed. You simply cannot change the locks on a home you don't own and then deprive the owner of access. That is tantamount to theft and the landlord could be sued for conversion.
On the other hand the eviction judgment awards possession of the lot on which the home is located to the landlord. Several provisions of the MHP landlord tenant act prevent the home from being removed even after eviction until the landlord is paid what he is owed. I read all of this as recognizing ownership of the home by the tenant, subject to a possessory landlord's lien in favor of the park that allows it to keep the home in its possession until the debt is paid. Since the home remains owned by the tenant, the locks cannot be changed. But since the landlord has a judgment excluding the tenant from the lot and has a statutory right to hold the home until he is paid, he has the right to prevent the tenant from re-entering it.
In the old days, parks would rent a construction fence and erect it aroung the home to prevent access. But that is cumbersome, unsightly to other residents, and fence rentals are extremely expensive.
The same effect can be achieved by simply fencing the doorknobs to the home. By that I mean purchasing "cuffs" that fit around the doorknobs that get installed when the Constable visits to remove the tenant.
Once the Constable removes the tenant from the home, he should supervise the landlord's installation of cuffs on the doorknobs and then post the home with the standard notice to the evicted tenant.
If the tenant sneaks back in after that and breaks into the home the police should be called and should arrest the tenant under the new post-eviction trespass statute (ARS 12-1178 D).
There is no law dealing with the right of tenants to get their belongings out of the home after they are removed. My view is that parks and Constables should follow the Residential landlord tenant act procedures in ARS 33-1368 (E) and allow the tenant to get into the home during normal business hours (after checking in with the office) for 21 days following removal by the Constable.
I believe a Constable has an obligation to remove the occupants of the home, to supervise it being cuffed and to post it on the day they serve the writ. However I also believe they have discretion in unusual cases to warn the occupants to leave but to return a few days later if they are not gone. In my view this discretion should only be exercised in exceptional cases such as ill or infirm residents. The presumption should be in favor of immediate enforcement. That is the requirement of ARS 12-1178 (C).
ENTRY OF TENANT OWNED MOBILE HOMES BY CONSTABLES ENFORCING WRITS OF RESTITUTION
I have frequently been questioned by Justice Court Constables whether in my view they have the authority to enter a tenant owned mobile home when enforcing a writ of restitution issued pursuant to a forcible detainer judgment in favor of a mobile home park landlord.
The law is not crystal clear on this and I have tended to duck the issue in the past. But it is time to take a stand and in this article I will express my view that forced entry under the right circumstances is appropriate.
ARS § 12-1178 is the basic writ of restitution statute. It states in subsection C:
No writ of restitution shall issue until the expiration of five calendar days after the rendition of judgment. The writ of restitution shall be enforced as promptly and expeditiously as possible. The issuance or enforcement of a writ of restitution shall not be suspended, delayed or otherwise affected by the filing of a motion to set aside or vacate the judgment or similar motion unless a judge finds good cause.
So the law is clear that the writ must be enforced without undue delay. The statute also addresses the consequences of a tenant returning to or remaining in the premises after the writ is enforced where at subsection D it says:
A defendant who is lawfully served with a writ of restitution and who remains in or returns to the dwelling unit, as defined in section 33-1310, or remains on or returns to the mobile home space, as defined in section 33-1409, or the recreational vehicle space, as defined in section 33-2102, without the express permission of the owner of the property or the person with lawful control of the property commits criminal trespass in the third degree pursuant to section 13-1502.
So a dispossessed defendant remaining on the premises becomes a criminal trespasser.
Not many jurisdictions have addressed the specific right of the Constable to enter the defendant-owned mobile home to enforce the writ. None that I have found indicate that the home should not be entered. The few that address it seem to contemplate an entry to remove the defendant.
Nebraska, for example, has a requirement that the officer first post the premises, and then return three days later to remove the occupants if they are still there so the landlord can change the locks. The Nebraska policy about entering three days after posting does not distinguish between plaintiff owned dwellings and defendant owned mobile homes. But it does make the distinction after the occupants have been removed when it separately addresses the issue of disposing of the home once the occupants have been removed. See www.rentlaw.com/eviction/nebeviction.htm
Forcible detainers have been around since before statehood. In the early years they were used to evict people moving on to ranch or farm land who often erected their own structures and lived in them. That is similar to what happens in mobile home parks where the tenant places his own structure on the landlord’s land and lives in it. There doesn’t seem to have been much doubt about the authority of the officer enforcing the writ to enter the structure to remove the defendant in those cases, and in fact it was pretty common.
In 1907 this subject was addressed in Duties of Sheriffs and Constables, William Harlow (Bancroft Whitney, 3d ed., 1907), where at section 697a, the right of a Constable or Sheriff to enter a residence pursuant to a civil writ is identified, subject to the requirement that it be done during daylight hours and only after first knocking, clearly identifying his purpose in being there, and requesting that the door be opened to permit his entry.
There is a specific Arizona statute dealing with writs of restitution in mobile home park evictions. It is ARS § 33-1481 which in subsection B provides, in part:
In the execution of any writ of restitution issued pursuant to section 12-1178 or 12-1181, the landlord may provide written instructions to the sheriff or constable not to remove the mobile home from its space, and if those written instructions are provided, the sheriff or constable may fully execute the writ of restitution by removing all occupants and their possessions from the mobile home and from the space it occupies. The mobile home shall then be deemed abandoned and section 33-1478 applies and the landlord may terminate any utility services that are provided by the landlord. An owner of a mobile home in compliance with the provisions of subsection C of this section may recover possession of the owner's mobile home while the title remains in the owner's name.
Consequently I believe the Constable has the clear statutory power to enter the home and remove the occupants once the plaintiff provides written instructions to do so and to leave the home itself in place.
This statute is permissive meaning the Constable may choose not to place himself in jeopardy by entering a home deemed dangerous. In that case a police backup should be arranged. It also means the Constable, once entering the home may elect not to immediately remove an occupant for good cause (e.g., whose health would be jeopardized by an immediate move). In those rare cases the occupants may be given a little more time to make arrangements to leave (or the landlord may need to make additional arrangements).
Finally since the statute is permissive, the Constable also has the discretion to determine how much of the tenant’s belongings will be removed. Sound discretion would entail ensuring an occupant is decently dressed, takes necessary medical supplies, his pets, tools, immigration documents, and children’s clothing. But there is no requirement for the Constable to personally remove all or any of the defendant’s possessions. Just let him take what he wants and what he can carry with him at that point.
If upon entering the home is found unoccupied but there are pets in it, steps should be taken to ensure their welfare before securing and posting the home. A notice as to where the pets have been taken should be posted as well. If unattended small children are found, of course, appropriate safeguards need to be taken. In both cases the safeguards will be comparable to these same situations when found in apartments.
Since the home is still owned by the former tenant, the locks should not be changed and no effort should be made to board it up or make any other physical changes to the home. But it should be posted, the park manager should be advised to take a legible photo of the posting in case it is later torn down, all doors should be cuffed with lock out devices, and all park supplied utilities should be disconnected with the meters removed if possible.
There is a section of the mobile home parks landlord tenant act that prohibits a landlord from entering a tenant owned mobile home. But the termination of the tenancy that led up to the eviction and issuance of the writ means that there is no longer a landlord tenant relationship, and the protections afforded by the act no longer apply except those provisions specifically addressing how eviction judgments are enforced and the disposition of the home following removal of the defendant.
There is nothing in the mobile home parks landlord tenant act dealing with a former tenant’s possessions remaining on the premises after his removal by a Constable. Given the absence of specific procedures, the Constable seems to have discretion in the matter and the discretion can be exercised by requiring the landlord to comply with the residential act provisions that address these situations (ARS § 33-1368 (E)).
ABANDONMENTS RESULTING FROM EMPLOYER SANCTIONS BILL
By now you should be familiar with the Employer Sanctions Bill. This is the law enacted by the 2007 Arizona Legislature and signed by the Governor that imposes sanctions on employers hiring illegal immigrants without first performing certain due diligence to verify lawful immigration status. The bill, HB 2779, requires all such applicants’ immigration status to be verified before they can be hired.
If an employer is found to have hired an illegal immigrant without having done his due diligence, he faces serious sanctions that will include permanent loss of all business licenses on a second offense. Generally speaking, the law will protect an employer who checks the identity database operated by the U. S. Department of Homeland Security and is advised the applicant’s status is acceptable. This program, formerly known as “Basic Pilot” is now named “E-Verify”. Employers must sign up to participate in the E-Verify program by logging onto www.uscis.gov.
At this writing the Arizona law is under attack in the Courts by immigration and business groups. It is impossible to say whether the law will survive these attacks and it is possible that by the time you read this the law will have been stricken down.
A largely overlooked consequence of this law is how it will affect landlords. Illegal immigrants live somewhere, and many are undoubtedly in mobile home parks. Family parks have become popular with recent immigrants to the U.S., and since we avoid checking immigration status of applicants for residency because of Fair Housing Laws, we don’t know what percentage of them is illegal. It is probably a high percentage.
A number of managers of Hispanic dominated family parks are themselves Hispanic and get along well with their tenants. Many have advised me that they are hearing that Hispanic residents are being told they will be fired in January if they can’t prove immigration status. Employers are telling them this now.
Since so many are illegal immigrants, a sizeable number are making plans to leave and some are leaving now (this article is being written in mid-October). Every year there is a large exodus of Mexican families as they drive back home for the holidays starting in early November. Most have come back in early January. This year, I expect that many will not return.
This creates problems for mobile home park landlords. Two come to mind:
First, many residents will simply leave and not come back but will not tell you what their plans are. Eventually you will figure out the home is abandoned and take steps to deal with it (e.g., by notifying the lien holder or initiating a landlord lien sale). But before you figure it out a number of months may pass meaning you will be losing more rent revenue than necessary. Starting in November, be especially diligent about following up whenever rent is not received on time or when a home looks like it is in longer being cared for. Do not turn a blind eye to this.
Second, you may be seeing a lot of “for sale” signs going up on homes. Illegal immigrants getting ready to leave may try for a quick sale for cash to get rid of the home and avoid losing their entire investment. Make note of every home you see going on the market and keep an eye on them to ensure that people do not move in without your approval. In order to make the sale, the current tenant may not bother telling the buyer that it is a rental park and that the buyer needs to be approved by the landlord. If you see a lot of signs going up you may want to consider posting a sign in English and Spanish at the park entrance warning about buying a home without first getting park approval to live there.
In everything you do, remember that Fair Housing Laws still apply. Be careful not to single Hispanic residents out for closer scrutiny or more immediate action than non-Hispanics. Fair housing laws prohibit disparate treatment of residents on account of race or national origin. Any policy of increased attention to the possibility of abandoned units should be racially and ethnically neutral.
Finally, do not use the E-Verify program to check applications for residency or credit. Its use is strictly limited to employment verification. And pay attention to media reports on developments in the Court proceedings challenging the Employer Sanctions Law. It may not go into effect at all. But even if it does not, you may be affected. Plans are being made now by many illegal immigrants to leave, so some abandonments will take place even if the law is later stricken down.
For updates on this subject check the web log page on my website.
TENANTS RETURNING AFTER EVICTION
A recurring problem in mobile home parks is the tenant who sneaks back into his home after being evicted. We encounter this problem a lot and it is understandable in a way. After all, the tenant owns the mobile home and may feel he has the right to go into his property. Of course he overlooks the fact that his property is on your property, that he has been evicted from your property, and that he chose to leave without taking the home with him.
Often when this happens the police get called. Many officers believe this is a "civil matter" and refuse to get involved. Regardless of what trespass laws say, they believe that since it is the tenant's home he is going to, he has some sort of right to go there. The fallacy of saying it is a civil matter is that the dispute has already been resolved in a civil action--the eviction--and the tenant was ordered off the landlord's property.
In Pinal County, some City Attorneys instructed their police departments not to get involved in such matters and told them not to treat the return of an evicted tenant to the premises as a trespass.
The 2007 Legislature has now, hopefully, fixed this problem. An amendment to section 12-1178 of the eviction statutes was enacted. This added two new subsections to the statute dealing with writs of restitution, reading as follows:
D. A DEFENDANT WHO IS LAWFULLY SERVED WITH A WRIT OF RESTITUTION AND WHO REMAINS IN OR RETURNS TO THE DWELLING UNIT, AS DEFINED IN SECTION 33-1310, OR REMAINS ON OR RETURNS TO THE MOBILE HOME SPACE, AS DEFINED IN SECTION 33-1409, OR THE RECREATIONAL VEHICLE SPACE, AS DEFINED IN SECTION 33-2102, WITHOUT THE EXPRESS PERMISSION OF THE OWNER OF THE PROPERTY OR THE PERSON WITH LAWFUL CONTROL OF THE PROPERTY COMMITS CRIMINAL TRESPASS IN THE THIRD DEGREE PURSUANT TO SECTION 13-1502.
E. IF THE DEFENDANT IS FOUND GUILTY UNDER SUBSECTION A OF THIS SECTION, THE COURT SHALL GIVE THE DEFENDANT NOTICE THAT A DEFENDANT WHO IS LAWFULLY SERVED WITH A WRIT OF RESTITUTION AND WHO REMAINS IN OR RETURNS TO THE DWELLING UNIT OR REMAINING ON OR RETURNS TO THE MOBILE HOME SPACE OR THE RECREATIONAL VEHICLE SPACE WITHOUT THE EXPRESS PERMISSION OF THE OWNER OF THE PROPERTY OR THE PERSON WITH LAWFUL CONTROL OF THE PROPERTY COMMITS CRIMINAL TRESPASS IN THE THIRD DEGREE PURSUANT TO SECTION 13-1502.
What this means is that once an eviction judgment is entered by the court, a writ of restitution is issued, and the writ is enforced by the Constable who oversees the removal of the tenant and who posts the home, if the tenant then comes back without the landlord's permission, his return is specifically declared to be a trespass.
The change requires the court to notify the tenant that returning to the premises after being removed will constitute a trespass. This is probably best done on the face of the eviction judgment. It is suggested that judgment forms be modified by inclusion of the following new language:
Any Defendant returning to the Premises after being removed following service of a writ of restitution is subject to arrest for criminal trespass in the third degree. ARS §12-1178 (D).
Be sure your attorney is made aware of this change. It goes into effect on September 19, 2007. Save this article and if it is necessary to call the police on a tenant who sneaks back in, show it to the officers if they are reluctant to act.
If someone asks how the tenant can reclaim his home, tell them to review sections 33-1481 and 33-1451 of the mobile home parks landlord tenant act.
TRANSFER OF RECORDS WHEN PARKS ARE SOLD
Frequently I get calls from managers or new owners of parks which have recently been sold, complaining that their records are incomplete or, sometimes, that there are no records. Often it turns out that the park sellers have destroyed security deposit records, tenant files, assessor's card files and other tenancy records. Equally disturbing, sellers often do not transfer such things as plats, surveys of the park, and records of the location of underground utility lines.
In many cases, while the Seller can be faulted for not transferring these records, the Buyer is not entirely blame free. Basic due diligence on a park buyer's part would seem to include making sure there are complete and accurate tenant files and deposit records. A prudent buyer would also be expected to have reviewed whatever plats and surveys are available as well as any infrastructure records that are available. He should also be expected to protect himself by requiring in the sale contract that all of these records be transferred to him in the same condition as they were in when he reviewed them, at closing.
Finally, a buyer in conducting a due diligence review of park records should determine what is not being provided. If he has not been given drawings showing the location of sewer and other underground utility lines and records of other infrastructure, he should ask where those records are and if they don't exist, why. He should factor into the price being offered the potential cost of developing "as-built" plans, and the potential liability that may exist because he will be buying a park without that information.
If he is unable to see tenant files to see what kind of rental agreements exist; whether there is a history of tenant litigation with the park; whether there is a complete set of assessor's cards on homes in the park; and what the status of tenant security deposits are, he should likewise consider the cost of taking over a park without those records.
Something you will be hearing and reading about over the next several months is the "Blue Stake Bill". This bill will probably be enacted by the legislature and become effective by September 1, 2006. It contains elaborate requirements for parks to blue stake underground utility lines when underground work is about to take place.
One of the things included in this bill is a new ARS §33-1438. This will become part of the mobile home parks act. It will require a seller of a mobile home park to deliver to the buyer, at closing, the following:
1. All available plans, drawings and records pertaining to the location of all underground facilities in the park.
2. All plans, drawings, surveys and plats of the park.
3. All records pertaining to tenant security deposits.
4. Complete files for each tenant of the park containing rental agreements and other documents and disclosures required by law in the seller's possession.
Thus for the first time there will be a statute specifically requiring a seller to transfer these documents to a buyer. A similar statute will be added to the residential landlord tenant act requiring the sellers of apartment complexes to transfer the same sort of records to buyers.
Only one specific sanction is created by the statute. A seller who does not transfer accurate records of underground utility systems, whether active or not, installed after December 31, 2006, is liable for all damages suffered by anyone as a result, and is also liable for the expenses suffered by successor landlords in recreating these records. Elsewhere in the Blue Stake Bill are requirements that such records be created and maintained for underground infrastructure installed on and after January 1, 2007.
This liability could be substantial and could become personal liability of the principals of entities which sell parks and then disband. For example, if an LLC whose sole asset is a park, sells the park and then is liquidated, but fails to transfer records on underground facilities installed after December 31, 2006, the individual members of the LLC could be found liable. At least the managing members could be.
For other records, specific sanctions are not specified for failure to transfer them. But that failure would be in violation of a statutory duty to do so. This means a successor park owner would have an easier time recovering damages against a seller that did not transfer documents required by the statute.
Both buyers and sellers of parks should pay close attention to the records that will be transferred at closing and ensure that what is available gets transferred.
DEALING WITH TENANT ASSOCIATIONS
This industry seems to have entered into a phase of contentious, even poisonous relations with tenants. This is unfortunate and we should all do whatever is in our power to combat it.
The trend seems to emanate from the State headquarters of AAMHO, the mobile home tenants organization. Its board has had personnel changes resulting in the addition of some members who seem to be reflexively hostile to landlords. Its administrative staff has experienced virtually a complete turnover. Its new lobbyist seems to reflect the hostile attitude towards landlords.
Moreover, there are other tenant organizers in the State who believe that AAMHO has not been sufficiently “aggressive” in the past. Efforts have been made in recent years to form statewide mobile home tenant organizations to compete with AAMHO. One of their main selling points is that they will be more “aggressive” towards us than AAMHO has been.
For more than 20 years, MHCA’s philosophy has been that landlords and tenants have more interests in common than adverse, and both are best served by working together. Where our interests diverge, we have been able to negotiate and reach compromises, many of which get written into the law.
This is in sharp contrast, for example, to California where landlord and tenant organizations have historically been hostile towards one another. This has resulted in huge sums of money being paid by organizations representing each side for both lobbyist and legal fees, and in time consuming and extremely expensive battles in both the legislature and courtrooms across the state.
Our guiding principle has been to avoid what has been going on in California and to try to work with, rather than fight, AAMHO. I hope we will continue to try to do so, and that the current hostility we see there will fade out over time.
AAMHO is trying to organize new chapters in parks without them and is trying to energize many of its existing chapters. In addition, an increase in the formation of tenant associations not affiliated with AAMHO seems to be taking place across the state.
It is typical when a new association or AAMHO chapter is formed, that the organizers encourage hostility towards park management. The sales pitch is that management is riding roughshod over the rights of tenants and that they must organize to fight back. Often a list of grievances, some real, some imagined, is drawn up.
As a park owner or manager, you may be forced to deal with a new or reinvigorated tenants’ association which is suddenly hostile towards you. You may be the target of accusations and threats. How do you deal with this situation?
First, understand the association’s legal rights. The mobile home parks landlord tenant act deals with them in a couple of places.
Section 33-1418 recognizes the right of tenants to form an association for the purpose of trying to buy the park, assuming you would be interested in selling to it. Nothing, of course, requires you to sell or negotiate to sell to it.
Section 33-1452(G) says a landlord shall not prohibit tenant meetings with or without invited speakers in the park or in the clubhouse provided they are at reasonable hours and the facility is not otherwise in use.
Section 33-1491 says rent increases, eviction notices or eviction actions, and cuts in services which take place within six months of a tenant joining a tenants association is presumed to be retaliatory (the presumption can be rebutted). If retaliatory, it is prohibited.
In addition, it is common practice to permit tenant associations to sponsor hearing officer complaints on behalf of large numbers of association members.
With this in mind, here are some tips on dealing with associations.
1. If they want to hold a meeting in the clubhouse, let them. If they invite you to attend, accept the offer, remembering it is their meeting and your job is to answer questions but to otherwise remain silent. If they don’t want you there, stay away.
2. If the association wants to have a representative meet with you to discuss problems, meet with them. Explain the park’s position on these problems. If they have good points, pay attention. If they point out your mistakes, admit and correct them.
3. If they want to suggest improvements to park rules, leases or the like, let them. Consider their suggestions. If they have good ideas, incorporate them. Of course you should make clear that while they can make suggestions, the final decision is the landlords alone.
4. Sometimes you will simply disagree. In such cases communicate your disagreement firmly but respectfully.
5. Don’t fight with them. Don’t argue with them. Respectful exchange of an explanation ofideas and positions is fine. Bickering, name calling, and personal attacks are not.
6. If they distribute a flier in the park making incorrect or misleading claims or accusations against management, you are free to distribute your own flier politely and respectfully setting the record straight.
7. If they circulate a petition, do not interfere. Other tenants may complain about the petitions. If the petitioners are not being abusive towards other tenants, explain that the petitioners have a right to do it and while you may disagree with what the petition says, don’t interfere with its circulation.
8. If presented with a petition, respond to it in writing. Be honest, keep the tone professional, make it brief, and simply deal with the facts.
9. Do not get involved in the internal affairs of the politics of the association. Often factions develop among tenants, and one faction may try to get the landlord to side with it against the other. Don’t do it, even if you happen to agree.
10. Remember, you are not part of the tenant’s association. You are management. What goes on in the tenants’ association is no more your business than the internal affairs of the park is their business. Keep your dealings at arm’s length and professional. Beyond all else, do not interfere in its affairs and do not try to hurt or thwart it.
Hopefully the current state of antagonism with AAMHO will pass and our relations can once again become cooperative. By treating local AAMHO chapters and other tenant organizations professionally and with respect, each individual park can contribute to a restoration of that relationship.
PROBLEMS WITH OBSOLETE RULES
Let's say your rules are very strict and say that all homes must be sided and skirted in a particular way that is expensive for older homes to do. Let's further say that when older tenants die or move out, you have not required their homes to be upgraded to comply with those standards because people could not afford to do it. Now the owner wants you to start enforcing the requirement. Can you?
Let's say that your rules limit the size of dogs. But you have been lax about enforcing it because most tenant dogs don't bother anyone and you did not want the hassle of making violators get rid of them. Now the park is getting overrun with big dogs. Can you begin enforcing it?
Let's say you have not been diligent about enforcing the age 55 requirement in your age 55 park. If people were "close" and had no kids, you would rent to them. But now you are down to 80% of occupied spaces with an age 55 resident. An elderly tenant wants to sell to an age 48 couple. That would drop you below 80%. Can you now enforce the age 55 requirement and reject the buyer?
The answer in all these cases is that if you are challenged in court, your earlier pattern of non-enforcement of park rules may be found to constitute a waiver of your right to enforce them.
Often, park rules become obsolete over time. If many years pass without the rules being updated, they begin to fail to meet the park's true requirements. Technology changes; mobile home styles, manufacturing techniques, and materials change; laws change; and most importantly, people and social attitudes change. If your rules are not periodically updated, they become increasingly irrelevant to your current practices. As a result, you begin enforcing what you think the rule should be.
You may begin enforcing non-existent unwritten rules which may conflict with the rules actually on the books. The problem with this is that if you have a problem tenant, and if he "stands up for his rights", you can enforce only those rules that (1) are written down; and (2) that are uniformly and consistently enforced against all residents.
Courts are being required to closely scrutinize the factual basis for all evictions. If you are trying to evict a tenant under a 14/30 notice for conduct that does not clearly violate a written rule, you are probably not going to succeed. No matter how bad a space looks or how bothersome a tenant's conduct is, if there is not a rule that is being violated, you are not going to be able to force him to remedy the situation or evict him if he does not. The solution to this is simple though it involves some work and perhaps some modest expenses.
Review, revise, and update your rules and regulations. I will almost guarantee that if you have not done this within the past couple of years, you will find that in many respects they are obsolete. Look at your rules with "fresh eyes".
Purchase a May 2007 edition of the MHCA Blue Book and look at the newly expanded sample rules for ideas. Consider, as you look at each of your rules, what it is that you are really doing or what you would like the rule to actually say. If the current rule is out of date, update it. If the current rule is no longer enforced, delete it. If there are things you are trying to get tenants to do that are not in the rules, put them there.
When you finish your draft, let the park's attorney review them. He may have additional ideas. He may also be able to spot any problems that could make enforcement difficult, or provisions that may violate fair housing laws. It is really important for you to do this. Obsolete or unenforceable rules can result in a deteriorated park and a loss in value to you and to your tenants' mobile homes. The time to fix the problem is now.
Nothing is more important to the business of being a landlord than knowing what you are owed for rent and taking effective action to collect it. Yet I see more and more managers who are lax in enforcement and who do not know what is owed.
Every landlord should know exactly what is due each month. Here are some guidelines. Base Rent and Tax Rental agreements will identify what the base rent per month for the space is. Localities will typically impose a rental tax on this base rent, normally a bit more than one per cent.Rents can, of course, be increased at renewal of rental agreements on 90 days notice.
Utilities. Most rental agreements require tenants to pay the landlord for utilities the landlord provides. Most frequently, water, sewer and trash are separately charged. Some parks also charge tenants for gas and electricity supplied through park-installed meters at each space. Parks can charge up to the residential single-family service rate of the local utility provider for this. That can be complicated especially for metered utilities.In any event, utilities become additional rent and should be added to base rent and tax on the monthly rental statement to tenants.
Miscellaneous Charges. Such things as guest charges, pet fees, extra person fees, RV Storage Yard fees, etc., also become additional rent provided they are identified in the rental agreement. They also should be identified in the monthly rental statement and added to the other rental charges.
Late Fees. Parks can charge up to $5 per day as a late charge provided the rental agreement has such a provision. Late fees cannot be imposed if rent is paid on or before the 6th of the month. If paid after that, late charges can be imposed retroactive to the second.
Partial Payments. Although there is no statute in the mobile home parks landlord tenant act requiring this, most judges regard acceptance of a partial payment after service of a seven-day termination notice for non-payment of rent as a waiver of the default. Therefore it is best not to accept less than the entire amount due from the tenant unless a payment plan covering the balance due is agreed to in writing.
7 Day Notice. Rent is due on the first and delinquent on the second. But it is a common practice not to send out seven-day notices of termination of tenancy for non-payment of rent until the seventh, which coincides with when late charges can be imposed. A seven-day notice tells the tenant how much is owed on the date of the notice, that late charges will continue to accrue until everything due is paid, and that if the balance then due is not paid within seven days after receipt, the tenant faces eviction.
It is very important that the amount shown as due in the seven-day notice is accurate. The purpose of the notice is to tell the tenant exactly how much is owed that date so that he can pay that amount plus any charges that accrue after that date and avoid eviction.
If the amount shown in the seven-day notice is not accurate, then the purpose of the notice is frustrated. Technically the notice is defective and any eviction action filed on the basis of it could be dismissed. The notice is effective seven days after it is served on the tenant. That is the day it is hand delivered to him, or five days after it is sent by certified mail. Any method of delivery other than hand delivery or certified mail is probably defective.
Reinstatement Right. The law gives the tenant an absolute right to "pay and stay". At any time prior to entry of a judgment evicting him, the tenant can force the landlord to drop any eviction action and can reinstate his tenancy by paying all rent, tax, miscellaneous fees, utilities, late charges, court costs and attorneys fees due on the date of his payment. That includes any rent and utilities that come due after the seven-day notice is served. If the tenant pays in full, the landlord must accept the payment. But if less than the full amount is offered, the landlord may treat it as a partial payment, reject it, and proceed with eviction.If the landlord wants to accept the partial payment, it should do so only if a written payment plan dealing with the balance still due is signed.
Eviction. If a seven-day notice is served and payment is not received, a forcible detainer can be filed seven days after receipt to evict the tenant. Most landlords do not like to file evictions. But it only hurts everyone to put it off too long. Delaying the eviction often means that more charges come due and eventually the tenant gets so deeply in debt he cannot work it out. If more than two months rent comes due and the tenant subsequently abandons the home, the landlord will not be able to collect any more than that from the lienholder.
Importance of Accuracy. At all stages of the process it is important for the manager to know exactly how much the tenant owes and what it is owed for. A valid seven-day notice cannot be prepared without this knowledge. A payment plan cannot be prepared. A tenant cannot reinstate. An eviction action cannot be prepared. All of these things require knowledge of exactly what is owed.
Conclusion. Changes in laws and court rules covering evictions are coming. It is likely these changes will hold landlords to a strict standard of accuracy in knowing and communicating to tenants what they owe. If you need to change your bookkeeping practices to meet this standard, now would be a good time to do so.
SQUATTERS AND UNAUTHORIZED RESIDENTS
The mobile home parks landlord tenant act specifically prohibits a landlord from entering a tenant's mobile home unless the tenant agrees in writing. ARS §33-1453. That means the landlord can not go into the home to confirm who is living there. This creates problems for parks when they believe tenants have let unapproved residents move in. There are two types of situations involving unapproved residents.
First the tenant may move out and let someone else move in without bothering to check with the landlord. These are squatters.
Second, the tenant may move someone in with him but not get management approval. These are unauthorized residents.
Squatters. The tenant moves out of the home. He may be unable to sell it or, for some reason, does not want to sell it. Instead he wants to let someone else move in. That person may be a relative or it may be a renter. It may be someone who bought the home but did not realize it takes the landlord's approval for him to live on the space.
In parks that allow subleasing, the tenant could submit the prospective occupant for approval but chooses not to. In those parks, this is a red flag. Normally there is a reason that person is not submitted. All too often the reason is that the occupant has a criminal record that would disqualify him.
Other parks that do not allow subleasing would obviously turn the request to allow a substitute occupant down. They would require he buy the home, go through the application process and if approved, sign a rental agreement. In either case the result is the same. A stranger has moved in and taken possession of the space. He has not been approved, and the landlord has not screened him. He could be dangerous. The park simply does not know.
When you discover this situation there are some things you should do. 1. Do not accept any more rent until the situation is resolved. If you accept rent knowing of the situation, you may be found to have inadvertently entered into a verbal rental agreement with the squatter. 2. Talk to the squatter and the tenant if possible. Try to find out what is going on and explain what needs to be done to get approval if it is even possible. 3. There is no rental agreement with the squatter. Do not give him any notices terminating rental agreements (e.g., 7 day or 14/30 notices). 4. Instead, hand deliver a demand for possession (see MHCA Blue Book for form). This tells the squatter he is a trespasser and must vacate in five days. 5. If the situation does not get worked out or the squatter does not vacate within five days, turn the case over to the park attorney for eviction.
Be prepared to prove the tenant is not actually living there. Often they will lie and say they are even though they have moved out.
Unauthorized Residents. Here the tenant is still living in the home but has allowed someone else to move in with him without park approval. Once that person is there more than 30 days in a 12-month period, he is no longer a guest (see definition in ARS §33-1409). At that point, if he does not leave he becomes a resident. If the park does not approve him, he is an unauthorized resident.
Once again, someone is living in the community that the landlord knows nothing about. There could be a number of reasons the tenant does not seek approval. He may exceed the occupancy limit in the park; he may not meet an age 55 parks age requirements; or he may have a criminal record or otherwise be unacceptable to management. Sometimes evicted tenants move in with friends in the park.
When you discover this situation, here is what you ought to do: 1. Do not accept rent until the situation is resolved. 2. In this situation a rental agreement is in force. The tenant is still living on the premises and you have a rental agreement with him. By having the unauthorized resident the tenant is in non-compliance with his rental agreement. 3. As a result you need to give the tenant a 14/30 notice terminating the rental agreement. The notice should identify the reason for termination this way: You have permitted someone to move into your home without approval of the landlord in violation of your rental agreement and/or the park rules and regulations. 4. If the unauthorized resident does not vacate within 30 days, turn the case over to the park's attorney for eviction.
A common reaction from a tenant in this situation is that the occupant is just visiting. He really doesn't spend the night there; he just comes in early and leaves late. In an eviction you will need to be able to prove the occupant has spent more than 30 nights there in the last 12 months. That can be hard to do.
General Comments. You should check the park rules and rental agreement forms to be sure this subject is adequately dealt with. The rental agreement should identify by name all parties eligible to live on the premises, and should prohibit residency by anyone not specifically named unless approved in writing. It should also say that any guest there more than 30 days in a 12-month period must be approved as a resident or vacate. The rules should specifically provide that tenants are responsible for conduct of their guests, and that after 30 days in a 12-month period, guests must either be approved as occupants or vacate.
The new MHCA Blue Book has updated forms that cover this area. When you see squatters or unauthorized residents in the park, do something about it. If you turn a blind eye towards the situation or just put off dealing with it, you may find that by continuing to accept rent knowing they are there, you can no longer act to remove them.
Conclusion. You are to some extent responsible for ensuring a safe living environment in the park. If you allow strangers to live there, you have no idea whether they are dangerous or not. If it turns out that they are, the park could be found legally liable for the injuries to innocent parties they cause.
TENANTS REFUSING TO SIGN RENTAL AGREEMENTS
I keep hearing reports of tenants who refuse to sign a new rental agreement when their old one expires. A park in such a case has two choices. Either treat the tenant as a month-to-month tenant or take action to require the tenant to sign a new agreement or move out. Section 33-1413 (H) of the mobile home parks landlord tenant act says that when a written rental agreement or renewal agreement expires, the tenancy becomes a month-to-month tenancy, unless either landlord or tenant asks for a new written rental agreement.
The plain meaning of this is that if either party asks for the renewal agreement, the tenancy does not become month-to-month. Section 33-1483 (B) says that if the tenant remains in possession without the landlord's consent after termination or expiration of the rental agreement, the landlord may file to evict. If the holdover is willful and not in good faith, the landlord can recover extra damages.
If you want a renewal agreement, you should notify the tenant in advance of the expiration of the current agreement that a renewal rental agreement needs to be signed. Advise him how to get the agreement so that he can execute it. If he does not respond and the agreement is about to expire, send him another notice at least 30 days prior to the expiration advising that if he does not execute a renewal agreement before that date he will need to vacate. Send these notices by certified mail. Hand deliver copies if possible.
If the tenant continues to ignore these notices, once the rental agreement expires, you can file an action to evict him on the basis of the second, 30 day notice, if you choose to do so. If you continue to accept rent, however, you may by implication be creating a month-to-month tenancy. If you choose to evict, do not accept rent after the agreement expires.
IS IT TIME TO UPDATE YOUR RENTAL AGREEMENT FORMS?
Laws change. So do the ways courts interpret them. So do the arguments your adversaries use. A prudent landlord will periodically review and update his tenancy forms to ensure they reflect these changes. Now would be a good time to take a close look at yours. There is no more important document used by a landlord than the rental agreement. This is the contract under which the landlord's customer binds himself to rent a space and commits to the payment of rent for a defined period of time.
Properly drafted rental agreements add to the value of the mobile home park by guaranteeing a defined cash flow. Lenders considering financing parks will take a close look at the rental agreements in force. So will prospective buyers should you decide to sell the park. The prospect of new court rules dealing with evictions increasing the burden on landlords, and the deterioration of relations with tenant advocacy groups in Arizona, makes this a good time to review your rental agreement forms to ensure your interests are really protected and that you are in compliance with the law.
It would be wise for mobile home park operators to review their rental agreement forms and revise and update them. A little preventive attention now may avoid costly problems in the future. In doing this, be especially attentive to the following:
Financial Terms-Base Rent. From the landlord's point of view, this is the most important aspect of the rental agreement. To begin with, fill in the blanks. It is crazy to sign a rental agreement in which the rent space is left blank. But it happens all the time. If the rental agreement is for more than a year, be sure to make provisions for rent increases during its term. You cannot simply increase rent while a longer-term lease is in effect by giving a 90-day notice. Under ARS section 33-1413 (G), a 90-day notice can be effective only on expiration or renewal of the rental agreement. If you want rents to increase during its term, you must make provision for increases in the rental agreement itself.
Financial Terms-Other Fees. Most rental agreements provide for a number of fees in addition to rent. Some of the more commons ones are: extra person fees, guest fees and extra person fees. There is no legal limit on how much can be charged so long as it is reasonable. Fair housing laws however, prohibit landlords from imposing them on children in family parks. Be sure the rental agreement is clear what the amount per person per month is.
Pet fees. There is no legal limit on the amount of these either as long as they are reasonable. Fair housing laws prohibit them from being assessed on handicap assistive animals. Be sure the amount of fee per pet is clear.
Guest fees. No fee can be imposed on a guest the first 14 days he is there in any month. After that, there is no limit on the amount per day per guest that can be charged so long as it is fair. Be sure this is clearly set forth. Note that persons cease being guests after being there 30 nights in a 12-month period.
Late charges. There are legal limits on these. No late charges can be imposed if rent is paid on or before the 6th of the month. If not paid by then, they can be assessed retroactive to the beginning of the month. Late fees cannot exceed $5 per day.
Lot cleanup fees. ARS section 33-1477 allows the landlord to clean a tenant's lot and charge him for doing so provided: (1) The condition is a health or safety hazard; (2) the tenant is given a 10-day notice to clean up or the landlord will do it; and (3) the tenant fails to do so. The limit is the actual cost if reasonable, or the fair and reasonable value. A provision allowing this may be a good idea.
Financial Terms-Utilities. Utilities are electricity, gas, water, sewer and trash. A landlord may provide these to tenants and separately charge for them. The law limits the maximum charge to the local utility provider's single-family residential rate. For electricity, gas and water, each space must be separately metered; monthly readings must be taken; and the monthly bill must contain the same information as the local single-family utility bills do. Rental agreements should specify those utilities that will be separately charged by landlords and provide that charges will be at the single-family residential rate of the local provider.
Financial Terms-Deposits. Some parks require security deposits. ARS section 33-1431 limits deposits including prepaid rent, to a total of two months' rent, unless a tenant "voluntarily" agrees to pay more. Deposits bear 5% interest per year that may either accumulate on the books or be paid annually. A deposit cannot be required to be increased after the initial rental agreement is signed. If a park requires deposits, it should be spelled out in the rental agreement.
"Additional Rent”. Some courts have held that charges other than base rent cannot be recovered in eviction actions. Some have held that utililties, late fees and the like are not rent, and a tenant's failure to pay them does not support a termination or eviction for non-payment of rent. In my view they are wrong but it has been happening. Many Legal Aid lawyers will argue this. The way to avoid this is to specifically designate each and every fee and charge as "additional rent". It is also a good idea to add a catch-all provision saying all fees and charges imposed under the rental agreement constitute "additional rent".
Residents. The rental agreement should name the "tenants". They are the ones who should sign it and be legally responsible for performing its terms. It should also identify "additional occupants". These are people such as children or grandparents who are authorized to live with the tenants but do not sign the rental agreement and are not obligated to pay rent. The rental agreement should prohibit any occupants not listed unless application for approval is made and written management approval is received. It should also specify that any person spending more than 30 nights there in a 12-month period is no longer a guest and must either vacate or be management approved.
Rent Payment. The rental agreement should specify that rent is not paid until actually received at the management office. It should also specify that the drop box is for the convenience of tenants and is used at their risk. Rents received by way of the drop box will not be deemed received until the next business day if deposited after normal office hours.
Mobile Home. The rental agreement should contain a space for description of the home and identification of the lienholder. This should be completed for each renewal. That way the park may be able to keep track of changes in ownership and lienholder status.
Disclosures. The rental agreement must identify the names and addresses of the manager and owner of the park and the statutory agent.
Conclusion. This article only scratches the surface. The MHCA Blue Book rental agreement forms have been extensively revised. In reviewing your rental agreement forms, compare them to the Blue Book forms. Also be aware that in addition to your normal rental agreement, you need to have a four year lease form available in case a tenant demands one pursuant to ARS section 33-1413 (K).
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.
The Articles on this page apply only in Arizona manufactured home communities and deal only with the application of the Arizona Mobile Home Parks Residential Landlord and Tenant Act. The rules applicable to apartments and other kinds of residential tenancies are very different from that law. All articles (c) 2007, 2008, 2009, 2010, 2011, "Today & Tomorrow", Manufactured Housing Communities of Arizona. Reprinted by permission.
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