All views expressed in this blog are mine alone and do not necessarily represent those of any client or other organization. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.
Copyright (c) 2009 by Michael A. Parham. All rights reserved.
December 31, 2009
This Awful Year Ends. It is self-evident how awful this year has been. Parks experienced high vacancy rates. Huge numbers of homes were abandoned. The first signs of extremely aggressive enforcement of fair housing laws began to appear. The FBLS Department got caught ripping off the Relocation Fund and then began interfering in landlord tenant relationships by meddling in ALJ decisions that are not its concern. The State government insolvency resulted in program cut backs and layoffs in agencies that the MHC industry is dependent on for certain services. The smothering embrace of the government was felt in such areas as requiring environmental inspections and permits to demolish old mobile homes at great expense. And those are just a few of the problems the industry experienced.
Can 2010 be as bad? In a word, yes.
In my view the Arizona economy is not going to improve in 2010. It may not get worse but it won't improve. Revenues of the State government will not improve either. The State projects even greater budget shortfalls in 2010 than 2009. That means State programs will be cut more. Agencies like the MVD and FBLSD will have programs reduced even further making the jobs of parks even more difficult.
Older homes will continue to be abandoned as owners lose jobs and find it impossible to sell them at any price. Evictions will remain a problem as tenants with financial hardships become unable to pay rent. Look for this situation to get bad after the first of the year as Christmas bills come in.
I think a very big problem is going to be the federal government. It keeps growing and has no compunctions about involving itself in the most mundane matters. I believe they will become a protagonist in local fair housing cases. Even frivolous complaints which clearly have no merit may become a nightmare to defend as federal bureaucrats exercise their powers to force landlords to disprove all allegations. Landlords will be tempted to settle such complaints to avoid the expense of defending them.
Hard times always result in increased litigation as people resort to the legal system for relief. Lawsuits involving government agencies doing the wrong thing will increase. ALJ filings will also increase. Starting January 1 AAMHO can represent tenants in these cases (provided there is no charge) and I won't be surprised to see a rash of filings shortly after that date. Hearings will be delayed as the Office of Administrative Hearings tries to handle increased workloads with decreased staff.
Some RV Parks are experiencing tenant complaints due to the way they charge for utilities. The utility charge law is confusing. Lawsuits by tenants have been threatened and at least one has been filed.
Even though inflation is supposedly low for now, government user fees are going to creep up and some taxes are going to be raised this year. That is just a prelude to 2011 when federal taxes are going to skyrocket as the "Bush tax cuts" expire. Somehow State taxes are going to need to be raised if a government shutdown is to be avoided. And the health care taxes that will result from enactement of a health care bill will apparently begin immediately. In my view inflation will become a problem later this year.
But tenant incomes will not increase. Covering increases in park operating expenses without significant rent increases will be a real challenge. Large rent increases will likely result in more abandonments and evictions.
All in all I think that while 2009 was a rotten year, 2010 has the potential to be even worse.
So--for what it's worth--Happy New Year!
December 30, 2009
Agriculture Funds Sweep Suit. I guess it's too much to expect a reporter to acutally do her job and fact check a story. This morning's Republic carries an article on the various suits being defended by the AG's Office claiming legislative sweeps of special purpose funds are illegal. The article mentions the agriculture funds suit in which I represent the plaintiffs. The article says that although the plaintiffs won, it wasn't much of a win since the funds were not ordered restored. The fact is that the swept funds WERE ordered restored.
Here is the article: www.azcentral.com/news/articles/2009/12/30/20091230lawsuits1230.html
I e-mailed the reporter a copy of the actual judgment with a request that a correction be published. I doubt that is going to happen but we will see.
The State has filed an appeal of this decision so the battle is still not over.
Update. The reporter did correct the story in the on-line version. It was corrected this afternoon. A correction will appear in the paper in the next couple of days. My thanks go out to the Republic and its reporter.
December 27, 2009
Tucson Rent Tax. Some governments cut spending when tax revenues go down in a severe recession even though this may mean cutting staff, hours or fringe benefits. Others regard their first priority to be to preserve what they have even at the expense of the public. You can decide for yourself where Tucson falls with its effort to impose a 2% tax on rents. Here is an excerpt from MHCA's website:
Tucson Considers Rent Tax for the Second Time this Year! The Tucson City Council is considering a 2% rent tax and will probably hold a Public Hearing on the issue on January 5, 2010 (please watch this web site for updates on date, time and location). MHCA has petitions for you and your residents to sign opposing this tax, and some general information on the tax attached.
December 24, 2009
Obamacare. This is not something I would ordinarily write about on this blog. But the Senate bill passed this morning and a House-Senate conference committee will now try to come up with a final bill that will pass both houses.
I know several physicians. Not a single one favors this legislation and most are in great fear of what it will do to their practices and medicine in general. One is a neighbor about to retire from the government. He was going to go into private practice next year but has changed his mind. As he put it, Obama has two problems here. He obviously dislikes doctors and he dislikes affluent people. In his view that means he is screwed.
This law once enacted will deeply impact all kinds of business including the MHC industry. Taxes of all sorts will go up including a variety of business taxes. Additionally, employers will to some degree be required to cover medical insurance for employees. The increase in operating expenses will create pressure for rent increases. Coverage, especially for seniors will deteriorate. Medicare will experience quality of service deterioration. Medicare Advantage Plans will probably disappear in a couple of years.
This is an unpopular move by the politicians but has taken on a life of its own. I am afraid it is going to happen no matter how unpopular it is.
Here is a video encapsulating what I think is the general public reaction to this legislation, at least out here in "flyover country": www.youtube.com/watch
December 23, 2009
Fair Housing Investigations. This week a fairly routine fair housing complaint was received, not from the City of Phoenix and not from the Arizona Attorney General's Office, but from HUD which is handling the investigation itself out of it's Santa Ana, California office. This frivolous claim was divided into three complaints by the Feds: fair housing; section 8 contract violations; and disability accommodation violations under the Federal Rehabilitation Act. In the past, similar complaints have been lumped together as a single fair housing complaint and referred to the Arizona AG or the City of Phoenix for investigation under their substantial equivalency contracts with HUD.
This is disturbing because not only is it being treated as separate complaints under three laws but an enormous amount of "data" including documents and information on a wide variety of subjects and tenants is being demanded, all within a 10 calendar day period over Christmas week. The expense and inconvenience of responding to this matter will be substantial, far greater than landlords confronting similar complaints in the past have experienced.
It seems like what criminal defense attorneys see when a prosecutor over-charges a defendant, throwing every possible charge he can think of in order to force the defendant to cop a plea and avoid the huge expense of defending the case.
The Federal Government has unlimited resources and the Obama Administration clearly is not hesitant to spend them. They have new leadership they have installed at HUD and the Department of Justice. It is entirely possible they are beginning to take an aggressive, prosecutorial stance on these complaints with an eye towards forcing landlords into settlements even of groundless complaints.
If HUD is going to take over investigations in Arizona in spite of the contracts with local agencies, I fear we may also start seeing coerced financial settlements of even groundless claims.
I may be reading too much into this single incident. But I have been afraid this sort of thing would take place under the current regime.
December 19, 2009
MHCA Publications. New versions of the Green Book (Park Owned Home Rental Forms), Blue Book (MH Space Rental Forms) and Purple Book (Abandonments) are now available. I extensively revised these last month to reflect significant developments in the industry and the economy. They are available for purchase from MHCA. Call (480) 345-4202 for information. I do not share in the sales proceeds from these books so I have no financial stake in how many if any are sold.
State Budget. The state budget nightmare seems to never end. In spite of all the cuts so far, the state is still $1.2 Billion in the red for the fiscal year ending June 30, 2010. So the Legislature is once again in session to make more cuts. They are unwilling to increase any taxes. Most state agencies will get cut another 7.5% and that includes a 5% salary reduction for all agency employees (at the discretion of agency heads).
But the Attorney General got cut a lot worse than that. It got the 7.5% cut but in addition had a number of funds that subsidize its operations swept. Eliminating access to those funds has the effect of cutting its budget another 7.5%, a total 15% cut (at least that's my estimate). If this cut survives, as it apparently will, the AG is going to need to eliminate some programs. Past talk has indicated elimination of the consumer protection and civil rights functions. My guess is these may be further cut (not much remains of Civil Rights now), but the rest of its functions will also probably be cut.
The MVD also gets cut and has already announced closure is imminent of many of its branch offices.
The Court system is also getting cut and having many of its funds swept. This could have effects on court access. Hours and staffing could be reduced. Evictions could slow down and resources may be diverted from civil cases to criminal cases.
I take no satisfaction from any of this. I have a child who works for the state and know first hand the hardships and uncertainties state employees are experiencing.
FBLSD. Rumors are circulating that it is about to be abolished. As nearly as I can determine those rumors are premature. It will have its budget further cut under the bill about to pass but no legislation has been introduced to abolish it. Elimination of an agency requires legislation to reassign the functions that will survive and terminate those that will be eliminated. No such legislation has been introduced. I know that elimination has been considered but I do not believe it is imminent. It is likely the Tucson public office will close. That was already proposed in the Department's plan for additional budget cuts. There may be some more layoffs and employee salaries may be cut 5% like other agencies. But it is still going to be around.
The Relocation Fund is not scheduled for any legal sweeps. I don't know if any more unofficial sweeps like happened last year are planned by FBLSD bureaucrats. I doubt it but who knows.
December 12, 2009
When Lienholders Won't Pay. At yesterday's manager training seminar (which had over 90 attendees) one of the most recurring questions involved abandoned homes with lienholders who, despite being notified of the abandonment, won't pay rent due.
ARS § 33-1478 (A) says that when a mobile home is abandoned in a park, the landlord must notify a lienholder of the abandonment within 10 days after it is discovered. The statute goes on to say that a properly notified lienholder is then responsible for paying up to 60 days past due rent and other charges (meaning utilities) plus future rent and other charges until the home is dispoosed of.
The problem is, a park may discover an abandoned home and give the lienholder the 10 day abandonment notice, but the lienholder simply fails to pay rent. Sometimes the lienholder ignores the problem altogether; sometimes it promises to pay but the check never arrives; and sometimes it asks for time to market the home, promising to pay when the home is sold.
Lienholders are having a difficult time, like other financial institutions in this economy. Their cash resources are limited and it is in their interest to try to get landlords to carry them, interest free, on the space rents while trying to sell repossessed homes. But that puts the landlord in the position of acting as the lienholder's bank, extending interest free financing of the space rent obligation. With high vacancy rates and a shortage of qualified prospective new tenants, parks are not in a position to finance lienholders.
That is not to say that parks should always be hard nosed. Cooperative working relationships with lienholders are always a good idea as long as the cooperation is reciprocated. It is fine to let the lienholder have a few months to try and market the home with an agreement the rent will be paid when it is sold. But if it goes on for more than two or three months, or if the lienholder stops returning calls or simply ignores the park altogether, the time for cooperation has ended.
Under Arizona MVD regulations parks can initiate landlord lien sale proceedings to auction the home off and apply the proceeds to the rent arrearage. This can be done even when there is a lien on the title. If a lienholder won't respond to a 10 day abandonment notice within a reasonable time, the landlord can send a termination notice to the owner of the home (normally the tenant), wait 60 days, and then publish a notice of landlord lien sale. At least 10 days before the sale, a notice of the pending sale must be sent to a lienholder advising that the home will be auctioned off and the lien knocked off the title unless rent arrearages are brought current.
If the home has value to the lienholder, that normally will result in a payment being sent. Otherwise the sale can proceed and the lienholder will lose its interest in the home.
This is an over-simplification of the landlord lien sale process. Many other things must be done to complete the sale and get title to the home. You can read the Abandonment page on this site for more information. The MHCA Purple Book describes the process in great detail.
The point of this posting is that a park is not at the mercy of a non-paying lienholder. While cooperation is always preferred, if the lienholder is not responsive, the landlord has the necessary tools to protect its interest and should use them.
December 8, 2009
Mobile Home Financing. I wrote about this on November 14. Apparently what I was hearing about is a federal law enacted in 2008 called the SAFE Mortgage Licensing Act.
This law "encourages" States to license "mortgage loan originators". Unscrupulous loan agents ofter swindled unsuspecting people into taking out dangerous sub-prime loans on over-valued houses and contributed greatly to the housing bubble that collapsed in 2008.
While this law does not target people making occasional loans on mobile homes they are selling, it is possible they could get caught up in a State's licensing scheme.
Arizona has a set of laws starting at ARS § 6-991 that covers licensing of "loan originators" and requires them to become licensed effective July 1, 2010. ARS § 6-991.01 (9) contains the following exemption:
"A manufactured home retailer and its employees if performing only clerical or support duties in connection with the sale or lease of a manufactured home and the manufactured home retailer and its employees receive no compensation or other gain from a mortgage banker or a mortgage broker for the performance of the clerical or support duties."
Common sense indicates that someone selling or renting mobile homes is generally not covered if not getting commissions from lenders for placing loans.
ARS § 6-991 (12) excludes someone making five or fewer mortgage loans per calendar year from the definition of "loan originator". But the requirement would seem to apply if more are made since the law applies to making loans to buy mobile homes.
December 5, 2009
Abandonments. There is no slowing in the number of abandonments I am seeing. Cases keep getting referred and whenever I talk to managers, it seems like there are suspected abandonments in their parks that for one reason or another they haven't gotten around to doing anything about.
Unless a diligent lienholder takes responsibility, an abandoned mobile home is going to deteriorate and rent on the space will accrue until the manager takes action. No one is going to come in and magically make the problem go away. The process for dealing with abandoned homes is a pain, but the alternative is worse and ends up with the same process being necessary. If you have a home that looks empty, rent is in arrears, utility service is off, and the space and home needs maintenance, initiate action to get the home disposed of. See the abandonments page on this site by clicking on the left for an idea of what all is involved.
Be especially aware that many homes are abandoned following eviction of the resident.
More Eviction Stories.
The Hothead. He is disabled (though you wouldn't know it to look at him). Supposedly he put in for Social Security Disability and has been waiting for benefits since October. He hasn't paid rent since October. His live-in girlfriend/"caregiver" also doesn't work. He was furious to be the subject of an eviction in December despite owing three months' rent. He raved and ranted at me and then at the Judge, finally storming out of the courtroom. His sense of victimhood and entitlement was highly developed. All his problems were someone else's fault. He didn't do himself any favors with that attitude and he will be on the streets next week.
The Mom With MS. She has rapidly developing MS which is deadly and debilitating. She can't get around her home any more now that she needs a walker full time. She has been forced to move to an apartment that is handicap accessible. She gets Social Security Disability and cannot afford double rent so she stopped paying space rent. She has been trying to sell her mobile home but in this market it probably has no value. Her daughter lives with her but lost her job several months ago and supposedly cannot find work. She was evicted for owing three months' rent but will have a couple of months to try and sell her home on site before it is disposed of by the park by way of a landlord lien sale.
The Absentee Tenant. He doesn't live there despite having signed the lease and owning the mobile home. His Dad does along with his brother who takes care of Dad. They were supposed to pay rent but stopped in October. By the time the tenant learned of the situation the court eviction papers had been served. The tenant came to court with cash and money orders and paid everything owed on the spot. The eviction action was dismissed. If the park had waited another month or two he couldn't have afforded to pay.
If there is a point to these stories it is that no one is helped by managers putting off evictions until the holidays are over. All that does is allow arrearages to build up that cannot ever get paid. Deal with rent delinquencies now. Don't put it off until after the holidays.
December 4, 2009
State Government Benefits. On November 25 a new law, ARS § 1-502 went into effect requiring State agencies to verify citizenship or lawful presence in the U.S. before extending benefits under any State programs. I read this as including the Relocation Fund. Presumably the FBLSD has adopted procedures for verifying this eligibility before paying any benefits out of this fund. Here is a link to the law. www.azleg.gov/FormatDocument.asp
Relocation Fund Audit. I have not forgotten this. I have not posted details of inappropriate expenditures because I am waiting for other pending actions to be taken. I can't go into the details but suffice to say that this is not a forgotten subject.
December 1, 2009
Fair Housing Decision on Testing. Private fair housing organizations often engage in testing on their own initiative with government financial backing. A favorite area of testing is in the handicapped accessibility area. The law requires apartments and many other rental dwellings to meet certain accessibility criteris if built after 1991. Since it is common for builders to make technical mistakes in complying with these requirements, testing will frequently find slight violations (e.g., a thermostat set a quarter inch higher than allowed).
The testing organization will often file a fair housing violation complaint with a government agency or, infrequently, a lawsuit. As a condition of settling the complaint or suit it will demand "damages" claiming it needed to "divert resources" to dealing with the violation. I have written before that this is simply a shakedown when it happens, and unfortunately it happens in Arizona. An article I wrote a couple of years ago, posted on the Fair Housing page of this site, expressed my view that these organizations are not entitled to any "damages" under these circumstances.
A federal judge back east seems to agree with that view and dismissed a high profile suit by a big time advocacy organization against a major apartment operator. While the decision does not set any precedent, it will hopefully give local organizations cause to reflect before initiating complaints on technical violations for the prupose of fundraising.
Code Violations. I occasionally get calls about parks being cited by local code enforcement agencies for the terrible condition of tenant spaces. You should never allow that situation to arise. Parks have plenty of tools at their disposal to force tenants to comply with code requirements and owe it to their neighbors to do so as a matter of routine. But if you screwed up and wind up on the receiving end of such a citation, deal with it immediately.
Start by talking to the tenant and serving him with a termination notice--normally a 10/20 notice for health and safety code violations. If he won't act you can either file to evict him or give a 10 day notice of intent to clean the space and charge him the cost of doing so. But you can not clean or repair the home at his expense--you have no right to touch the tenant's home even in these circumstances. The best thing normally is the eviction route. He can always stop it by doing the cleaning and repair work himself.
November 29. 2009
December 11 Manager Training. This will be my last training session in 2009 and the last for a number of months in the Phoenix area (it is scheduled in Mesa). If you are a manager and need or will need six hours now or in the next few months, this would be a good opportunity to get signed up. Contact the MHCA at (480) 345-4202. Don't bother with their website--it is badly out of date and the December session is not listed.
Park Owned Home Rentals. More and more parks are renting homes. This creates revenues from vacant spaces and allows homes sitting vacant in a cold sales market to be put to some use. There are drawbacks, mainly the need for the landlord to ensure the home is maintained and complies with codes, and the risk the unit will be trashed by an irresponsible occupant. Laws are very different for home rentals versus space rentals. Rental forms are a lot different as a result.
The MHCA Green Book covers this subject and has forms for park owned home rentals. Because of the increase in this activity and the fact that some of the homes being rented are fairly new and have substantial value, I have just finished revising the Green Book. It will have some new forms in it including a longer and more comprehensive rental agreement form. If you are in this business, keep an eye out for the new Green Book.
November 25, 2009
Evictions. This economy is hurting a lot of people who are unable to deal with it. I see them when I handle evictions. Sometimes I feel like a huge underclass of previously responsible self reliant people is developing and I fear for the future. I am going to share a few of these stories between now and the end of the year, starting with two cases I handled yesterday.
The Marine. He is 56 and served in the Marines in the early '70's. He has worked in the trades until about 18 months ago. He was laid off and has been unable to find work in anything he is qualified for. The park allowed 10 months of rent to build up before finally referring the case and waived late fees. But the amount due still came to over $3,500. He was looking at homelessness. Fortunately a friend came to court with him and paid the full amount due. She is never going to see any of that money back so it really was an act of charity. I don't know how he will keep future rent paid but he is going to try. He did not whine or blame anybody for his situation.
The Good Brother. An unemployed construction engineer with no prospect of finding work in his field, especially at age 60. Too young for Social Security and Medicare. He was working as a salesman early this year when he learned his brother was dying out of state. He left his job and went to be with his brother who died a few months ago. He used his savings to keep rent current while gone and also after he got back to Arizona since he could not find any kind of work at all. He stopped paying rent about three months ago when his savings ran out. When he got to court he was down to a roll of quarters. He hopes he has a job with a sketchy used car dealer that self finances. He doesn't want to do that kind of work but needs some sort of job and that's the only nibble he has had. The park is willing to work with him if he can get on some sort of payment plan. Once again, no whining and no excuses.
All the money being spent by government is not getting down to the kind of small businesses that would normally be hiring these two men. Both are in decent health and anxious to work. But both are older White males with skills not in any demand in this economy, and both are facing homelessness. It is really frustrating to me.
I plan on posting a few more of these stories as the Holidays approach. I don't know why--it really serves no purpose. But maybe it will give folks a chance to see the human face of what we are dealing with.
Private landlords cannot be providing free shelter. But they may be able to help by not allowing residents to get so far under they cannot dig out and wind up becoming homeless.
November 20, 2009
Qwest Letter. Qwest has sent a letter to mobile home parks in Arizona saying that because of requirements in tariffs published by the Arizona Corporation Commission, when work is necessary on Qwest underground cables, the park, not Qwest is required to do the excavation work necessary for Qwest to do repairs and replacement. Alternatively Qwest "may" elect to do it at the park's request and charge the park its costs of doing so.
This letter is hugely deceptive and misleading. Corporation Commission tariffs have no application to private property owners. They apply to regulated utilities like Qwest. In other words the Commission cannot require a park to do anything to help a utility company out. If Qwest needs to do repair work on underground facilities but is unable or unwilling to do it due to costs or its interpretation of Commission regulations applicable to it, it can discontinue service to it's customers, your tenants.
The MHP LTA requires parks to maintain and provide utility services in the community but phone, television and internet service are not included. If Qwest tells tenants they are being forced to cancel any of these services because the park is violating any legal obligations, you may need to set the record straight.
There are many alternatives to Qwest for obtaining these services (e.g., cable television providers, DSL, and wi-fi contractors). These may be available at lower monthly cost to tenants, certainly if the enormous costs of doing what Qwest wants is factored into future rent increases. If you are on the receiving end of a demand from Qwest to do this kind of work, explore those options and comparative costs before agreeing to anything with Qwest.
Typically there are easements in the park covering Qwest facilities. These easements spell out the requirements with respect to the park and Qwest. There may also be some form of service agreement that adds to that.
The Qwest letter demands a suitable recordable easement before work is done. Before agreeing to any new easements, parks should review their current easements and agreements with Qwest as well as alternative service arrangements. Do not just sign what they put in front of you.
MVD Layoffs. The MVD announced over 100 clerks are being laid off. This is going to affect getting landlord lien and bonded titles. If you are sitting on any such paperwork, get it in ASAP.
November 18, 2009
Holiday Evictions. It's that time of year again when managers with full hearts and empty heads decide to put off evictions for the holidays. I suppose some owners are also responsible for this lunacy.
Am I Scrooge? Well yes, but that has nothing to do with my views on this. When a tenant is allowed to not pay rent during the holidays, he often winds up spending the money on other things like presents for the kids. Meanwhile late charges build up and more rent comes due the following month. A park not evicting over November rent and waiting until after the holidays in January has allowed three months' rent and associated late fees to build up. The tenant has spent the money and by the time the day of reckoning arrives has gotten so far behind that he can not possibly get caught up.
But if the park forced the issue in November when the rent came due, the amount due would be manageable and the tenant would not have had the opportunity yet to spend the money on Christmas presents. He can afford to dig out of the fairly small hole he is in.
Making the tenant deal with the issue now is the best Christmas present the park can give since it will enable him to keep a roof over his head after the start of 2010. Giving into the soft hearted and even softer headed instinct to be "kind" and not file to evict eventually results in the tenant being forced to move and in most cases to lose his home.
I think there should be a special place in Hell for the manager who does this. It is an evil Christmas present that more times than not will create a homeless family.
November 14, 2009
FTC Red Flag Rule. On July 19 I wrote a piece on this page entitled "Identity Theft". I discussed the Federal Trade Commission "Red Flag" rule requiring "creditors" to adopt a written program for preventing identity theft. MHC's are creditors within the scope of the rule and parks should have procedures in place to prevent identity theft of tenant and applicant identity information in their custody. The wirtten plan need not be extravagant but must cover four areas. Here is a link to an FTC publication on this subject spelling out what must be done: www.ftc.gov/bcp/edu/pubs/business/idtheft/bus23.pdf
The main thing to be aware of is the need to safeguard sensitive information like applications and credit reports as well as copies of tenant/applicant ID. Keep this stuff separate from normal tenant files in a secure location and strictly limit employee access to it. Another thing to focus on is when an applicant furnishes another person's credit information including another person's Social Security Number. Procedures should be in place to notify law enforcement when that happens.
Read the FTC publication and my July 19 posting.
Mobile Home Financing. There are some rumors going around about a new requirement that people financing mobile homes they are selling must get some sort of lending license. I have not researched this but am not aware of anything new. There has been a consumer lending license law on the books in Arizona for many years. But it exempts "A person who is not regularly engaged in the business of making consumer lender loans" at ARS § 6-602 (A) (3). Infrequent carryback financing of relatively small mobile home sales should not expose a park th this licensing requirement, though the specific nature of the park's financing business will actually determine whether it is required to be licensed..
I will post more on this subject if and when I become aware of any new developments.
Dealer Licensing. On the subject of parks selling homes, be aware that a park buying for purposes of resale or selling homes is required to be licensed as a dealer. Two or more such transactions in a 12 month period meets the definition of "dealer" and triggers the licensing requirement.
Normally a D-8 license is obtained by such parks from the FBLSD. Check its website for details (see the "Links" page at left for a link).
November 11, 2009
FBLSD Audit. We see and will continue to see in the Fort Hood shootings how government agencies will engage in "duck and cover" tactics to avoid responsibility for their failings. Rare indeed is the government agency or official who will simply admit a screw-up and apologize. As a very junior political appointee in the Nixon Administration I saw up close how this attitude could bring down a government.
The $900,000 unlegislated sweep of the Relocation Fund by the Department is being looked at by more and more people. This includes both ordinary folks and persons wielding some influence. Stonewalling and refusal to admit wrongdoing in this case is not going to work. If nothing else I will begin posting some of the expenditures on such things as State Fire Marshall expenses, rental car bills, consultant payments and the like having nothing at all to do with mobile home relocations that were charged to the Fund. But I am holding off on that for now because I expect other things to happen making that unnecessary.
Traffic on this website is off the charts. I have an internal counter that counts hits whenever the site is visited. I never expected it to have a high traffic count. It is not intended for that purpose but instead is designed to communicate in narrow areas to park managers and others interested in the MHC industry in Arizona. But I have had thousands of hits since I started writing about the Relocation Fund.
I also get e-mails from MHC residents outraged at what they have seen happen. One theme of these messages is frustration over what ordinary folks can do about it. All I can say is that you should tell your neighbors what you have seen and write the Governor and your State Senator or Representative. Here are links to the members of the Legislature and their e-mail addresses as well as the Governor:
November 8, 2009
Marine Corps Birthday; Veterans Day. Tuesday, November 10 is the 234th anniversary of the founding of the Marine Corps in Philadelphia. The following day is Veterans Day. Remember them both, especially given the environment our uniformed services find themselves in today.
November 7, 2009
Agriculture Funds Suit. I have been talking about the suit I filed against the State for taking money out of three agriculture funds for general budget purposes. The suit claimed this "sweep" was unlawful. The Attorney General defended the suit. We prevailed and the court entered judgment that the funds had unlawfully been swept. Contrary to some press reports, the Court also entered an order that the State return the money to the funds.
The Attorney General has filed an appeal and the case will now proceed to the Arizona Court of Appeals. Interestingly, the suit was filed against the Governor, Jan Brewer, and the State Treasurer, Dean Martin. Only the Governor has appealed. Treasurer Martin has not. Since both of them have publicly stated that they are opposed to sweeps such as this, the Treasurer is to be commended on being true to his principles in accepting the judgment of the trial court.
Tenants Acting as Rental Agents for Other Tenants. I have recently encountered several instances of tenants acting as agents for other tenants in renting out and overseeing their homes or park models while the owners are gone. In some cases the units are purchased by the owners for the sole purpose of being rented out and not for personal occupancy. The tenant acting as the rental agent in these situations would seem to be subject to Arizona real estate licensing laws. Those laws generally require real estate brokers to be licensed by the Department of Real Estate in order to do business. A broker's license is not easy to get. It requires considerable experience in the business as a sales agent; substantial formal training; passing a background investigation; and passage of a fairly difficult examination. ARS § 32-2101 of the Real Estate Licensing Code defines "real estate broker" in part as follows:
47. "Real estate broker" means a person, other than a salesperson, who, for another and for compensation:
(a) Sells, exchanges, purchases, rents or leases real estate or timeshare interests.
(b) Offers to sell, exchange, purchase, rent or lease real estate or timeshare interests.
(c) Negotiates or offers, attempts or agrees to negotiate the sale, exchange, purchase, rental or leasing of real estate or timeshare interests.
(d) Lists or offers, attempts or agrees to list real estate or timeshare interests for sale, lease or exchange.
Since the rental agent is not only renting the home or park model on someone else's behalf, but also subletting the space lease, a "real estate" interest is involved and that would seem to trigger this statute.
ARS § 32-2122 makes it unlawful for someone to act as a real estate broker without a license. ARS § 32-2165 makes violation of these licensing laws a felony, the degree of which depends on the exact nature of the offense. The law permits the Real Estate Department to issue and enforce cease and desist orders in addition to investigating and prosecuting violations of these laws.
Accepting Rent After Incurring legal Expense for Evictions. Another area I have recently been seeing problems in, is where a tenant has not paid rent within seven days after getting the seven day non payment of rent termination notice. After seven days the case can be referred to the park's attorney for eviction.
The tenant always has a right of reinstatement; a right to "pay and stay" that can be exercised any time before a judge actually signs an eviction judgment. This right is set forth in ARS § 33-1476 (E) that says in part:
Before judgment in an action brought by the landlord under this subsection, the tenant may have the rental agreement reinstated by tendering the past due but unpaid periodic rent, reasonable attorney's fees incurred by the landlord and court costs, if any.
That means that to reinstate the tenancy the tenant must pay all rent including that coming due since the termination notice was served; all late fees through the date of payment; all accrued utility charges and ather fees; and any attorney fees and court costs the park has incurred. Even if the case was referred to the attorney but not yet filed with the court, the attorney fees must be reimbursed. A tender of money in less than the full amount due should be rejected.
Often a partial payment is left in the night drop. The landlord should try to return the partial payment. If that is not possible, do not deposit it; bring it to the court hearing so it can be returned to the tenant there.
Landlords need to be sure their calculations of what is due are accurate. If a tenant's payment is correct but rejected because the landlord's figures are wrong, the case will likely be dismissed and the landlord will eat any legal fees and court costs incurred after the attempted payment was tendered.
FBLSD Suit. I have previously mentioned that MHCA has sued the Department over it's unsolicited decree that the one year statute of limitations does not apply to ALJ cases. I do not intend to litigate this case in this blog but will report on the outcome. However, a filing by a tenant in a related case concerns me that park residents have unnecessarily been stirred up over this issue--possibly by staff members at the Department.
In this litigation, the only claim made is that charges of violations of statutes brought in the form of ALJ cases must be brought within a year after the claim arose. That is the law and it has applied for decades when it comes to filing claims in court actions. The only issue in the MHCA lawsuit is whether the same deadline that applies to court claims for statutory violations also applies to ALJ claims.
No one is saying that all claims by tenants against landlords must be filed within one year. There are many statutes of limitations and the exact limit depends on the kind of claim that is made. Breach of contract claims can often be brought as late as six years after they accrue. Damage claims for negligence normally have to be filed within two years.
But the only kind of claims that can be filed with ALJ's are statutory violation claims and these are required to be filed within one year. The purpose of the MHCA lawsuit is to force the Department to comply with that limit and to stop pretending it does not apply to claims brought before ALJ's.
Multiple Animals as Reasonable Accommodations. Fair housing laws require housing providers to make exceptions to rules when necessary and reasonable to enable disabled residents to live in the community. A frequent request is the adjustment of a pet restriction to allow an assistive animal. For example, an exception to a no pet rule or a size limitation to allow a seeing eye dog for a blind resident.
There are many kinds of assistive animals. It is more and more common to see doctors' notes requesting permission for patients with emotional or psychological disorders to have "comfort animals". Like any other reasonable accommodation request, if there is evidence of a disability, a professional opinion that the animal is necessary, and a connection between the animal and the disability, the request must normally be approved.
Recently I have been seeing a number of cases where more than one animal is being requested, and the exception being asked for is to the limit on the number of animals allowed in the household. The same rule applies. If there is a disability; a medical professional states that all the animals are needed, and the connection between all of them and the disability is shown, it normally must be approved.
However, if one or more of the animals is not an assistive animal, it may be possible to condition approval of the assistive animal on the resident getting rid of the non-assistive animal in the household.
These cases can get very tricky and such requests must be taken seriously. If a multiple animal situation would cause operational problems in the community, it might be considered unreasonable. In that case, don't just say "No"; you need to engage in an "interactive process" with the resident to see if some mutually acceptable compromise can be worked out.
The worst thing a landlord can do on getting such a request is just blow it off.
October 31, 2009
Tenant Financial Problems in Age 55 Parks. In recent weeks I have seen a significant increase in both evictions and abandonments in Age 55 Parks. Normally these are quite stable since people living there are thrifty, control their budgets and in most cases have reliable incomes. But we live in unusual times and financial problems in these parks seem to be increasing.
Yesterday I was in court to evict a nice lady who was a couple of months behind on her rent. The manager didn't want to but rent had stopped coming in. In talking with the lady I found that she was widowed and had been working in the medical field until being laid off a few months back. Her unemployment compensation applications kept getting rejected for inane reasons, she could not talk to a live person, and the DES website was unresponsive. This is a common story; the DES system is dysfunctional and has caused a lot of people to get evicted this year.
I asked her about Social Security and she responded she was not getting any. She is 67 but didn't know she could apply and had not even signed up for Medicare. This is a U.S. native who has worked all her life. I insisted she go to the local Social Security office immediately after court and see what she is eligible for both on her own account and her deceased husband's account. Also to sign up for Medicare. Once she does so and gets an income stream she can work out a payment plan to stay in the park.
It never occurred to me before that something so obvious as Medicare and Social Security benefit eligibility may not be so obvious to others. I wonder how many people having financial problems in Age 55 Parks are not getting the benefits they are entitled to.
This is something to bear in mind when dealing with older residents having financial problems. It would also be worthwhile to coordinate with HOA's in the park to arrange for presentations by Social Security people or others who know something about it.
Social Security eligibility can get very complicated and I wouldn't be surprised if many Age 55 Park residents are being underpaid and maybe, like the lady I met yesterday, not paid at all.
MVD Budget. State agencies are coming up with horror stories about how the world will go to Hell if they have to cut their budgets another 15%. Some of the predictions are really humorous. But there is an element of truth in them as well.
MVD is threatening to close down a majority of its local offices. People will either be forced to go to the giant ones that specialize in making you wait in line and then to talk with an incompetent clerk who barely speaks English, or to do the transaction on-line.
This could be a big problem for parks in trying to process bonded title or landlord lien sale applications. That cannot be done on-line and in many of the offices the level of incompetence of the clerks makes it almost impossible in person.
Be sure that you promptly process these transactions now before any more MVD cuts take place. And don't turn a blind eye to abandonments in your park. If they are there, deal with them. As hard as they are to deal with, it is only going to get more difficult as MVD evolves into an even less responsive agency than it already is.
Posting Notices. I still get eviction cases where the termination notice was "posted" or "taped to the door" which I must reject. That is not effective service of the notice. It must be delivered by handing it to a responsible resident at the space or sending it by Certified Mail to the tenant. The new eviction rules prohibit attorneys from filing evictions based on improperly served notices and require judges to dismiss cases where the notice was not properly served.
October 25, 2009
December 11 Training Class. MHCA's website is woefully out of date. They are working on getting it revamped and on a current basis. The educational page does not show it but I am scheduled to conduct one of my all day sessions in Mesa on December 11. This is four hours landlord tenant and three hours of fair housing training. It satisfies the legal requirements for manager education. New managers especially should enroll. I am not sure when I will be conducting a course in the Phoenix area after this one so anyone in need of manager training should contact MHCA at (480) 345-4202 or (800) 351-3350 to register.
Park Models/"Park Model Alternatives". At the Tucson Conference last week, some RV park operators told me they were about to buy some new park models to go into their communities. When I asked if they were really park models or the new "expanded" version that really are mobile homes, they didn't know what I was talking about. One thought they were bigger than 400 square feet.
On April 10, I posted an entry about the so-called "park model alternative" being marketed. It is very important for RV park landlords to be sure that what is going in their parks are really authentic park models, not these "alternatives" which actually seem to be mobile homes. Putting mobile homes in RV parks can have serious adverse consequences to parks in the landlord tenant law and zoning areas just to name two. Read the April 10 entry before letting these things into your park.
This issue was first surfaced by the FBLS Department which did a good job bringing it to our attention.
October 24, 2009
Tucson MHCA Conference. I spent the last three days at this event which was well attended, especially given the nature of the economy. Some unusual issues came up there.
Section 8 Program. Three parks in attendance were participating in HUD's Section 8 program. This federal program subsidizes rents for low income tenants meeting federal qualification standards. A number of apartment communities in the State are section 8 participants, but MHC's have traditionally stayed away from it. The main reason for this is that it is designed to subsidize rental of a dwelling whereas in a MHC the landlord rents only the land and the tenant already owns the dwelling. But these three parks were participating with park owned home rentals.
Section 8 sounds appealing at first glance since it allows hard to rent homes to get occupied and enables vacancies to be filled. But it is a Faustian bargain. By participating a landlord signs away much of his ability to manage his operations. It becomes extremely difficult to control the activities of Section 8 tenants and especially hard to evict them. The Section 8 contract the landlord needs to sign gives the program administrators a lot of authority to withhold approval of landlord actions that are necessary to regulate activities of tenants. In some instances they may prolong the period that disruptive or even dangerous residents are allowed to occupy the rental property before being evicted. Not only the landlord but other residents are inconvenienced or even endangered.
I have never been a fan of Section 8. I recognize that in some markets and for some economically disadvantaged people it may be worthwhile. But in a community where most tenants own their own homes, sprinkling in a number of Section 8 residents in park owned homes who have little incentive to maintain them is not appropriate. More importanty, ceding management authority to remote government bureaucrats in my view is a huge mistake. Any landlord considering Section 8 participation needs to carefully read the proposed contract and government regulations and be clear how much control he will be surrendering to the government.
RV Space Rentals. Many if not most parks have RV space rentals. But most are not really clear how the landlord tenant laws relative to these kinds of rentals work. MHCA publishes the Orange Book with forms for both long and short term RV space rentals. It also publishes the Turquoise Book that explains how these laws work. It is clear after conducting several RV oriented seminars that landlords need to study up on the laws and learn the proper use of RV space rental forms. Any park renting RV spaces should at a minimum obtain these publications and study them.
FBLS Department. Copies of the Relocation Fund audit report were distributed at the Tucson Conference. It is not an overstatement to say that participants were horrified at what they saw. After relying on the integrity of this Department for 23 years to act as a trustee of this fund, to see that it had suddenly expropriated over $900,000 from it was a shock. Even more shocking was its attempt to justify this, and worse still was AAMHO's evident complicity in giving it's "blank check". I think it's safe to say that the Department is going to be hearing a lot about its actions over the next few months. Moreover it is important that AAMHO's local chapters learn about the actions of its Board in giving the "blank check".
I will be posting more information in the future on how to get this information out. I will also be posting more detailed information on exactly what some of the money was spent on during the nine and a half months it took the Department to blow through the $900,000. In other words, what it used the "blank check" for.
FBLS Department Lawsuit. I previously explained that MHCA had filed suit against the Department for declaring out of the blue that the one year statute of limitations applicable to claims of statutory violations no longer applied to ALJ complaints. One news service reported on this story and its report appeared in multiple media outlets throughout the state. Here is a link to one of them: www.azstarnet.com/sn/mailstory-clickthru/314102.php
October 17, 2009
FBLS Department--Budget Reduction Proposals. In September the Governor's Office asked State agencies to come up with proposals to cut their current budgets by another 15%. This morning's Republic carried an article saying how a lot of agencies had done so and that the proposed reductions were so serious as to endanger public safety. Having worked for the federal government for seven years in a senior position, I know how that game is played. The main idea is to protect your empire. Propose cuts to the few programs that are really important and leave the fat and featherbedding alone. This hopefully will scare the budget cutters away and the empire will remain undiminished.
Anyway I decided to see what the FBLSD had come up with to achieve the 15% reduction. I figured it would have to be really severe since not only were they looking at a 15% reduction in their appropriations, but were also being weaned off the more than $900,000 they had ripped off the Relocation Fund the previous year.
In reading their proposal I wondered why the cuts suggested had not already been made. These are things the Department could easily do without. It looks like management of this agency is so disconnected from reality that it really doesn't know what is important and what is fluff.
You can see their proposals here: www.ospb.state.az.us/documents/BudgetReports/MMA.pdf
Let me comment on these proposals:
1. Have the federal government begin paying for two employees under current federal programs. This will save $117,000. Question: Why hasn't this been done all along?
2. Reduce fleet size. Return seven vehicles and save $30,000. The proposal says there will be no negative impact. Question: If there will be no negative impact from not having these vehicles, why are they there in the first place? Could it be they are there because they were being charged to the Relocation Fund?
3. Eliminate reimbursing the Attorney General for legal advice. This will save $70,000. Given the recent actions of the Department, either they are getting lousy advice or not following the advice they are getting. If ever an agency needed good legal advice, this is it. But given how they are complying with the law, paying nothing is probably a good deal.
4. Eliminate the public access office in Tucson. This will save almost $29,000. People in Tucson will be disadvantaged by having to do business in Phoenix, just like people in Yuma, Flagstaff, Prescott, Page, Kingman and Duncan already are. It would be nice to have offices everywhere but these are tight times.
5. Eliminate Office of Administration. This will save almost $112,000. That's a no-brainer. This office is a self perpetuating mini-bureaucracy. Most of what it does involves stirring paper up and redistributing it. There are some functions assigned to it involving dealer, manufacturer, installer, etc. licensing, discipline and auditing that are important. They should go over to the OMH. The ALJ function should be eliminated (that would take legislation). Most of the rest of it's functions are fluff.
The FBLSD is an agency that needs to be abolished. The reconstituted OMH should be transferred elsewhere (Housing Department?). Administration should be eliminated. And the Fire Marshall transferred elsewhere as well, though I really have no idea why we really need a fire marshall at the State level. Perhaps it should be put to the task of justifying it's existence.
The Relocation Fund audit showed the Department as an institution is incompetent and untrustworthy. Given how it mismanaged the Relocation Fund, it has no credibility in the industry, especially when it comes to such things as auditing dealer trust accounts. Who is it to criticize how a dealer administers his trust account in light of how it administered it's trust account--the Relocation Fund?
October 15, 2009
Bogus Caregivers. When times are tough, age 55 parks start seeing a lot of kids and grandkids move in with gramdma and grandpa. When they are discovered, a phony claim may be made that the unapproved underage kid is a caregiver.
ARS § 33-1413.03 covers caregivers. Essentially it allows them if there is a legitimate need certified by a medical provider and if the caregiver passes a background check involving criminal background and eviction history. It also calls for a six month treatment plan from the medical provider.
The state statute is trumped by fair housing laws. They treat this as a reasonable accommodation. The landlord is being asked to make an exception to it's age restriction and perhaps it's occupancy limit as an accommodation for a resident who needs a caregiver that would otherwise violate these rules.
The law allows the landlord the right to require medical proof of the existence of the disability if it is not readily apparent. Such proof is normally a statement from a medical provider. The landlord can also require proof of the connection (the "nexus") between the disability and the accommodation being requested. In other words, if it's not apparent, why does this resident need the caregiver. Also, why could the caregiver not provide the same care but live somewhere else.
If satisfactory evidence is given that a RESIDENTIAL caregiver is really necessary, the landlord should approve it and have all parties sign a caregiver's addendum to rental agreement (see MHCA Blue Book).
But if the person is living with the tenant without providing satisfactory evidence, once she has been there more than 30 days, serve the tenant with a 14/30 notice for unapproved occupant.
Times are tough. But allowing underage people not really qualifying as residential caregivers can ultimately jeopardize the park's status as an age 55 community. By the same token, refusing a legitimate request is a violation of fair housing laws.
Testing. A lot of testing of residential communities is being conducted by advocacy groups using newly available federal funding subsidies. When violations are suspected the testing agency will file a fair housing complaint. Don't let that happen to you. Be sure you understand fair housing laws and comply with them. You may be tested in person or over the phone. It's probably safest to assume that every phone inquiry or prospective applicant visit is really a tester.
October 9, 2009
Relocation Fund Audit of FBLSD. Last spring an audit of the Relocation Fund was undertaken by the State General Accounting Office. The results are a disgrace. Here is the key quote from the report:
In our opinion, the Department is charging excessive, unsupported expenses as “direct and indirect” costs for processing relocation applications. From July 1, 2008 to April 17, 2009, the Department processed 13 mobile home abandonments costing $17,500 and 14 relocations costing $92,714 for total actual tenant relocation costs of $110,214. During that same time frame, the Department allocated over $900,000 as costs of processing applications and support of the Department’s hearing function.
The FBLSD spent $110,000 in direct relocation expenses. To do that it spent more than another $900,000 on itself. ALL OF THAT MONEY WAS TAKEN OUT OF THE FUND. How in the world can the management staff of this agency look at themselves in the mirror? Raising chutzpah to a new level, they actually defended this outrage in responding to the report's findings. Perhaps even more amazing is the fact that AAMHO defended this in a letter quoted in the report.
Read the report here: www.michaelparhamlaw.citymax.com/f/Audit_of_Relocation_Fund_-_Dept_of_Fire_Building_and_Life_Safety.pdf
There is a new page on the left margin entitled "Multimedia" that talks more about the report and has a link to it.
October 3, 2009
Repossessions. A number of parks are financing their tenant home purchases. Typically, the park owns the home and sells it to someone who then becomes a tenant. The tenant pays space rent and, separately, makes payment on the carried back portion of the purchase price of the home. Given the tough economy, it's a buyer's market for a qualified potential buyer. Home prices for many park owned homes are really low since a major motivation of the park is to get a tenant into the park paying space rent.
Unfortunately, the rate of defaults is pretty high in this area. When a tenant stops making the home payments, the park needs to repossess the home. The park has no right to enter the home or resell it until the repossession is complete and the title is back in the park's name.
If the tenant is evicted or simply abandons the home by moving out and home payments stop coming in, under the installment sale contract or the security agreement that was used to sell and finance the home, there is a default.
In the event of a default like this, the park needs to comply with whatever notice requirements appear in the installment sale contract or security agreement. Any required notices should at the least be sent by certified mail so there is proof they were sent in the file.
If less than 60% of the purchase price has been paid, and the home is empty, it can be repossessed by the filing of an affidavit of repossession with the MVD. Assuming everything is in order, the MVD will issue a new title to the park. If the park finances through another affiliated entity, then the paperwork will be done in that entity's name and the new title will be issued to it.
The Arizona Uniform Commercial Code requires a notice be sent to the buyer when less than 60% of the purchase price was paid telling him that the lender intends to take back the home in return for discharging the debt. It gives him 20 days to object in which case the creditor (here the park) needs to sell the home at public auction. If more than 60% of the purchase price has been paid the Code requires the creditor to conduct an auction of the home.
Most times the home is empty and less than 60% has been paid. All that is normally necessary is to send the notice of intent to take the home back and discharge the debt, and to file the affidavit of repossession. Here is a link to the form that can be filled out and then printed. mvd.azdot.gov/mvd/formsandpub/viewPDF.asp
September 30, 2009
California Rent Control Case. On September 28, 2009 the 9th Circuit Federal Court of Appeals released a decision concerning the rent control ordinance of the City of Goleta. The 9th Circuit is the federal appeals court covering both California and Arizona. In a very detailed opinion the Court ruled that the Goleta rent control ordinance operated in such a way as to diminish the value of a mobile home park to its owners and increase the value of the mobile homes and leasehold interests of the tenants. The Court found this amounted to a transfer of the park owner's wealth to its tenants caused by a government law--the rent control ordinance. It upheld the City's right to do so but found it to amount to a "taking" of the park owner's property. As such, the government will be required to compensate the park owner the value of what was taken.
This is an example of a regulatory taking. The government leaves title to property in the name of the legal owner but places restrictions on how it can be used that have the effect of devaluing it. In a rent control case, the effect can actually be the taking of the owner's value and the transfer of it to another party--here the park tenants.
Rent control is just one example of a regulatory taking but there are many. One the MHC industry continues to contend with is AAMHO's ongoing efforts to place park models under the MHP LTA. Subjecting RV parks to the MHP LTA will certainly diminish the park values and will result in litigation against the State seeking compensation for that loss. The Goleta decision will support that effort.
This is a 75 page opinion but you can read it here if you want: www.ca9.uscourts.gov/datastore/opinions/2009/09/28/06-56306.pdf
September 29, 2009
Accepting Rent After Termination Notice. I continue getting questions on this.
Rent Termination. If a tenant does not pay rent on time, he can be given a seven day notice (five day for park owned homes or long term RV space rentals). Under that he must pay everything owed or vacate. By everything I mean rent, utilities, court costs, legal fees, etc. If another month's rent comes due after the notice, that too needs to be paid. If everything is paid, the tenancy is reinstated and the termination notice is voided out. If it is not, an eviction action can be filed.
Suppose the tenant wants to pay part of what is due? If the part payment is accepted, the termination notice is voided out for a park owned rental. Though the law requiring this does not apply to mobile home space or RV space rentals, many judges will still be inclined to conclude that your intent was to reinstate the tenancy and give up your right to evict.
So the best thing is not to accept part payments. But in tough economic times it may be hard to turn the money down. If you want to accept the part payment, require the tenant to agree on a plan to pay the rest of what is owed and keep future rent current. Then sign a partial payment agreement using forms in the MHCA Blue, Green or Orange Books, as appropriate.
It may be best to simply refuse the part payment, go to court, get the eviction judgment, and then do a post-eviction agreement not to enforce the judgment if the tenant makes payments according to an agreed schedule while keeping future rent current. This should reserve the right to enforce the judgment if the agreement is breached. The tenancy is then reinstated only when the entire amount owed is paid and the judgment is satisfied.
Non-Compliance Termination. It is best never to accept rent after giving a 14/30 or 10/20 notice (5 or 10 day notices for park owned home rentals). Technically rent can be accepted after giving the notice but before the cure period is up. For example rent could be accepted after giving a 14/30 notice during the first 14 day portion since the tenancy technically does not terminate unless the violation is not cured in the first 14 days. But after that the rental agreement terminates and acceptance of rent could be held to create a new tenancy. The best thing is simply not to accept rent after giving the notice until you are satisfied the violation has been cured.
September 28, 2009
FBLSD Lawsuit on Statutes of Limitations. In a June ALJ decision, the judge ruled that the one year statute of limitations in ARS § 12-541 (5) applied to ALJ complaints. What that means is the the complaint must be filed with the FBLSD within one year after the right to file accrues or it is lost. That statute applies to "actions" which are normally disputes filed in court and not administrative complaints. But the MHP LTA defines "action" in a way to include ALJ complaints.
In that case, I have been told that the tenants did not seek a rehearing (I did not handle the case). Nevertheless the Director of the Department issued an order "rejecting" that decision, stating that the one year statute of limitations did not apply to ALJ claims. In my view, in the absence of a rehearing request, he had no authority to do this.
Aside from that, the law seems pretty clear that he is wrong and that the one year limit does apply. MHCA asked him to change that declaration and the park owner in the case involved also sought a reversal. He denied the park owner's request and ignored MHCA.
Today MHCA filed suit against him in Superior Court asking the Court to declare that he is wrong.
It is natural to wonder why, in the absence of a request by the tenants who lost that case, he would make such a ruling.
Other developments involving the Department are taking place and I will go into those at the appropriate time.
September 26, 2009
FBLSD Developments. I have been sitting on some news concerning the Department that is a little too early to report. Keep tuned.
Forms. I keep seeing parks using forms from apartment landlord attorneys or from stationary stores such as termination notices and occasionally rental agreements. When a MHC space rental is involved and the MHP LTA applies it is very important to use MHC forms. Each form is tailored to the law that applies to the tenancy and different laws have different requirements and time periods.
Termination forms, for example, have time periods and statutory references that are unique to the law the form was developed under. The statutes referred to in MHC forms start with ARS § 33-14__. Long term RV space rental forms start with ARS § 33-21__. Forms used for apartments (and park owned home rentals) refer to statutes starting with ARS § 33-13__. Be sure the statute references match up to the kind of tenancy involved and do not use the wrong forms.
The only organization that publishes MHC space and RV space rental forms is the MHCA. Of course a knowledgible attorney (i.e., one who understands these laws) can also supply them.
Solar Water Heaters. Going "green" is the new fad and our government is a big participant in this movement. Tax breaks are available to people installing certain energy efficient utility systems in their homes, and this includes solar water systems. This can be significant to parks because the system requires a roof mounted set of solar panels and such modifications would be prohibited by the rules in most parks.
New solar technology is more reliable than before and the roof mounted panels are a lot less unsightly than in the past. Some parks are being asked to revise their rules to allow solar panels. I don't have any problem with this provided the rules require local permits and inspections for the installation, require a comprehensive set of plans to be submitted to the office for approval as to appearance, and require a high degree of maintenance.
Parks that include water in base rent need to be especially concerned over maintenance since water leaks will result in higher water bills to the park. But that has been the situation with evaporative coolers for decades.
Another "green" innovation is solar power generators that supply electricity to the home and send excess power to the electric utility for a credit on the power bill. This requires some extensive hardware that probably is not suitable for MHC's. But the solar water heaters should be okay if the rules are properly drafted.
September 18, 2009
A New Kind of MHC. This was sent to me today by a friend.
September 17, 2009
FBLS Department. I spent seven years in a policy making position with a huge federal agency in the late '60's to mid 70's. I was involved in the extensive reorganization of that agency and helped run a RIF. I know the effect that uncertainty and change can have on employee morale. Many of the career staff at the FBLSD have been hurt in the last year. The cause in large part has been the State's budget crises and the enormous cuts to the FBLS budget the last two fiscal years. Of course the way in which those changes were carried out leaves a lot to be desired. Management has done a poor job to say the least.
State revenues are continuing to drop and budgets will likely be cut even further.
I hear from many of the career staff and wish I could help. All I can say is that there are many industry groups out here affected by what you do and appreciative of your work. There has been very little interplay between agency staff and industry people. Just be assured that we can see what is happening and are trying to be supportive where support is merited.
Abandonments. This continues, in my view to be the big problem the MHC industry is facing. Not only mobile homes but RV's, park models and travel trailers are being abandoned. Treat them all the same. If space rent is not kept current, get an abandonment notice out to the lienholder, if there is one, and initiate landlord lien sale or bonded title procedures if no one acknowledges responsibility for the rent.
Also, I keep hearing about managers going into abandoned units. If the home or RV is not in the name of the park, landlord personnel have no right to enter the unit and doing so anyway could be a crime--burglary to be exact. STAY OUT of the abandoned home until the title has actually been transferred into the park's name. The only exception is when you hold written permission from the current owner (i.e., the owner per current MVD records) allowing access.
If in doubt, STAY OUT!
September 15, 2009
FBLS Department. I have it on good authority that a major change will be announced today. This MIGHT be the first fallout from last Spring's audit of the Relocation Fund. My suspicion is that it will also be the first in a line of dominoes to fall. I have been talking for a year about the fact that the entire Department could be abolished to save money, its important functions reassigned to other agencies, and the fluff eliminated. It looks like this may be in the works but that is largely speculative. What is clear is that this agency is a mess and that has become apparent to many.
Rent Increase Relocations. The MHP LTA at ARS § 33-1476.04 says that if a park rent increase exceeds 10% plus CPI when combined with other rent increases in the prior 12 months, the rent increase notice must be accompanied by another notice of eligibility for relocation fund benefits should the tenant wish to move. This is the time that parks are giving out rent increase notices to be effective on January 1, 2010.
This year the CPI has actually gone DOWN. See www.bls.gov/news.release/pdf/cpi.pdf. The question has come up whether the negative CPI needs to be subtracted from the 10% to determine whether to give the relocation fund notice.
ARS § 33-1476.04 (A) (3) is the controlling language. It says the tenant is eligible for relocation benefits if a number of conditions are met, one of which is:
3. The rent increase either singly or in combination during any consecutive twelve month period is more than a total of ten per cent plus the current increase in the consumer price index over the most recent one year period before the date of the notice of the rent increase. (Emphasis added).
The statute says "increase", not change. I drafted this statute and at the time my intent was to limit it to increases only. Decreases would not count. But my intent at the time is not relevant. What counts is what the statute says, and it says "increase". Other provisions of the MHP LTA recognize that things can increase or decrease. For example ARS § 33-1413 (G) says the landlord can "increase or decrease the total rent or change payment arrangements" at renewal of a rental agreement with a 90 day notice. But the relocation fund notice becomes applicable only when there is an "increase" in the CPI.
In sum, I do not believe the relocation fund notice needs to go out if the rent increase is 10% or less. But this year, if the rent increase is more than 10% combined with other rent increases in the previous 12 months, the relocation fund notice needs to accompany it.
September 14, 2009
FBLS Department. Major changes are coming. Soon.
September 12, 2009
Park Owned Home Rentals. With the bad economy and more and more abandonments, parks with inventories of homes for sale are having a hard time selling them, and the inventories are growing as parks wind up getting titles to abandoned homes. While some parks are able to sell them (mainly at big discounts or for virtually nothing), others are turning to renting the homes.
Parks with lots of snowbirds sometimes rent the homes for a few months during the fall and winter months. Other parks rent them on a long term basis. Whichever way the park goes, the tenancy created is far different from the kind of tenancy most parks are used to dealing with when renting spaces to tenants with their own homes. Park owned home rentals, to begin with, are covered by a different landlord tenant act--the Arizona Residential Landlord and Tenant Act. This is quite different from the law that applies to space rentals and has consequences that can affect the park's costs.
To begin with, the RLTA does not require a written rental agreement. But a landlord would be insane to rent a home without a written agreement. In addition, all the forms used under the RLTA are different reflecting different notice periods and documentation requirements. The MHCA publishes the Green Book with the forms necessary. The Green Book also contains an explanation of how the RLTA works for park owned home rentals.
The rental agreement form in the Green Book is a bare bones kind of agreement and omits a lot of things that many landlords will need to cover in their rental agreements. For example, lead based paint and mold disclosures are not contained in that form. A park about to start renting homes would be well advised to have a rental agreement form tailored for them.
The RLTA requires a joint walkthrough of the home before the rental agreement is signed. At that time a move in/move out form is completed showing the condition of the premises at rental. The second part of the form is completed at move out and compares the condition at that time to the condition at first rental. This serves as the basis for determining what to do with the security deposit.
ARS § 33-1321 (A) limits total security deposits to 1 1/2 months' rent unless a greater deposit is voluntarily made. Remember, the rent is the combined rental for the space and the home. Parks need to be sure to get a substantial deposit since the home can and often is seriously damaged at move out. The deposit also protects against unpaid rent and utilities at move out. Part of the deposit (e.g., a cleaning deposit) can be made non-refundable if the purpose is stated in the rental agreement. The balance is refundable and must be refunded within 14 business days after termination of the tenancy and return of the keys, less proper withholdings. Failure to refund what is due on time exposes the park to treble damages.
ARS § 33-1324 obligates the landlord to keep the home in compliance with codes and keep all utility systems functioning, though the rental agreement can shift responsibility for maintaining utility systems (e.g., plumbing, electrical and HVAC) to the tenant.
Parks would be well advised to prohibit water beds in park owned homes, and to restrict pets since they can do so much damage.
There are a couple of features in the RLTA that favor landlords compared to the MHP LTA. First, the rental agreement can be non-renewed without cause with notice at least 30 days prior to the end of the term.
Also, under ARS § 33-1343 the landlord can enter the home by giving at least 48 hours prior notice. Under the MHP LTA there is no right to enter a tenant's home absent his consent.
Remedial and termination notice periods are all different under the RLTA so the space rental forms used by parks will not work for home rentals. Use the Green Book forms.
Some parks are successful with their home rentals. Others suffer a lot of grief. Much of this depends on screening. It is very important to be careful who you rent to. The home is a valuable asset and can be destroyed in the blink of an eye.
One expense that will be higher is eviction costs. Renters have a much higher rate of evictions in parks with both home and space rentals than tenants who own their own homes. Once again, screening is important to minimize this expense.
Non-Lawyer Tenant "Representatives". It is becoming more common than ever to see letters from people purporting to represent tenants in disputes with their landlord. In Arizona, only a lawyer can represent someone else in such matters. Some AAMHO representatives are often insistent that they be dealt with on individual tenant matters.
There are a lot of laws that restrict information in landlord files on their tenants, and parks discussing this information with AAMHO representatives, people with powers of attorney, or anyone else other than a lawyer representing that tenant can get in a lot of trouble.
Parks receiving requests or demands from such third parties should tell them they will not discuss tenant matters with them no matter what kind of authority they have, and to let the tenant know what has happened and what the park's position is about not dealing with third parties.
Don't confuse this with dealing with AAMHO and other tenant associations on general matters in the park. That is appropriate and is a good idea. Just not on specific matters involving an individual tenant.
September 5, 2009
"Final" State Budget. The Governor approved a "final" FY2010 budget yesterday. I use quotes because it guarantees a deficit before year end (June 30, 2010) meaning State government will shut down in the Spring unless more cuts or revenue increases are approved. A number of bills were signed in this process, some of which contained line item vetoes of portions. Many provisions are relevant to the MHC industry. The bills can be accessed through the Governor's web site. Just go there and click on the bill number in the second portion of this page: azgovernor.gov/BudgetActions.asp. Here are some features of the package.
HB 2006. This mandates all general fund agencies cut their staffs by 5% compared to the levels on June 30, 2009 (Section 17, page 36). This will include the MVD, AG's office and the FBLS Department. I think they have already made these cuts.
HB 2008. This requires all applicants for State or federal benefits administered by State agencies to provide proof of lawful presence in the U.S. That would include Relocation Fund benefits. This is at Section 1, pages 1-3. It also imposes a moratorium on changes to local building codes applied to residential or commercial facilities getting final approval prior to June 30, 2009. The moratorium expires June 30, 2011.See Section 7, page 8. A new law imposing liability for deficiency balances on residential mortgages that I have previously written about if the borrower has not lived there for six months was repealed. See Section 17, page 28. The residential Landlord Tenant Act will no longer be printed by the State. Apartment and park owned home rental agreements will now need to refer to the Secretary of State's website for a copy of the Act. MHP's have been doing this for years for the MHP LTA. See Section 18, page 29.
HB 2010. The AG can subsidize his operations by drawing on the Consumer Protection--Consumer Fraud Fund. See Section 28, page 26.
Previously imposed budget cuts including the huge cut in the FBLS Department budget are unaffected. Remarkably, in spite of these cuts and the many employees recently laid off by that Department, I understand it still has at least one consultant under contract. Must be working on some pretty important stuff.
September 3, 2009
VIN Numbers, Etc. Sometimes it seems I spend my entire waking life working files on abandoned homes. There are huge numbers of these around the State and despite the volume I am handling my fear is that it only scratches the surface.
Anyway, A lot of the work I wind up doing (and charging for!) would be unnecessary if park managers were getting correct information on the homes and periodically getting it updated.
ARS § 33-1478 (B) requires parks to maintain information on the make, year, VIN number, lienholder and owner status of homes on tenant spaces. Other sections of the law give County Assessor Offices the power to use that information for tax purposes.
All parks should have assessor card files. Each tenant should be required to complete an assessor's card when first becoming a tenant either by purchase of a home in the park or bringing one in. Each card should have every line filled out. It is the hallmark of a lazy and incompetent manager when I see "information on file" written on a card that is stapled onto an old card. Or even worse when there is no card at all.
Tenants will often fill these out by guessing at the information since they may be too lazy to look it up. Sometimes they will lie by listing themselves as owner of the home when they are not. They may be holding an open title or may be renting it from the true owner in violation of the park's rules. For some reason I also see false statements that there are no liens on the home when in fact there are.
In sum, even where the park gets the cards completed, as often as not the information is unrelaible.
That is important since parks need lienholder identity to notify them within ten days after the home is abandoned. Valuable rights can be lost if an abandonment notice goes out late. Accurate VIN numbers are needed to confirm or ascertain ownership and lien status with the MVD. If there is no accurate information on file, the process of dealing with the abandoned home stops for several weeks while an MVD inspection of the home is arranged to determine the VIN. This delay allows rent to continue to accumulate. It may allow a dangerous home to remain in the park.
Many parks insist that all tenants provide copies of their titles. This can be required as a condition of approving an application for tenancy. Unfortunately for tenants already in the park it becomes more difficult to force them to allow their titles to be copied.
However, if the assessor's card is not complete or does not seem accurate, since the law requires tenants to ensure it is accurate and to keep the information up to date, parks could request all tenants to update assessors cards and produce titles to verify accuracy of information. A tenant repeatedly refusing to comply could be given a 14/30 notice. I once evicted a tenant for refusing to keep the assessor's card information accurate.
Many parks use rental agrrments requiring this information. The MHCA Blue Book forms call for it. Never write "information on file" in this space. Require tenants to complete the section and ask them to do so from the title.
This information is really important for park files to contain. Not having it delays things and costs money when homes are abandoned, including extra legal fees. Good for the lawyer. Not so good for the park.
August 31, 2009
Landlord Lien Sale Documents. Last week I had a client "order" me to put landlord lien sale documents in its parent name. I refused. I'm sure the client thinks I am an ass since I can't seem to get across my reasoning.
The park is the landlord and has the lien against the home to secure payment of rent. When the home is seized and ultimately sold to raise money to pay the rent, it is the park as lienholder acting to satisfy its lien for rent. If the park bids in the rent due and no one else bids higher, the park will have bought the home in exchange for the rent debt owed by the former homeowner.
The problem with titling the home to a different entity is that that entity was not owed the rent. The only way a different entity could directly take title is to bid and pay cash which would then go to the landlord.
The park of course could take title as the high bidder in exchange for its rent bid and then transfer the home to the different entity. But simply putting the home directly in the name of that entity would break a chain of lawful ownership and make the landlord lien sale process open to challenges of irregularity.
It is extremely important in both landlord lien sale procedures as well as bonded title procedures to scrupulously follow the rules and to be absolutely honest in handling the paperwork. We need to be sure not to claim any sums due that are not clearly and certainly owed. We must wait the necessary time periods. We must give all notices required by the law and MVD regulations. And of course we must be absolutely clear who the landlord is and ensure that it is the landlord in all aspects of the process that is enforcing the rent obligation.
Trying to take short cuts for convenience sake may very well jeopardize the legitimacy of the sale.
Equally important, at the end of the process the final paperwork presented to the MVD is an affidavit in which the manager swears under penalty of perjury that everything in it is correct. Swearing that an affiliated company is a landlord when in fact it is not can amount to perjury.
While I sympathize with a desire to make things simple, doing so in such a manner as to circumvent the law is stupid and quite likely illegal.
August 28, 2009
Constables. I conducted a seminar for Constables in Flagstaff this past Tuesday on the subjects of the new eviction rules and writs of restitution and execution. I think most Arizona Constables were there.
I have been involved with Constables for the past 25 years. I am so impressed with their current level of professionalism that its hard to express. With little assistance from the State in the past, they have grabbed hold of their profession and instituted a variety of training programs in all facets of their business.
There is a wonderful mix of former federal, State and local ex-law enforcement officers in their ranks as well as professionals in other walks of life, including one former Judge. They network with and support one another and the result is an increasingly skilled and professional group. I am really proud to associate with them.
JP Courts get precious little support from the State, especially in the rural counties (see next entry).
At the seminar I promised to post a link to the Court Eviction Rules. I will put it on the links page and am showing it here also. www.supreme.state.az.us/rules/2008RulesA/R-07-0023%20Final%20Rule%20Order.pdf The "Bill of Rights" is an attachment to the rules. That is the document that needs to be attached to the summons in residential evictions. On the Links page I also give references to Maricopa County information and sample eviction forms. Other Counties could pattern forms after these since they are pretty good.
Rural County Evictions. I spoke before the Constables at their Flagstaff training session this past Tuesday. One of the things that became clear to me was that the powers that be in the Court system bureaucracy are doing a lousy job getting information out on the new eviction rules in the 13 rural counties. JP Courts in precincts in many of those counties are still processing evictions using obsolete forms that actually violate the current rules and many are failing to require termination notices be attached to the complaint or that information sheets be attached to the summons in residential cases.
I have always had a dim view of the quality of training the Supreme Court bureaucracy offers to JP's, at least in the areas I practice in. I guess its better than I received when I was an active pro tem JP for nine years and received exactly no training. Training classes were held for JP's in the first few months after the rules went into force (early 2009) and judges in the metropolitan areas pretty much all attended. But given what I heard from the Constables, that is not the case in the rural counties. Plainly some know what is going on but others have not gotten the word.
August 21, 2009
Budget. Probably hard to believe but as of now there is still no complete State budget. This leaves open the possibility of even more State office closures and staff cut backs. My main fear is office-hour reductions and bigger lines and waiting times at MVD offices. With so many abandonments, many managers are spending a lot more time at MVD offices processing title work than they ever wanted to.
FBLS Department. Still no results released on the Relocation Fund audit. That's really strange given the fact it took place some four months ago. Rumors are going around that the Department has been tagged for elimination. That would explain the huge cut in it's current budget and the large staff reductions it has been forced to make. Sitting on the audit report and keeping Napolitano holdovers at the helm could also figure in there I suppose. But I have been around long enough to instinctively distrust rumors. I don't even like talking about them when people's livelihoods are at stake as they are here. But they can't be ignored.
To my knowledge no-one who has any insight about what the Department does (at least outside of it) has been consulted on such a proposal. Eliminating agencies is hard to do since many of their functions are important and would need to be transferred. One would hope that stakeholders would be consulted beforehand. On the other hand, we are dealing here with government.
I just wish the audit would get released and everyone could get some reassurance on what the future holds for the Department. Rumors have got to be killing morale. It's extremely stressful being a State employee in any agency right now with the budget mess. When rumors are circulating about eliminating an agency, its got to be twice as hard to deal with the stress.
Fair Housing Shakedown. There is a private fair housing advocacy group in this State that occasionally sends testers out to housing providers to try and find technical violations of fair housing laws. They will then prepare a cookie cutter complaint alleging a violation and file it with HUD or one of the State agencies (AG or City of Phoenix). The exact same complaint will be filed for many different properties and it will say nothing specific about what an individual property did.
The local government enforcement agency gets reimbursed a couple thousand Dollars by the Feds for each complaint it gets so they are welcomed in tight budget years. HUD accepts all filings it seems, even when the complaint really says nothing specific about the target property.
The advocacy group filing them will insist on being paid money by the housing provider as a condition to agreeing to a dismissal. Landlords will give in to avoid stress and expense of defending the claim.
A few years ago the complaints would allege apartment landlords in newer properties were guilty of violating handicap accessibility guidelines by building structures that did not fully comply. Often it was something on the order of a thermostat being a quarter inch too high or something of that sort.
I am beginning to see a new crop of these. The one I just saw makes a completely non-specific claim that the landlord is violating familial discrimination laws. No specifics as to what it supposedly did, when or who did it are given. My expectation is that a whole bunch of these are being filed to genetate some revenue for that group.
This really is a racket. Unfortunately these laws lend themselves to this kind of abuse.
August 15, 2009
Colonial Bank Failure. The news today includes a report that Colonial Bank of Montgomery, Alabama has been closed and its assets sold off by the FDIC. For a number of years in the mid '90's to early 2000's, if I recall correctly, Colonial was making loans financing MHC's. This was a time when interest rates were falling and a number of parks refinanced their mortgages. I am pretty sure Colonial was the Alabama bank writing a lot of those loans. I recall the people there as being very nice and competent and I hate to see the bank go down. This economy is sure taking its toll in a lot of areas.
Handicapped Discrimination Complaints. I keep seeing these kind of complaints getting filed. Many of them are difficult to deal with. In many instances they are triggered by insensitive, over-worked managers brushing off what seem like silly requests for accommodations by people claiming disability. Sometimes a manager will simply decide the tenant is faking or exagerrating a disability in order to get an exception to rules everyone else must follow.
Managers need to understand that if a physician says a resident has a disability, that is a determination that is usually final. The manager's belief that the claim is a phony and the doctor doesn't know what he is talking about is irrelevant.
If the physician backs up the tenant's request for accommodation and explains in general how it will aid in dealing with the disability, the manager must normally agree to it, no matter what his personal views on the necessity for it are. A number of federal laws forbid the manager from demanding more private or personal medical information.
This can be difficult to do, but what it really boils down to is getting rid of prejudices and accepting the new reality that disabilities have become broadly defined and the law has expansive protections.
The two most common and troublesome areas of accommodation requests are for exceptions to pet restrictions and residential caregiver requests. If in spite of the resident's request and the physician's opinion, a manager is inclined to deny the accommodation, I strongly recommend that an opinion of the park's attorney be obtained. That may avoid defending an expensive fair housing complaint later on.
Oddball Lienholders. Sometimes the MVD records will disclose that a mobile home is subject to a restitution lien (one securing an order to make restitution to the victim of a crime), a child support lien, or another DES lien. These things are liens on a person's property giving the government first claim on the asset to collect money owed the government. Personal property taxes owed on a mobile home are also a lien though not expressly noted as such on the title.
Occasionally a park applying for a bonded title or a landlord lien sale title will be rejected due to the existence of one of these liens.
ARS § 33-1478 (A) says lienholders of abandoned homes are responsible for space rent after receiving proper notice. That includes these oddball lienholders. When such a lien is discovered, the park needs to get the actual identity and address of the agency with the lien from the MVD and then contact the agency. Advise of the obligation to pay rent and then request a lien release if they don't want to pay. Keep after them--many are non responsive at first due to layoffs resulting from budget cutbacks.
Occasionally it may be necessary to sue to force their hand, but most agencies will provide a lien release once they figure out the situation they are in.
State Layoffs. I was at the Attorney General's Office last week. It was amazing. The parking lot was half empty and many of the offices were vacant. This is due to staff cutbacks there. The AG has really tried to stay on top of budget reductions with hiring freezes, furloughs and layoffs. But its getting like a ghost town down there. The Civil Rights Division has had most of its attorneys reassigned and the Civil Division, despite cutbacks, has been buried under litigation filed against the State resulting from the budget cutbacks and fund sweeps.
I think the fat is gone in the AG's Office if there was ever much in the first place. Management there is trying to use its staff to do the most critical jobs and I have real fears of what will happen if more layoffs take place. Civil Rights could be in danger of losing substrantial equivalency status and the ability of the State to defend itself in civil litigation could be badly harmed.
I am no fan of big government. But by the same token we need some government to perform essential constitutional functions. An effective Attorney General is one function we need to maintain.
Spending cuts in my view are the answer to the budget problem. But relatively little is spent on State payroll. Tough to say but the money seems to be in education and that's where, in my humble opinion, the cuts must take place.
August 8, 2009
Rule Violations and Repititive Violations. A recurring and frustrating misunderstanding I see involves confusion over when and how to evict MHC tenants who refuse to comply with park rules.
ARS § 33-1476 (D) (1) says that if there is a material non-compliance with park rules, a 14/30 notice can be given the tenant. This gives him 14 days to cure the violation or says the rental agreement will terminate in 30 days and he must vacate. ARS § 33-1476 (D) (2) reduces these times to 10/20 if the violation materially affects health and safety.
When the 30 (or 20) day period expires and the violation is ongoing and the tenant is still living there, the law says the rental agreement has terminated and allows the park to then file for eviction. NO MORE NOTICES ARE NECESSARY!
Unfortunately, many park managers are also reading ARS § 33-1476 (D) (4) that talks about repetitive violations. This says that if there are three violations of park rules (two of the same rule) within a 12 month period, a notice can be given advising the tenant that upon another violation, he will be given a 30 day notice to vacate.
The repetitive violation section comes into play when the previous violations have been cured but then re-occur. If a tenant gets a 14/30 and does not cure or vacate in 30 days he can be evicted. If he cures, then the cured violation counts towards the three (two of the same rule) violations necessary to trigger the repetitive violation notice.
As a practical matter the repetitive violation statute is worthless. In order to evict a park must be able to prove all the violations occurred. Proving one is hard enough; proving several can be nearly impossible. Moreover it is necessary to convince a judge that a tenant curing violations must nevertheless be evicted. While that is easy enough to do in cases of evictions from apartments under a similar law, it is very hard when a judge knows a tenant will be forced to abandon his mobile home.
Finally, most problem tenants will not even cure the 14/30. In that event, no more notices are necessary.
A couple of other points:
1. Late rent payments do not count towards repetitive violation notices.
2. Every violation leading to a 14/30 or 10/20 notice must be material. Trivial or technical violations do not count.
3. Pattern of conduct violations are not cured when there is a temporary cessation in the offensive activity. If a tenant allows a dog to run loose or has loud parties several times a month, temporarily stopping the parties or keeping the dog inside does not cure the violation until it has been stopped for a reasonable amount of time--maybe a month. For these kinds of violations, do not be too quick to send a release notice.
In all rule violation evictions, remember that it is the landlord's responsibility to prove his case in court. Bring lots of recent photographs where they can prove it. In other cases bring witnesses who can testify as to what has been going on. Do not bring written statements, videotapes or photos on CD's. They will not normally be considered since the court does not have the hardware needed to display them and the ability to keep them in the file as exhibits.
August 5, 2009
Competing for Tenants. It's a tough market out there. Parks have lots of vacancies and many more abandoned homes. Expenses are up but cash flow is down. Some parks are being creative in dealing with the problem and trying to attract new residents. Here are some of the things I have been hearing about.
1. Reducing rent. One park I talked to reduced rents around $90 per month. Interestingly, no-one even thanked the manager.
2. Late charge furlough. Another park is suspending late charges until the financial mess is mitigated. It knows it must give 7 day notices and not let arrearages build up, but temporarily stopping late charges makes digging out of the hole somewhat easier for tenants.
3. Fix up. Two parks have told me that after years of putting it off, they are now repaving/seal coating the streets. Making the park more attractive is essential to attracting new residents even when coming up with the money is hard.
4. Giving homes away. Some parks getting titles to abandoned pre-HUD homes will actually give them away to new tenants signing leases and moving in. It is critical that they ensure the transfer is "as-is" and documented properly and that the tenant agrees to fix the home up and ensure it meets applicable codes. These parks get the titles for very little or nothing and this way can increase cash flow from space rents.
5. Free Wi-Fi. At least one park is setting up a Wi-Fi network in the park and offering it as a free service to residents. Its a little thing and doesn't really cost that much, and is an amenity that few parks offer.
6. Park owned home rentals. If you have an inventory of park owned homes, it may be possible to rent out those not selling. But be careful. Irresponsible renters can do lots of damage to a home. Be careful in screening renters, get a decent security deposit, be sure you have them insured properly, and be sure to use the correct rental ducumentation.
Parks need to be creative in coming up with ways to attract new business. Equally important is treating your current residents right so as not to drive them out.
August 3, 2009
New Articles. I just posted seven new articles on the MHC Articles page. They are the top seven on the list.
Thanks again to MHCA for permission to publish them here.
July 31, 2009
Abandonments. Once again I opened 42 abandonment files in July, the same number as in June. As I have repeatedly said on this blog, this is the tip of the iceberg. My clients tend to be upper quality parks, and most of the abandoned homes in the State are probably in the older family parks. Keep an eye out for abandoned homes and don't just ignore it when you discover vacant homes with no rent coming in.
Anti-Deficiency Law. On July 10, I wrote about the bill enacted last legislative session that, in my opinion, corrected a misinterpretation by the Court of Appeals (in a case I lost). That case held that anti-deficiency protections allowing a mortgage loan borrower on a single family house to walk away from the loan if the loan balance exceeded the value of the home, applied to investors as well as consumers living in their own houses. In the 23 years since that decision, tens of thousands of houses have been bought by investors who rented them out, secure in the knowledge that if the houses lost value, they would not be liable for the excess loan balance.
The new law says that unless the borrower has lived in the house for six years preceding the foreclosure, he is liable for the deficiency. I believe that was the original intent decades ago when the original statute was first enacted.
But it really is unfair and probably unconstitutional to pull the rug out from under investors and make them liable for deficiencies after 23 years of settled law protecting them. The new statute should have made applicable only to mortgages originating after the statute became effective.
When it discovered the law, the real estate industry started putting the heat on the legislature and Governor to fix the problem. It now looks like the statute will be repealed. I hope that instead, it is revised to apply only to future loans since I think single family home investors contributed a lot to the crash in our economy. And it really makes no sense to protect new investors from bad decisions.
While-You-Wait. A manager faxed a question to me today and after about an hour started calling asking where his answer was.
I don't run a while-you-wait shoe repair business or a one hour dry cleaner. It sometimes takes me a couple of days to respond depending on how full my calendar is. Today was very busy but as luck would have it I was about to answer his fax when I got the message. It went to the bottom of the pile. Maybe it will be answered Monday. Others not so self important instead got their inquiries responded to.
This age of instant gratification and self-importance sometimes really wears on me.
Moving Pre Hud Homes. I think I am getting senile. That may not come as any surprise to many of you.
A few days ago I was talking to Neal Haney and he asked where the law was that required pre-HUD homes to be State approved before being moved. I responded that I wasn't even sure there was such a law. Today he faxed me the statute and low and behold! Not only does it exist but I drafted it. Here is the relevant part of ARS § 41-2195 (C):
C. A person shall not occupy or otherwise use a mobile home which has been brought into this state or move a mobile home from one mobile home park in this state to another mobile home park in this state unless it meets the standards adopted pursuant to this chapter and displays the proper state insignia.
Pre HUD homes lawfully present may be occupied. But when a pre-HUD home is moved into a park it needs to meet State standards and be approved by the Fire, Building & Life Safety Department before it can be lived in.
It's tough getting old, both for pre HUD homes and pre HUD lawyers.
July 25, 2009
Non-Responsive Lawyers. Sometimes people complain that I am not accessible or responsive. Occasionally they are right. More often they are not.
There are only a few lawyers in this State that know anything about evictions or landlord tenant law. There are a lot who think they do, but few who really do. Success in this business is built on reputations. As lawyers become proficient in this field, people start getting referred to them. Over the years the good ones build a following, and more people become interested in retaining them. Eventually the lawyer must either add staff to cover the increased workload or restrict his practice so he can get the work done.
Even when the lawyer restricts his practice, in times like these the work for existing clients mushrooms and it can be hard to keep up. Sometimes this translates into delays in returning calls and getting work done as quickly as everyone would like.
In addition, in this age of instant gratification, people, including many of YOU, want things done immediately. Often that is not possible.
I am writing about this not because my work has bogged down; it hasn't. I work every day until my desk is clear. But I have had calls from clients complaining that other attorneys they use, mainly in other cities, are becoming non-responsive. My point is that if you have been happy with his work in the past, but things aren't getting done as fast as you want now, you need to try to be a little understanding. Send an occasional fax or e-mail reminding him of what you are waiting for in case it has been misplaced, but then just be patient.
This economic mess has affected different businesses in different ways. Good landlord tenant attorneys have been impacted with a huge increase in workload.
Responding to Non-Clients. I get several calls a day at my office from non-clients seeking advice. Normally these calls do not get returned. I cannot give advice to non-clients. Unless the message states clearly the desire to become a client, the call will not be returned. In addition, sometimes the caller is rude or abusive to my secretary. There is no way I will ever represent a person who behaves in that manner. Basic courtesy and respect is important to me.
I have been getting e-mails from people reading this website asking for advice. I cannot give legal advice under those circumstances either. If an e-mail involves an issue that may be of general interest I may discuss it in general terms on this blog, but I will not respond with advice to the e-mail.
Finally I only represent landlords. I know that a lot of tenants read this blog and I try to post information that is fair and unbiased on it. I certainly have no problem criticizing bad landlord practices. But I will not provide advice to or represent tenants since at one time or another I have probably represented the MHC they are living in.
Automatic Renewal of Rental Agreements. A rental agreement may contain a renewal clause saying it renews year to year unless either party requests a new one. Such clauses are enforcible. In the absence of such a clause, the rental agreement only renews month to month. If a landlord merely sends a notice out saying he is renewing it for another year, unless the tenant agrees to such a renewal it does not create a renewal one year agreement, absent a year to year renewal clause.
Attorney General Reorganization. The AG laid off 29 employees last week. That was in the newspaper. But I also understand a reorganization of the Civil Rights Division took place. I am told that all lawyers except the Division chief were transferred to the Civil Division, leaving the Civil Rights Division only with investigators and supervisors.
Normally I don't care about musical chairs in government bureaucracies, but this could affect the housing industry. Arizona has a contract with the Federal government to enforce fair housing laws that keeps the Feds out of here in the fair housing area. But if this reorganization makes it difficult to effectively enforce those laws, the contract could be in jeopardy and the Feds could return.
It's too early to say now what the effect of this is going to be but it bears watching.
July 22, 2009
December Training. I will be doing a training class in Mesa on December 11. It is now confirmed. Register with MHCA if interested.
Abandonments. They continue to come in. Today alone I opened 13 files, 12 from one park. Managers--keep your eyes open for abandonments. Dont let them sit there hoping the rent fairy will come. THERE IS NO RENT FAIRY!!! If lienholders keep promising payment but it does not show up, start landlord lien sales. Many lienholders will get as long a free ride on your ticket as possible while trying to sell the home. When forced to decide whether to pay to avoid the sale or walk away, they will often walk away.
Renewal Rental Agreements. What happens when old rental agreements expire and the parties cannot agree on the terms of a new one?
ARS § 33-1413 (H) says when a rental agreement expires, it renews month to month unless either party requests a written renewal agreement. It doesn't say what happens then except that the renewal term will be one year if the parties cannot agree on a term. But suppose there are other things they cannot agree on?
The law makes it clear that rent is non-negotiable. It also defines exactly what a park can charge for utilities and how. Limits are placed on late fees and guest fees. But the law really does not cover other areas. ARS § 33-1410, however, obligates a landlord and tenant each to deal in good faith with one another.
Landlords have standardized rental agreement forms. In part that is to avoid discrimination claims. In part it is to allow managers to know what the rental agreements contain. In part it is to avoid tenant charges of favoritism in preparing them. There are a variety of reasons that standard forms are used.
In my view, as long as the contents of a standard form of rental agreement do not reflect a landlord's bad faith and are consistent with landlord tenant and fair housing law, the landlord has the right to insist they be signed without alteration. In this respect landlords are in a similar position to banks using standard loan documents, car dealers using standard sales contracts, and a myriad of other businesses using standard business and contract forms.
Tenants who don't like the contents of a standard rental agreement form that does not contain bad faith provisions and that is consistent with law have two choices if the landlord won't agree to revisions. Sign and live with it or move out. A tenant refusing to do either can be evicted as a holdover under ARS § 33-1483 (B).
That sounds pretty harsh but in a case like that, it is important to recognize that the landolrd is the property owner. Subject to the limitations of the MHP LTA, the property owner has the right to say who can live on his land and under what conditions. Courts are not going to negotiate rental agreements or force property owners to allow people to live on their land under conditions they don't agree to. There are Constitutional protections applicable to property rights that would be violated by forcing land owners to allow people to live on their land under conditions they don't agree to.
It is not uncommon for landlords to encounter tenants objecting to provisions of rental agreement forms, especially new revisions. It is important for landlords to explain why those provisions are there. It there is widespread objection, consider the merits of the tenants' point of view. They may have a point and it might be worthwhile considering them and possible revising the form or coming up with a standard addendum resolving the proble,
Tenants are, after all the park's customers. While the customer is not always right, sometimes he is.
The Role of Park Lawyers. I hear frequently about the unfairness of parks having lawyers but tenants not being able to affore them.
Parks are FORCED by the court system to use lawyers for evictions, even the simple ones. I personally disagree with that requirement and think managers could do okay on routine evictions, but I am alone in that view.
Parks also use lawyers to prepare standard rental forms. The MHP LTA is a complex, bewildering mess that has evolved over the last 40 years. It gets amended from time to time and amendments are usually negotiated by adverse parties and then finalized by legislative staffs that don't understand the industry. I have been involved in all the changes since 1987 and have drafted most of them, at least the version that started out before everyone else got involved.
It takes a knowledgible attorney conversant with MHC and housing discrimination laws to interpret them and draft forms that are consistent with them. There are not more than a dozen attorneys in the state with the level of expertise necessary. Most laywers without experience in this narrow area get it wrong when trying to interpret complicated areas of this law.
It COULD be fixed. The MHP LTA could be re-written, simplified and streamlined. But that would take the agreement of the players--MHCA and AAMHO. They can't agree on anything these days.
So we are going to continue on with this mess for the indefinite future.
July 19, 2009
Identity Theft. An article in today's Republic discussed a fairly new federal requirement for businesses to have an identity theft plan. There is a program enforced by the Federal Trade Commission (FTC) that requires almost all businesses to have such a plan. The requirement applies to "Creditors" as defined in the underlying law. "Creditor" includes businesses extending credit on the basis of credit reports. That means any landlord evaluating tenancy applications in part based on credit reports is covered.
The FTC requires all such businesses to have a written "Identity Theft Plan" to detect identity theft signs ("Red Flags") and saying what steps to take when evidence of identity theft is discovered. The purpose is to make it difficult for bad guys to steal other peoples' identities and to minimize harm to the victims.
The plan should alert your personnel what to look for in the way of identity theft "Red Flags". This would include phony looking ID; credit reports being received on Social Security Numbers under names other than your applicant; credit reports stating there is no such SSN as the one given you, etc. In addition it should include contacts made later by people claiming to be the person you rented to but who deny they were your renter.
Once you identify what the "Red Flags" are your plan must alert your personnel to be on the lookout for them. This would include not just accepting copies of ID cards but looking at the original to ensure it is not alterend; looking closely at the photo on the ID to see if that is the person applying (though this won't help with a manufactured phony ID), etc.
The plan then must instruct personnel what to do when a "Red Flag" is detected, such as calling the police and notifying the credit bureau.
There is a signficant possible fine for not having such a plan.
Here is an FTC brochure on this subject. Read it: www.ftc.gov/bcp/edu/pubs/business/idtheft/bus23.pdf
If you want to see your government at work, here are 59 pages of fine print regulations on this subject. ftc.gov/os/fedreg/2007/november/071109redflags.pdf
Two points here:
1. Be careful. In Arizona, most identity theft MHC's are seeing involves Illegals seeking housing. It is important to NOT assume that every Hispanic applicant is an Illegal using a false or stolen identity. Be sure you are blind as to ethnicity in evaluating applications, ID cards and credit reports.
2. Most of this is targeted towards banks and credit card issuers. MHC's are small fry in this area. Your plan can and should be short and simple.
Dead Tenants. The MHP LTA is completely inadequate in addressing what happens when a tenant dies.
ARS § 33-1452 (I) says that if there is a surviving co-tenant, the survivor continues as the sole tenant. ARS § 33-1452 (J) says if a sole tenant who was also the sole owner of the home dies, his heirs or estate can cancel the lease with a 30 day notice. That's it. Nothing else.
The second provision is silly because death automatically terminates the lease of a sole tenant. I suppose the statute could be construed to say that unless it terminates, the estate takes over and the lease continues on, but then it really should actually say that.
Anyway, instances of people dying and no one taking over the home are commonplace. My practice in these situations is to wait a couple of months to see if someone comes forward. If no one does, or if the family cleans out what they want from the home and disappears or tells you they don't want it, then it should be treated as abandoned. Give the lienholder an abandonment notice or, if there is no lienholder, send a demand for payment of rent and a demand for removal of the home to the estate of the tenant at the last known address of the tenant. Then proceed as with any other abandonment situation.
If a family does take over responsibility for the home by paying rent, then you may as well regard them as successors to the tenant's interests under the last rental agreement. If they don't maintain the home they should be treated as any other tenant in non-compliance with park rules, and that would include service of a 14/30 notice.
Finally, do not let anyone move into the home without getting and approving an application for residency, and signing a new rental agreement with the new resident.
July 18, 2009
December Training. A number of people have complained to me that I am not scheduled for any more MHCA training classes in the Phoenix metro area this year. Because of this, MHCA is trying to schedule another of my classes this year. It is tentatively set for Mesa on December 11. This is not final yet, When it is I will post it here and on my "Seminars and Appearances" page.
Assistive Animals. At my Cottonwood training class on July 17, I got lots of questions about handicap assistive animals. Everyone should know that one of the most common requests for reasonable accommodations made by disabled residents is that they be allowed to have a service animal that violates park restrictions. If a disability really exists that necessitates an animal of some sort to help the resident, the request for the exception must normally be granted unless unusual burdens to the landlord result. In that case the parties should meet to see if some alternative to what has been requested could also work.
Most of us are also aware that the law here is one of the most abused. Non-disabled people or people with disabilities that don't really require an animal often claim the need to get their pet approved. Screening out the phony claims from the legitimate requests is difficult.
Landlords have the right to require confirmation from a medical provider that a disability really exists unless the disability is obvious. While a blind person is obviously disabled, the disability of someone claiming emotional or psychological disorders is not apparent. When the disability is not obvious, medical confirmation of its existence can be requested. The landlord cannot be overly intrusive and insist on a bunch of details since medical privacy laws protect the resident. But confirmation of the existence of the disability can be requested.
When the disability does not make the need for the service animal obvious, medical confirmation that an assistive animal is necessary can also be requested. For example, a blind person asking for a seeing eye dog obviously neeeds one and asking for confirmation is nothing more than harassment. But the need of a person with psychological problems for an animal is not so obvious. In this case the medical provider can be required to explain the need for the animal.
This includes describing in a general way what the animal will be doing to assist the resident in his daily tasks. A housing provider needs to approve an assistive animal only when there is some "nexus" shown between the disability and the requested animal. How will the animal be helping deal with difficulties resulting from the disability.
More and more frequently, two animals are being requested. In this case the medical provider should be asked to explain why multiple animals are needed, and if a second one will be there only temporarily, he should be asked when it will no longer be necessary.
Landlords need to avoid rejecting requests for assistive animals out of hand--even when the request appears to be absurd. Ask the resident to document the request as I have described above. You may find you are going to need to approve it even if you think it is phony if the medical provider satisfies the requests I have described.
Here is a link to a government memorandum giving guidance on reasonable accommodations. www.hud.gov/offices/fheo/library/huddojstatement.pdf
Sections 17 and 18 talk about the kinds of information that can be requested.
Often tenants requesting service animals refuse to provide any information claiming privacy rights. As long as the landlord is limiting the inquiry as described above, the resident should comply. It might be a good idea to show the resident a copy of that memorandum.
July 15, 2009
More on Sweeps Suit. Here are some media reports on this decision. www.azcentral.com/news/articles/2009/07/14/20090714budget-ruling0715.html; www.yumasun.com/news/funds-51436-farm-arizona.html; www.azstarnet.com/allheadlines/300959.php
I would post the Capitol Times article but their incompetent reporting continues to get my name wrong and I don't want to send them any business. As the old saying goes, "I don't care what you say about me as long as you get my name right". Most articles don't even mention me and frankly I prefer it that way.
Health Care Reform. Here is a simple diagram of how the new health care reform proposal pending in the House of Representatives will work. docs.house.gov/gopleader/House-Democrats-Health-Plan.pdf
Hard Times. Times are really tough. I was doing paper work in a Burger King near Tolleson from 7 to 8:30 this morning waiting to go to court. It is in a shopping center with a Sam's Club and several other stores. In the past it has been very busy that time in the morning with Sam's Club employees stopping for breakfast and workers on their way to construction jobs stopping for stuff. In the hour and a half I was there this morning not a single other customer came in. My window was by the drive through lane and I saw no cars coming through.
Traffic out and back to Tolleson on I-10 was almost non-existent.
This is an area on the west side that has been largely populated with Hispanics, many of whom were probably illegal. It has turned into a ghost town. That is consistent with what I have been hearing from family parks in Hispanic areas. They have been emptied out.
The Arizona Republic had an article this mornong about how hundreds of thousands of "migrants" have left the State due to a combination of the Employer Sanctions Law, the economy, and immigration law enforcement. The newest result of this is the closure of Bashas' Food Town grocery stores that cater to Hispanic shoppers.
Whatever your views on immigration and immigration law enforcement, it is clear that the departure of so many people who rented spaces and spent money here is having a severe effect on business, especially small business.
July 11, 2009
Sweeps Suit Decision. Most followers of this blog know that I have been representing certain agricultural organizations in challenging the legality of the State taking money out of dedicated funds established to serve agricultural interests and instead use them for general State spending. The State has been using hundreds of millions of Dollars per year from hundreds of these funds the last three years to balance the budget. The current budget still being negotiated assumes several hundred million Dollars will be taken from a variety of these kinds of funds.
The decision in my case was just handed down and the Superior Court Judge agreed with our argument and ruled that the State could not do this. Here is the minute entry decision: www.courtminutes.maricopa.gov/docs/Civil/072009/m3792637.pdf
It is important not to read too much into this case. Funds differ from one another and those differences can make a huge difference in whether they can be taken by the legislature. But the ruling agrees with our position that not all funds under State guardianship can be taken.
This is a very important decision in these economic times. More care must be taken in determining whether a given fund is off limits before deciding to sweep it.
The job of the legislature is extremely difficult and I fear this decision will make it more so. Legislators take a lot of criticism in the media and elsewhere. I really admire them for serving in such a low paid and difficult task, and my one regret in this case is making their job more difficult.
July 10, 2009
Anti-Deficiency Law. In 1986 I lost a case in the Arizona Court of Appeals that I should have won, and the Arizona Supreme Court refused to review it. The case was Northern Arizona Properties v. Pinetop Properties Group, 151 Ariz. 9, 725 P.2d 501 (App. 1986).
This case held that a statute designed to prevent homebuyers from being held liable for amounts owed on mortgages in excess of what the foreclosure sale brought applied even when houses were owned by investors who rented them out. That decision in my view was terribly wrong and has been protecting unscrupulous home investors from liability under mortgages when they rent houses out. It added a small bit to the housing bubble that burst in Arizona late last year by encouraging speculation by investors.
For 23 years I have believed this ruling was wrong and have been frustrated by my failure to convince the Court it's reading of the statute was wrong.
Finally, 23 years later, the legislature has corrected this terrible interpretation of that statute. In a bill just signed by the Governor, the statute has been amended to require the home buyer to have personally lived in the home for at least six months before the foreclosure sale to be protected from the deficiency. Here is a link to the bill: www.azleg.gov/FormatDocument.asp
Other Bills. It doesn't look like anything else passed this past legislative session will have any effect on MHC's or landlords in general.
July 9, 2009
RV Space Rentals. We all know times are tough. People are losing their homes. Landlords are losing tenants. MHC's are seeing high rates of abandoned homes. I have heard of innumerable parks with 15% or higher vacancy rates. Many landlords are putting off evictions until the tenant is four or more months behind (not very smart in my opinion).
This morning I was talking to a park manager who said she is making up for some of this by renting more spaces to tenants in RV's. It seems that some people after losing their homes still have an RV and want to live in it for a while since they can't afford anything else. Others, after getting kicked out of the house when a marriage breaks up (a common occurrence in hard times) take the RV and also want to live in it. This park has been promoting RV space rentals and been picking up some of these folks.
Before doing this be sure local zoning allows it. Also be sure that there are sufficient sanitation facilities to handle these folks. Parks that already allow RV space rentals should not have this problem.
Stray Cats. Here is more fallout from our economic problems. When people get foreclosed and lose their homes, they frequently abandon their household pets. Fido and Fluffy are suddenly thrown out of their comfortable homes and are on their own in the world. If they survive, they become what is known as feral animals.
Some areas, especially where there are lots of foreclosures, are becoming innundated in stray animals, especially feral cats.
MHC's are full of residents who can't stand to see these animals going hungry. Many of them start putting bowls of food and water out for the poor creatures to eat and drink.
Unfortunately this act of kindness produces bad results. Easily available food and water simply attracts more and more strays. This is happening all over East Mesa and parks are becoming beseiged by strays.
Government is non-responsive. Animal Control authorities will not act meaning the problem is the landlord's. Killing or injuring these critters is a crime. Yet the landlord must do something since the abundence of strays creates health and safety problems. One landlord today reported that the park is becoming infested with fleas because so many strays have moved in.
The solution is to eliminate the cause of the problem. People must stop feeding and watering these animals. Without food and water they will move on. Eventually they will die. But unfortunately that is the way of the world.
To stop the problem parks experiencing it should adopt a new rule making it a violation of park rules and regulations to feed strays, including putting out any food or water in a place accessible by strays. The rule should require all household pets to be fed inside the home. A cover letter should be sent with the new rule explaining it is necessary due to the problem with strays and declaring that it will be strictly enforced--that violations will result in termination notices and possible eviction.
A New Level of Stupidity. www.youtube.com/watch. This speaks for itself.
July 5, 2009
Abandonments. In June I opened 42 new files on abandoned mobile homes. About a third of these will wind up being sold at landlord lien sales; half will be taken over by lienholders; and the rest will be handled with bonded titles. Almost all of the free and clear units are pre-HUD homes having almost no value on the market. Assuming 42 per month is an average rate, that means around 500 abandoned home files will be handled by my office this year. That is actually less than what I handled last year.
Some States have discovered that they are facing a crisis in abandoned homes. A few such as Pennsylvania and Illinois have enacted laws aimed at allowing these cases to be handled simply. Others are wrestling with the problem. In North Carolina, authorities estimate there are about 40,000 abandoned mobile homes in the state. South Carolina believes it has a similar problem. Here is a 2006 article about North Carolina's experience. www.indyweek.com/gyrobase/Content
North Carolina has discovered its abandoned mobile homes are largely worthless junk, that they are dangerous, attracting vermin and crime, and that they harm the quality of life of their neighbors and drive local property values down.
The problem there and elsewhere is what to do with the homes. They have owners and sometimes have lienholders. Most are subject to tax liens, So a lot of people have property rights tied up in the homes. Rental parks have the obligation to keep their land safe and habitable but their options are limited when it comes to taking action to get rid of these homes since other people own them.
Since the 2006 article was written, the problem of federal environmental requirements being enforced requiring expensive inspections and permits prior to demolishing mobile homes has developed.
The measures enacted in States with legislation, and the measures being considered in other States to allow disposition of these homes are inadequate. Nothing is really working anywhere and the problem continues to grow.
Here in Arizona I have seen a big uptick in abandoned homes since the Employer Sanctions Law went into effect in January 2008. The pace accelerated when the economy went down the tubes late last year. The files I have been getting are only the tip of the iceberg, I fear. When parks start looking around their properties, they discover many abandonments. I don't get just one or two; I get a dozen cases. On Thursday just before I left the office, one park sent nine files. That is 5% of the spaces in the park.
It wouldn't surprise me if, on a Statewide basis, we have nearly as many abandoned homes as North Carolina. It is a huge problem and we are only just beginning to see its dimensions.
Park managers need to take a close look at their communities and start identifying and dealing with abandonments. Ignoring the problem just means the home will deteriorate and get in even worse shape that it is now. There is no rent fairy who will suddenly bring the account current. Eventually you will be forced to address the problem and it will be harder then than it would be now. Think about receiving a criminal citation for code violations resulting from dangerous abandoned homes on your property that will take two or three months to deal with under our current law. How will you explain having done nothing in the past when begging the prosecutor for more time to resolve the problem?
July 2, 2009
Legislative Session. Finally it's over. A number of bills passed as the session was ending. I am not aware of any having a major impact on MHC's or landlords in general. But is is possible something got through I am not aware of so I will be looking them over in the next few days. The biggest news was the budget. Of the agencies I have been following, two of three seem to have done okay. The MVD is part of ADOT and the ADOT budget seems to have been increased a bit at the end. The Attorney General took a hit but a footnote allows it to recover additional monies it needs from a couple of independent funds it administers.
The FBLS Department is a different story. It was already slated for around a 10% cut. At the last moment that cut was increased to nearly 25%. I have not heard any explanation of why though I have my suspicions. I have previously expressed the view that while the Department has some important functions assigned to it mainly dealing with licensing, regulation and discipline of dealers, manufacturers, installers, etc. of manufactured homes, it also wastes resources on a lot of fluff. By "fluff" I mean landlord tenant related stuff, the now defunct HOA hearing program, papershuffling of complaints to and from the Office of Administrative hearings, attending meetings, and the like. Also it has been top heavy with administrative types.
A severe budget cut can be a powerful inducement to eliminate fluff and overhead. From my point of view that is a very good thing.
Wacko Litigation. I guess when times are tough, people do strange things out of a feeling of sensitivity to offense and perceived victimhood.
This week a superior court judge threw out a case filed by a big law firm against a park giving 90 day non renewal notices to park model space tenants. The suit asked the court to treat park models like mobile homes desipte the MHP LTA being clear they are not and despite the long term RV space act clearly applying to them. The park incurred major expense in defending this stupid and frivolous suit. I hope the judge will make the tenants reimburse the park's legal fees.
This week a tenant sued a park in superior court for evicting her and for damage she incurred when a lienholder repossessed the home after she moved. She has no lawyer and the suit is pure trash but the park will pay good money to defend it.
Finally, a law firm filed suit against an RV park last week on behalf of a tenant who claims that the rental agreement form being used by the park does not satisfy the long term RV space act (even though it does). The suit claims the park is trying to force the tenant to sign the form even though the park's lawyer told the lawyer filing the suit that the tenant could live there as a verbal yearly tenant if he didn't want to sign the rental agreement.
When times get tough we see that kind of trash being filed. Normally we also see garbage ALJ cases also, but for some reason I am not seeing many of those.
Wacko Discrimination Claims. But I am seeing these. The multiple rats as assivtive animals case was recently resolved. Earlier this week I got the second service animal needed to train the first service animal case. A couple of weeks ago the denial of the under age grand daughter lying on her application about prior evictions to be a caregiver who is seven months pregnant case came in. And of course I wrote earlier in the week about the power scooters.
Dealing With Them. Parks need to take all these cases seriously but it sure is a shame that all this money needs to be spent defending what are obviously ridiculous garbage claims. What is especially disturbing is that so many of them are being filed by lawyers. I guess everyone is looking for ways to stay busy and make money.
July 1, 2009
Budget Delivered to Governor. At 7:30 this morning the legislature adjourned. A budget was passed and sent to the Governor. It makes big cuts and does not include referring a sales tax increase to the voters. Apparently the Governor will strike some provisions with a line item veto and sign the thing.
State offices are open.
The FBLS Department budget was slashed by an enormous amount. You can read the basic budget bill here: www.azleg.gov/legtext/49leg/1r/adopted/h.2643-se-approp.pdf
FBLSD is covered at page 47 line 25.
June 30, 2009
State Government Shut Down. As of 6:00P.M., there is no budget. If that does not change, "non-essential" State services will close at midnight. The State is already closing State parks.
I assume the Courts will be open tomorrow since they are funded by counties with State assistance. But I am not entirely certain. If you have a court appearance tomorrow, go to it.
Before going to any offices such as the MVD, call and check if they are open. Do not confuse this with county or city offices. They will be open.
The last I have heard, as of this time, there was no agreement on either the flat tax or the referral of the "temporary" sales tax for a referendum. This means that the Governor and legislature cannot reach agreement on what both say are critical deal points. It looks like the legislature is just going to send the budget that passed a couple of weeks ago to the Governor who has said she will veto it.
State employees may not get paid salary and wage checks they are owed for work ending June 30. Although they are entitled to be paid, the State office that writes paychecks and makes electronic deposits into employee checking accounts may be closed. Parks with State employees living in them may find their State employee tenants are unable to pay July rent because of this.
It is likely that in a day or two, closed offices may re-open under temporary funding arrangements.
June 29, 2009
Mobility Scooters. You have probably seen the ads on TV for scooters for disabled people to get around on. Typically they will say they can be gotten for "free" since Medicare will pay for them.
As the country ages and continues to fatten up, more and more people need these things to carry them around. Grocery stores now have motorized shopping carts for the fat and infirm to ride while shopping. These things come with a range of problems. MHC's are now starting to experience some of them.
A park contacted me today saying it had lots of tenants using power scooters. Until now they had been riding them to the clubhouse, parking them near the entrance, and walking in. Now many people want to ride them into the clubhouse and stay in them as they do whatever it is they came to do there. The park asked if it can force residents to leave them outside.
The problem is that people are getting these things because doctors are prescribing them for their ailments. With the prescription, they can get Medicare to pick up the tab. But the legal effect it that it becomes a medically prescribed device. A park not allowing use when a doctor says it is necessary runs the great risk of being found to have engaged in handicapped discrimination--sort of like telling a blind man he cannot have a seeing eye dog.
Of course no one is thinking of the landlord confronted with dangers resulting from traffic jams in clubhouses not designed to handle this kind of traffic. At the worst the community could be forced to close the clubhouse if too many of these people insist on riding these contraptions inside.
Another park called with a problem with speed bumps. They just had them installed on the streets to slow traffic down. A number ot tenants with scooters have complained that they can't get the scooters over the bumps and some have threatened to sue.
I don't know why anyone would be riding a scooter in the street. But if the side of the street is used for pedestrian traffic, it would be wise not to extend the bump to the very edge of the street. Leave an area flat on the side wide enough to accommodate a scooter.
It angers me to see people who really don't need these things getting them at the government's expense. While some do need them, many others do not--the best thing some of them could do is get out and walk. One of the biggest suppliers of them recently settled a case with the federal government for Medicare fraud. Read about it here. sanantonio.fbi.gov/dojpressrel/pressrel07/falseclaims051107.htm
But the problem for landlords is that they are stuck with the results of doctors prescribing these things.
June 27, 2009
Website Problems. This site has been down for most of the past week. I am not sure why. The Internet is alive with gremlins and some got into my site and started making it run circles around itself. Being somewhat paranoid I suspected hacking but will not know if that was the cause for a while. Hacking a website is a crime and the perpetrator can be traced. But the more likely reason is a screw up by one of the companies involved in making the thing work. Anyway I hope it is working now. My tests indicate that it is.
FBLS Department. I am not aware of any release of the results of the Relocation Fund audit that took place last April. There seems to be no deadline for the Auditor General to release his findings but many people including me are interested in them.
Budget. Supposedly there is a deal on the FY2010 budget that will avoid a July 1 shutdown in State provided "non-essential" services. The problem is that the deal will let a "temporary" sales tax increase go to the voters and will substitute a flat tax for the income tax structure we have now. I don't see Republicans voting for the sales tax referendum, and I don't see Democrats voting for a new flat tax. Since the deal has to pass both houses of the legislature, I do not see how it can go into effect.
Heaven knows I am no political expert. But I think we stand a very good chance of a State government shutdown on July 1. If you need things done at the MVD, FBLS Department, have a hearing scheduled at the Office of Administrative hearings after July 1, etc., try and get the business done before the end of June, and see if the agency you are dealing with is open after July 1.
FBLSD Budget. Interestingly the FBLS Department had its budget cut by 25%, a huge cut, far more than other State agencies incurred. An original $3,128,300 budget was cut by $766,100, down to $2,362,200. That is up $445,000 from the cuts in the earlier budget deal. One wonders if there is any connection between that and the Relocation Fund audit. These changes show up in the Joint Legislative Budget Committee summaries and in one of the so called "trailer bills" that actually will accomplish the negotiated plan if it and the other trailer bills get passed. Here is a link to HB2643, the trailer bill: www.azleg.gov/FormatDocument.asp The final cuts are in section 22, amending section 39 of the original budget bill.
These are not final figures and can always change since this is just a proposal and in my view won't get past the legislature. But it really worries me about how the Department under present management can perform its important functions with these sorts of cuts, especially considering all the experienced people it just laid off.
Abandonments. Mobile homes keep getting abandoned. In recent weeks I have been flooded with new abandonment cases. Some parks are inventorying tenants delinquent on rent and finding in many cases that the home is abandoned. An abandoned home is not going to produce any rent revenue unless you act on it. Since no one will be caring for it, it will just sit there and deteriorate. You need to notify lienholders of abandoned homes promptly if they exist. If the homes are free and clear you should start landlord lien sale or bonded title proceedings to dispose of them.
Parks getting titles to abandoned homes need to decide what to do with them. In the past they were often destroyed and hauled to the dump. But recent environmental law enforcement actions require parks about to destroy homes to get demolition permits and have them inspected for asbestos. That can cost thousands of Dollars, meaning it may be more cost effective to just repair and sell or rent abandoned homes.
Here is a link I posted in March to a brochure explaining the permit requirement: www.maricopa.gov/aq/divisions/compliance/air/docs/Asbestos_Brochure_Tri.pdf
June 20, 2009
Website Anniversary. This website is two years old this month. It was slow starting and after a year I was ready to shut it down since it wasn't getting much traffic. But after getting picked up by Google and other search engines and getting some word of mouth promotion, visits to it picked up. To date it has had over 13,600 visits, two thirds of them the past year. In the last month it got almost 1,000 hits. Given the very limited audience it appeals to and the fact that it is not linked by anyone and gets no publicity other than word of mouth, I am happy with that usage. I will keep it going.
Budget. Nothing has changed publicly. The budget has been approved but not sent to the Governor who has threatened to veto it. A suit will be heard by the State Supreme Court on Tuesday between the Governor and the leaders of the two houses of the Legislature. My guess is that the Court will decline to act. Negotiations on changes to the approved but not transmitted budget continue in secret. State agencies are planning to close "non-essential" functions on July 1 if a budget is not in place by then. I think the chances are 50-50 there will be such a closure. If you have business with a State agency, try to get it done before July 1.
Bills. With passage of the budget the Legislature is fast tracking a number of bills. Since they want to adjourn on June 30, these bills are not getting much attention and those that get enacted are probably going to have a number of unintended consequences. Some of these bills will affect MHC's if passed. Here are a few. Remember--these are only bills. They may or may not get enacted.
SB1160. This would require proof of lawful presence of applicants for titles to motor vehicles and trailers but NOT mobile homes. It is designed to prevent Illegals from getting titles to vehicles. View it here: www.azleg.gov/FormatDocument.asp
SB1177. This would make it a crime for Illegals to solicit work, for employers to hire Illegals, or for any one to harbor or shelter or attempt to harbor or shelter an Illegal. Some are concerned that this could be used to prosecute landlords who rent to Illegals. That would be a problem due to restrictions on landlords in Fair Housing laws prohibiting different treatment of people based on perceptions of ethnicity or national origin. But the bill is sort of like the current federal harboring statute which does not seem to apply to landlords. If this bill gets enacted we will need to take a close look at how to comply with it. View it here: www.azleg.gov/FormatDocument.asp
SB1280. Another harboring bill. This one is more narrowly drawn and further along in the legislative process. View it here: www.azleg.gov/FormatDocument.asp
SB1163. This prohibits the use of federal individual taxpayer identification numbers to get loans. These are the numbers that look like SSN's and are issued by the Social Security Administration, but are not really SSN's. It makes it unlawful to make a loan to anyone using this kind of identifying number.; This is designed to restrict loans like mortgages and MH loans to Illegals. View it here: www.azleg.gov/FormatDocument.asp
SB1377. This makes it unlawful to falsely represent that an animal is a Service Animal. I am not sure this would actually address the problem we have with phony claims that house pets are handicap assistive animals but it might. View it here: www.azleg.gov/FormatDocument.asp
June 17, 2009
Rights of First Refusal. Many parks include in their rental agreements, rights of first refusal. These provide that if a tenant sells his home to someone intending to remove it from the park, the park has the right to match the offer and buy the home. Occasionally a tenant ignores this provision and sells the home to a dealer or other person intending to move it out.
When the buyer requests a clearance for removal the park might refuse to grant it because of the violation of the right of first refusal. Once in a while the park will force the tenant to get a duplicate title and sell the home to it.
The problem here is that unless the buyer had actual knowledge of that right, there is no basis to hold him (the buyer) responsible for violating it. The park in those circumstances normally has no choice but to let the buyer pull the home out. Of course it can sue the former tenant for damages for breach of the right. If a park wrongfully denies a clearance for removal or interferes with the buyer's rights, it can be liable for major damages.
Remember--the buyer is not a party to the rental agreement and is not bound by its terms. Since the right of first refusal is in the rental agreement, only the person who signed it--the tenant--is responsible for any violation.
Managers Not Advising Lawyers to Close Files. Nothing is more maddening then to do work on a file only to contact the manager and to find out that the matter has been resolved and there was no need to do the work. This frequently happens in landlord lien sale situations when the lawyer prepares notices to lienholders and homeowners and perhaps a notice of sale, only to find the lienholder has been making payments or the home is gone. The park will still get a bill for the work. There is no excuse other than gross neglect or stupidity, for a manager to resolve a case sent to the park lawyer but not bother telling him to close the file. Just a phone message or fax note will suffice.
Fair Housing Complaints. I am seeing a sharp increase in these the last six weeks. I don't know if it is coincidence or results from people being in bad moods due to the hard economic times. The areas they are concentrated in seem to be refusal to make reasonable accommodations for handicaps and ethnic (mainly Hispanic) and racial discrimination. Many of these can be avoided with good tenant relations, an understanding and sympathetic ear, and responding to tenant concerns. Getting mad or brushing off complaints often triggers the filing of one with the government. Those can be expensive to deal with even when they are dismissed, as most eventually are.
June 16, 2009
State Government Shutdown. It is looking more and more like State (but not county or city) offices in Arizona are going to be closed beginning July 1 unless they provide "essential services". No one really knows whar are considered "essential". This is happening because a budget for the fiscal year starting July 1 has not been agreed to and the legislature and Governor are light years apart. Today the Governor sued the legislature in the Arizona Supreme Court over the budget. That is unprecedented.
If you are in need of any State services you ought to plan on completing your dealings before July 1. If you need things done by the MVD get them done now--don't put it off. If FBLS Department needs to do something try to get it done before July 1. Although we don't know what offices will close on July 1, unless its law enforcement related, assume it will be closed.
In California some courts are closing their civil divisions one day per month. It is possible Arizona Court civil divisions could be closed, though I sort of doubt it. In a worst case scenario, it is possible evictions and other civil cases could be stopped and courts limited to criminal matters.
The simple fact is that we have never been here before. There are no rules. We won't know until its announced what services will become unavailable. So the safe thing is to get as much done at State offices before July 1.
Of course it is possible a budget will be agreed to befure July 1 and none of this will happen. But a prudent planner will not assume that.
June 14, 2009
Budget Bill Provisions. The Legislature has passed a 2010 state budget but not yet sent it to the Governor. They are negotiating and the Governor has threatened to veto the bill in its present form. There are at least 100 major points of disagreement on it. The current fiscal year ends June 30.
If a new budget is not in place by July 1, non-essential areas of state government will have to close down. I do not know what is considered non-essential. In my view most of it is non-essential. Probably agencies not involved in public safety would close until a budget was finally agreed to.
This would only be state offices like the MVD, civil sections of the AG's Office, and the FBLS Department, but not county or city offices.
In the budget that passed are a few things affecting the MHC industry. These appear in Budget Reconciliation Bills that make changes in statutes necessary to legalize the appropriations in the budget. Often things not directly related to the budget get in these bills since they pass quickly with virtually no scrutiny.
One thing in there is a requirement that anyone applying for a state public benefit prove with acceptable ID that he is lawfully in the U.S. That would include the Mobile Home Recovery Fund. Essentially this would prohibit any fund proceeds from going to Illegals and the FBLS Department would need to get proof of lawful presence.
Another section allows the Secretary of State to stop printing the Residential (apartment) Landlord Tenant Act.
Another legitimizes and specifically allows state agencies to place employees on furlough (i.e., leave without pay) in the upcoming fiscal year.
June 13, 2009
"Mobile" Homes. So do they call them mobile homes because they are (or were) mobile? Or is there another reason?
Snopes.com is in the business of debunking myths. They have an article up saying the name has nothing to do with the mobility of the home. According to Snopes, the industry got its start in south Alabama and Mississippi. As the industry gained traction and more and more homes were produced in the years following WWII, they became known for the nearest city in the area where the industry's roots are. They are named mobile homes after that city--Mobile, Alabama.
Read the article and see if it doesn't make sense. Mobile homes have never really been mobile. The truly mobile units are RV's and travel trailers. Mobile homes are immobile.
Just be glad the industry didn't get its start in Kalamazoo.
Here is the link: www.snopes.com/lost/mobile.asp
June 12, 2009
Age Discrimination in Employment. There are a variety of discrimination laws on the books. The ones MHC's are most familiar with are fair housing laws. These prohibit discrimination in housing on account of seven grounds. Age is not one of them.
But a different set of laws applies to discrimination in employment. These laws prohibit discrimination on account of age by covered employers.
This subject is brought to mind by actions of the FBLS Department this week in laying off a number of employees. The Department is severely affected by workload reductions due to a poor economy and a decline in manufactured housing sales. It has had its budget cut the last couple of years and faces a large cut the next fiscal year. I am surprised it has not been forced to lay off more people until now (I am also surprised layoffs are taking place in a fiscal year with only three weeks left but that is another matter).
Anyway, I am hearing that the people laid off were almost all long term state employees while new hires were exempt from layoffs. I have no way of knowing if that is true and it really is no concern of mine. But the idea of limiting layoffs to experienced, presumably older employees with, again presumably, higher salary and fringe benefit costs, raises the question whether age was a factor in the decisions of who to lay off.
MHC operators will soon be facing these sorts of hard decisions, especially companies with multiple parks and several layers of management. Operators who are covered by employment discrimination laws need to ensure that age is not a factor in deciding who to lay off.
A covered employer violating age discrimination laws faces the possibility of age discrimination lawsuits. More realistically, they face the prospect of the laid off employee filing a complaint with the Equal Employment Opportunuty Commission which has a Phoenix office. If the EEOC finds a probable violation of these laws after investigating it can initiate litigation against the employer on the employee's behalf.
Here is a Q & A website on this subject: www.myemploymentlawyer.com/discrimination-eeoc-FAQs.htm
Here is a link to the EEOC website explaining these laws: www.eeoc.gov/types/age.html
Before laying anyone off, park operators would be well advised to become familiar with these laws to ensure they are not inadvertently violated and that layoff files are properly documented.
June 9, 2009
Tenant Associations Screwing Things Up. The organizers of many tenant associations including park AAMHO chapters often think they are divinely endowed with special knowledge simply because they lead the association. They of course do not have any special knowledge.
To paraphrase Lincoln, "He who knows not but knows not that he knows not, is a fool".
As an example, in a recent case a tenant HOA urged a member whose home is being hurt by rain runoff to file an ALJ complaint against the park. It looked to me like the runoff was not the result of any changes in the park or in any way was the landlord's fault. But everyone assumed it was simply because the problem existed (i.e., rain runoff getting under the tenant's home).
This condition is usually caused by other factors. The home may settle on the lot over the years; the tenant's landscaper or installation contractor may not have sloped the grade of the lot away from the home; the skirting may have been improperly installed on the home; concrete installed by the tenant may have changed drainage patterns forcing water to run towards the home; the home may have been improperly placed on the lot; etc. It is usually safe to say that if no problems occurred for many years but suddenly start now, and no grading work has been undertaken in areas near the tenant's home, the condition is not caused by the landlord.
Here it looked like the problem was not the park's responsibility. But the landlord would like to help fix it and help out with the costs of restoring the tenant's home to its earlier condition. In part that is to avoid the expense of dealing with the ALJ hearing and in part because we are dealing with a concerned landlord.
The HOA head is a know it all. The existence of the condition meant, to him, that the park was at fault. He was out soliciting other tenants to check their homes and see if there are any similar problems. If so he was encouraging them to file their own complaints.
This of course makes it impossible for a landlord to do what it would like to do and get the problem fixed, and forces it to litigate with the tenant to show the others these conditions are not its responsibility. Any settlement with this tenant would have been interpreted by the HOA as a sign of weakness and guilt.
Its a shame that the HOA actually hurt the one it is supposed to be helping. But of course the main reason many people seek positions of leadership in these organizations is not really to help others but to feed their own egos.
June 2, 2009
Tenants Trashing Managers. I got a call today from a manager furious because some tenants posted comments on an on-line bulletin board critical of him and his wife. I constantly get complaints from managers alarmed or angry because tenants circulate petitions to their neighbors asking them to sign onto criticisms of managers and often demanding they be fired.
I look upon these things as badges of honor. Would a good manager really want these people to say what great guys their managers are and that tenants want them to stay there forever? Managers are there to manage, not to make friends. A good, effective manager is always going to rub some people the wrong way, especially in residential communities and most especially in Age 55 parks which are filled with spoiled children over 55.
The good tenants in the park will appreciate the effective manager, and a good manager should not care what the malcontents think. George Patton and Ulysses S. Grant had a lot of their troops despise them. But they were interested in being effective and capable leaders, not in making friends. The good park manager will concentrate on knowing his job, doing it well, treating people fairly, and not playing favorites. He will view tenants as customers, not friends. As with any good business, there will always be a few customers who don't like the product or service. But if most are satisfied and the business is successful, the good manager will not be worried over the opinion of a few disgruntled customers.
Park owners are not concerned when they have good managers but receive tenant complaints demanding they be fired. In fact they tend to regard it as evidence the manager is doing his job.
Writs of Restitution. Under the new eviction rules, a landlord has 45 days after the date of an eviction judgment to enforce it by getting a writ of restitution. After 45 days the court will not issue the writ unless a motion is filed explaining the delay and the judge approves the writ being released. There is normally no reason other than laziness for getting a writ issued when the evicted tenant refuses to move out and there is no deal approved allowing him to stay.
May 30, 2009.
Nothing is Happening. The legislature is still focused on only the budget and nothing else. No bills are pending affecting MHC's or landlords. While current plans include sweeps of many special purpose funds, the Relocation Fund is not on the list.
The results of the Relocation Fund audit that took place at the FBLS Department last month have not been released. Rumor has it that results have been submitted to the Department for comment.
The Judge has not yet decided the suit in which I represent several agricultural groups challenging the State's authority to sweep certain agriculture funds. Nothing should be read into the delay.
Virtually every state agency has seen management changes since Gov. Brewer took over. But the FBLS Department remains in the hands of Napolitano holdovers. The Department is small and obscure, and historically does a good job (with the possible exception of its administration of the Relocation Fund). There is an old saying: "if it ain't broke, don't fix it." Whether the Department is "broke" may turn on that audit.
Pravda. I sometimes think I am Alice in Wonderland. The world is turning upside down. I try to avoid politics on this site, but an article in, of all places, Pravda, seems to accurately summarize what is going on in our country. Who would have expected this Soviet Union era propaganda organ to have an article in 2009 like this one: english.pravda.ru/opinion/columnists/107459-0/
May 22, 2009
Age 55 Park Tenant Finances. This country is about to experience some of the most massive tax and expense increases in the history of any nation, and the impact on seniors on fixed incomes is going to be devastating. Consider this.
To pay for health care, the government is going to begin taxing health benefits paid by employers. This won't affect age 55 park residents. But it is also going to begin imposing a wide variety of excise taxes on a multitude of products like beer, wine, many foods, and soft drinks. These taxes will drive up the cost of those products.
Gas taxes are going to go up. In addition, not allowing domestic oil production will drive up gas prices. Not only will seniors pay more for gas, but food prices will go up as the cost of diesel fuel used to haul food products are factored into the price.
Car prices are going to go up as manufacturers are forced to make cars that get more mileage to the gallon and that reduce pollution levels. Some think that more efficient cars will reduce gas consumption and thus gas expense. But all that means is the tax per gallon will go up as states make up for taxes lost on reduced gas sales.
Cap and trade means that anyone producing a product that results in pollutant emissions will need to buy pollution credits. This is just another form of tax and it will be a huge one. Utility costs are going to skyrocket. In Arizona, the cost to air condition a home is going to get unimaginably high.
One can expect tariffs to go up as overseas manufacturers undercut domestic manufacturers' prices since domestic prices will get so high due to tax increases. Tariffs are taxes on imports designed to make them more expensive and help local manufacturers compete. All these cheap imported clothes, electronics and food are going to get a lot more expensive.
Upper bracket income taxes and real estate taxes are going to skyrocket. These will cut into MHC profit margins and will force rents up.
Finally, on top of all of this, we are going to begin paying the price for all the borrowing and, in effect, printing of money the last several months. Several trillion dollars in new debt is going to seriously reduce the value of the dollar and interest rates are going to go back to levels not seen since the Carter Administration.
Seniors on fixed incomes are not going to see their incomes increase. The way Social Security figures cost of living adjustments seriously understates the effect of inflation. Private pensions are not going to be able to keep up with inflation and many are going to go bankrupt. Income from annuities, IRA's, etc will not go up and the value of those fixed monthly payments will be badly eroded by inflation.
In effect, seniors' incomes are going to go down due to inflation while their basic living expenses are going to go way up. I honestly don't see how they are going to afford to live. Working will be the only way to keep up, and work for retirees is very hard to find.
I am a senior and would like to retire. But the economy has forced me to indefinitely suspend any plans I had for retirement,
Age 55 parks need to start planning for what they are going to do when large numbers of tenants become unable to afford to live in their communities. I don't have any solutions. All I can do is look at this developing problem with horror and wonder why more people aren't talking about what our increasing population of retirees is going to do when this tidal wave hits. And it is going to begin hitting by the end of this year.
May 20, 2009
Agriculture Funds Sweep. Some of you know that I represent some farm groups in a suit against the State for sweeping money out of special agriculture funds into the State's General Fund. This past Monday the case was argued in the Superior Court. I guess I was so unimpressive that the initial Capitol Times article on it reported my first name as Jeffrey. Someone (not me) must have told them because they corrected the error. An article on it appears here. www.azcapitoltimes.com/story.cfm I expect a ruling before the end of May and will report it here. The odds are against us in this case given the State's desparate need for the money in this budget crises, but on the merits I obviously believe the agricultural groups should prevail.
This is similar to what the State did to the Mobile Home Relocation Fund in 2002, where I represented AAMHO and MHCA in a similar suit. There the State agreed to restore the money to the Fund and the suit was dropped.
I don't envy the Legislature. Balancing the budget is almost impossible where every spending cut is protested by powerful interest groups, and even more powerful groups oppose tax increases.
MHCA Conference. Registrations picked up at the end and, given these tough times, attendance was pretty good. Attendees evaluated the speakers and I did okay though some folks are not fans. My favorite comment was from someone saying they need bathroom breaks after each of my sessions. Evaluations are anonymous so all I can do is speculate who need the breaks, why just for me, and what kind of effect I am having out there.
May 10, 2009
Legislative Session. The focus is still almost entirely on the budget. In the rough plan that emerged last week, a number of state funds are swept but I did not see the MH Relocation Fund among them. One thing of note is that the Residential LTA (that applies to apartments and park owned home rentals) will no longer be printed and made available to the public for free. People will need to get it on line if that ultimately passes. They stopped printing the MHP LTA several years ago. Park owned home rental agreement forms will eventually need to be revised to reflect this change.
Park Drainage Problems. A number of MHP ALJ cases have recently been filed and so have some law suits, involving damage to tenant homes in parks resulting from water runoff. These can be difficult to figure out.
When parks are first developed, the local authorities require plans showing water drainage patterns. These ought to show that heavy rain runoff will be channelled around tenant homes into drywells, storm drains or retention basins, and not simply into the streets. Once the final approval is granted the drainage plan theoretically will handle rain runoff just fine.
But problems will arise for a variety of reasons.
Homes may be set up in such a way as to disturb the runoff plan. A home set too high will force water into unplanned locations. Homes set too low will allow water to run towards them that will eventually find its way under them.
Tree growth over the years will change the level of the surrounding land as underground roots force the surface higher. You can really see this when root growth under driveways cracks them.
Neighboring landowners may change the lay of their land to divert water into the park that was never planned for. It is usually illegal for this to happen but it does. Also neighbors may not be adequately maintaining their own properties resulting in their runoff plans not working. They may not be properly maintaining irrigation ditches. Small changes to adjoining irrigation canals may force runoff elsewhere.
Tenant homes may over the years just settle and become a bit lower than when installed. Skirting may be improperly installed allowing rain water to run under the home. Tenants doing their own gardening and landscaping may change the slopes and grades immediately adjacent to their homes that allows water to pool by the home and gradually get under the home. The lot should always slope away from the home.
The law gets tricky here. Section 33-1434 of the MHP LTA requires the landlord to maintain the entire park. But section 33-1451 makes an exception by requiring the tenant to maintain the rental lot. Other sections make the tenant responsible for damage when he is at fault.
Generally speaking, if water is getting under tenant homes because of a condition somewhere other than on the tenant's lot, and the tenant did not cause it, the park is responsible. If the condition is on the tenant's lot and did not exist when he became a tenant, it is his responsibility. So changes in the grading of his lot; improper set up of the home by the tenant's installation contractor; or tree growth by trees the tenant planted are his responsibility.
But if the condition was caused by another tenant or a neighboring landowner, or improper design of the park, the responsibility is the landlord's. After remedying the situation the landlord may have a claim against the other tenant or the neighboring property owner for the costs. But as to the tenant who was damaged, the landlord needs to act.
When a tenant complains about damage from rain runoff, don't just ignore him. Look into it and find out what the cause is. Often a surveyor may need to be brought in to determine the elevations and grading in the affected area.
These problems don't just go away. They almost always get worse and other tenants might be affected if they are not resolved promptly. The monsoon season will be here in a couple of months and any water problems you have been ignoring will be back to haunt you. Deal with them now.
May 2, 2009
MHCA Conference. This is scheduled for May 13-15. There is a total of 18 hours qualifying as manager training during the three day Community Managers Workshop. I will be conducting a fairly large portion of this, speaking at seminars on abandonments, squatters/unauthorized occupants/trespassers, special lease provisions, and the new eviction rules, and will be conducting the "You Be The Judge" program. Other speakers will cover employment laws, false ID's, marketing and financing homes, home installation requirements, utility billing, and overviews of other laws impacting us. This is a worthwhile event.
I am not scheduled to conduct any more training programs in the Phoenix area this year after the Conference.
Room is still available. Here is a link to more information. mhcaz.com/pdfs/MHCA09con.pdf
Government Agencies as Lienholders. Often parks find liens against abandoned homes they are trying to deal with in favor of government agencies. Examples are DES liens for child support owed by a tenant, traffic fines, etc. The most common encumbrance is the County Treasurer's Lien for unpaid personal property tax.
Personal property taxes are assessed by County Assessors each year against mobile homes in parks. Landlords assist them by providing information on home movement in the monthly assessor reports they file.
When the tax bills that are sent out are not paid, a public record is made of the delinquent taxes. This gets picked up by MVD computers and title transfers cannot occur until the liens are paid. Permits cannot be pulled and it is actually illegal to move the home while there are outstanding taxes owed on it.
After a while the delinquent tax rolls get turned over to the County Treasurer and the County Sheriff. The law requires the Sheriff to seize the home and sell it for the taxes due. The law goes on to require the Sheriff to transfer title to the home to the County if there is no bid at the tax sale high enough to cover the total tax bill.
When the taxes have been allowed by the County to build up so high that they exceed the value of the home, there can be a problem. The park needs to get title to get the home out of there. But the County cannot compromise the tax bill (though it can waive penalties and interest). In Maricopa County, at least, the Sheriff won't conduct a tax sale knowing the home is not worth what is owed. This avoids the need to transfer ownership to the County.
As a result a worthless junker continues to occupy a space with no rent coming in.
The law specifically defines the County as owning a Lien on the home for the taxes. Section 33-1478 (A) of the MHP LTA says a properly notified lienholder on an abandoned mobile home is liable for two months' space rent and future rent on the space. Since the County is a lienholder by reason of the delinquent taxes. it would seem to fit in under section 33-1478 (A).
The best course of action is to simply pay the taxes and avoid a fight with the County if the home has value. But if the home is worthless and the park is expected to pay a big tax bill to get rid of the home, it may be worth considering a notice of abandonment to the County Treasurer and maybe a suit for rent under section 33-1478 (A) if they continue to ignore the problem.
In my experience, other agencies with liens will promptly release them on receipt of a notice of abandonment and perhaps an explanation of what the situation is.
Deteriorating Mail Service. Mail service everywhere is getting worse and in some locations has gotten completely undependable. This can be a real problem for parks that have a lot of snowbirds who mail their rent checks from home when they are gone. Late mail receipt is becoming more common as is lost or misdelivered mail. It is probably going to get a lot worse soon as expected major personnel cuts are made by the Postal Service.
Some parks allow automatic deposit by tenants, and one big operator requires it. Parks that have a lot of tenants paying rent from distant locations may want to talk to their bank about allowing direct deposit of rents by tenants. Offering this as a voluntary option can be done at any time. Requiring it, however, is subject to the same restrictions as rent increases, and can almost be guaranteed to upset many tenants.
April 25, 2009
Entering Tenant Homes. I keep hearing about park managers going into tenant homes and getting into trouble because of it. This is almost always a sign of an untrained manager or owner and exemplifies why the law requires training for managers of parks.
1. Tenant Owned Homes. The MHP LTA has a provision, ARS 33-1453, that says a landlord has no right to go into a tenant owned mobile home. It also says the landlord and tenant may mutually agree in writing to allow the landlord access. Absent such an agreement there is no right to enter, even in cases of emergency. Literally read, the statute forbids entry even if the occupant of a home is screaming for help. Because of this, some landlords are including provisions in their rental agreements permitting access in cases of emergency.
2. Abandoned Tenant Owned Homes. Even after the home is abandoned it remains owned by the tenant or at least by someone other than the landlord. There is still no right to enter. That is why in landlord lien sale situations, landlords are unable to show the interior of the homes to potential bidders.
3. Park Owned Home rentals. The Residential LTA has different rules for the rental of dwelling units. ARS 33-1343 allows the landlord access in cases of emergencies. In other cases the landlord may enter after giving the tenant at least two days notice of intent to enter. Entry may only be at reasonable hours except in emergencies. A tenant giving a landlord a maintenance request requiring entry is deemed to consent to the necessary entry by maintenance personnel. Finally, in case of abandonment or surrender of the premises, the landlord may enter it. Remember, these rules apply only when the park owns the home and is renting it to the tenant.
4. Tenant Owned RV's and Park Models. The laws covering these have no provisions dealing with entry. Therefore, in the absence of a provision in the rental agreement allowing entry, there is no right to go into the tenant's unit. Landlords should consider a provision in their leases allowing entry in cases of emergency.
A landlord entering a tenant's home without authority could be charged with burglary. I once saw an instance where the manager was actually charged and arrested. The greater risk is being accused of stealing things out of the home and being sued. That is not uncommon.
Some landlords will accept and hold tenant keys to their homes. Generally that is not a good idea. In the absence of a written agreement to enter the home, what's the point in holding a set of keys. Also it opens the manager up to false claims of theft of the home's contents, and makes the manager a suspect when things are believed missing from a home where there is no sign of forcible entry.
Legislative Session. The legislature continues to work on the budget. Nothing else is happening.
Mobile Home Relocation Fund Audit. Apparently an unexpected audit of this fund was performed last week, presumably by the Auditor General. I have been questioning the use of this fund over the past year. In checking the Auditor General's website I see that it has been many years since the fund was last audited. So I welcome this audit. Hopefully it will show everything is proper. The fund has a special place in my heart since I represented MHCA and AAMHO in 2002 to stop the legislature from sweeping a couple million Dollars from it. The money in the fund comes from special assessments on tenants and reimbursements by landlords, and the use of fund monies is strictly limited by statute.
April 21, 2009
A Crisis of Ethic Proportions. A column by John Bogle appears in today's edition of the Wall Street Journal. It deals with the awful ethics shown by business leaders who looted and ran so many of our major corporations into the ground. It makes the point that these leaders placed their own personal interests above those of their shareholders and employees in managing their businesses.
The column quotes from Adam Smith as follows: "Managers of other people's money [rarely] watch over it with the same anxious vigilence with which...[they] watch over their own...They ...very easily give themselves a dispensation."
He calls for establishment of a "fiduciary society" where managers are legally required to place the interests of owners of funds held in trust above their own interests.
This is not limited to private corporations. We occasionally hear of the lawyer being disbarred because he stole money being held in his trust account. It is unfortunately not unusual to hear of children ripping off the assets of their elderly relatives who they are supposed to be looking out for.
Government too is involved here. The last few years, a variety of funds held in trust by the State were "swept". That is, monies were taken from those designated funds to help pay the cost of government that resulted from revenues not equalling or exceeding expenditures. That is perhaps the most egregious example of an abuse of trust--when a government agency takes from a trust fund and uses the money for unauthorized purposes.
Hungry Lawyers. There are way too many lawyers in this State and not enough work to keep them busy. Nothing is more dangerous than a hungry lawyer. You start seeing lawsuits filed that ordinarily would never be accepted. An area of increasing litigation involves security deposit refunds. When a landlord does not timely account for a security deposit (including the 5% interest), he becomes liable for three times the amount wrongfully withheld. Added to this, he becomes liable for the attorneys fees of the tenant's lawyer, and they can really be run up. There is at least one lawyer filing these suits who knows how landlord tenant laws work and he is having some success. The best way to deal with this is to make sure to account for security deposits in a timely fashion.
Employment Posters. Periodically private outfits will send official looking notices saying you need to disply certain workplace posters and offering to sell them to you and put you on their mailing list. The best thing to do is throw those notices in the trash. There are certain notifications that each worksite needs to post but most can be obtained for free. Here is a site to find out what is needed and how to get them: az.gov/webapp/portal/displaycontent.jsp
April 11, 2009
FBLSD Website. The Department (which regulates and licenses dealers, installers, manufacturers, etc. of manufactured homes) has a new-look website. It is also beginning to add some worthwhile information. On the Office of Manufactured Housing page you can now see a list of licensees in alphabetical order showing the kind of license they hold. It does not indicate the status of their licenses. I assume all are active and in good standing.
Given the number of scumbags who get into the dealer business and the turnover that industry sees, it would be nice to see a list of (1) licensees disciplined during the preceding period (it looks like these lists will be published monthly); and (2) the licensees whose licenses expired or were surrendered that month.
It has been common in the past for disciplined licensees to keep on doing business and no one would know their licenses had been pulled. Listing these categories would be helpful to parks and consumers to see if the person they are dealing with had been sanctioned.
But the Department is just getting started on improving its web based services and the listings it is now putting up are very helpful.
Here is a link to the homepage: www.dfbls.az.gov/
April 10, 2009
Park Model Alternatives. A new product is hitting our industry. The "Park Model Alternative" is essentially a park model except that it is bigger than 400 square feet--At least every one of them I have looked at is. According to the Arizona Fire, Building and Life Safety Department, these units are being built to federal construction standards and HUD labels are being affixed to them.
Assuming these two things are true, that they are bigger than 400 square feet and have HUD labels on them, for Arizona law purposes these are Manufactured Homes, NOT Park Models.
Arizona dealer and manufactured home regulatory law defines "manufactured homes" as units built to the federal act. To put it simply, if a unit has a HUD label on it, for those purposes it is a manufactured home. Dealers and other regulated businesses must treat them as manufactured homes, not park models. FBLSD has recently put out a Notification saying that.
The MHP LTA defines "mobile home" as manufactured homes built to the federal standards and bearing a HUD decal. The Act excludes park models but goes on to define them as being between 320 and 400 square feet. These "Park Model Alternatives" are bigger than 400 square feet and thus do not fit our definition of a park model. Since they are built to the federal standards and have the HUD label, they qualify as a manufactured home and are therefore covered by the MHP LTA.
This can have huge and unintended consequences for RV park landlords who allow them to come into their parks. Since they are manufactured homes going on rental spaces, once there are four of them in a community, it becomes a "mobile home park" under the MHP LTA. All space rentals with these units on them become subject to the MHP LTA, including the perpetual lease provisions.
Park model parks allowing these units in are going to become mobile home parks as well with all tenants placing them in the park being under the MHP LTA. All such tenancies must be documented as the MHP LTA requires. The MHP LTA rules on rent increases, ALJ complaints, rent increase conditions, utility charge restrictions, and the like will apply to them. Most notably, the ability to non-renew tenancies without good cause will be lost for those tenants.
Another key point is that since these are in reality manufactured homes going onto rental spaces, they are covered by the Mobile Home Relocation Fund that is created in the MHP LTA. Tenants are required to pay an additional personal property tax assessment on them that goes into the fund. I do not know if the county assessors are aware of this. I also do not know how the MVD is titling them. If being titled as park models ("PT"), they are probably not being properly assessed.
If my understanding is correct, that all of these units are over 400 square feet and all have HUD decals, then they are manufactured homes, not park models, regardless of what the manufacturers are calling them. Landlords should treat them as manufactured homes.
April 3, 2009
Telemarketer Scams. If you own a park, your manager can get you into trouble. If you are a manager, be careful who you talk to and what you say. Telemarketers are making cold calls to mobile home parks to sell such things as yellow page ads in yellow page directories no one reads, or ads in web sites that no one pays attention to. Stupid or careless managers will actually talk to these people. The telemarketer will carefully lead them in to commiting to advertising they don't realize they are ordering. The next thing the manager knows is that she has placed an order for the advertising, most times without realizing it.
A bill for $500 or so will then be sent to the park for the advertising. The owner will reject the bill since the manager was never authorized to order the ads. The dunns and threats will then start with the case being turned over to a collection agency. At some point the owner will be told the manager placed the order over the phone and it was tape recorded. Then you will be played a tape of the call in which the manager technically agreed to place the order. Come to find out that in Arizona only one party to a phone call needs to consent to it being recorded. The fact that the manager did not know is irrelevant.
This scam relies on the legal doctrine of "apparent authority" (see below).
Anyone getting unsolicited calls selling things or even promoting them should hang up immediately. NEVER TALK TO TELEMARKETERS!!! You owe them no courtesies. Just hang up on them. If you try to be polite they will try to induce you to stay on the line. JUST HANG UP. Never never never talk to a telemarketer. You must assume you are being tape recorded.
Some parks advise they believe the conversation taped has been altered. It is impossible to alter a discussion that never occurred. So hang up on them.
Doctrine of Apparent Authority. If an owner gives a manager the authority to do certain things. then obviously she can do them. But what happens when the manager goes beyond the actual authority given her by the owner. For example, suppose the owner makes it clear to the manager that all contracts and orders for goods and services must be approved by the owner? Suppose further the manager makes a mistake and orders something anyway? Or is suckered into it by some slick telemarketer.
If the other party to the agreement did not have actual knowledge of the limits on the manager's authority and if the sort of authority involved is pretty typical of what a business manager normally would be expected to have, the law may well conclude the manager had apparent authority even though she lacked actual authority. Thus the owner will be stuck with the contract or order even though the manager was not really authorized. This is to prevent innocent parties contracting with someone who would normally have that kind of authority from being harmed.
So even if an owner tells a manager clearly that she cannot place orders or enter into contracts, if the manager does it anyway the owner can be stuck. Telemarketers know this which is why they call park offices to make their pitches.
Owners need to ensure managers know their authority, and managers need to know not to talk to telemarketers. In my opinion the ruder you are to telemarketers or people dropping in to make cold calls and sell something, the better. Be safe. Be rude!
March 30, 2009
Thank You. To my anonymous friend, thank you! The appropriate referrals are being made.
March 25, 2009
Attorneys Fees in ALJ Cases. In a very well reasoned decision, an ALJ has ruled that the prevailing party can recover an award of attorneys fees in an ALJ case. She ruled that they could be recovered both under the attorneys fee provisions in the lease and also under a provision of the MHP LTA (section 33-1408). This is interesting because in the more than 20 year history of ALJ cases involving MHC's, the judges have always refused to award attorneys fees. They did so on two grounds. Most importantly they did so because of a Court of Appeals decision in a Registrar of Contractors case, that said an ALJ proceeding is not a "court proceeding" as the term is used in contract clauses and attorneys fees statutes. Of lesser importance is the lack of a mechanism in the law for enforcing collection once they are awarded.
In this new decision the ALJ thoroughly examined the law and legislative history and decided that the way the ALJ and landlord tenant statutes are written supports a far different interpretation than the way it works in Registrar of Contractors cases. Though she didn't address the way the award is to be enforced, in my view it can be enforced much the same way as arbitration awards are enforced.
This is a decision by a single ALJ and there is no assurance others will follow it. But in this case a different ALJ had also awarded attorney fees but his decision was set aside on other grounds and a new hearing was held. So it looks like two ALJ's are prepared to award attorneys fees.
It is possible this represents a policy shift in the Office of Administrative Hearings. The ridiculously low $50 filing fee the FBLS Department charges for these cases encourages silly filings by tenants seeking mainly to amuse themselves and to show off to their neighbors. That creates a major workload in the state agencies hearing the cases. All state agencies are having their budgets cut and being forced to furlough and lay off staff. Spending scarce resources to hear stupid time wasting cases must be very frustrating to these people under such circumstances. Once people are aware that if they lose a case they may be stuck with the winner's attorneys fees, they may reduce the number of frivolous filings.
This should also act as an incentive for both landlords and tenants to informally resolve their problems rather than file ALJ cases.
March 21, 2009
Air Quality Permits for Demolition of Manufactured Homes. I have just become aware that Maricopa County's Air Quality Department is enforcing certain federal and state air quality laws and regulations dealing with asbestos against parks demolishing and removing manufactured homes. I have not gotten into this yet except to confirm that there are laws dealing with demolition of certain structures on land that require permits and environmental inspections before demolition can take place. Other laws may restrict depositing the debris in land fills. I am not sure if the laws and regulations really cover manufactured homes since they talk in terms of "buildings" but Maricopa County apparently believes they do.
The regulations seem to require an inspection by a qualified inspector of the structure and then submission of a proper notification form with the appropriate fee to the county at least 10 days in advance. The inspection can cost around $2,000 and the county fee is several hundred dollars depending on the size of the structure.
I do not think HUD homes have ever been allowed to contain asbestos. But I am not sure of that. Anyway the air quality regulations seem to require this even when there is no asbestos present.
MHCA will look into this to see if these laws really apply to manufactured homes. My understanding is that county enforcement officials really don't understand how our industry works and the distinctions between the various kinds of manufactured homes, RV's and the like.
But for now be careful demolishing homes. Though I am concerned with Maricopa County right now, all counties enforce these laws. Here is a brochure put out by Maricopa County on this subject: www.maricopa.gov/aq/divisions/compliance/air/docs/Asbestos_Brochure_Tri.pdf
Fire Building & Life Safety Department Website Down. I don't know why but today their website is down. This can be a problem since it is our source for LTA publications, some ALJ forms and the summary of the LTA. Hopefully it is just a glitch.
Personal Responsibility. Recently a case was referred to my office where the landlord had tried to represent himself in a contested proceeding. While trying to do the right thing, he really didn't have a clue how to participate and wound up screwing the case up and making it more difficult and expensive for me to take it over. Being a fairly blunt person I told him he had screwed the case up in an effort to save legal expense.
His reaction was that it was MY FAULT, because in my park management training programs I did not devote enough attention to how landlords can represent themselves in contested cases. Obviously in the four hours I have to cover all the landlord tenant laws and practices in MHC's I can't cover everything, but this sort of thing is covered in the MHCA Grey Book.
But that's not the point. My concern is the ever increasing inability of people to own up to their own mistakes and shortcomings, and the need to play the victim. Nothing is more offensive to me that a whiney screwup incapable of taking responsibility for errors. An essential characteristic of a good manager is the ability to recognize and learn from mistakes and then take action to guard against a reoccurrence and to learn from it. Denying responsibility and playing the victim means you will learn nothing and continue to make the same mistakes over and over. After all, its not your fault.
Firearms. A bill has been introduced in Congress to prohibit possession of any firearm in the U.S. without a federal firearms license. The license would be issued upon completion of an application, submission of a thumbprint, a showing that the applicant is "qualified" to use a firearm, a certification that chlidren will not have access, and a review of any mental health records pertaining to the applicant by the federal government.
This bill will not go anywhere this session of Congress but it was apparently drafted by a national gun control advocacy group and indicates what they want to do. Though it will not pass this term, in the next eight years anything is possible. The bill is silent about what current gunowners who do not or can not get a license are supposed to do with their guns. Here is a link to the bill: www.opencongress.org/bill/111-h45/text
March 14, 2009
Legislative Session. I have not been writing much about the current legislative session because not much is happening that does not concern the budget. The state faces ever increasing shortfalls and more cuts in state services and (probably) increases in fees are in our future. No bills directly affecting MHC's have been introduced that I have seen. A few involving apartments are in the hopper but whether they will go anywhere is anyone's guess.
Update on Tips for Buyers of Parks Page. I just updated this page (click on page in left margin to read it). This alerts potential buyers of parks to problems I am seeing with parks either ignoring abandonments, unreasonably delaying dealing with rent delinquencies, or simply not processing MVD paperwork. In recent weeks I have seen several cases where landlord lien sale or bonded title paperwork was sent to the manager who did nothing with it.
In one park with about eight abandonments the owner was too cheap to pay delinquent property taxes so the paperwork is simply sitting in the office and the homes are sitting vacant. In one park the manager fixed up and re-sold the home. A year later he decided to go to the MVD to get the title only to find out that six months earlier the original owner had transferred title. Now he must start all over with the abandonment process. The home is far more valuable now and is occupied by someone who paid fair value but can not be given a title. In another park, the old manager put off applying for the title, finally was terminated, and the new manager cannot find the papers. Once again the process must start over.
These situations are indefensible and largely result from stupidity, laziness or both. They are also too common.
March 12, 2009
Taxes (old English anonymous poem).
Tax his land,
Tax his wage,
Tax his bed in which he lays.
Tax his tractor,
Tax his mule,
Teach him taxes is the rule.
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirts,
Tax his work,
Tax his dirt.
Tax his tobacco,
Tax his drink,
Tax him if he tries to think
Tax his booze,
Tax his beers,
If he cries,
Tax his tears.
Tax his bills,
Tax his gas,
Tax his notes,
Tax his cash.
Tax him good and let him know
That after taxes, he has no dough.
If he hollers,
Tax him more,
Tax him until he's good and sore.
Tax his coffin, Tax his grave,
Tax the sod in which he lays.
Put these words upon his tomb,
"Taxes drove me to my doom!"
And when he's gone,
We won't relax,
We'll still be after the inheritance TAX !!
March 11, 2009
The Economy and Age 55 Parks. In the current economic mess, expenses are rapidly going up. Parks are being hit with major increases in utility costs and taxes. Governments will be increasing fees for everything in an effort to balance their budgets since their revenues are way down. Normal expenses are going up, for example gasoline costs, insurance costs, employee health care costs, etc. In the next year or so we can expect to see increases in payroll taxes as social security taxes are increased, and anticipated income tax increases are going to reduce already narrow profit margins of landlords running parks. Borrowing is difficult and as credit quality landlords borrow money for necessary financing of operations, interest costs will increase. With the massive borrowing and spending spree the federal government has embarked on, a program that amounts to simply printing money, inflation will soon take root, and many people are predicting hyper-inflation with the value of the dollar being rapidly and sizeably reduced.
The natural way for any business to cover increased operating expenses is a combination of cutting expenses and increasing revenues. But the problem for parks is that most have already cut expenses to the bone--tenant complaints over parks not adequately maintaining themselves are common. That leaves the option of increasing revenues.
How does a landlord increase revenues? It either gets more customers or increases its prices, or both.
Getting new customers in age 55 parks is getting more and more difficult. As the WW II generation dies off or moves into more assistive living arrangements, landlords are finding that the next generation, Boomers, are not really anxious to move in and take their place. Many do not want to live in communities largely populated by people 20 or more years older than they are. Many age 55 parks are filled with homes 30 or more years old. To Boomers this makes the community look old fashioned and depressing. Boomers are not especially interested in age 55 park amenities--shuffleboard, swimming in 80 degree heated pools and putting jigsaw puzzles together doesn't have much appeal. Suffice to say that filling vacancies in age 55 parks is extremely difficult.
That leaves rent increases. Some increases in what tenants must pay each month are going to happen no matter what the landlord does. Utilities, for example are going to increase. Federal programs like "cap and trade" and the so called "green' mandates on utility operators are going to increase single family residential utility costs by a lot. Those increases will wind up with the utility companies and ultimately the government. Landlord expense increases are going to need to be covered by base rent increases. If expenses go up as much and as fast as I fear, those base rent increases are going to be dramatic.
The problem is that residents of age 55 parks typically live on Social Security and fixed income investments. While Social Security adjusts each year to reflect inflation, the index the government uses grossly understates the true extent of inflationary increases. Moreover, Medicare over the next few years is going to have dramatic premium increases that are taken out of Social Security checks.
Income from investments, typically in bonds or bank CD's remain the same in absolute dollars regardless of inflation. In other words, the real value of the investment income declines as inflation mounts.
The net effect of all of this is that when parks are going to need to impose significant rent increases to cover increased operating costs, tenants in age 55 parks will be hit by major erosions in their incomes and wealth. How in the world are they going to be able to pay what the parks will need to charge to continue operating when they are already being forced to live on less?
I have said for years that in 90% of things, park landlords and tenants are on the same side of the issues. Until about seven years ago the landlord and tenant associations in Arizona recognized this and worked together. I think the industry now faces a looming crisis in the age 55 park area. It is going to be made worse by the continuing mean spirited antagonistic attitude of these groups. They should be working together on finding solutions to the problem but instead they barely speak.
I lay most of this at the feet of AAMHO. It is time to stop trying to grow membership by encouraging antagonisms between residents and their landlords, and begin trying to work with landlords in dealing with this oncoming freight train. It would be nice if in individual parks landlords and tenants could explore what is being done now that could be eliminated or done more efficiently. Tenant volunteers might be able to take some of the workload now done by paid employees. Utility bills could be reduced by closing facilities when they don't get much use. Filing of frivouous complaints causing parks expense to defend should stop. Current tenants could try to recruit new residents to move in and quit trashing the park to their friends.
By the same token, parks should start encouraging tenant committees to form for these purposes and should begin paying attention to their suggestions. But the committees would need to operate in good faith, and not just consist of a minority of malcontents who only want to bitch about their landlord.
I think the industry faces an existential threat in the age 55 park area in the next few years. If it can't be dealt with, the only option that may remain for landlords may be to convert to all age status, enabling them to get working people in whose incomes can keep pace with inflation, and also enabling them to appeal to a much larger market in filling vacancies.
March 7, 2009
Flagstaff Discriminatiom Ordinance. I wrote on this subject on February 3. The AMA had me write the Flagstaff City Attorney a letter explaining our view that the City lacked legal authority to enact this and that it would conflict with existing federal and state discrimination laws. It was also opposed by many churches and the Alliance Defense Fund that represents religious groups in litigation. The City explained that it decided not to adopt the ordinance because of all of this opposition.
March 6, 2009
Every year when the snowbirds return to their age 55 parks they file stupid complaints against their landlords. Now is about the time of year they go to trial or hearing. Here are a few going on.
$40 Suit. A tenant sued his landlord because he got a 10 day notice to clean up his lot or the park would do so and add the cost to his rent. He refused and the park after a couple of weeks cleaned the space and added its $30 charge to his rent bill the next month. He deducted the $30 from his rent and sent the net amount in. The park refused it. Then he saw the specific provision for it in his lease and brought a new check in for the full amount. By then another $40 in late fees were due so the park rejected it again. So he paid the full amount and then sued his manager personally for the late fees in small claims. I got the case, had it transferred to the Civil Division, and yesterday it was set for trial. The judge dismissed it for many reasons and entered judgment against the tenant for the attorneys fees plus court costs.
The Messy Space Suit. After a heavy rain last summer a tenant found his space was a mess. He got someone to come out and clean it. Then he sued the park for $129, the cleaning costs saying the rain left a mess but would not have washed over his patio if the park had been correctly designed. He has lived there for many years and bought the home from another tenent who put it there around 20 years ago. That case also was filed in small claims and moved to the Civil Division. It goes to trial on Monday. We will see if he also gets stuck with major legal fees.
The Utility Overcharge ALJ Complaint. A tenant filed a complaint claiming the park overcharges for utilities because in addition to the charge for actual usage of water, it charges a base service charge each month. Unfortunately he did not read the part of the single family rate of the local city that specifically authorizes the monthly service charge. He also claims the park does not allow furloughs in charges when he is gone. He overlooked the fact that the local ordinance requires the absence be over 90 days for the furlough requirement to apply. That case will be heard later this month.
The Gas Line ALJ Complaint. The tenant replaced 75 feet of gas line from his home to the meter on another space digging up other tenant yards in the process. Then he demanded reimbursement from the park of his $2000 bill. He did this without prior notice to the park which the law requires and thus without giving the park an opportunity to verify the problem and get it repaired itself. That case goes to hearing later this month.
All of this is recreational litigation serving no purpose but inflating the tenant's ego (until he loses) and running up park expenses that ultimately all tenants wind up paying. Its good for me since I get paid to handle the cases. But it is really stupid. The latter two tenants claim they were told to do so by AAMHO. I hope that's not true.
ALJ Cases. I have not seen more than one legitimate ALJ filing in the last year. Even that one was lost by the tenants but they had a reasonable basis to believe the landlord was not treating them properly. All the rest of the cases I see are groundless and serve no purpose other that to inflate the egos of immature people. This sort of abuse is encouraged by the $50 filing fee the FBLS Department still charges. That fee can and should be set higher by the Department both to help deal with the state's financial crisis and to discourage filing of frivolous cases wasting not only its time but that of the Office of Administrative Hearings as well. Not to mention the expense of landlords that eventually gets passed back to all tenants.
Small Claims Cases. As seen above, these can be transferred to the court's Civil Division and the parties are free to use attorneys. In a landlord tenant case the winner will get his legal fees awarded against the loser. So tenants who think it is fun and has no downside should think again. Most parks will have their lawyer defend them and get judgments against tenants for their expenses.
Eviction Filings Drop. The courts and all of my colleagues report a 20% drop in eviction filings so far this year, and you can really see it in how empty courtrooms are when eviction calendars are heard. I'm not sure why this is. Maybe everyone is current on rent or maybe landlords are putting them off hoping things will work out or to avoid legal fees. I hope it's the former. If it's the latter and landlords are putting them off, that will just make the problems worse in the long run. I haven't seen this in my practice yet (I don't handle that many evictions). It is mainly apartment evictions I am talking about.
February 27, 2009
Mobile Home Registers. I have been contacted by several parks concerning the obligation to maintain mobile home registers. Apparently this stems from letters being sent to parks from the Maricopa County Assessor reminding of the need to keep these.
Parks are required by the tax code to keep these and update them monthly. The information is used by the Assessor's Offices to tax tenant and park owned mobile homes which are taxed as personal property. Tenant homes are taxed to tenants but the Assessors rely on parks for the necessary information.
ARS 42-19151 defines "mobile home" for purposes of this law as a unit 8 x 30 or larger or a smaller unit being used as a dwelling unit by someone regardless of size. Note: These definitions are different from the ones in the MHP LTA.
ARS 42-19154 requires "Landowners" to maintain registers of mobile homes as defined above, on their land for more than 30 days on forms provided by the County Assessor. Knowing violation of this is a class 2 misdemeanor. It also requires a report to be sent to the Assessor's Office within 10 days after the end of every month. County Assessors mail copies of register forms to parks in January with an instruction letter. The monthly reports are to tell the Assessor what units moved in during that month and which were either sold or moved out. Information on new home owners is also required. Reports can usually be faxed to the Assessor's Office, and parks should have their fax numbers on file.
In Maricopa County the fax number to send monthly reports is (602) 506-7335. Their information number is (602) 506-3291. In other counties check your County Assessor's web site.
The MHP LTA also requires tenants to keep this information up to date by completing and providing current assessor card information to their landlords. This appears at ARS 33-1478 (B).
This is important. Also remember that the information must be provided for park owned homes as well as tenant homes.
Employment. This morning's Republic in the Business section has an article on the increasing unemployment rate in Arizona. From January 2008 to January 2009, employment in every sector fell, on average by 6%. That of course is bad. But in one sector it increased. That sector increased from 427,900 employees in January 2008 to 433,700 in January 2009. What sector is that? GOVERNMENT!
There is really something wrong when more than 8% of the Arizona population (including children) is employed by government and when its rolls are growing when everything else is shrinking. And these numbers do not account for what will happen when the "stimulus" money starts rolling in. So hold the tears when state and local government employees start complaining about layoffs. They are in the only growth industry in this state.
February 20, 2009
New Articles. I just posted seven new MHC articles on the MHC Articles Page. They are the top seven articles in the list. As always I appreciate MHCA's permission to reprint them here. They were originally published in the MHCA publication Today and Tomorrow.
Untrained Managers. This continues to be a problem that plagues me. Today a manager mailed me an immediate eviction involving a tenant who injured someone in the park and is obviously dangerous. She sent a huge file replete with photos of his messy space and a blow by blow narrative of the violent episodes. But she never gave him an immediate termination notice for the violence or a 14/30 for the condition of the space. Only a seven day notice for not paying February rent. Knowing when to give notices and what notices to give is pretty basic stuff and I don't understand how an owner can allow a manager without that knowledge to run a park. I do not think this cheapskate owner has allowed her to attend a training class.
On this subject, new eviction rules require lawyers to get more detailed information before filing evictions and I have been requiring this for three months and sent out new eviction referral forms for that purpose. Yet many managers still send them in without this information using old forms. This only slows the process down.
Untrained MVD Clerks. We do not have a corner on the market of allowing untrained people to have important jobs. Many MVD clerks do not have a clue how to process landlord lien sale applications or bonded title affidavits. If you are seeking one of these and get turned down or experience a run around from an MVD clerk, keep calm and polite and INSIST on seeing a supervisor. Then ask her to read the policy and procedure manual section on either the Landlord Lien Sale or Bonded Title Procedure. The MVD offices don't see many of these for mobile homes and tend to get scared of them. That fear can be allayed by having them simply read the Policy Manual sections involved.
Fair Housing Complaint on Eve of Eviction. It is not unusual for a tenant to file a fair housing complaint with the State Attorney General just before an eviction is filed or a case goes to court. Most such filings are groundless acts of desperation, but the AG doesn't know that when a complaint comes in. As a rule of thumb, you should suspend the eviction to give the AG a reasonable chance to look into it. When they know how close the eviction is they will usually get right into the complaint and see if they think there is reason to believe there may be a fair housing violation. If the complaint is frivolous they will decide not to get involved in the eviction. But if you push the case to court before they have a chance to check the alleged fair housing violation out you may force them to intervene which can create big problems and bigger expenses for you.;
February 19, 2009
Embezzlement. This is a touchy subject to write about on this site since it is regularly read by both owners and managers. It is motivated by an article in today's Wall Street Journal dealing with employee fraud causing financial problems for small businesses.
Every year I get a few cases in my office involving park managers who have stolen money from the park. This is embezzlement and it is a felony. Employees convicted of embezzlement face potential prison terms and ruination of their future employment prospects.
Park managers usually deal with rent receipts and often have the opportunity to steal rents. Fortunately most managers are honest and only a few have gotten involved in theft over the years. But the effect on their employer can be devastating.
Owner Actions Minimizing Embezzlement. There are a number of things park owners can do to minimize the risk of manager theft. First, pay the manager a decent salary representing the value of what is really a very challenging job requiring skills in both human relations, knowledge of a variety of complicated laws, maintenance of real estate, and personnel and contractor management.
Second, try and provide fringe benefits including health care. I know this can be difficult to obtain and to afford. But it is not uncommon to see an honest manager start dipping into the till to help pay for the cost of major unanticipated medical bills.
Third, be aware of what is going on in your manager's life. Talk to her frequently and be sympathetic about her problems. Vacation time is necessary for anyone in such a high stress job, and owners need to understand this.
Fourth, institute cash and rental receipt controls. Impose a rule requiring ALL rents to be paid with chaek or money orders--NO CASH. If the manager makes deposits, have duplicate deposit slips faxed each deposit day. Check the deposit account on-line periodically to match actual deposits to deposit slips. Get twice monthly reports on tenants who have not paid rent. Ensure that the deposits each month match the rents being reported as received each month. Ensure that 7 day notices are served on tenants reported as not paying and that those cases are referred for eviction each month. Do not allow bank statements to be sent to the park office--have them go to the owner's office, and review them on receipt.
Fifth, if the manager has contracting authority, put a dollar limit on how much can be contracted for and ensure that you have approval authority over contracts to be awarded in excess of that authority. For contracts within the manager's authority, get at least monthly reports on what contracts were awarded, for what, and the status of their performance.
Sixth, visit the park AT LEAST once a month and make sure that some of these visits are unscheduled. Spend some time with the manager, review the tenant files, rental receipt books, etc.
Seventh, on those visits, talk to some tenants to get an idea from their perspective what is going on.
Manager Involvement. Managers need to understand that their owner doing these things does not reflect a lack of trust in them. There is an old axiom that delegation of authority without control is abdication. managers need to understand that getting feedback and making visits are simply part of good management by the park owners. Also by cooperating in their owners' efforts to gain feedback and exercise control, they avoid suspicions that they are up to no good. Everyone in a management position is accountable and this is how accountability is exercised. There are things managers can do to make the task less burdensome.
First, make sure you know what is expected. It may be worthwhile to ask the owner for a written set of instructions as to what is expected. What reports are expected and when. When standard forms can be used (for example on a rent delinquency report or a rent deposit report) ask the owner for such a form or come up with one and get the owner's approval of it.
Second, do not be resentful of these requirements or resist them. They are for your protection as much as the owner's
Third, be sure that when you hire people or contractors, they are doing their jobs and that they do not have the opportunity to steal from the park. Their dishonesty reflects badly on the manager they are working for.
Fourth, DO NOT ALLOW RENTS TO SIT AROUND THE OFFICE!!! That is an invitation for theft. Make frequent bank deposits. If something happens to rent receipts while they are in your custody, suspicion will be directed at you. Protect yourself and get those receipts into the bank.
Fifth, get owner approval before cutting deals with tenants. This includes rent incentives offered to applicants, and reducing late fees or other charges for tenants experiencing financial difficulties.
Conclusion. Difficult financial times often result in an increase in cases of manager embezzlement. Financial pressures can make even the most honest person give into temptation when it is easy to get access to the bosses' money. Prevention is the remedy. Instituting effective monetary controls will help keep the business healthy and, in the long run is in the manager's best interest.
Finally, if you are a manager experiencing huge financial problems, talk to your owner. Most owners will bend over backwards to help out and keep a good manager. This is one of the most difficult jobs to fill and park owners know (or should know) it.
February 15, 2009
Abandonments and Evictions. I just closed my books on 2008. Not surprisingly they bear out what I have been thinking all year. The abandonment files opened in my office were up more that 30% over last year, and last year saw a big increase over the year before. Evictions, however were up only slightly (2%) over last year. Since I think I do a major percentage of the MHC evictions in Maricopa County, and probably a large majority of the abandoned home dispositions state-wide, these are more than just anecdotal numbers. They confirm that abandonments are sharply increasing. Part of this is the effect of the Employer Sanctions Law that caused a lot of Illegals to leave the State. And part is the economy that is forcing people to lose their homes. Interestingly, most of the increase in abandonments seems to be double-wides.
Parks normally stay on top of their evictions and refer the case before the tenant gets too many months behind on his rent. But in the abandonment area, I often see parks referring matters over in bunches, almost like homes have been sitting abandoned for months, even years, before the park gets around to doing something about it. That is crazy. The quicker the matter is handled the quicker the home can either be removed or sold/rented to a new, paying tenant. Remember that it takes around 90 days to get the matter resolved after the process is started--normally a landlord lien sale.
February 9, 2009
Frustrating Client/Manager Questions. Sometimes I get so frustrated with the lack of thinking or knowledge on the part of Park operators I feel like throwing up my hands and retiring. But I bravely toil on. Here are some questions I got today alone, before noon:
1. A park that asked last week if it should/could be doing its own evictions as a cost savings device, called to advise it had accepted and deposited the February rent after I had filed an eviction, but not the legal fees or the January rent. I have been telling parks for over 20 years not to accept partial payments or payments after evictions have been referred without court costs and legal fees. But it keeps happening.
2. A park selling a mobile home accepted a trade-in as a down payment and let the buyer move into the new home. But it didn't get a title to the trade-in and now the buyer is telling the park he does not have it, it wasn't in his name anyway, and he does not know whose name it is in. Now it faces the expense of a landlord lien sale or bonded title.
3. A park sold a mobile home it did not have title to. The buyer paid for it and moved in. Later the park discovered it did not have title when the tenant started requesting it. An MVD record showed the owner of record so a landlord lien sale was scheduled and took place. Paper work was sent to the operator after the sale. The operator now asks if the paperwork can be changed to incorrectly state that the person the home was sold to who is living there bought it at the sale so the operator can avoid the hassle of getting and then transferring the title. The operator doesn't realize the paperwork consists of an affidavit under oath and falsifying it is a felony for which he could be prosecuted.
4. A manager called the day before court on two cases saying she accepted and deposited partial payments from both tenants without court costs and legal fees and wants to know whether she still needs to go to court and what to tell the tenant about court tomorrow. The answer is (1) don't accept part payments; (2) but if you do, come to court anyway and have the tenant there so the mess can be worked out.
5. A manager wanted to know if the amount of rent bid at a landlord lien sale resulting in the home being bought can still be collected from the tenant since there is an eviction judgment in that amount. The answer is No. Once the amount owed is spent it cannot still be collected. The park using that debt to buy the tenant's abandoned home is no longer owed the money and the judgment must be satisfied (i.e., cancelled).
On being questioned, all of these people are "too busy" to read this web site.
February 7, 2008
Increased Eviction Costs. Some parks will experience increased legal fees in the future resulting from the new eviction rules. My fees will not increase because of this but other attorneys will have no choice but to increase fees to recover added costs resulting from the new processing time and paperwork required by the new rules. Since I was already doing those things anyway the rules do not impact me. But I was charging more than my colleagues anyway so I suppose this will just narrow the gap between us.
One area causing increased expense is the location of Maricopa County JP courts into new central facilities. This vastly increases driving distances between parks and the courts that serve them. It really is ridiculous to think that Anthem is served by a court located at 135th Ave and Bell Road. Or that parts of Glendale have to drive to Buckeye. Process server fees are partly based on mileage and if the process servers are really doing their jobs and serving papers, their fees are going up. Likewise with court constables who also charge mileage when enforcing writs of restitution. And this distance factor also results in more tenants not being able to get to court for an eviction hearing, and in witnesses being even more reluctant to come to court.
New FBLSD Web Site. The Fire, Building and Life Safety Department has redesigned its web site. It is much more user friendly and contains valuable data. For example on the Landlord Tenant Information page you can print out both the short summary of the MHP LTA that parks are required to provide tenants, and the full LTA itself. The LTA booklet has excerpts from other laws as well. I wish they had excerpts from title 12 dealing with evictions, and from chapter 3 of title 33 of the ARS covering general landlord tenant principles that supplement the MHP LTA like the Secretary of State's version of the Residential Act has. But overall this is a good product.
The redesigned site is streamlined and eliminates a lot of fluff that served no purpose. Visit it here: www.dbfs.state.az.us/
New OAH Web Site. The Office of Administrative Hearings has also redesigned its web site. It is cleaner than before but still cumbersome. Overall it is a bit more user friendly but still difficult to do research on. This is the agency that conducts hearings in tenant conplaint cases filed with the FBLSD. You can visit the site here: www.azoah.com/index.html
February 3, 2009
Relocation Fund Reimbursements. I wrote about this on January 26. The Department has advised it was in error. In reading the statute I can see how such an error could be made since there was an amendment to the rent increase relocation statute a year after it was enacted that made reference to reimbursements. It should have been cleaned up before being added to remove that reference but was not (I might be to blame for that--I don't remember). But that language did not change the fact that landlords do not need to reimburse the fund when relocations are due to rent increases.
I commend the Department for promptly remedying this. That is one of the nice things about Fire, Building & Life Safety. They are small, the people there know their business, and they are responsive. It is for these reasons I worry about how the current State budget cuts can hurt them.
Proposed Flagstaff Discrimination Ordinance. Flagstaff will consider adoption of a broad anti discrimination ordinance that will apply to housing as well as any other kinds of business including employment. In addition to the kind of discrimination we already know is prohibited, the proposed ordinance will expand coverage of its law to people on account of marital status, gender orientation, sexual identity, ancestry and appearance. It would also encourage affirmative action plans to remedy "past discrimination". The City Council will consider it on February 9. I think it is a mess and there are many legal questions whether Flagstaff even has the necessary authority to adopt such an ordinance.
Cutting Legal Expense. I had two calls today involving landlords trying to figure out how to save money cutting legal expense. Two areas were questioned.
Evictions. One landlord asked if he could do his own evictions. Court rules say an owner of a park can file his own evictions. If the park is owned by a corporation or partnership, an officer or partner can do it. The court may ask for proof of the position when the person appears. Employees including managers cannot do it. The law is that only attorneys can represent others in court. If you are an owner and are considering this, be sure you know what you are doing. I could save money by doing my own dental work, but I don't since I don't know how and mistakes are very painful. Also, limit it to non payment cases and be sure to bring full records of all payments.
Abandonments. Much the same thing can be said. These are very complicated since so many things can go wrong and so many considerations must be taken into account. MVD will reject applications for landlord lien titles or bonded titles for technical errors. But it can be done and for that reason MHCA publishes the Purple Book. Buy one and learn it before attempting this.
If I had my way, managers would be doing rental evictions. Unfortunately the Arizona Supreme Court sees things differently and prohibits this in its rules, allowing only owners to handle their own evictions.
February 1, 2009
Serving Termination Notices. Many, perhaps all JP's are going to start dismissing eviction cases unless the termination notice (e.g., 7 day, 14/30. etc.) was either hand delivered to a resident in the tenant's home or sent by certified mail. They have said they are going to do this even if the tenant really got the notice by some other means. Any park not already serving notices personally or by certified mail but instead posting or sending them by regular mail, needs to change its practice. If the JP's really do this, any other means of delivery will be a complete waste of time.
State Budget Reductions. A final Bill was enacted over the weekend making severe reductions in the current State budget in order to balance it. I have written before about how this can affect the MHC industry. Since the agency cuts are pretty big, there is little doubt we will be affected; the only question is how.
Attorney General. The AG took a net reduction of $2 Million. That is around 8% of the total budget. But that agency had been planning on it since late last year and had taken a number of steps including laying off 20 employees to prepare. In lobbying the legislature, Attorney General Goddard told them he could live with a $2 Million cut but would need to terminate a lot of critical employees if the cuts were larger. Originally the legislature wanted to reduce the AG budget by nearly $4 Million. By getting it down to $2 million (including a couple of fund sweeps), the current level of the AG's operations should be unaffected. Since our industry gets involved with the AG in fair housing complaints, further cuts could have slowed down the processing of those cases. Hopefully they will continue to be handled expeditionsly as they are now.
MVD. MVD is part of the Arizona Department of Transportation (ADOT) which took some large cuts. I am not familiar with how ADOT/MVD funds its operations but it looks like the source of money for title and vehicle inspection enforcement took a $400,000 reduction. If that is where vehicle inspection funding is, it explains why we now have to use contractors for Level I inspections. If this is a bigger cut than ADOT expected we may have trouble getting MVD out for Level II inspections. Also we may be looking at increased title and registration fees.
Office of Administrative Hearings. This is where our landlord tenant complaints are heard. The ALJ's that decide them work there. It is a very small agency mainly employing experienced lawyers as ALJ's and a small administrative staff that supports them. Its total 2009 budget was $1,284,700. It was cut by $166,800. That's a big amount to make up in the five months that remain this fiscal year. If they haven't had a hiring freeze and experienced some voluntary staff departures, making these numbers in five months will require layoffs. This will undoubtedly delay hearings from being scheduled, something I am already seeing. But it could also encourage the FBLS Department to start actually screening out the groundless and frivolous complaints it gets instead of just sending everything over to OAH.
Fire, Building & Life Safety Department. The original 2009 budget was $3,586,800. It has now been reduced a total of $458,500. That's a pretty staggering cut. It is the number the legislature started out with and the Department either didn't try to get it reduced or was unsuccessful. Given the fact it is run by Napolitano holdovers, its lack of influence is not surprising. Like OAH, how bad this affects them depends on whether they were prepared by doing such things as imposing a hiring freeze. The independent funds administered by the Department were not swept and it will be interesting to see if it tries to recover some of the money cut by the legislature from those independent funds, notably the Mobile Home Relocation Fund. I heard the Department awarded a consulting contract to a former industry association executive, so I would be surprised if they have been planning for a cut of this magnitude. FBLSD is involved with the industry in a number of ways, and many of us know and like people who work there. But it seems unlikely they can cut their spending without layoffs.
Even Arizona Highways Magagine had $1,500,000 taken from its fund. I seem to recall that it is very close to being closed down, and has survived only because this fund exists. I have no idea of its real financial situation, but I sure hope this doesn't kill it.
These are hard times but many people have seen this coming for years. The State has been spending like a drunken sailor for the last six years with big new programs in education and elsewhere. Capital spending has been through the roof at both the state and local level. Bond money has been raised and spent like there's no tomorrow. All this spending was based on revenues coming into the government that were dependent on the housing bubble never bursting. When it finally did burst, the revenues coming in could no longer support the spending and cuts had to be made. Its too bad and it can largely be blamed on the political leaders at that time who acted as though there were no tomorrow. Well there is always a tomorrow and it is now here.
January 26, 2009
Relocation Fund Reimbursements. The Relocation Fund was created in 1987. At that time a number of parks were closing because we were in another real estate boom and land was being redeveloped for other uses. Tenants had no protections back then and were sometimes losing their homes since they could not afford to move them. Several protections were built into the law in 1987 for tenants. Perhaps the most important one was the Relocation Fund.
As originally written in 1987, the Fund would raise money with special assessments on tenant homes. Tenants forced to relocate due to a change in use could get substantial financial assistance covering the cost of moving the home from the Fund. Once the tenant homes were gone, the park landlords were required to partially reimburse the Fund the cost of the move. This was to be $500 for a singlewide and $800 for a doublewide.
Over the ensuing 22 years a lot of changes were made to the Fund statutes. A big one was in 1999. That year a new law was added to the fund statutes, ARS section 33-1476.04. This new law provided that if a park increased rent by more than 10% plus CPI in a 12 month period, the Fund would pay similar benefits to tenants who chose to move their homes out rather than pay the new rent.
Unlike the change in use law, the rent increase statute did not provide for a landlord reimbursement after a tenant moved. The theory was that this would amount to a tax on a landlord for raising the price of his product and there could be significant constitutional problems with such a tax.
Today a file was referred to me where the Fire, Building & Life Safety Department was demanding reimbursement to the Fund of $800 each for tenants who had moved out due to a rent increase. The demand letter was quite threatening and the landlord was intimidated. And, of course the Department was wrong in trying to do this.
I hope this was an isolated mistake. Since this is the first time I have heard of this happening in the ten years the rent increase statute has been on the books, it probably was.
But one never knows and it is possible that after receiving such a letter, other parks may have simply sent in the money.
If you are a landlord or know of a landlord who has received a demand for reimbursement for a rent increase relocation, please let me know. Do not confuse this with change in use relocations where reimbursement is required.
January 24, 2009
Post Eviction Workouts. In a majority of eviction cases I am handling these days, the tenants are showing up at Court. Almost all of them are for non payment of rent. Sometimes the tenant has some money but sometimes he has none. For the most part these folks are working people who have lost their jobs due to the economy going down the toilet. They are not used to being out of work and broke.
Often they are so embarrassed about their situation that they have not tried to talk to the park manager before Court, and it is humiliating for them to be in that situation.
I have a strong policy of trying to engineer post eviction arrangements for tenants to get caught up on rent and to reinstate their tenancies. It is mainly for that reason that I require managers to accompany me to Court.
The deals I work out involve these elements.
First the tenant must agree to an eviction judgment being entered. This judgment, standing alone, declares that he owes the rent, late charges, court costs and attorneys fees incurred in the eviction. I review the rent breakdown with him to ensure he understands it and that all of his past payments have been credited. Once the Judge signs this judgment the manager can have the tenant removed from the property.
Second I talk to the tenant about what he can afford to pay and when he can pay it to get the judgment paid off in a reasonable amount of time, never more than 6 months and usually in 3 months or less.
Third, I prepare an Agreement Not to Execute to be signed by both landlord and tenant. This agreement says that the park will not enforce the judgment and that the tenant can continue to live in his home in the park as long as he complies with his obligations under the agreement. The main obligation is to make periodic payments as specified in the agreement so he can get the judgment balance paid off. Other obligations are to keep future rent current and to comply with all provisions of his rental agreement and the park rules. Violation of any of these obligations gives the park the immediate right to enforce the judgment and have the tenant removed from the premises.
Once the tenant gets the judgment paid off, I file a Satisfaction of Judgment with the Court that makes the judgment no longer effective, and his rental agreement is reinstated. Unfortunately you can't unring a bell; the entry of the judgment will be noted by the credit bureaus and will go on his credit record. But the record will also show it was paid. It is far more preferable from the tenant's point of view to avoid having a judgment entered at all, but that requires payment of everything due including court costs and attorneys fees before Court, and most tenants in this situation don't have the money.
These agreements work out more than half the time, but in a sizeable number of cases the tenant doesn't make all the payments and winds up being forced to move anyway.
Parks are well served by this practice since it keeps a space rented and delinquent rents are collected, albeit somewhat late. A home abandonment with all the associated costs, is avoided. And the park vacancy rate does not increase. In a tough economy, when you have a tenant, it is worthwhile to work with him to try and retain him.
The new Court Eviction Rules make my practice a lot easier to do than before. Judgments can be enforced for up to 45 days after entry without explanation of the delay. They can be enforced more that 45 days after entry by the park filing a motion to enforce it, explaining that the delay resulted from an agreement that the tenant later broke, and that the agreement itself provides for enforcement if that happens.
Ultimately the decision whether to do such an agreement is up to the park. All I can do is recommend it which I do unless there are some independent reasons to want the tenant out of the park.
They Are Trying to Take My Home. I hear this so much that my response has become automatic. This is what tenants facing eviction often say about the landlord. The eviction is really a pretext for the park to get the home so it can be sold to someone else. This has risen to the level of an urban myth. When I hear it I try to explain how ridiculous that statement is.
1. If the park wanted to own and rent dwellings it would own apartments. If it wanted to buy and sell homes it would be a dealer. But a mobile home park landlord got into that kind of business because it does NOT want to own and either rent or sell homes.
2. If the tenant is evicted and moves out, abandoning the home, the park will then be fighting with a lienholder over rent and will never get paid everything due. If the home is free and clear the park will incur several hundred dollars in legal and MVD related expenses in getting title. Since that process takes around 90 days, another three months space rent will be lost.
3. If the park winds up getting title to the home, it owns a white elephant. Older mobile homes are a glut on the market and there are hardly any buyers out there. In addition, by the time the park gets title the home is normally a wreck inside. If the home is to be resold or rented, often the park must spend thousands to refurbish it. It is then often unable to sell the home for what it has in it, especially considering even more space rent goes uncollected as work is done on the home. Frequently after getting title, parks need to have homes hauled to the dump--the final expense.
This is something the parks typically want nothing to do with. They are in the business of renting spaces, not disposing of old junked homes. While the individual home may have sentimental and monetary value to the tenant living in it, usually on the market they have little or no value.
It is partly for this reason that parks are usually willing to enter into Agreements Not to Execute with tenants being evicted, so they can avoid the hassle and expense in dealing with another abandoned home. Any reader of this website knows that there is a glut of abandoned homes parks are dealing with now, and no park wants to add to that.
January 21, 2009
Relocation Fund. There is a "hit list" of special purpose funds targeted for possible seizure by the State in its effort to balance the budget that I have reviewed. Somewhat to my surprise and relief, the Mobile Home Relocation Fund is not on it. So unless the list is expanded, it looks like that fund is safe for the time being from being swept.
Evictions. These continue to come in in high volumes. I have mentioned before that many parks allow several months of rent to accumulate before sending the termination notice and referring the file for eviction. While there may be good reasons for this in some individual instances, as a general policy it is a mistake. The deeper in debt the tenant gets the less likely it is he can work out a paymant plan enabling him to stay. This means he will either move out after getting the termination notice or being evicted, or will file for bankruptcy. Stay on top of these situations and don't fall for false promises or sob stories simply designed to buy time by a tenant who cannot pay.
Writ of Restitution Enforcement. A new manager enforcing her first eviction judgment called me today upset that the Constable, acting upon the writ of restitution, would not remove the tenant and lock her out. He explained that the park needed to provide "cuffs" with which he could lock the tenant out without changing the locks. The manager did not know this and was upset with everyone including me. It is the landlord's responsibility to provide the cuffs.
In Pima County, I am told, Constables carry cuffs with them and will sell them to the park at their cost if the park does not have them. But in Maricopa County and, I suppose the other 13 counties, they do not do this. Since the landlord does not own the tenant's mobile home, the locks on the home itself cannot be changed. The remedy is to use the cuffs which go over the door knobs and prevent the tenant from being able to turn the knob. These are also called door knob "clamshells". You may need to call around town ar locksmiths or hardware stores to see who carries them in stock, and make sure what you get will fit MH door knobs.
Parks should probably have about four of them in the office. They will last forever and four should allow two writs to be enforced at the same time.
They only need to be kept on the home until the tenant has removed his belongings.
Also remember that parks can cut off park furnished utilities once the writ has been served, and that if the tenant comes back without park permission after being removed by the Constable the police can be called and are supposed to trespass or arrest him.
January 17, 2009.
Relocation Fund. I have reviewed the proposed list of fixes for the current year's budget shortfall and next year's as well. To help balance the current year's budget (the year ends June 30, 2009) the legislative appropriations committee chairs are suggesting a sweep of "agency funds" of $191 Million. You can read the proposal at www.azleg.gov/jlbc/AppropsBudgetOptions011509.pdf.
The Governor also submitted a budget proposal. This will probably be ignored since she is about to be replaced, but is nevertheless interesting. Her proposal calls for "agency fund" transfers of $111 Million to help balance the current year's budget. You can read her proposal at azgovernor.gov/dms/upload/NR_011609_BudgetNewsRelease.pdf.
"Agency funds" are special purpose funds held and administered by individual state agencies. The Fire, Building & Life Safety Department holds and administers the Mobile Home Relocation Fund among others. While there is no list I am aware of yet of what specific funds are going to be targeted, it is hard to imagine the Relocation Fund escaping again like it did last year. Agency funds are in addition to other large funds being proposed for transfer.
Other Areas Cut. Reading through the Appropriations Chairs' proposals, one can see that many of the spending reductions are going to based on specific agency cuts. They are talking about lump sum cuts on agency budgets of 10% for the rest of this year (5 months) and another 15% for the next fiscal year. They are talking about overall salary reductions in agencies of 4.2% the rest of this year and another 10% next year. Unless agencies have had a lot of people leave and not be replaced this year (i.e., since July 1, 2008), there will need to be layoffs to make this kind of reduction between Feb. 1 and June 30, 2009.
Finally the Chairs of the Appropriations Committees envision specific agency reductions and/or suspensions. In other words they will be looking to suspend or eliminate agencies and/or functions that are non-essential, over and above the other cutbacks.
Why Do I Care?. I am concerned because the MHC industry and even residential landlords in general are directly impacted by a number of State agencies. The FBLS Department obviously has an impact on the rehab, installation and construction of manufactured homes. They license brokers and dealers and audit their operations to ensure they are honest. These are extremely important to the industry.
Handling consumer complaints to ensure they don't get screwed by brokers, manufacturers and installers when people buy new homes is also very important. It is obvious this agency is going to get funding cut and my concern is that it recognize there are far less important areas it is involved in that should shoulder the burden when the cuts take place.
We are also impacted by the Civil Rights Division of the Attorney General's Office. The AG to his credit has anticipated this problem. In addition to a hiring freeze in recent months, the AG earlier this year announced layoffs. That is hard to do given individual hardships created by job losses. But doing it earlier means fewer people will need to be laid off overall since the salary savings start kicking in immediately. Like any other area there are critical functions at the AG's Office and some that are not so critical. I hope and believe their management will recognize this.
One thing about the CRD is that its fair housing enforcement is subsidized by the Feds. Hopefully this will mean that cutbacks there will be minimal.
We are impacted by the MVD as well. MVD has had a hiring freeze for a while. We have had a problem as it scrambled to reallocate its employees to deal with its workload. That is one of the reasons it stopped allowing in house inspectors to do Level One inspections in MHC's. MVD does the title work on manufactured homes and processes our landlord lien sale and bonded title work. The industry is really dependent on their efficiency in getting homes titles transferred in all kinds of transactions.
This is the tip of the iceberg. Members of the MHC industry should not delude themselves that State budget cutbacks will not affect them. We will be directly impacted by what the new Governor and legislature does between now and January 31 when I expect the current year's budget cuts go into effect.
January 15, 2009
FBLSD and ALJ Matters. A few years ago the ALJ statutes were amended to cover complaints by Home Owner Association members against their HOA's. Like MHC cases, the idea of this was to give residents of communities under the control of an HOA the ability to file an efficient and low cost complaint against the HOA. The same procedures applied to the hearing and processing of these cases as MHC cases.
A couple of months ago a Superior Court Judge ruled the HOA ALJ process unconstitutional as violating separation of powers principles. That is, that an Executive Branch hearing officer can not exercise responsibilities reserved by the Statre Constitution to the Judicial Branch. That was the same argument I made and lost in the Cactus Wren case that was decided in 1993 by the Arizona Court of Appeals.
The Superior Court in holding the HOA hearing statutes invalid ruled that unlike the MHC statutes, where the Court of Appeals found them to be part of a greater regulatory scheme covering the manufactured housing industry, the Fire, Building & Life Safety Department had no authority over HOA's other than what these statutes gave it, and they are strictly ministerial. In my view the Court of Appeals was in error in finding the authority to regulate manufactured homes also included authority to regulate mobile home parks. But the decision is nearly 16 years old and the ALJ process works fine so I am okay with the outcome.
Looking this over made me wonder about the disparity in filing fees. Since no one appealed the Superior Court decision, and since it does not set precedent, the HOA statutes remain in effect. The Department continues to accept HOA case filings.
The filing fee for an HOA case is a minimum $550.00, and a multiple count case filing fee is $2,000.00.
The filing fee for a MHC complaint is $50.00 regardless of the number of counts.
The Director of the Department sets the filing fees. Since the expense and manpower to the Department and the Office of Administrative Hearings of handling both kinds of cases is comparable, I would sure like to know why there is such a disparity in filing fees.
With the huge budget deficit the legislature is now wrestling with, it strikes me as indefensible that the Arizona taxpayer is subsidizing the filing of MHC cases almost to the extent of giving the complainants a free ride.
My Views Alone. I have made a number of comments in recent months about the Fire, Building & Life Safety Department and some have questioned why. Historically this has been a small, highly efficient agency that performed its functions well. For the most part that is still true. But I remember when it was formed that most of its functions were drawn from other agencies. Since then a few new ones have been added, most of which in a financial crises can be deemed non-essential. Examples are the MHC and HOA hearing functions.
The Fire Marshall is a square peg in a round hole and has nothing to do with the rest of the functions. The core responsibilities have to do with regulation and licensing of dealers, manufacturers and installers of manufactured homes, installation standards, upgrading standards for older homes, etc. These things are really important. Probably the single most important function in my opinion is trust and escrow account auditing.
Without getting too detailed, I simply think that when every nickle needs to be carefully spent, there are far more cost effective ways to perform these functions than with the current structure of this Department. And for the same reasons I think the non-essential functions should be dispensed with.
I helped run a massive reorganization and downsizing of a huge federal agency in the early 1970's. We laid off several thousand loyal career civil servents. Those were good people, and 35 years later I still have nightmares about it. The State government is about to go through this now and in some agencies (e.g., the Attorney General's Office) it has already started. Since it is going to happen I would just like to see some thought given to what needs to stay and what can be dispensed with.
In any event I am just one guy speaking only my own mind,. This website states repeatedly that these views are mine alone and do not represent the views of any client or anyone else. That means exactly what it says.
January 14, 2009
Abandonments. Abandoned mobile homes are continuing to increase, at least in my experience. Today alone 15 files were referred to my office. While a lot more than normal, not a day goes by that two or three files are not received.
Since traffic on this website has picked up over the last few months, I suspect and hope that this increased volume is the result of information on what to do about abandonments being available and not simply an increase in tenants walking away from their homes.
Some park operators are trying to handle the abandonment procedures themselves and save legal expense. That is always a good idea provided the park is familiar with the process. It is for that reason the MHCA publishes the Purple Book. One thing to be aware of however, is that MVD procedures have been changing and late last year I rewrote the Purple Book. Anyone with a Purple Book having a publication date before 2008 has a badly obsolete version. MHCA will exchange the old cover for a new book at a discount from the normal purchase price.
Even the new veraion of the Purple Book is a bit out of date since it was after the date of publication that the MVD changed its policies regarding on-site Level One inspections. So any park trying to handle its own abandonments should frequently check this page for new developments.
I wrote a few weeks ago about one park referring 14 files on a single day. Remarkably, when the first notices went out on these to the owners that their ownership of the homes was in jeopardy, about a third of them sent money into the park to get current on rent. The park collected thousands of dollars in delinquent rent and avoided having to go further with the process on those homes.
This is not typical, unfortunately. That particular park contains many rentals constituting vacation homes that are not occupied year round. Nevertheless, the results confirm that while doing nothing will only allow the situation to get worse by having unpaid rent continue to accrue, taking action can and sometimes does result in rent getting paid. And even if it doesn't, at least it gets the ball rolling on getting the home disposed of and the space restored to a rentable status.
Federal Tax Liens. It doesn't happen often but occasionally a federal tax lien will encumber the title of a mobile home, especially one that has been abandoned. The difficulty with tax liens is that they are effective upon recording with the County Recorder. We do not check for liens of any sort with the County Recorder Offices since mobile home liens are filed with the MVD. A tax lien recorded with the County Recorder will not show up on an MVD report. Nevertheless the federal tax lien is effective anyway.
If you are handling an abandonment situation and hear even a rumor that the home owner was in trouble with the IRS or had tax liens, do not finalize the case until verifying whether there is a tax lien. The park's attorney can look into it. If evidence of a tax lien is found, a deal will need to be made with the IRS to get a tax lien release.
If the abandonment is finalized and a tax lien is later discovered, the IRS can come back and assert it against the home. It is easiest and best to deal with suspected tax lien situations before the disposition of the home is final.
January 11, 2009
Relocation Fund Sweep?. An article on the front page of this morning's Republic discusses in graphic detail the severity of the money shortfall facing the State. It didn't mention that there have already been some State agency layoffs. The Attorney General's Office laid off 20 employees including attorneys last week. This is just a hint of things to come.
Blood is going to flow as State programs get eliminated, agencies either get terminated or are required to lay large numbers of employees off, and interest groups scream about what is happening to their pet programs. The article refers to three lawsuits challenging earlier actions that could make the situation worse. One of those is a suit I am handling against the State challenging the legality of a "sweep" of money out of three agricultural funds into the general fund. A decision in the case may come as early as March. It could affect the ability of the State to take money out of some, but not nearly all, special purpose funds.
The legislature is not about to raise taxes. But user fees are a different story. State fees of all sorts are going to go up. In addition, many, if not all remaining special purpose funds are probably going to be swept , maybe taken in their entirety.
The Mobile Home Relocation Fund got away unscathed in last year's sweeps. I doubt it will be so lucky this year. With several million dollars and a history of carrying large balances forward from year to year, it is a sitting duck for a sweep. In addition at least one influential legislator is no friend of the fund to begin with.
FBLS Department Affected?. This is truly a non-essential agency. There are some important functions there that can be transferred to other agencies. But there is also a lot of non-essential fluff. Moreover it is overstaffed due to workload cutbacks resulting from the economic downturn.
On top of these things. it is headed by Napolitano appointees. The head of the Department of Real Estate has tendered his resignation due to the change of Governors. If the new Governor's administration becomes aware of the existence of this small agency, I would expect to see changes in its leadership as Gov. Brewer makes her own appointments as agency executives.
Management may survive because the agency is so small and obscure, and financial cuts may be avoided because in the context of the budget as a whole. the funding for Fire, Building & Life Safety is a drop in the bucket. But if called on the carpet to explain and justify their existence I hope they are able to point out that what they do is within their authority, and why their programs are so important in a time when funding for schools, universities and health care is being eliminated and when State prosecutors are being let go.
January 10, 2009
Tree Maintenance. Section 33-1434 of the MHP LTA says the landlord is responsible for maintaining the "Premises". The "Premises" is defined in section 33-1409 as the entire park. But section 33-1451 says the tenant is responsible for maintaining that part of the "Premises" that he rents in as good condition as when he moved in. That all means the tenant maintains his rental space and the landlord maintains the unrented spaces and the common areas. That is simple and makes sense.
But trees have been a big problem over the years. Big trees are expensive to keep trimmed and dangerous if not maintained. If a big tree is on a rental lot, the above statutes place the responsibility for maintaining it on the tenant. The tree is, after all, part of the space. But tenants and AAMHO officers over the years have attempted to read section 33-1434 as requiring the landlord to maintain them and conveniently ignore section 33-1451.
An ALJ case in Tucson in 2007 considered the question of what to do when trees on rental spaces die. That case held that the responsibility for dead tree removal is the landlord's, even when trees are on tenant spaces. In that case which was very poorly handled by the park, it appeared that the rules requiring tenants to maintain their trees was not being enforced. The ALJ noted that section 33-1434 required the landlord to maintain the "Premises". But nowhere in the decision is section 33-1451 mentioned, and it appears that statute was not pointed out by the landlord or discovered by the ALJ. Moreover, it can be argued that removal of a dead tree is not the same as maintaining a live one.
The net effect is that the ALJ decision is at least partially incorrect, mainly because the park did not adequately defend itself. Fortunately ALJ decisions do not set precedent.
In all likelihood the result would have been the same however, even if all parties had fully briefed the law. That is because park rules required tenants to maintain their trees. The decision made it pretty clear that the rule was not being enforced. Section 33-1452 of the MHP LTA requires landlords to enforce their rules, and they can be found responsible for not doing so.
AAMHO has been holding District meetings in its various districts in recent months, where they have told their membership that this case requires park landlords to maintain trees on tenant spaces. Because that is not what the case says and because the case was not decided on the correct law, that advice is simply wrong. Nevertheless, park landlords can expect to see complaints and probably more ALJ case filings on this issue in the future.
As a side note, I think as a matter of policy and for various liability reasons. that it is a good idea for parks to nevertheless maintain big trees everywhere in the community. Of course this will result in higher rents.
Here is a link to this decision. Insert the case number 07F-L067022-BFS in the "Matter ID" field and when the result comes up, click on the case number link to read the decision. portal.azoah.com/search1400/Default.aspx
Perhaps the biggest lesson here is the price you pay by representing yourself in a case you really don't understand, and losing it.
January 6, 2009
Untrained Managers. I am seeing a sharp increase in new MHC managers with no experience running mobile home parks. They are being turned loose to manage a park without a clue as to how it is done. They don't know what forms to use, how to document an eviction, how to prepare a rental agreement, when and when not to accept partial rent payments, what the late charge rules are, etc. It is really scary to think that owners would turn such valuable assets as mobile home parks over to people with no idea what they are doing.
Moreover, I seriously doubt many of them are being screened since the rate of turnover is high and more than one instances I am aware of involve embezzlement. Finally the damage to tenant relations inflicted by bad or inexperienced managers can be irreparable.
Managers are hard to find and the job of mobile home park manager is complex and extremely difficult. When an owner finds a likely candidate, he (or she or they) should be screened. Once hired, they need to get support. It is stupid to think an inexperienced manager can step into such a demanding job with no training or support. Get the new manager enrolled in the next MHCA training class (the law requires training anyway). If the owner has another park in the state, that park's manager should be assigned the job of mentoring the new manager and giving some on the job training. Ownership must maintain a very close relationship with the new manager.
If an absentee owner has only one or two parks with new managers, it would be wise to engage a property management firm that specializes in mobile home parks. There are a few of these active in Arizona. Check the MHCA membership listings for their identity. Mobile home property management firms can assist in or even handle the hiring of on-site managers.
Fair Housing Violations Increase. I have been previously advised that the Attorney General's Office has been receiving more and more complaints about fair housing violations in age 55 communities and discrimination against children in family communities. I wrote on it late last year in my 2008 Blog. Today I learned from the City of Phoenix which also investigates fair housing complaints, that the number of cases where it finds there were actual violations has increased substantially. Part of this can be attributed to inexperienced managers and part to the fact that fair housing training is not being taken seriously.
One recurring problem I am seeing is management putting out blanket restrictions on children in the community, far beyond those in local curfew ordinances. This is a sure-fire way to get into trouble. If you have kid problems in the community don't simply "ground" all the kids there. Identify the violators and take the matter up with the tenants in whose household they reside--just like you would if any other member of the household committed a violation.
Good management is the key here, and it is a sign of poor (or very frustrated) management to try to punish all kids for the violations of some. And, of course, such action in all-age communities, also violates fair housing laws.
January 3, 2009
Happy New Year. I really don't like the New Year holiday. I am starting out this year as a grouch. I think it is going to be a terrible year on many fronts--economic and otherwise.
But I decided to brighten the New Year by posting an alluring photograph on my home page and several others around the site.
I will keep my 2008 Web Log page up for the next several months but this one will have new updates.
Legislative Session. Like the flu, the New Year brings with it another session of the Arizona Legislature. I am not aware of any Bills damaging to the residential landlord industry being introduced yet. The hopper has been open since November so that is a good thing. My guess is that this session will be preoccupied with getting the budget under control. State agencies are going to have their spending and probably their staffs severely cut, probably starting in February. Expect to see cuts everywhere. In my areas I foresee cuts in personnel in the AG's Civil Rights Division and in the Fire, Building and Life Safety Department. While the CRD is not really over staffed, they have hired a number of new people in recent months and that may have been a mistake.
FBLSD is another story. They are over staffed due largely to workload reductions resulting from the economic slowdown. Given the fact that the MVD is cutting back on many of its services that the MHC industry uses, it would seem a natural thing for BFLSD to try to take some of them over or at least get an interagency agreement negotiated (I am thinking mainly of performing verification inspections on abandoned homes). But I don't see them doing anything. I hope for the best for them.
Evictions. I have been writing over the last year about the new court rules that went into effect on January 1. Denise Holliday, an attorney at Andy Hull's Office has been following these and there is a Memorandum (December 15) on Andy's web site describing how the rules will be affecting them and their clients. Bear in mind that Andy concentrates on apartment evictions and the article is directed at them. Notice periods, etc are different for MHC's. Here is a link: www.doctorevictor.com/news.html
The information contained on this site is not legal advice and does not create an attorney-client relationship with the user. Landlord-tenant and fair housing laws are always changing and are subject to interpretation. You should always consult an attorney before taking any action.
This is an attempt to collect a debt. Any information obtained will be used for that purpose.
Michael A. Parham
Williams, Zinman & Parham, P.C.
7701 E. Indian School Rd., Suite J
Scottsdale, AZ 85251
Phone: (480) 994-4732
Fax: (480) 946-1211