Williams
Zinman &
Parham P.C.
Removing Homes From Mobile Home Parks
What Are the Rules?

 

                                       

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

Copyright (c) 2017 by Michael A. Parham. All rights reserved


January 1, 2017

In 2016 the Legislature enacted HB 2259. It has two key provisions. To begin with it amends ARS §33-1451 to add a new section C reading as follows:

C.  A person shall not enter a mobile home park and begin work on the removal of a mobile home from a mobile home park without first satisfying the requirements for a clearance for removal as prescribed in section 33-1485.01. A person who has not satisfied the requirements for a clearance for removal as prescribed in section 33‑1485.01 and who refuses to leave and remove their removal equipment from the mobile home park on request from the landlord commits criminal trespass in the third degree pursuant to section 13‑1502. This subsection does not apply if the landlord refuses to provide the clearance for removal if the requirements in section 33‑1485.01 are satisfied.

So if a poacher or moving contractor shows up and begins tearing down the home without a clearance for removal first being obtained, this statute applies. A park facing this should prepare and give a “TRESPASS NOTICE TO POACHER OR POACHER’S AGENTS.”  The form is available from MHCA and is in the MHCA Blue Book. Give one to every single person on-site involved in the activity. Tell them to leave immediately or you will call the police and have them removed and arrested.

If the police are called and refuse to remove the people or say it is a “civil matter”, show them that notice and point out the statute quoted in it. If they still fail to act, insist they call a supervisor. If nothing comes of it, get names and badge numbers and refer it to your lawyer.

Note: If you have wrongfully refused to issue a clearance for removal even though a responsible party was identified and rent through the removal date was paid, this statute does not apply.  Be sure you are in the right.

When delivering these notices, take pictures of the vehicles, equipment and members of the removal crew for use in later prosecution if that becomes necessary.

The second part of this law amends ARS §41-2186, the dealer and licensee disciplinary action statute by adding a new basis for the Office of Manufactured Housing to take disciplinary action against a dealer, salesperson, installation contractor and other licensee, reading as follows:

The doing of any other wrongful or fraudulent act in conjunction with the sale, transfer or relocation of a mobile home in this state.

If you can prove a dealer or one of his salespersons lied to a tenant about being able to sell his home and the right of first refusal; that the licensee fraudulently marked up the price when offering to sell the home to the park; or that the licensee ignored the clearance for removal requirements of the law in removing the home, you can and should file a complaint with the OMH. Be sure it is a strong, well documented complaint because we believe the OMH will be hesitant to act on any but the most serious, provable violations.


November 30, 2012

Issue

Removal of manufactured and mobile homes has become a problem in the MHC industry.  This is for a variety of reasons.  Some are:

1.  Parks already have high vacancy rates and it is harder to fill vacant spaces than sell homes already on spaces.

2.  Homes being removed are often older and smaller.  In older parks it is difficult to find newer homes small enough to fit on spaces in older parks.

3.  Homes being removed are usually older and can be sold for a lower price than newer homes that needs to be brought in to replace them.

4.  The same home will cost more to bring in and set up with commissions and transport fees being added on than it will cost to simply purchase it on site from the current owner.

Additional Problems

1.  Some parks have a misguided view that they have some right to prevent a home from being removed. That is wrong, though depending on the terms of their leases with tenants they may have some legal recourse when it happens.

2.  Some dealers have learned that parks are desperate to keep homes from being removed.  They have been able to obtain licenses and solicit sale offers from tenants in parks.  After getting tenants under contract they try to flip the home and resell it at a premium to make a profit with no investment.  In so doing they may be violating the anti spif law and putting their dealer license in jeopardy.

3.  Otherwise reputable park operators encourage this kind of behavior by offering to buy these homes from dealers pulling them out of other parks.

4.  Some parks engage in this same sort of conduct--soliciting sale offers from tenants in other parks, buying and them moving those homes to their parks for resale.

5.  Some parks will try to make deals with dealers to get them to stop buying and removing homes in their communities.  Such deals could also violate anti spif laws and possibly state anti trust laws.

General Rules

It is important for park landlords to understand that they do not own homes on rental spaces and generally have no right to prevent a home from being removed as long as the homeowner has complied with provisions of the MHP Landlord Tenant Act pertaining to removal of homes.

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.

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.

Rights of First Refusal

Many parks really hate to see mobile homes being pulled out.   On the other hand, some parks are thrilled to see older homes leave because it gives them the opportunity to get new homes into the park and freshen and modernize the appearance of the place.

To minimize the risk of having homes leave, a number of parks include a provision in their rental agreements entitled "Right of First Refusal".  What this says is that if the home is to be sold to someone who intends to move it out of the park, the tenant must give the landlord a 72 hour opportunity to match the purchase offer and if the landlord elects to do so, the home must be sold to the park.  The price is the same as what the outside seller offered the tenant.  If the landlord does not agree to buy the unit for that price within 72 hours the tenant is free to sell it at or above that price to the third party.   But if he decides to sell it cheaper he must again give the park a chance to match the lower offer.

The standard right of first refusal does not apply if the home is to be sold to someone intending to become a tenant and keep the home in the park.  The reason for that is to avoid situations where it could be used by a landlord to prevent protected minorities from moving in and violating fair housing laws.

Rights of first refusal create a "win-win" situation for both landlords and tenants.  Rights of first refusal are a good thing to include in rental agreements.  But a park including them needs to be able to explain to suspicious tenants that there is no way they can be hurt by them since they are guaranteed the price they want.   

      Advantages for Landlords. This is a way for a landlord to ensure that move-outs are kept to a minimum.  The park winds up purchasing the home, fixes it up and resells it on site.  That gets a new rent paying tenant in more quickly and avoids the lot being vacant.

     Advantages for TenantsThe tenant will lose nothing by selling it to the park at the third party price.  If the home was sold through a dealer or broker, the landlord will pay the same price that the third party buyer would have that will include the dealer or broker's commission.  So the dealer or broker does not get hurt.  Of course the third party buyer will be disappointed but the dealer or broker gets a chance to sell him another home somewhere and make a second commission.  In many parks with these first refusal rights, tenants will come into the office and tell the manager they are going to list the home for sale but before doing so will ask if the park has any interest in buying it.  Many parks will negotiate a sale right then.  This gets the tenant a good price and he is able to get the home sold much more quickly.

     LegalitySometimes it is claimed these rights are "illegal".  In my view that is wrong.  The MHP LTA at ARS § 33-1413 (C) states:  "The rental agreement may include conditions not prohibited by this chapter or other rule of law governing the rights and obligations of the parties."  There isn't anything anywhere else that prevents or restricts these so they are valid.

     Problems.  Most problems result from misunderstandings or shyster dealers or both.

1.  Tenants may forget about the right and list and sell the home without offering the park the chance to buy it.  Once the home sells and the deal closes there is nothing that can be done to undo it.  But in doing this the tenant is in violation of his rental agreement and can be sued for breach of contract and subjected to a judgment for damages incurred by the landlord as a result of the home selling and leaving the park.  Those damages could be significant.  Once in awhile a tenant will phony up an offer for more that was really offered and present that to the park.  That is fraud and a tenant doing that could be sued for damages and maybe even prosecuted for fraud.

2.  Dealers may tell tenants to ignore the right--that it means nothing.  They are wrong and are opening the tenant to liability for breach of contract damages.

3.  When the right is violated and the home sells, the park must allow it to be removed.  The buyer/new owner of the home was not a party to the rental agreement that created the right.  So while the buyer gets to remove the home the now ex-tenant can be sued for selling the home in violation of it.  There can be instances where the buyer knew about the right and may have encouraged the tenant to breach it.  In those rare cases where buyer complicity can be proven, it may be possible to go to court, force the home to be sold to the park, and stop removal of the home.

4.  Sometimes a dealer encourages tenants to list and sell homes that will be removed, and there are a few dealers that buy the homes themselves and pull them out.  A dealer or anyone else buying a home for removal knowing about the right of first refusal can also be sued for damages for bringing about a tenant's breach of contract.  Recently a few dealers have been sued by parks that obtained temporary restraining orders preventing the homes from leaving.  There are one or two sleazy dealers that engage in this kind of conduct and once in awhile a park will decide it has had enough and will sue to stop it.  The key here is to be able to prove the dealer knew about the right when the dealer will lie and deny any such knowledge.

     Stopping Homes Sold in Breach of the Right from Leaving.  The law gets tricky when it comes to parks going after buyers or even tenants removing homes where a first refusal right is being violated.  The question is whether the park where the home is located can prevent it from being moved, even when the buyer induced the tenant/seller to breach the right of first refusal in the lease.  I believe the better view is that it cannot.  Other lawyers will disagree with me.

Several provisions in the MHP LTA guarantee the right of the owner of the home to remove it whenever he wants, so long as all current obligations are paid, even if the removal takes place before a current lease term expires.

ARS § 33-1452 (E) says:  "A person who owns or operates a mobile home park shall not . . . 3. Deny any resident of a mobile home park the right to sell the resident's mobile home at a price of the resident's own choosing during the term of the tenant's rental agreement . . ."

ARS § 33-1451 (B) says:  "The landlord shall not interfere with the removal of a mobile home for any reason other than nonpayment of monies due as of the date of removal even if the term of the rental agreement has not expired."

ARS § 33-1481 (C) says:  "A mobile home that is subject to a judgment for forcible detainer may not be removed from its space until the provisions of section 33-1451, subsection B have been satisfied."

ARS § 33-1485.01 (B) says:  "The landlord shall not interfere with the removal of a mobile home for any reason other than nonpayment of monies due as of the date of removal even if the term of the rental agreement has not expired."

So it seems to me that as long as rent is current, the owner of the home, including a buyer participating in a seller's breach of a first refusal right can remove the home.  That is not to say that the first refusal right is not valid--I believe it is.  But the remedy for a breach is a suit for damages, not self help by blocking the home from leaving.

ARS § 33-1413 (C) says:  "The rental agreement may include conditions not prohibited by this chapter or other rule of law governing the rights and obligations of the parties."  That means, in my view, that the first refusal right can not be construed to prevent the buyer from removing the home since so many other parts of the MHP LTA guarantee that right.  The tenant is obligated to comply with it, but if he refuses to do so, the only remedy in my view is a suit for damages.

Park owners need to realize that they do not own tenant homes.  As much as they would like the home to stay, it is the tenant's home and ultimately the tenant's decision what to do with it, including whether to remove it or sell it to someone else who will remove it even if that action constitutes a breach of the tenant's contract.

Lienholders

A lienholder is responsible for 60 days past due rent and utilities, but not late charges or legal expenses, when a timely notice of abandonment is received.  Note that the law deems it received five days after mailing by certified mail to a proper address if actual knowledge is not obtained earlier.

The lienholder's liability in these situations does not arise out of a contract since there is no contract with the lienholder.  It arises under a statute and the statute says it is liable only for rent.  The statute does say, with respect to future rent, that it must pay rent "and other charges" but in context it appears to be referring to utility charges.

Since the lienholder's liability does not arise under the tenant's rental agreement but under a statute, the lienholder is not bound to provisions in it other than the obligation to pay rent and utilities.  Lienholder liability is separate because it arises under a statute.

Most landlords will permit rent to accrue for awhile to enable a lienholder to re-sell the unit on site.  The normal deal is that the buyer will pay the lienholder's debt to the park when the sale closes.  BE AWARE, however, that such buyers often try to avoid paying the park the lienholder's debt and some have been known to try to move the home without paying.  ARS 33-1485.01 imposes double liability on all parties if that happens.  And the lienholder remains liable under ARS 33-1478 (A) if the buyer refuses to pay the lienholder's obligation.  Lienholders should ensure their debt is actually paid when selling a home under these circumstances.

A lienholder that pays rent is always free to remove the home if rent is current by following the above rules.  The lienholder is also free to sell the home to a buyer who can remove it by following those rules.  Parks wanting homes repossessed by lienholders to remain need to make arrangements to buy the home.  If they don’t like the lienholder price, they must be aware that the home may be removed by the buyer.  It is important for parks to realize that neither the lienholder nor a buyer is subject to the tenant’s right of first refusal.

     Purchasers of Abandoned Homes.  A buyer of an abandoned home from a tenant steps into the shoes of the tenant.  In order to be approved for tenancy he can be required to pay all charges then due under the tenant's rental agreement.  Note that the rental agreement continues in force after the abandonment since possession of the premises was never surrendered by removal of the home.

A buyer of an abandoned home from a lienholder steps into the shoes of the lienholder.  The repossession of the home cuts off the old rental agreement.  A buyer of the home can only be required, in my view, to pay what the lienholder owes at the time the buyer is approved for tenancy.

NOTE that under ARS §33-1485.01 the home cannot be removed from the park until a clearance for removal is received, which will not happen until all financial obligations towards the park are satisfied.

     Landlords--Homes subject to Liens The landlord can only collect what is actually owed by the lienholder following the rules above.  By trying to get more than is owed, a park may become liable for conversion by controlling the home while insisting on payment of sums not owed.  NOTE that if you failed to give a timely abandonment notice, you may have forfeited the right to any rent owed until the lienholder actually learned of the abandonment.

Arizona Spif Law

ARS § 33-1417 provides as follows:

A. A landlord shall not offer, solicit, pay, receive or require from another landlord or from a person who is licensed pursuant to title 41, chapter 16, article 4 any form of compensation or benefit in connection with the purchase, sale, rental, location or removal of a mobile or manufactured home to or from a mobile home park or mobile home space.

 

B. A person who is licensed pursuant to title 41, chapter 16, article 4 shall not offer, solicit, pay, receive or require from another person who is licensed pursuant to title 41, chapter 16, article 4 or from a landlord any form of compensation or benefit in connection with the purchase, sale, rental, location or removal of a mobile or manufactured home to or from a mobile home park or mobile home space.

 

Some dealers attempting to get landlords to pay them a bribe not to remove a home from the park may be violating the spif law and should be reported to the Fire, Building and Life Safety Department which may discipline them for doing so.  Landlords paying them are may also be in violation.  The law permits recovery of treble damages (three times actual damages) by the victim in a lawsuit.

 

Wrongful Interference in a Business Relationship

This is where dealers can get into real trouble.  Examples are where they solicit sale offers from tenants under long term leases or with rights of first refusal in their leases.  When they encourage tenants to ignore these restrictions they become liable to the landlord for damages for doing so.

Tortious interference occurs when someone wrongfully interferes with your business relationship. If you are a small-business owner, you can sue another party for tortiously or wrongfully interfering with your business relationships.  In the context of tortious interference with business relationships, you must typically prove that but for another company's business interference, you would not have suffered economic harm. Economic harm includes a loss of profits. 

Courts can award damages to contracting parties who prove tortious interference. They may award actual or compensatory damages if you can prove the amount of harm actually suffered. Courts may award expectation damages or the amount of lost profits or foregone business opportunities and expected profits had the tortious interference not occurred. You may also receive punitive damages if you can prove emotional distress. Courts may order an injunction or award you equitable relief by ordering the losing party to refrain from further attempts to contact your customers or employees.

Landlords should notify dealers raiding their parks by certified mail of the parks that they operate and that these parks have long term leases (if they do) and that rental agreements contain rights of first refusal (if true).  This helps prevent the dealer from claiming that he did not know about it.  Of course there are other ways to prove this, like past dealings with the dealer or testimony from the seller that he told the dealer.  But sending the notice is always a good idea.

The best solution to the problem of dealers encouraging tenants to sell in violation of their leases and then trying to extort deals out of parks is to sue them and get judgments against them.

NOTE:  this will not apply in the case of buyers from lienholders following repossession.


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

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