SEE NEW 2016 BLOG BEGINNING 1/1/16
CORPORATIONS and LLC's TAKE NOTE
Anyone naming me as statutory agent in the past must make updates to their records with the Arizona Corporation Commission reflecting my current address. The agent should be changed to Williams, Zinman & Parham P.C. Be sure to send the papers to us because we need to sign the acceptance. Call Denise at our office for details.
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) 2015 by Michael A. Parham. All rights reserved.
December 24, 2015.
Parks Selling. This is really an unbelievable year when it comes to parks changing hands. This week alone I have been asked to review transactional and loan documents involving the sale of three parks. This is in addition to a number of other sales now pending that we are involved with. This is a far larger number than anything I have ever seen in past Decembers.
I do not think apartments are selling at a comparable pace to MHC's, though there are a lot of them being sold. I think its a good sign about the health of a shrinking industry. I say this because at this time a significant number of older parks are being closed and there are no new ones I am aware of being develped.
Year End Numbers. Our firm filed a record number of evictions in 2015 and also opened files on a record number of abandonments. Evictions were up mainly because we attracted a number of new clients. Abandonments were up largely due to the number of parks being closed that were forced to deal with abandoned homes they had been turning a blind eye to in the past.
I have never understood that mindset since ignoring the problem of abandoned homes in these parks probably contributed a great deal to the ultimate need to shut them down.
December 18, 2015
Dodd Frank Reform Fails. MHI, the industry national trade association in Washington has been lobbying for years for amendments to the Dodd Frank Act to eliminate the barriers it poses to manufactured home sales and financing. MHI had been optimistic the bill it was pushing would get through. I was doubtful it would since we are such a low priority in Washington, and also believed that Dodd Frank reform as a stand alone bill would be vetoed.
Apparently MHI tried to get it added in to the gigantic budget bill that just cleared Congress. If that had been done it would have probably not be vetoed. But it was not to be. The negotiators of the budget bill elected to omit Dodd Frank reform.
Next year is an election year and I don't expect anything of significance will get done by Congress, and a lame duck President is going to have a quick veto pen anyway.
So it looks like we are stuck with Dodd Frank in its current form for the foreseeable future.
December 11 MHC Manager Class. About 100 folks showed up for this class last Friday. It was another good audience. There were a lot of new managers there and I hope thy profited from the class.
January 22, 2016 MHC Manager Class. My next class will be in Glendale in January at Palm Shadows. The rest of my 2016 classes will be outside of Maricopa County. Contact MHCA to register at 1 (800) 351-3350 or (480) 345-4202.
December 14, 2015
City of Phoenix TPT Tax. As a result of tax increases approved by voters last August, the Phoenix transaction privilege tax on residential rentals will rise from 2% to 2.3% beginning January 1, 2016.
December 10, 2015
Appeal Decision. We just prevailed in an appeal of a very difficult case. Melissa handled the initial appearance in an eviction of a snowbird last spring who was out of town at the time and got an eviction judgment against him.
When he found out what happened he sought to have the judgment set aside. Melissa appeared at that hearing and prevailed again.
He filed a second motion to set the judgment aside. Melissa was by then on maternity leave so I appeared and conducted an evidentiary hearing on the merits of the case and we once again prevailed.
Then the tenant got an attorney and she filed a number of motions including another motion to set the judgment aside. Scott appeared at the hearing on those and we again prevailed.
Following this the tenant through the same attorney filed an appeal. By now Melissa had returned so she handled the appeal. This morning we got the decision. It was several pages long but upheld our position on each and every issue. The court also awarded attorneys' fees against the tenant.
This case has cost our client a lot of money to prosecute and is an example of how unreasonable litigious people can use the legal system as a weapon to hurt others they don't like. This is a risk every landlord takes when he gets into the rental business--that he will rent to a litigious tenant.
We try to minimize the pain and expense of these cases to our clients as much as we can. But they are still difficult for clients to deal with.
Holiday Evictions. This was in my 2009 Blog around this time.
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.
December 7, 2015
Pearl Harbor Day. On this day in 1941 the Japanese attacked Pearl Harbor. A memorial now exists over the remains of the USS Arizona.
I lived in Pearl Harbor from 1951 to 1953, long before the memorial was built. In 1950 the Navy built a wooden platform and flag mast on the boat deck of the Arizona. The hoisting and striking of the colors over the USS Arizona became a familiar tradition at Pearl Harbor during the 1950s.
That is what I remember of the Arizona--just the stark remains of the superstructure sticking up out of the harbor. The colors were raised in the morning and taken down at night to the sounds of Retreat by a crew using a launch to go out for the ceremony. Ships coming into and leaving the harbor would salute the Arizona, a tradition that continues today.
Here is what the Arizona looked like when I lived at Pearl Harbor.
December 5, 2015
Refugees. We have read a lot recently about the controversy over refugees being taken in by various charitable groups in the U.S. A lot of them are winding up in Arizona and I have been getting to know some of them.
So far this year I have represented landlords in evictions against a single Iraqi lady, a single Rwandan man, and earlier this week a man from Angola with a wife and two kids. In each instance they had been placed in apartments they could not afford; they had not learned to speak even rudimentary English; and if they were employed, they were working for minimum wage in menial jobs.
It seems to me like the resettlement agencies are bringing these folks here, putting them in housing, and then abandoning them--at least in these cases. They probably feel real good about themselves but they don't seem to be around when the refugees are on their own, without money to pay the rent, unable to speak the language, and feeling helpless in society and in particular in the Americal legal system.
I keep hoping that when I read about taking in refugees, I will also read about integrating them into this society so that they do not wind up homeless in a society that is alien to them
Park Closures Under Fair Housing Laws Part 2. I wrote about this in my July 10 Blog entry. Essentially I talked about how the recent U.S. Supreme Court decision approving Disparate Impact as a test for housing discrimination could releate to park closures. The idea is that most parks about to be closed are largely inhabited by minorities and the closure would have a "disparate impact" on those minorities. But, as I pointed out there is language in the decision saying "practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system" may be legitimate anyway.
In an article in the September 2015 WMA Reporter, two officials with MHI speculated on the effect of this disparate impact decision on community closures. They referred to an Iowa Law Review article involving a series of park closures in the Boise, Idaho area. Those parks had disproportionate numbers of single female residents. The article apparently speculated that they could have complained of a fair housing violation based on sex since the closures had a disparate impact on females.
That article actually appeared in the Idaho (not Iowa) Law Review in 2011 but it has now been taken down by the University and I was unable to find it on line or on the MHI website.
Nevertheless it is easy to see why someone would speculate that a closure of a community with a disproportionate population of people in protected classes would trigger disparate impact claims. But unlike 2011 when the Boise cases took place and the Law Review article was written, we now have the Supreme Court decision to guide us. It clearly makes the point that these sorts of actions having a disparate impact are acceptable if the action is to secure a legitimate goal, specifically including profit.
Discussions I have had with the Attorney' General's Office also make it clear to me that the community owner's efforts to minimize the difficulties faced by tenants in parks being closed will go a long way towards avoiding such claims being made. The MHCA program is thus even more valuable under this decision. The WMA article made the point that these considerations need to be part of the owner's due diligence before closing a park, and I agree with that.
November 29, 2015
December 11, 2015 MHCA Training Class. I am doing one for MHCA in Scottsdale on Friday, December 11. My next one will be in Glendale in January and the rest of my 2016 classes will be outside of Maricopa County. Contact MHCA to register at 1 (800) 351-3350 or (480) 345-4202.
Untrained Managers. With the sale of so many parks recently, a lot of new managers have entered the industry. The law has requirements for managers to receive at least six hours of training for MHC managers within six months of first hire and every two years after that.
MHCA offers meaningful training several times a year. Unfortunately AAMHO also offers it and many parks choose that since it qualifies, mainly because it is much cheaper. The problem in my view with AAMHO training is twofold. First it makes no sense for a tenant association to be training landlord employees. Second, I really don't think they are qualified to train managers based on reports back to me on what is being said at their classes.
That aside, it seems that many managers are either not learning anything no matter what course they choose or are not getting trained at all. Every day we are confronted with requests from managers who obviously do not have the faintest idea what they are doing. We get eviction requests from managers who have not documented their cases or given proper notices.
The way the law is written, only classes offered by MHCA or AAMHO satisfy the training requirement. Other training is nice but does not mean that qualifying training is not required.
FBLS Department. This small agency licenses and regulates local manufactured home manufacturers, installers and dealers, and does a good job. It also houses the State Fire Marshall which is a function of questionable efffectiveness but probably is in no danger of being abolished. And it administers the MH Relocation Fund which given the existence of the fund and the number pf park closures is pretty important. The rest of what it does is largely unnecessary.
Governor Ducey has been in office for close to a year. The former Department Director has left and the job has been held on an interim basis by the Deputy Director for a long time. This is a patronage job and it seems like it would have been filled by now. But that may not be the case if the Department was to be abolished and its core functions farmed out to other agencies, and there are rumors circulating that this may be what is planned.
I don't have any inside information, and despite the many aggravations the industry has had with this Department over the years, we are probably better with it than without it.
We may learn something about the Department's future when the next public budget cycle begins.
November 22, 2015
2016 Legislative Session. The Arizona legislature goes back into session in mid-January. While planning by lobbying groups goes on year round, it kicks into high gear as we approach the holidays.
MHCA has a strong legislative presence. As it’s long time legal counsel and one of its registered authorized lobbyists, I annually draft the MHCA legislative proposals and review other bills affecting the MHC industry.
This year the MHCA bills will seek a number of cleanup changes to the MHPLTA that has become outdated in many areas. We will also seek to impose some controls on unethical and unlawful activities by poachers, and to clarify MH abandonment procedures.
Separately MHCA is looking into trying to relax regulation by county health departments of tenant uses of community kitchens, especially for potluck events.
MHCA is optimistic this legislative session. Legislative proposals have been drafted and are being formatted as Bills for introduction by sponsoring legislators when the opening date for submission arrives in December.
Of course like the scorpion killing the frog while crossing the river on his back, we expect AAMHO to oppose everything just because they are sponsored by landlords. Even when it hurts their own interests, their opposition can be expected.
Park Sales. So many parks have sold this year and so many prominent operators have entered the Arizona market in 2015 that it is breathtaking. And the year is not over yet. I am aware of at least eleven pending major park sales that will probably close this year, with at least one more national operator entering the market here in a big way.
Despite our problems, we are a desirable place to operate MHC"s due to many factors including healthy legal climate, low cost of living, great weather, and affordable MHC prices.
Of course availability of funds at very low interest rates helps too.
November 13, 2015
Anticipatory Releases. Many parks have facilities where residents who are not properly using them could be injured. Parks will often require residents to sign a form releasing the park from liability if they are hurt while using the facility.
This is called an “anticipatory releases”—a release in anticipation of possible harm.
The Oregon Supreme Court recently concluded that a ski area's anticipatory release from personal injury negligence claims was unconscionable and therefore unenforceable. The Court applied a multifactor analysis in concluding the release violated public policy, was unconscionable and therefore was unenforceable.
The Court did not say all anticipatory releases would be unenforceable in the state, but they would be subject to a case-by-case analysis. Courts will examine the terms of the release and the circumstances in which they were entered. This examination will include whether the release language is conspicuous and unambiguous, whether there is disparity in the parties' bargaining position, whether the release is offered on a take-it-or-leave-it basis or if there is an opportunity to negotiate the terms of the release, whether it is offered in the course of a consumer transaction, whether enforcement would result in a harsh or inequitable result.
Arizona is not Oregon and it is an open question how Arizona courts would deal with this issue. But I have always believed that too much faith is placed in the protections supposedly gained from the use of anticipatory releases. There is just no substitute for good liability insurance coverage, especially when the park may be sponsoring hazardous activities or operating potentially hazardous facilities.
November 11, 2015
Zeman Homes. This Chicago based multi-park operator has just purchased two parks in North Phoenix, its first acquisition in Arizona. Just another example of how popular this market has become with out of state operators. Read more about it here.
November 10, 2015
Semper Fi. Today is the 240th anniversary of the founding of the U.S. Marine Corps.
Veterans Day. Tomorrow, November 11 is Veterans Day.
November 7, 2015
Due Diligence Assistance. With so many parks changing hands, one area of our practice that has taken off is due diligence assistance. We have already been providing loan opinions in conjunction with financing. Due diligence is now one of our hot areas.
Before closing on a purchase a buyer will have negotiated a period of time in the purchase and sale agreement during which he can investigate the property being purchased to determine if it is an appropriate property to go forward with. At the end of this due diligence period, the buyer will make a go or no-go decision on proceeding with the purchase. With so many buyers chasing so few parks, the decision is usually to proceed.
Things looked at during this time will vary by park, location and buyer, but at the least include zoning, land use restrictions, tenant relations, rental documentation, rent increase history, prior litigation including ALJ and fair housing complaints, and utility issues. Many parks are on septic systems and this entails extra due diligence to review the history of those systems, availability of municipal sewer in the area, getting the systems inspected and transferring the rights to operate them.
Rent increase histories and restrictions on the ability to increase rents is important as well. If park owned homes are involved, or financing carried on past park owned home sales is being transferred to the buyer, those transactions must be reviewed. The lender financing the purchase may have restrictions or requirements concerning these issues that need to be dealt with.
Major national park operators love the Arizona market and smaller operators from Florida, California, Idaho, Michigan and other places are also interested in Arizona parks.
Drainage Case. Another ALJ decision concerning damage to tenant homes resulting from improper drainage to and through the tenant rental space has come out. I was not involved in that one--thank God. The hearing went for 2 1/2 days and the decision was 32 pages long. But the result was the same as in cases I have handled over the years. Where the tenant does things on the space that change the drainage plan created when the park was developed, the tenant, not the landlord is responsible for the damage to the home that results.
Such changes happen when homes are set up and proper grading of the lot to slope away from the home is not done; when concrete slabs are poured later blocking drainage channels and diverting water flow; when skirting is not correctly installed or maintained; when tenant landscaping interferes with planned water flow, etc.
People are always looking for someone else to blame for their misfortunes. All too often that is the landlord.
Tricon. TriCon Lifestyles Communities bought three east valley RV resorts last week. They have previously purchased three metro Phoenix manufactured home communities.
TriCon Lifestyles is a subsidiary of TriCon Capital. TriCon Capital Group is an asset manager and principal investor focused on the residential real estate industry in North America with approximately $2.3 billion of assets under management.
They have ventured into the Arizona market in recent years and are on track to becoming one of our largest park operators.
Read abourt this transaction here.
October 31, 2015.
Rising to the Bait. We recently tried an immediate eviction case where the tenant chest bumped a manager and made threats. But the manager refused to back down and engaged in a heated confrontations with the tenant. At the end of the trial the judge was very critical of both parties but especially the manager and denied the eviction. While he didn't say so, he probably did this because he believed the manager was at least partly at fault and his conduct in part provoked the tenant.
Park staff should NEVER allow themselves to be provoked. Do not rise to the bait. If you do, you have lost the confrontation. Always stay calm and if an encounter gets heated just walk away. Thjere is plenty that can be done after the fact with termination notices including material and irreparable breach (immediate) termination notices.
But as in this case, if the manager is found to be partly at fault the judge is likely to deny the eviction. When that happens do not blame the judge or your lawyer. Look in the mirror and blame yourself.
Know Thy Lease. A park recently wanted to give a rent increase. It asked that one be prepared advising that all tenants were on month to month renewals of expired one year rental agreements. Month to month agreements enable 90 day rent notices to be given any time and effective 90 days thereafter.
But it turned out that this park's lease said it renewed year to year, not month to month, and the next renewal date was almost another year away. A MH space rent increase must always be preceded by a 90 day notice and can only be effective on the expiration/renewal of the rental agreement next following the running of the 90 day period.
This error cost the park nearly a year's worth of the planned rent increase amount, a big sum of money.
Its hard to understand how a park does not know the basic terms if its rental agreements but this is not uncommon.
October 24, 2015
Rent Increases. The government has announced that there was no increase in the CPI index used for calculating Social Security benefit increases so there will be no increases in benefits in 2016. Social Security recipients are in effect frozen at this year's level next year.
But when it comes to Medicare, the CPI had a huge increase meaning the Medicare premium is going up a lot. For people having Medicare premiums withheld from their benefit checks there will be no increase. But for the 25% of Medicare beneficiaries who do not have the premiums withheld, the premiums will go up by around 50%.
Anyone with half a brain knows inflation is significant for ordinary living expenses and Social Security beneficiaries are going to be hard hit next year, especially those whose sole income is Social Security. I think it is clear the government cooks the books on the CPI to avoid paying more benefits out.
Age 55+ parks raising rents need to take into account the effect of rent increases on fixed income seniors. It would be a shame for rent increases to backfire by triggering evictions, abandonments and higher vacancy rates.
Unbundling Utilities. Parks are looking at this again as a source of additional revenues without having to raise base rents. "Unbundling'" refers to beginning to separately charge for utility services that were previously included in the base rent. For example many parks in the past included sewer and trash service and often water in the base rent. When they are broken out and separately charged, that is an unbundling.
Since they are paying more for what they get than they were previously, tenants are getting a rent increase. Accordingly tenants are entitled to a 90 day notice and it cannot be effective until the expiration and renewal of the tenant's rental agreement.
Utility charges cannot exceed the local single family residential rate. If a metered utility like water is involved, separate meters need to be installed at each space and readings taken each month to determine consumption since part of local single family water charges depends on how must is used each month.
Sewer is unusual since there is no meter involved. But sewer charges normally adjust under local rate structures each year depending on winter month water usage. That requires water meters to determine. Parks without meters can probably charge the minimum base sewer charge but cannot add anything that depends on checking water consumption.
Parks also need to give a relocation fund assistance eligibility notice if the increase plus all others the preceding 12 months exceeds in the aggregate 10% plus CPI. CPI is effectively Zero in the applicable index these days. The only way to avoid giving the eligibility notice is to keep the unbundling increase below that level.
Home Sales Escrow Requirements. Parks that are also licensed MH Dealers, normally with D-8 licenses are subject to statutes dealing with sales transactions and accounting for funds. ARS § 41-2180 requires all used homes sales for $50,000 or more to close through escrow with an escrow agent. It also requires all new home sales regardless of the selling price to close through escrow. The $50,000 threshhold does not apply to new home sales. All must close through escrow.
But there is an exception built into the law for MHC's with dealer licenses if they choose to take advantage of it.
A dealer may qualify under ARS § 41-2180 (C) as one selling new homes to be located in parks owned by or affiliated with the dealer and post a $100,000 dealer bond. In that case, all new homes sold that are to be located in a dealer affiliated MHC qualify for closing through the dealer's trust and escrow account and do not need to close through escrow.
To qualify under ARS § 41-2180 (C) (2) the dealer must satisfy the FBLS Department that it shares common control with specifically identified MHC's and increase its normal $25,000 dealer bond to $100,000.
This exception only applies when a qualified dealer is selling a new home that will remain in the MHC. And it has no effect on used home sales which, if over $50,000 must still close through escrow.
October 17, 2015
Dangerous Breeds And Fair Housing Laws.Most parks have rules restricting pets. Many parks have rules prohibiting dangerous breeds.
A number of studies of death and injury caused by dogs show certain breeds have a higher incidence of attacks by certain breeds. But while there is a correlation between breed and frequency of attack, many experts believe that being one of those breeds does not necessarily mean the dog is dangerous.
Others believe the numbers speak for themselves and safety dictates those breeds be excluded from residential areas. Many individual homeowner insurance policies prohibit homeowners from owning dangerous breeds or exclude coverage for their actions.
However it is somewhat of an urban myth that park liability insurance policies require landlords to prohibit tenants from owning them. While some park policies may do so, I have seen many that contain no such provisions.
I recommend a dangerous breed prohibition in park rules and regulations. But beware of the effect of the requirement to make reasonable accommodations.
It is a violation of Fair Housing laws for any person to refuse to make a reasonable accommodation in rules, policies, practices, or services, when such accommodations may be necessary to afford a person with a disability equal opportunity to use and enjoy a dwelling. This can include exceptions to pet restrictions when necessary to allow the disabled resident to have an "assistance animal."
In an April 30, 2013 publication, HUD defines “assistance animal” as an animal that “works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identified symptoms or effects of a person’s disability.” In other words, an “assistance animal” can be any type, breed, or size of animal and does not have to be trained or certified.
The HUD publication provides that when a resident makes a request for reasonable accommodation involving an assistance animal the request may be denied if: "(1) the specific assistance animal in question poses a direct threat to the health or safely of others that cannot be reduced or eliminated by another reasonable accommodation, or (2) the specific assistance animal in question would cause substantial physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation."
HUD goes on to say that breed, size, and weight limitations may not be applied to an assistance animal and that a determination that an assistance animal poses a direct threat of harm cannot be based on "mere speculation or fear".
In other words, if a resident requests an exception to a pet restriction to allow a dangerous breed assistance animal, and backs the request up with medical evidence of the need for the dog, the landlord is usually going to need to approve it unless there is evidence that that particular dog has caused injury or damage in the past.
Tucson Manager Class. I conducted an all day training class for MHC managers in Tucson yesterday. We had a really engaged and attentive audience. Sunland Asphalt sponsored the class and provided breakfast and lunch which they cooked up on their grill. Our thanks also to Far Horizons East MHP that allowed us to use their clubhouse.
Here a picture of Sunland cooking up the burgers for lunch.
October 15, 2015
New WZP Newsletter. We just published a new one for MHC's. Read it here.
October 10, 2015
MHCA Manager Training Class in Tucson. I am doing one on Friday, October 16 at Far Horizons East MHP in Tucson. MHCA training classes consist of 4 hours landlord tenant law and 3 hours Fair Housing law. They satisfy state law MHC manager training requirements. To sign up call MHCA (Nancy) at 1 (800) 351-3350 or (480) 345-4202.
October 9, 2015
Ex Manager Eviction. We handled an eviction of a former resident MHC manager earlier this week. The community is owned by an individual who hired the manager.
The manager's employment agreement gave her the right to live in one of the park owned homes as long as she was employed. Her employment was properly terminated and the termination notice required her to vacate the unit within five days.
But the manager refused to move out. The employer and manager got so caught up in their personality disputes and in their fierce arguments over petty matters that were irrelevant to the termination and requirement to vacate that it became a nightmare.
Both of them became frantic over so many irrelevant disagreements that neither could focus on what the case was actually about--the loss of the ex-manager's right to live in the manager's unit since she had been terminated.
Fortunately we were able to deal with these situations, to calm both parties and get the Judge to focus on the real issues. The eviction action was successful.
Happily this only rarely happens. Almost all managers we deal with are skilled and professional in their jobs. But about once a year we encounter a case like this and often emotions are running high on both sides.
It is always a mistake to let emotions take over, especially when court action is involved.
Park Owned Homes When Parks Are Being Financed. Every ten years or so, many park operators are faced with mortgage loans coming due and the need to refinance the park. Sometimes parks being bought need to be financed.
Freddie Mac is relatively new to the business of financing mobile home parks. They tend to finance more affordable housing communities than other lenders like Fannie Mae or commercial lenders. Freddie Mac will also finance parks that have park owned rental homes.
However financing these parks and securing the big mortgage loans on the park owned homes gets tricky. The main asset being financed is the land the park is on and that is real estate. There is some personal property like the clubhouse and park office furnishings, park golf carts, security deposits, etc. that are personal property and financed with UCC filings with the Secretary of State and County Recorder.
But park owned homes are titled like cars and financing them involves title searches and filings with the MVD and getting the mortgage loan noted on the titles to these homes as first liens.
Institutional lenders are not used to MVD filings.
A Freddie Mac lender recently engaged us to lay out a roadmap of how park owned homes can be used to secure park mortgage loans. We hope this will enable more parks to get this kind of financing and be allowed by lenders to keep park owned homes since the law has made it so difficult for tenants to finance their own homes and rentals are replacing them.
October 2. 2015
Abandonments. We set a new record in the number of abandonment files opened in September. We opened 50% more new files than in the biggest volume month previously.
This really is not good news. Many of the new files came out of parks being closed or rehabilitated and have been opened to get titles on homes that are worthless and need to be junked. The existence of these homes just sitting there and decaying probably added to the ultimate need to close the park.
Evictions. We set another record in September for evictions. We filed more eviction cases in September than in any month in our history. This broke the record from this past July which in turn broke another recent record.
I don't think there are any more evictions being filed in Arizona than in recent years--though there are a lot since the economy still stinks. Our increase instead results from landlords discovering us and switching work to us since for the same price we provide a superior work product.
Emotional Support Pig. Melissa discovered this article reporting on an autistic child in Chandler having a pot bellied pig as an emotional support animal. Chandler wants them to get rid of it since it violates zoning laws prohibiting livestock in residential areas. Chandler is probably going to lose this one.
I remember a case many years ago where Show Low tried to prevent a disabled resident from having a miniature horse for similar reasons. The Attorney General litigated with them and Show Low had to back down.
Fair housing laws require municipalities to make reasonable accommodations to zoning regulations when necessary to enable disabled residents to live in the community--just like landlords need to do.
Firearms in Parks. The Oregon college shooting yesterday raises the question of what landlords can and should do to regulate firearms on the premises.
The Second Amendment restricts the power of GOVERNMENT to regulate guns. But landlords are not the government.
Arizona has a tradition of responsible gun ownership. Many of our residents are veterans, hunters, law enforcement personnel, and shooting enthusiasts. But there are some mentally impaired people, violent people and bullies who misuse firearms.
We believe it is impractical to try and ban firearms altogether from residential communities though some landlords do so. The reason is that it is simply not possible to effectively police what people keep in their apartments or houses.
In addition, in mobile home and RV parks the landlord has no right to enter the home for any purpose without the tenant's prior consent.
Finally, concealed carry is generally lawful in Arizona and it is impractical to prevent that on the premises.
But we think a rule prohibiting PUBLIC display of firearms by anyone except sworn law enforcement personnel on the premises is enforceable and makes a lot of sense. At least it will minimize the risk of guns being used to bully or intimidate and prevent conflicts that can easily escalate to a gun battle.
September 26, 2015
The Eviction Process. I find a lot of confusion out there over how the eviction process works. There are a lot of new managers out there but sometimes even the experienced ones get confused.
I had one case this past week where a squatter tried to pay rent but on our advice the payment was refused. Then when we filed the eviction, we sought the fair rental value of the premises in addition to the eviction order. The manager was irate that we would seek rent after she had refused the squatter's attempts to pay before eviction, and to this day is convinced that we don't know what we are doing.
So here is a refresher on eviction basics.
Before an eviction can be filed, a proper notice of termination of rental agreement or demand for possession must be properly served on the tenant or occupant and the required time periods must have expired.
Filing the Eviction
Once the termination notice or demand for possession has matured, a summons and complaint must be prepared. The summons contains the trial date and is directed to the defendant telling him he is the subject of an eviction action. It tells him when the initial court date is. The case will be set for the initial appearance a few days after the case is filed.
The court will file the original of the complaint upon payment of a filing fee. The clerk will provide copies for the process server who must serve the defendant with the summons and complaint. The law requires the tenant to be served several days prior to the first court appearance.
Trial Court Proceedings
On the initial appearance date, the judge will review the case file and be sure that everything required by the law or eviction rules is in it. If the defendant does not show up, the judge will confirm that the termination notice or demand for possession is in proper form, that it correctly informs the defendant of the reason for the eviction, that all required time limits have expired, and that there is no apparent reason to delay granting the eviction judgment.
If the defendant appears, the judge will ask him if he has any legal grounds to contest the eviction. Hard times, financial problems, and unrelated disagreements with the landlord are not legal grounds to dispute it. If there is no legal basis to dispute the eviction, the judgment will be signed. If there are, the case will usually be set for trial a few days in the future at which time both sides will present their cases and the court will decide.
A losing party has five (5) calendar days after the judgment is signed to file a notice of appeal. A defendant wishing to appeal must post several bonds and is supposed to pay rents while the appeal is pending.
A timely filing of a notice of appeal will suspend the enforcement of an eviction judgment if the proper bonds are posted. Before the file actually gets sent to the Superior Court that decides appeals, appeal papers continue to be filed with the J. P. Court.
If a material and irreparable breach eviction judgment is appealed, and the dangerous situation continues after the notice of appeal is filed, the landlord may file a motion seeking to lift the stay of execution of the writ of restitution. In this case, the J. P. Court is required to treat the motion as an emergency matter and to conduct a hearing on the motion within three days.
The law is unclear whether the court can allow the writ of restitution to be enforced under these circumstances if the defendant has paid rent to the court. If the motion is granted, the writ will be enforced by the constable and the tenant removed despite the pendency of the appeal.
Enforcement of Judgments
Most judgments do two things; they award a sum of money to the landlord and they award possession of the premises to the landlord. Most of the time money judgments are simply not collectible.
The judgment for possession will order the tenant to vacate within five calendar days after it's entry. An exception is a material and irreparable eviction where the tenant only has 24 hours to move out. This means the tenant and all of his belongings must be removed from the premises within five calendar days (24 hours in a material and irreparable eviction).
If the tenant is not out by then, the landlord may have a writ of restitution issued. That is a directive from the court to the constable to forcibly remove the residents and their belongings from the premises.
If the landlord waits more than 45 days to apply for a writ, he must give a satisfactory explanation why it took so long.
The normal practice of the Constable is to visit the tenants, give them a few days to move, and tell them they will be forcibly removed if they don't leave voluntarily. Most of the time this will be the end of it; the tenants will move.
If the tenants refuse to move, it is then up to the Constable to forcibly remove them. The landlord needs to have lockout devices to go over the doorknobs for the constable (sometimes called “cuffs” or “clamshells”). Many locksmith shops sell these. At this time, utilities provided by the park can be disconnected.
If former occupants return to the home after the constable had removed them, they can be arrested for criminal trespass. Unless they have the landlord's permission to enter (for example to get their possessions), the landlord should call the police if they are seen in the home.
This does not mean they can't visit other people in the community; only that they cannot go back into the home without the landlord's consent.
September 18, 2015
Unconscionability. ARS § 33-1411 of the MHP LTA says that "Unconscionable" provisions of park rules and rental agreements cannot be enforced. The term is not defined in the Act but there is a definition in the Kentucly landlord tenant laws that is as good as any. It says:
"Unconscionable" means an act or conduct which is willful and is so harsh and unjust as would be condemned or considered to be wrongful and would be shocking to the conscience of honest and fair-minded persons.
A recent ALJ case held several provisions of a park's practices in routinely not allowing co-residents (unless they were on the home's title) to live in the community to be unconscionable under this statute. The ALJ found that the restriction was not in the park's rules or leases, though it was in the application form and tenants generally were aware of it. The case was brought by tenants with elderly or disabled family members they wanted to live with them so they could take care of them.
The park proved the tenants had not requested reasonable accommodations under fair housing laws and had not taken advantage of a state law permitting beneficiaries to be identified on mobile home titles, and simply found the practice was unconscionable.
The decision might have been different if the restriction was actually in the lease and/or park rules. But maybe not.
The lesson is to be aware of especially harsh consequences flowing from park rules or policies. If too harsh in the mind of a Judge, they may be declared unconscionable and unenforceable.
Electronic Rent Payment. Many parks are adopting ACH (Automated Clearing House) payment service that enables them to electronically collect payments from residents for rent by directly debiting resident checking or saving accounts. This is a good process. Residents who agree to allow ACH payment must first authorize the park to debit their bank accounts for the amounts due. Authorization must conform to the requirements of the ACH Operating Rules and must be either written and signed, or electronically displayed. See www.nacha.org for more information.
This is different from permitting residents to make a direct deposit. That is a deposit of money by a resident directly into a landlord's bank account. Direct deposits are most commonly made by businesses in the payment of salaries and wages and for the payment of suppliers' accounts, but the facility can be used for payments for any purpose. Direct deposits are most commonly made by means of electronic funds transfers using online, mobile, and telephone banking systems but can also be done by the physical deposit of money into the recipient's bank account.
If a tenant makes direct deposits, he chooses the amount to be deposited (as opposed to ACH where the landlord debits the tenant's account for the proper amount). If the tenant puts in less than the full amount due, it is a partial payment, but the landlord does not have the ability to reject it. Once discovered, of course it can be returned but that is not a refusal. And it often takes days or even weeks to figure out the deposit was only a partial payment.
This can create big problems in an eviction since the tenant may argue that the landlord accepted a partial payment thereby waiving its right to evict. I believe landlords are well advised not to permit direct deposits into their accounts by residents. I do however encourage ACH programs.
September 11, 2015
9/11. This is the 14th anniversary of the attack on the World Trade Center. It seems to be widely ignored now and many, possibley most youngsters do not even know what it was.
Abandonments. I am astonished how many abandoned homes are just sitting in older parks, taking up space, deteriorating, becoming dangerous and not generating any rent. How can landlords tolerate this? The ultimate effect is that the value of the park itself is badly harmed. Lenders will not loan against parks with that problem, and the value of the park to a prospective buyer is almost destroyed.
This is one of the main reasons so many older parks are being sold to buyers who are closing them down. With all those derelict homes taking up space, with the decay and slum like conditions that develop in the community as a whole, and with the seedy nature of people willing to live in such a place, parks like this are no longer viable as residential rental communities.
What value there is lies in the land, not the park business. In fact the park business is a drag on the land value since in order to use the land, the park must be closed and all the junk homes must be removed. That is a big expense which is reflected in the low sale price of these parks.
Some parks get in such bad shape the local govenrment is forced to order them closed. This has happened several times in various places in the state the past year.
We see this when the buyers getting these parks and wanting to close them come to us for help in getting titles to all the abandoned homes they have inherited. It is not uncommon for us to open 20 or 25 abandonment files in just a single park facing closure by the new owner.
If the old owner had just stayed on top of the situation, dealing with each abandonment is it was discovered, the park could have continued generating revenues from those spaces and the value of the park as a rental business could have been maintained.
Its good for us in the short run, but terrible for the industry since those old parks, once closed are gone forever.
Approving Criminals as Tenants/Residents. It is pretty common for us to get calls saying there are sex offenders or other persons with criminal backgrounds living in the park, and the manager wants them out now.
But looking into the matter we often find that these people were allowed to move in without any criminal background report being obtained and without them being required to complete an application calling for disclosure of criminal background infprmation.
Sometimes there is a question in the application about the applicant's criminal background but the answer is left blank and the application is processed anyway.
The only way an applicant is under a duty to disclose criminal background is if the application calls for it. A landlord who does not ask the question cannot very well complain about not being given the answer.
A park that signs a rental agreement with a tenant who has a criminal background and did not cover it up during the application process is going to be stuck with that tenant if a criminal background is later discovered.
If you want to keep criminals and sex offenders out, use an application like the one in the MHCA Blue, Orange and Green Books that require disclosure of that information and do not accept applications without that section being completed. And then verify the information with a criminal background check
September 5, 2015
Rent Increases. September is Rent Increase Notice Month. Parks on a calendar year rent increase schedule must give 90 day notices in September before increasing rents. A 90 day notice sent certified (or regular) mail before September 25 can be effective January 1, 2016. If sent by certified (or in the case of rent increase notices, regular) mail, notices must be sent at least five days early to be effective on their normal effective date.
Kitchens and Food Codes. Most parks have clubhouses with kitchens in them that are available for tenant use. Often these kitchens are not equipped with commercial grade appliances but are more in the nature of large kitchens found in private residences. However they are not used the way private residence kitchens are used.
Typically they get used when either the park or tenant organizations sponsor social functions. Some of these functions are in the nature of "pot lucks" with residents bringing their own food already prepared for serving. Others involve the use of kitchen facilities for actual food preparation.
These facilities fall under a number of regulations. To begin with there are Federal standards that appear in the "Food Code Recommendations of the United States Public Health Service, Food and Drug Administration". State and local health codes generally adopt various versions of these as their standards. Arizona at the State level has adopted the 1999 version. These apply to "Food Establishments" which are broadly defined and capture the kinds of kitchens typically located in MHC clubhouses.
The Arizona State Code makes an exception to the definition of "Food Establishment" for "pot lucks" at workplaces. It is debatable whether a MHC kitchen qualifies as a workplace but another exception would seem to cover pot lucks anywhere--non-hazardous food prepared in a private home kitchen.
However most parks are covered by local codes, not the State code.
The Pima County code has an exception to the general requirement that MHC facilities must comply with the Pima County Food Code. It exempts "occasional "pot luck" gatherings attended by park tenants and guests" in its MHC Code. It does not define "pot luck", but the State of Washington actually has a definition in its Food Code which in the absence of anything else may be a good guide:
Potluck is an event where:
(a) People are gathered to share food;
(b) People attending are expected to bring food to share;
(c) There is no compensation provided to people for bringing food to the event;
(d) There is no charge for any food or beverage provided at the event; and
(e) The event is not conducted for commercial purposes.
I have not been able to find a "pot luck exception in any other County Food Code and as far as I can see Pima County is the only one allowing pot lucks in facilities not qualifying under regulations covering "Food Establishments."
Food Codes are health and safety codes. They impose requirements dealing with sanitation, food handler training, food preparation and storage, etc. They get into such things as facility design and layout and the kinds of equipment required in these kitchens. Violations can result in citations, fines and "cease and desist" orders.
When you think about it, these regulations are what prevent folks from getting food borne illnesses. Anyone who has experienced severe food poisoning from food served at a restaurant can appreciate the need for diligent controls over preparation and sanitation in these facilities.
Local health departments may have special event permit licenses available and MHC kitchens may satisfy requirements necessary for these. The local county health department should be consulted before allowing any such event.
August 29, 2015
Eviction Court Rules. On May 21 I wrote about this subject.
In 2008 the Arizona Supreme Court published rules of procedure to be followed by courts in Arizona in processing eviction cases. I was on the committee that drafted the rules. One of his goals was to make the rules short, fair and understandable to ordinary folks.
In most kinds of cases each party has the right to require an assigned judge be replaced without giving a reason. This slows cases down and allows parties to engage in "judge shopping". That's fine if you are a party to a case assigned to a judge that you do not like. You can get rid of him.
But its not so good if your case is assigned to a really good judge but the other party exercises this right and gets him replaced. Judge shopping like this in evictions can really slow the case down, especially in places where there is no replacement judge readily available.
I have always opposed the idea of having a provision like this in the eviction rules, and until now I have been successful. The 2008 rules did not have such a provision. In 2013 tenant advocates tried to get the Supreme Court to adopt such a rule but that was rejected. They tried again this year and rumor had it that the skids had been greased and the state Supreme Court was set to approve it.
On behalf of MHCA and myself I wrote the strongest opposition brief to this proposal I could. I have always thought that if you believe strongly about something, fight for it until the end. Do not give up.
That paid off. Yesterday the Supreme Court announced that the proposal had been rejected.
Mesa Royale. This has been a problem park for many years. A number of months ago the City of Mesa ordered it closed due to the huge number of unresolved safety concerns.
This sparked a wave of demonstrations. The park is occupied mostly by non-English speaking Hispanic residents. They demonstrated everywhere they could think of to oppose the closure, claiming they would lose theor homes, be left homeless and could not afford anything to replace what they had there.
The City was motivated to get someone to come in, fix the problems and keep the park operating as residential housing. But the City had to get the zillions of health and safety concerns resolved.
The park sold this week and new ownership has taken over, committed to keeping the park open but also to cleaning it up and making it safe. There will be a lot of problems in achieving that goal but progress at least is being made.
August 27, 2015
Generalized Anxiety Disorder. I constantly get clients asking "what if" this or "what if" that when I discuss solutions to their problems. Some of the "what if's" get to the point of absurdity. I get frustrated after a while and sometimes point out that this excessive concern over even the most remotely possible problems is a sign of depression. In an article at this site, the following appears:
Generalized anxiety disorder is a relatively common anxiety problem, affecting 3-4% of the population, that turns daily life into a state of worry, anxiety, and fear. Excessive thinking and dwelling on the "what ifs" characterizes this anxiety disorder. As a result, the person feels there’s no way out of the vicious cycle of anxiety and worry, and becomes depressed about life and the chronic state of anxiety they find themselves in.
August 23, 2015
Due Diligence. Real estate purchase contracts typically provide for an analysis period after the contract is signed called a due diligence period. This is an important time for the buyer.
The buyer is supposed to conduct an in-depth analysis of the condition of the property and the feasibility of buying it, with the right to terminate the contract if this analysis produces unsatisfactory results.
We assist client buyers of properties with their due diligence investigations, especially in the unusual class of properties where we have unique expertise--mobile home and RV parks.
It is a hot market right now. We are currently involved in due diligence analysis of eight MHP's and two RV parks under contract to sell.
We look not only at the real estate but the business of the park. Some of the things we examine are quality of rental documentation, tenant relations, rental and utility charge practices, zoning compliance, legality of sewer/septic and other utility systems, etc.
Buyers will have finance experts examine the books of the business, and other experts review additional subjects.
The purpose is to enable the buyer to know as best as is possible the nature of the property and business he is getting for his money. Essentially, we are trying to find any skeletons in the closet.
August 21, 2015
AAMHO. I represented a park at an ALJ hearing earlier this week that had been engineered by the park AAMHO chapter which obviously is trying to establish a name for itself and its leaders by looking like heroes against their landlord. This chapter filed two ALJ complaints. Both were the subject of hearings this month.
One was based on a wrong and frivolous interpretation of the law. The more recent one was based on speculative fear of what could happen if a couple of park rules were enforced the way these tenants supposedly fear they might be. In that case I think we demonstrated there were plenty of ways to safeguard tenant interests without trying to simply kill legitimate park rules.
Anyway, the top leadership of the State AAMHO organization showed up at the second hearing. After the hearing was over they came up and introduced themselves to me and I was happy to see some new faces and hear some constructive comments about working with landlords in the future for the overall good of the industry. That is the way things were done 15 years ago when the industry actually made progress.
In recent years AAMHO leadership was co-opted by a hostile and aggressive union mentality--motivated by a belief that management (the landlord) was inherently greedy and evil and must be fought on all fronts at all times no matter what the issue was.
This attitude resulted in distrust and in nothing of substance getting accomplished at the legislature.
Meanwhile the industry bleeds. Parks are closing down in greater numbers than ever, and out of state ownership is replacing local ownership as the locals get sick of dealing with unceasing hostility from tenant groups. It is unbelievable how many parks have either recently sold or are in the process of selling. Out of state management will have far less patience dealing with these tenant groups than the old time locals.
Land on which many parks are located has increased in value and the highest and best use of the land is almost always something other than a mobile home park. A lot of closures and changes in use have been announced and I am aware of many more in the planning stage.
AAMHO is not entirely at fault for this state of affairs but the unrelenting hostility of many of its chapters can be the tipping point to convince an owner to sell or just close the park.
I hope AAMHO leadership will realize this because if it continues on its current path this industry will continue to shrink.
Trees. We have established in past ALJ hearings that trees are part of the rental space and that tenants are responsible for maintaining trees just as they are responsible for maintaining the rest of the space.
But the tree belongs to the park and the tenant has no right to remove or destroy the tree. By the same token, when a tree needs to be removed, I believe that is the park's responsibility. Removal and/or replacement of a tree is different than maintaining it. Removal in fact is the opposite of maintenance.
Every year at this time in the desert areas we see cases of monsoon storms damaging old trees and resulting in them needing to be removed. That is especially the case with big old eucalyptus trees which I think are not really suitable for this climate. They break easily in the wind and are often so big that limbs seriously damage nearby structures. It is my belief that storm damage often requires removal and when that is necessary it is the park's responsibility.
August 14, 2015
Melissa Returns. She came back to work this week after four months of off and on maternity leave, and is now back on a full time basis.
Chris Leaves. Chris Francis, my legal assistant the last five years and manager of the abandonment program has moved on to greener pastures. He will still do work for us from time to time on a contract basis. We wish him well in his real estate sales venture. He is one of the best sales people I have ever seen and selling is a real art.
Vanessa Takes Over. Vanessa Johnson, a ten year employee of our firm has now taken over the abandonment program. Of course Melissa and I still oversee it and are responsible for ensuring it is correctly operated. Chris has been training Vanessa since January and she is ready to go.
Park Sales, Closures and Financing. This has been the busiest year so far in my experience in this business.
Many small parks are selling. Some are being kept open and rehabilitated by their new owners. Others are being closed. Larger parks also are selling though most large multistate operators are holding onto what they have. A number of new out of state operators are looking to buy larger parks in Arizona.
At the same time, a number of older parks on land that the neighborhood has developed around over the years are now in the process of being closed. The increased land value now means its use for small older parks can no longer be justified. Closing parks and changing use of the land is a complicated and specialized business entailing getting tenants out with the least pain and discomfort possible, and ensuring the Relocation Fund is properly utilized. We are involved in many such transactions. One of our problems in dealing with these old park closures is that small pre HUD units may or may not qualify as "mobile homes" under landlord tenant law definitions. If they qualify they are eligible for relocation benefits; if not, they are not. That decision is up to the FBLS Department but it normally does not get involved until the end of the closure process.
Finally with interest rates still low and both Fannie Mae and Freddie Mac wanting to loan money, refinancing remains popular.
Record Eviction Activity. We have really seen an increase in our eviction business this year. Each of the last couple of months has broken our record from the month before, and we have become one of the biggest eviction firms in the state.
We know the eviction business well with members of the firm having been deeply involved over the years in actually writing the laws and court procedures that govern the process. Our fees are competitive with most other eviction firms, though a few will handle them almost at a loss just to generate volume. I do not understand that mentality.
But our overall competitive fees coupled with our high degree of automation and our incomparable knowledge of the business is resulting in this growth.
August 7, 2015
MHC Space Boundaries. People are territorial. Renters often want to know the exact boundary lines of the property they are renting. That's human nature. They are paying for the use of property and it makes sense to want to know exactly where it begins and ends.
The problem in MHC's is that there typically are no boundary lines between spaces. The reason is clear to folks who understand the business. Homes come and go. A home coming in to replace one that has left will almost always have different dimensions. Home placements must comply with local front, back and side setback requirements. These requirements are mostly to enable access by emergency service personnel.
If there were fixed boundaries like in residential subdivisions, the setbacks would be measured from lot lines. But in MHC's where there are no lot lines, the setbacks, especially the side setbacks, are measured from the homes next to the home being set up. This gives parks flexibility in bringing homes in and keeping vacancies down. It also enables efficient use of the surface areas of the community. But over time as homes come and go, the original spaces that were visualized in the park change.
Tenants often feud over where the boundaries are in the community, and fight over whose responsibility it is to maintain the space and vegetation. Sometimes tenants want to build fences and want to know where the boundaries are to erect the fence.
Normally the boundaries are where management says they are. MHCA Blue Book model rules and regualtions even have a provision in them say that.
There are no fixed boundary lines dividing spaces and tenants must use common sense and cooperation in figuring out what their maintenance responsibility is.
This was brought to mind yesterday as I represented a community defending an AAMHO engineered ALJ complaint asserting that the law requires parks to specifically define space boundaries. Susan Brenton, MHCA's Executive Director and former Executive Director of AAMHO testified as an expert on the matters I have just discussed and even the tenants who brought the case finally seemed to understand how they came to rent spaces in communities with no defined boundary lines.
This is just another quirk in this industry that keeps it interesting.
July 31, 2015
Identity Theft and Fraud. Yesterday I handled the eviction of a young girl who had rented a house for six months and prepaid six months’ rent in advance. The problem was that the person she rented from did not own the house.
Our client owned it but while the house was vacant for a while, a con artist had the locks changed and then advertised and rented it. When our client discovered the person living there, she got an eviction notice and was evicted yesterday.
That young lady is a victim on several levels. She paid six months’ rent but has no place to live. She has an eviction judgment on her credit record. And she gave the con artist a completed rental application with all the information he needs to engage in identity theft.
The police told both her and our client that this is a common scam and renters cannot be too careful in screening potential landlords.
Identity theft is a growing concern everywhere including landlords. A federal regulation called the Red Flags Rule has for several years required credit providers including residential landlords to safeguard tenant information that could lead to identity theft.
That includes safeguarding things like applications, copies of tenant ID cards, credit reports, etc. It also includes keeping computers protected against malware, viruses, worms or other devices that can be used to steal sensitive tenant information on them. Red Flags Rule compliance materials are in the MHCA Blue Book.
Seemingly innocent things like wishing someone a happy birthday on social media or listing one's birthdate on his Linked In or Facebook page can result in ID theft. Dates of birth and Social Security Numbers are the big two items used by identity thieves.
These are dangerous times we live in and it is impossible to be too careful with your personal information.
Arizona is one of the top five identity theft states.
July 24, 2015
Caregivers. Most age 55+ parks have been presented with requests by tenants that caregivers be approved for them. If there is a restriction that would ordinarily prevent someone from being in the park that the tenant wants, under fair housing laws that restriction would need to be waived if there is a confirmed disability of a resident and a disability related need for a caregiver. This would be a "reasonable accommodation."
There are two categories of caregivers:
Non Residential Caregivers. these are folks who visit, normally during daytime hours to provide care. These are normally pretty easy to deal with. If there are security or parking restrictions impeding the ability of a visiting caregiver to do what the resident needs, the park, upon confirming the disability and need if it is not apparent, would have to provide the visiting caregiver with an entry pass, key code to a gate, parking privileges, and allow him to accompany the resident in community facilities.
Residential Caregivers. This is where the problems come up. Often a resident will lie about the need for a person to be a residential caregiver in order to get a troubled family member not otherwise qualified approved as a resident. Even if the landlord is certain the request is a phony, if the resident produces medical verification of the need for a residential caregiver, the park will need to consider approval of waiver of such things as age restrictions and occupancy limits and approve him. The gut reaction of management that it is all fraudulent is not sufficient grounds to deny the request if the resident produces medical verification supporting the request.
However if the request is made in such a way that it appears the need can be satisfied with a non-residential caregiver, it may be possible to approve it on that basis and not as a residential caregiver.
If the need can only be satisfied by a residential caregiver, the landlord still has the right to require an application be completed and to screen the proposed caregiver to ensure he meets applicable background criteria. The landlord is not interested in his credit since he will not be a tenant and willnpot be signing the rental agreemenbt as a tenant. But public safety requires that the caregiver satisfy the landlord's criteria as to criminal background.
DO NOT LET THE CAREGIVER SIGN THE RENTAL AGREEMENT AS A TENANT! Instead the landlord, the tenant and the caregiver should all sign a Caregiver's Addendum to Rental Agreement (form in MHCA Blue Book). This allows the caregiver to be there to provide care but provides he is not a tenant and must leave when the need for a caregiver ends.
Be sensitive to caregiver abuse of their elderly principals. It is not unusual for vulnerable seniors to become victimized by unqualified, greedy and sometimes violent people who have been approved as caregivers. There is no licensing or government requlation of caregivers and this sort of thing is not unusual. If you see folks being abused by caregivers, contact family members or Adult Protective Services.
July 18, 2015
New Articles Posted. I just posted four new articles on the 2012-2015 Articles page.
MHCA Legislative Program. I attended an MHCA Board meeding yesterday. The main subject was the 2016 Arizona legislative program. Despite a lack of success the last two years in getting anything proactive done we are going to try again. The two primary goals are to get a clear abandonment process defined in the law for dealing with abandoned homes, and a strong legislative fix to the problem of poachers in parks. This will mainly focus on preventing poachers from engaging in fraudulent conduct, and criminalizing certain violations of the law by poachers.
Poachers. Not everyone buying and removing homes from parks is a poacher. I tend to define a poacher as someone coming into a park either in response to a FSBO ad or simply driving around looking for FSBO signs in tenant windows. Sometimes he places his own ads looking for unhappy tenants to buy homes from.
The poacher will typically make a low-ball offer to a desperate tenant, talk him into accepting it, convince him that the park's right of first refusal cannot be enforced, and get him to sign a sale contract. The typical poacher will then offer to sell the home to the park for somewhat more than the contract purchase price with the threat that if the park does not buy the home will be pulled out. The excess is termed a "commission" since the poacher is a licensed dealer.
No matter what happens the tenant gets a low price, the park or the third party buyer pays a high price and the poacher pockets the difference. If the park buys the home, then the poacher has a greater profit since there are no relocation costs involved.
Often the poacher will not honor the clearance for removal process and will leave the space a mess, laying off liability for that on the home's removal contractor. If the right of first refusal is breached and the tenant gets sued for breach of contract, as far as the poacher is concerned that is the tenant's problem--even if he talked the tenant into ignoring that obligation in the first place.
Poachers are in business because park operators buy homes from them. Sometimes the same operator that buys homes from one poacher is the loudest complainer when another poacher takes a home out of his park.
On the other hand there are legitimate dealers who take listings from tenants wanting to sell their homes. Often these dealers have relationships with other park operators and once they get listings that seem to meet what the other park wants, they will present the home to that park. If the second park makes an offer that the tenant accepts, that is a legitimate sale, and in fact the dealer would be violating a fiduciary duty to the tenant listing the home not to make it known to other parks that may be interested.
The legitimate dealer will honor the right of first refusal if there is one. When the park where the home is located gets the right of first refusal offer, it will often have a knee-jerk reaction that a poacher is involved. Though it may look this way, that is not a true poaching case.
I suppose there are two main differences between poachers and legitimate dealers. First the poacher is the driving force behind the tenant's desire to sell, whereas a legitimate dealer is just taking a listing in response to a desire to sell originating with the tenant.
Second, the poacher's main goal is profit to himself with the tenant/seller's interests not considered at all. The legitimate dealer is going to get a commission but the main goal is to sell the tenant's home at a fair price of his choosing. Poachers often engage in extortionate behavior towards the park where the home is located, whereas legitimate dealers simply honor the terms of the right of first refusal. Poachers will often lie about the price being paid when offering to sell the home to the parks where it is located.
The best thing parks can do to prevent homes from leaving is to ensure tenants are aware of the right of first refusal; be sure thy know the park may make an offer to buy should they wish to sell and that the net return to them will be greater since no commission will need to be paid; and to drive the park frequently to check for sale signs in tenant windows. Be aware of what your tenants are doing when it comes to wanting to sell, and be the first to make an offer.
July 10, 2015
Park Closures Under Fair Housing Laws. In Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the U.S. Supreme Court held that “disparate impact" claims may be brought under the Fair Housing Act.
"Disparate impact" goes beyond outlawing intentional discrimination and also makes illegal normal business practices that happen to have discriminatory outcomes. In essence, "disparate impact" punishes practices not intended to discriminate, but which have a disproportionally adverse impact on a protected class.
Under this decision, if a statistical discrepancy occurs because of an action taken by a park, a protected class disproportionately impacted by the action may bring a discrimination complaint. The legal burden shifts to the landlord to prove the action is necessary to achieve legitimate, non-discriminatory interests.
The Court added some protections against abusive claims, stating that "... practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system ..." may be legitimate. In addition, the Court stated that profit is a valid interest.
In the case of change in use and redevelopment of older parks, if the majority of the people displaced were protected minorities, the actions could be viewed as having a "disparate impact" on a protected class under the fair housing laws. A fair housing complaint could be the result. Hopefully the Supreme Court language endorsing such actions for nondiscriminatory valid business reasons will enable such complaints to be defended.
July 8, 2015
Park Closures. There are at least seven parks in Arizona in the process of closing in order for their owners to convert the land to some other use. These are almost always older parks with lots of pre-HUD homes and low income, often minority tenants living in them. Since local zoning often prevents pre-HUD homes from being relocated, these tenants/homeowners are often the most affected.
The MHP LTA allows parks to close for a change in land use by giving tenants a 180 day change in use terminatiuon of tenancy notice. If they do not vacate by that time they can be evicted.
MHCA has developed an elaborate process to help both landlords of parks being closed and tenants being displaced. It sponsors tenant meetings to explain the change in use process and most importantly the Mobile Home Relocation Fund. This Fund subsidizes tenants who either remove their hgomes form the park being cloised or simply decide to abandon them.
As of 2005, the following benefits are available to tenants from the Fund::
1. Relocations. Actual expenses up to $5,000 for a singlewide and $10,000 for a multi-section home. This includes take down, moving, and set up costs, provided the home is moved to a new location within a 50 mile radius. At the discretion of the Department of Fire, Building and Life Safety, up to $2500 is available if the home is a ground set unit. This $2,500.00 is available only for relocations due to change in use of the land.
2. Abandonments. 25% cash payment from the Fund where a tenant abandons a home in a park involved in a change in use program. This 25% benefit does not apply to the extra $2500 available when ground set homes are involved.
If there is a change in use of the park, the landlord must reimburse the fund $500 for each singlewide and $800 for each multi-section home moved for which benefits were paid. This reimbursement doubles if the change in use happened before the time declared in the parks statements of policy. .
Parks considering closing should contact Susan Brenton at MHCA for information on what it can to to help in this difficult process. Call her at (480) 345-4202 or (800) 351-3350.
July 3, 2015
Independence Day. Since July 4 falls on a Saturday this year, the holiday is observed on Friday.
In considering this it occurred to me that 2015 is the 50th anniversary of the U.S. getting involved in the ground war in Viet Nam. We had advisors there starting in 1957 (a guy I once worked with was a Green Beret in the original advisor contingent). But we first put ground troops in with the 3,500 Marines that deployed there in 1965. Ten years later Saigon fell and we were out.
These anniversaries are for some reason being ignored in the media (at least I have not seen anything about them).
Here is a picture of the Viet Nam Wall in Washington on a recent Fourth of July.
July 1, 2015
Jeffrey Matz. A final judgment has been entered in the Superior Court againsty Jeffrey Matz. You can read it here. This man is still associated with ILUVLUCY in buying and either trying to resell homes in MHC's or removing them from parks.
Everyone who has encountered this person should print this judgment out, familiarize himself with it, and show it to anyone doing business with Mr. Matz in which the park is involved.
Mr. Matz is allowed to continue using the "attorney in your pocket" e-mail address but is required to note that he is not a licensed attorney in any jurisdiction.
One of the listed sanctions in case of his violation of the judgment that is available is incarceration pursuant to the Court’s inherent power.
If you believe he has violated this judgment contact the State Bar via email at firstname.lastname@example.org, via fax at (602) 416-7466 or via direct line at (602) 340-7205.
June 30, 2015
Confederate Flag Display in Parks. Yesterday I had a call from a manager saying she had a tenant flying a Confederate battle flag and another tenant had complained that he was offended and wanted it removed. I asked if the park had rules against flying flags and she said no. Tenants fly U.S. and Canadian flags as well as special occasion flags on holidays.
So the question is whether the Confederate flag is a special flag meriting a prhhibition against its display. In other words is it an expression of hate or is it designed to inspire people to violence. I think most parks would ban cross burning on spaces and forbid display of the Nazi flag since both are accepted as fitting into this category. But I do not believe the Confederate flag falls into this category.
Some believe it does, but despite the political correctness of that view at the present time, I do not agree. The Confederate flag is part of our history and despite having been adopted by many with repellent beliefs as one of their symbols, I do not believe that means it is universally recognized as a symbol of hate or hate speech.
Many Muslims regard the Maltese Cross in the same way since it was adopted by the leaders of the Crusades in the Middle East, but I don't think anyone will seriously argue that the Maltese Cross is a symbol of hate. Likewise some believe the Israeli flag is a symbol of hate towards Muslims but I don't believe most would agree.
People are going to be offended by a lot of flags and the Confederate battle flag is just the latest example. The simplest thing would be for landlords to ban all flag displays on tenant spaces and avoid getting into a situation where they need to censor what individual flags can and cannot be displayed.
In the case of the park that called, my view was that the offended tenant should just be told not to look, and the tenant flying the flag should be told it is hurting the sensibilities of others in the park with the hope he may voluntarily take it down.
June 26, 2015
Economics of Park Refinancing. There is a lot of bad stuff going on these days, with the Supreme Court legislating from the bench, poachers running wild in Arizona parks, and the industry's inability to get legislative fixes for the many problems it is having.
But there is one brignt spot. For parks that are well maintained and well managed, things look good. These parks have increased in appraised value in recent years and interest rates are really low--sometimes below 4% for ten year interest only loans.
The increase in values would ordinarily make parks attractive to sell but the spectre of capital gains tax forces owners to either do 1031 exchanges to defer taxes on sales, or just to hold on to the park and put it off. That may or may not be smart depending on the future of capital gains tax and the capital gains tax rate.
But another alternative is to refinance. The higher values of parks makes it possible to borrow more. The interest rates are so low that the payment on the new higher loan may be lower than the old payment on a higher rate loan with a lower principal amount.
I was just involved in one loan where the owner was pre-paying an old higher rate loan and replacing it with a bigger but lower rate loan. He was able to borrow several million dollars more on the new loan but the much lower interest rate meant the payment would be no greater than before, The new loan is interest only. In fact the difference in rates was so great that the economics still worked even taking into account the pre-payment premium on the old loan that came to a bit more than 5% of the unpaid principal balance.
So even with payment of the pre-payment premium and all the other closing costs, the owner takes home several million additional dollars, starts a new ten year loan payment period running, and pays no more per month than before. He avoids a sale of the park and dealing with capital gains taxes or the complexities of 1031 exchanges.
Lenders compete for this business. There are a number of lenders offering Fannie Mae, Freddie Mac, CMBS and in-house loans looking for for this business.
June 25, 2015
Supreme Court decisions. This morning the Supreme Court UPHELD "disparate impact" as a proper test for housing discrimination under the Fair Housing Act. This was a 5-4 decision but settles the question for once and for all.
I think this is incorrect but this answers it.
The court stated:
"A disparate-impact claim that relies on a statistical disparity must fail if the plaintiff cannot point to a defendant’s policy or policies causing that disparity. A robust causality requirement ensures that '[r]acial imbalance . . . does not, without more, establish a prima facie case of disparate impact' and thus protects defendants from being held liable for racial disparities they did not create.
Essentially this decision preserves the status quo since all enforcement agencies were using this test anyway.
The Court in another case saved Obamacare by upholding federal subsidies in federal exchanges.
Both opinions admitted they were not what the laws actually say but were based largely on other considerations.
Most people will be happy with the outcomes, but the dangers in a court deciding cases against the clear language of the statutes under which they arise presents problems in the future.
June 19, 2015
New Articles Posted. I just posted five new articles on the current Articles page.
June 18, 2015
MHCA Conference. It was held the last two days. The turnout was really good. Perhaps the most encouraging development from my point of view was the election of some new members representing major national park operators to the MHCA Board. I have thought for some time that the Board needed new blood and that the national operators needed to get involved, and now that has happened.
I am really happy to see some dynamic new faces in positions of leadership with national operators. Alicia Owen with Inspire, Mindy Parish with Hometown, Melissa Dougherty with Sun, and Louise Everett with Cal-Am. These four ladies are really talented and dynamic and should help lead the industry here in the early part of this century.
Some people think this sounds funny coming from me since I am usually the oldest guy in the room. But being up in years does not make me blind. I recognize talent and the need for talent and we have it here now.
I was glad that Melissa was able to attend both days and to participate in panels on MH Space Rental Agreements and Abandonments. Vanessa was also on the Abandonments panel, and Chris headed up a two part panel discussion on Poaching and how to deal with it. I think we have a pretty good MHC team.
The Conference was well attended though many were members of MHIA since this year it was a joint sponsor. I thought one panel was really worthwhile and it was one I was on but did not know all that much to say. It was on MH financing.
Regulatory compliance resulting from the raft of new federal laws such as the SAFE Act and Dodd Frank is making it so expensive for sellers to finance homes that seller financing has virtually ended.
Parks with large inventories of low value homes are unable to finance them lawfully unless they use a third party lender for paperwork and loan administration. This costs $750 when the deal is originated plus a piece of the interest payment each month. Those numbers make sense if the carryback loan is $20,000. But if it is a pre HUD home worth $3,000 or $4,000, these compliance costs put the total cost beyond the reach of the pool of prospective buyers.
Since thousands of these homes are being acquired as a result of abandonments or surrenders each year by Arizona parks, this is a real problem. Parks need to get the homes disposed of so the spaces can begin generating monthly rent. Parks have the choice of complying with regulatory requirements and in effect eating those substantial costs; financing homes and ignoring these requirements taking the chance they will be caught and sanctioned; renting homes; giving them away, or selling them but not securing the carryback loan on the home but instead taking an unsecured note. Each choice is bad but there are no good ones.
Of course all I can do is recommend use of the third party to handle the loan paperwork, regulatory compliance, and loan administration and somehow figure out how to cover the cost.
My co-panelist, Cody Pearce who is very sharp, made it clear thet lenders are actually losing money on these deals since what they get does not cover their out of pocket costs.
This has been an intractable problem for years and shows no sign of getting better.
June 12, 2015
2015 MHCA Annual Conference. This takes place next week at the Sheraton Wild Horse Pass Hotel in Chandler. All training classes qualify for mandatory park manager training credit (managers need 6 hours of qualified training every two years).
I will be revisiting many of the basics in running parks since there are so many new owners and managers in the industry. My seminars are:
MH Space Rentals--The Rental Agreement and Statements of Policy.
MH Space Rentals--Park Rules and Notices.
Special Problems for the Industry.
Home Sales and Financing, with Cody Pearce, a recognized authority in this area.
In addition, Chris will be there and will be conducting a panel session on Poaching and steps to be taken to avoid poaching. On the panel will be representatives of several manufacturers of homes.
Vanessa will be manning our booth and Scott and possibly Melissa will put in appearances.
For registration information and detail on other Conference seminars, go here: http://azmhca.com/wp-content/uploads/Program.pdf
June 5, 2015
Buying Homes at Tax Lien Sales. I have been seeing more and more parks going to the mobile home tax lien sales at the County Sheriffs' offices.
When a homeowner does not pay personal property taxes on a home, the Sheriff can post a series of notices and mail copies to the homeowner advising that the home will be sold for delinquent taxes if they are not brought current.
The homeowner has the right to "redeem" the home by paying the taxes due at any time up to the time of sale. But when a bid is accepted and the Sheriff signs a bill of sale transferring the home to the buyer, that right to redeem ends.
The buyer at a Sheriff's sale should immediately go to the MVD and get the home transferred into his name to prevent confusion if the homeowner transfers title after the sale but before the buyer gets title.
If the buyer is anyone other than the landlord of the park the home is located in, he has the right to remove the home as long as the space rent is current through the time the home is removed. The Sheriff's sale cuts off the old homeowner's lease and any rights of first refusal in it do not apply to the buyer at the Sheriff's sale. Buyers of homes at such sales may well be regarded as poachers by the park that will be losing the home when it is moved out. The buyer may or may not be a poacher.
Parks should keep a close eye on homes in the community and should carefully monitor whether any are going to be the subject of a Sheriff's sale. It would be a very good idea, if the park does not want to lose the home, to either buy it from the homeowner and bring the taxes current before the date of sale, or go to the sale and bid enough to be the high bidder so the home can stay.
Parks intending to bid on homes in other parks might want to give the other manager a heads up that the home is scheduled for sale and that they intend to bid. The other park may not care, or they may want to keep the home. If you do this you may lose the opportunity to get a home cheap but you may also avoid making an enemy who may start poaching homes in your community.
June 2, 2015
Mississippi MHP Zoning Case. They say that imitation is the sincerest form of flattery.
In a new decision the Mississippi Supreme Court decided that the entire mobile home park and not just individual spaces constitutes a nonconforming use when a later zoning ordinance changes permitted uses for the land it occupies.
The City enacted an ordinance saying that if a mobile home was removed from the Cleveland Mobile Home Park, it could not be replaced by another mobile home on the site. The park challenged this. It had existed since the 1950's. At some point, the City annexed property. At that time, it was zoned light industrial.
The park claimed it was a non-conforming use since residences are not allowed on industrial-zoned property. The City ordinances state that non-conformities are allowed to continue until they are removed. This, however, was not enforced against CMHC. When the current owners acquired the property in 2008, they were told they could continue the practice of replacing mobile homes that moved with new ones.
In 2011, the City changed its mind and told the park it could no longer replace removed mobile homes. The park appealed to the Board of Alderman, but the Board instead enacted another ordinance specifically aimed at the park stating that once a mobile home was removed, it could not be replaced.
The park appealed and the trial court upheld the ordinance. The Mississippi Court of Appeals reversed, construing the nonconforming use to relate to the mobile-home park as a whole. “As long as the park is operated as such, without expansion, it is a permitted use”.
The Mississippi Supreme Court affirmed the Court of Appeals. In holding for the park the Court relied heavily on the Arizona Stagecoach Trails case in which the Arizona Court of Appeals cited the MHCA amicus brief which I prepared in deciding that the entire park constituted the nonconforming use, not just individual spaces in the park.
The case is Cleveland MHC v. City of Richland and can be read at that link.
May 29, 2015
New Newsletter. Our firm's May 2015 Newsletter is out. Read it here.
Poacher Ad offering to Buy Homes From Evicted Tenants. A poacher is running this ad in Craigslist. it is periodically updated:
I have someone who will buy your mobile home or manufactured home and move it so you don't have to give it to the park if you get behind on your rent and they are evicting you. Call me today. I can help you get some cash for your home. Do you have a home and are renting the lot it is on? We can have it moved into another mobile home park and you will get paid for the home. Due to the cost of moving it you will not get as much as if you just sold it where it is but it might get you out of a bad situation. Email me or call for more information. (The home pictured is not for sale)
Parks evicting tenants who own their own homes need to be aware that poachers regard this as an opportunity to buy the tenant's home cheap. In addition the tenant is often angry at the landlord and refuses to talk to him about selling the home to the park. Parks would be well advised to work with tenants having financial problems to avoid evictions. If the tenant simply can no longer afford to stay there, a discussion about the park buying the home may be a good idea before serving the eviction notice.
May 28, 2015
Financing and Refinancing of Parks. Landlords typically do not own their rental properties free and clear. Instead they finance them to ensure a minimum of their capital is invested in the equity of their properties, and more capital is freed up to purchase and finance more properties. As long as properties are well maintained and managed, landlords can turn a profit despite having to make payments on their mortgages.
Their financial position is helped by the fact that commercial loan interest rates on loans secured by quality apartment communities and MHC's are at historic low levels. We are presently involved in two loans on large MHC's, each over Ten Million Dollars that will be closing in the next couple of weeks, one at 3.99% and one at 4.59 %.
Our job is to review the financing documents, help with the park owner's due diligence, and ultimately issue an Opinion of Borrower's Counsel on the enforceability of the loan for use by the Lender.
These loans are interest only for ten years. Both are government backed loans, one is a Fannie Mae loan, the other is a Freddie Mac loan. Entry of these government entities into the multi-housing finance market a couple of decades ago has driven rates down, made loan payments much lower than in the past, and enabled landlords to buy properties while leveraging their capital and keeping the debt service expense to a minimum. Freddie just started making these loans on MHC's within the past year. It had previously limited them to apartment communities.
We review loan documents for clients and render borrower counsel opinion letters on these deals. Since they come due every ten years, its work that will be repeated every decade.
May 25, 2015
Memorial Day. This is a day set aside to honor those who died as they were serving our country in the armed forces. Its a holiday but not one created for family barbeques, car dealership sales, or merriment. The phrase "Happy Memorial Day" really disturbs me. Liking wishing someone a happy funeral as they are burying a loved one.
In the past I would go back to Washington in May and visit my Dad's grave site in Arlington on Memorial Day. I can't do that anymore with everything going on here. But I am there in spirit.
May 21, 2015
Eviction Court Rules. In 2008 the Arizona Supreme Court published rules of procedure to be followed by courts in Arizona in processing eviction cases. I was on the committee that drafted the rules. One of his goals was the make the rules short, fair and understandable to ordinary folks.
As legal rules go, this was successful. These are the shortest and easy to understand of any of the Arizona court rules. And there are plenty of court rules.
In most kinds of cases in Arizona courts each party has the right to require an assigned judge be replaced without giving a reason. This slows cases down and allows parties to engage in "judge shopping". That's fine if you are a party to a case assigned to a judge that you do not like. You can get rid of him.
But its not so good if your case is assigned to a really good judge but the other party exercises this right and gets him replaced. Judge shopping like this in evictions can really slow the case down, especially in places where there is no replacement judge readily available.
Eviction cases are supposed to move fast. But it often serves the interests of a tenant looking for more time to move to slow the case down and one good way is to get the assigned judge replaced.
Because of this I have always opposed the idea of having a provision like this in the eviction rules, and until now he and others with the same view have been successful. The 2008 rules did not have such a provision. In 2013 tenant advocates tried to get the Supreme Court to adopt such a rule but that was rejected.
Now they are trying again. I have just filed a brief opposing this proposal, and you can read it here.
We should know in a month or two if this is successful. You can view all filings on the proposal at the Court Rules website.
May 13, 2015
Triplets. Melissa's Husband got a special birthday present this year. Three identical sons born on his birthday.
Welcome Melissa's new identical triplet sons Charles, Joseph and Michael to our world. They were born shortly after 6:00 AM today.
Melissa has been working from home the last three months and more recently has actually been working from the hospital where she was on bed rest. She and all three boys are doing well. Each of them exceeds four pounds despite being early.
Identical triplets are rare. It has been said that the occurrence is so rare that it is difficult to accurately measure statistically. The odds are generally said to be 1 million to one.
May 10, 2015
Mothers' Day. I am the husband of one mother and the father of another. My own mother has been dead for 25 years but I remember her as well as my wife and daughter on this day. Melissa is about to become a mother again, this time in a very dramatic way.
To all mothers out there, Happy Mothers' Day. Yours is one of the hardest and least recognized jobs out there.
Pro Tem Judges. Anyone who does evictions knows the frustration of having a temporary fill-in judge covering cases when the regular judge is out--especially if that fill-in, or "pro tem" judge does not know what he is doing. If truth be told most pro tem judges do this not out of a sense of public duty, but instead to be able to put it on a resume and website, and to get an ID card to get past Court security and in a few cases to give the holder a sense of importance and self worth.
On Friday, May 8 I participated in a panel discussion sponsored by the Maricopa County Justice Court Administration on the roles played by landlord-tenant attorneys who also serve as Justices of the Peace Pro Tem (part time JP's who fill in when the regular judge must be absent). Many of us have done this on a voluntary basis as a public service duty.
I was a pro tem judge in the 1990’s but quit in 2005 when the rules covering us got so confused I could no longer figure them out. Another reason was that it was a deeply unsatisfying job. I did this for nearly a decade for free and never once got so much as a “thank you” for doing it.
There were three areas of concern giving rise to this event:
1. Is there some sort of conflict when Judges attend training classes in landlord tenant law conducted by lawyers who also practice before them? The consensus was that there is not.
2. Is there some sort of ethical violation when lawyers advertise on their websites and elsewhere that they are also pro tem judges? One panelist was the Director of Ethics for the State Bar of Arizona. She made it clear that this does appear to be prohibited by relevant ethical rules. That is going to come as a shock to many landlord tenant lawyers who make their pro tem service a centerpiece of their advertising.
3. The most contentious issue was the use of the pro tem credential to secure access to the court facility, bypassing security checkpoints, to get to court for private cases including evictions. The consensus of most was that this is improper and the credential should only be used when the person is using the facility for official pro tem duties. It looks like the Commission on Judicial Conduct is going to come up with some blanket rule on this.
May 7, 2015
Court of Appeals Landlord Lien Sale Case. We prevailed in the landlord lien sale case that Mark Zinman argued to the Court of Appeals on April 14. The decision of the Court was based on Mark's argument and the legal briefs written by Melissa Parham. Melissa was not able to argue the case due to her condition which limits her to working at home for the time being.
The Court actually affirmed the Superior Court decision on technical legal grounds related to "standing" and on other technical probate issues, and never really had to deal with the complexities of landlord lien sales under provisions of the MHP LTA. Nevertheless it was a gratifying victory.
May 5, 2015
USA Today Story. Although a bit heavy on the stereotypes, here is a very good story that appeared in the May 4, 2015 USA Today about MHC law, the lack of understanding and interest in it by almost everyone, and the consequences felt by residents of MHC's.
Arizona has a lot more protections built into its laws for tenants than most states, but it is also true that almost no one here--lawyers, judges, social workers, housing "professionals" or the government really understand this quirky field where the home owner does not own the land the home is on, is treated as owning only personal property, and is regarded much the same as an apartment tenant.
Sometimes I wish more people understood this field, but its pretty complicated and there is not a whole lot of money in it for the lawyer looking to become wealthy. For most, the return does not justify the work invloved in learning and mastering the field.
May 3, 2015
RV Park Operators' Conference. Vanessa, Chris and I attended the Arizona RV Association 2015 Conference on April 29. It was held at the Roberts Resorts community Pueblo El Mirage RV and Golf Resort in El Mirage.
This is a well equipped and beautiful venue. The golf course is a 6600 yard par 72 professional course. The resort occupies 310 acres and is a full service facility.
Chris and Vanessa manned our display table, mingled with the attendees, and discussed our abandonment program while I made a presentation on RV park landlord tenant laws as well as Fair Housing laws applicable to RV parks.
MHCA Conference. This is coming up June 16-18 at the Sheraton Wild Horse Pass and Casino in Chandler. My seminar subjects include Rental Agreements and Statements of Policy for MH Space Rentals; Park Rules and Termination Notices for MH Space Rentals; Special Problems for the Industry; Home Sales and Financing; and Abandonments. I am taking a back to basics approach in these since there are so many new managers and owners these days and since experienced people can always use a little brush-up.
This year's conference is combined with the MHIA annual conference (they represent dealers, manufacturers, etc. of homes). I am not sure this is going to work all that well but it might. In the past these organizations have had competing interests that interfered with their cooperation on other issues. But people change and so might policies. Call MHCA at 1 (800) 351-3350 or (480) 351-3350 to register.
Updated MHCA Publications. Laws change and so do the forms and training materials covering them. This has happened in the RV Long Term Rental Space Act and the MHP LTA. As a result I have updated the Blue and Orange Books (forms for MH and RV space rentals) and the Grey and Turquoise Books (publications explaining how those laws work). Landlords that have these books should get new versions and that is especially important with the Blue and Orange Books. Some forms in the old versions of these which were perfectly appropriate when they were first issued are now obsolete, and in some cases their use would actually be unlawful.
New books will be available at the MHCA Conference or can be ordered from MHCA at 1 (800) 351-3350 or (480) 351-3350.
Frivolous ALJ Cases. AAMHO has returned to its past leadership policies which were based on it getting ahead by attacking landlords. Tenants try to form AAMHO chapters by convincing others that the landlord is bad and try to back that up by circulating and then filing ALJ complaints against their park management.
These complaints are often bizarre and sometimes get downright stupid. In the last couple of weeks I have seen one filed on behalf or RV space tenants (who are not even covered by the ALJ statutes) and another claiming the landlord did not comply with the law covering affidavits of affixture that might apply if the lease is over 20 years but not, as here to a standard MH space rental agreement.
An idle mind is the Devil's workshop. No place is that more true than in an age 55+ manufactured home community.
Unfortunately, all of these must be responded to. No matter how silly or stupid the complaint, do not just ignore it if you get one filed by a tenant and sent by the FBLS Department.
April 25, 2015
Court of Appeals Landlord Lien Case. On April 14 Mark argued a very important case before the Arizona Court of Appeals. The case brings before the Court the issue of how mobile home park landlord liens work and how they apply when a tenant dies.
There were many other probate related issues that may be dispositive of the case. It is quite complex.
Melissa handled the case before the trial courts and wrote the briefs for the Court of Appeals. But she was unable to argue it and Mark was pulled in at the last minute to do so.
I was also there. He did a remarkable job and made one of the finest oral arguments that I have ever seen.
You can watch a You Tube video of the arguments. Mark's presentation begins at 17 minutes 14 seconds into the video.https://www.youtube.com/watch?v=9_bMlmN3pxs&feature=youtu.be
April 22, 2015
Bullhead City Manager Training Class. I conducted this last Friday at the Sun Communities park The Reserve at Fox Creek. We had about 35 people there and it was an engaged group. Some of those in attendance were RV park operators who are not required to go to manager training classes by state law like MHC managers are and I was gratified to see them there.
MHC Consulting. The market is driving us into sort of a sideline of consulting on many aspects of manufactured housing community management, operations and mobile home sales.
This is not an area of business we have actively sought to get into but instead has us filling a void in what's available to the industry due to our unique experience and abilities.
We are unique in our knowledge of the laws governing manufactured housing communities. We are unique in the number of technical cases involving the industry we have defended. We are unique in our involvement in drafting manufactured housing community legislation. And our mobile home abandonment program is unique in every aspect.
Couple this with Chris' 25 years experience as one of the most successful independent manufactured home dealers, his real estate sales and insurance backgrounds, and his experience in running our abandonment program the last five years, and you can see why community operators are now asking us to help in operational aspects of their business.
In recent months we have analyzed flood drainage causes in several communities in conjunction with threatened ALJ cases. We have analyzed for prospective buyers of mobile home parks what it would take to close the parks and redevelop the land.
We have been asked to audit sales office records to ensure compliance with trust and escrow requirements of state licensing agencies. We have assisted with the due diligence of prospective buyers of parks in confirming their decision to complete the purchase.
We have consulted in preparing development plans for parks to file with local zoning authorities. And we have assisted with the due diligence required to refinance parks.
Our entire mobile home park team of Melissa, Vanessa, Chris and I are involved in this expanding line of work.
April 16, 2015
Legislative Session. The legislature adjourned early this year and nothing was accomplished affecting MHC's. MHCA went in with an expansive set of legislative proposals. AAMHO also got some bills introduced. All the AAMHO bills were defeated dur to MHCA lobbying but MHCA in turn was unable to get anywhere with its proposals. One reason was the legislature and new governor wanting a short session and having their own agendas to fucus on. But the main reason nothing happened was the unravelling of an agreement between AAMHO and MHCA to jointly back a compromise bill with things each side wanted.
When push came to shove, AAMHO decided to run its own bills containing things not agreed on and forced MHCA to lobby against them.
This brings to mind the fable of the scorpion and the frog. A scorpion asks a frog to carry him over a river. The frog is afraid of being stung during the trip, but the scorpion argues that if it stung the frog, both would sink and the scorpion would drown. The frog agrees and begins carrying the scorpion, but midway across the river the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion points out that this is its nature. The fable is used to illustrate the position that no change can be made in the behavior of the fundamentally vicious. Visualize AAMHO as the scorpion and MHCA as the frog.
One bill that got through would allow police at the request of a landlord or tenant to trespass a tenant's guests or have them arrested. This is a stupid law for many reasons, but in any event is part of the residential act, not the MHP LTA or the Long Term RV Rental Space Act. It has no application to MHC's or RV parks.
Abandonments. One of the bills we proposed would create a set of statutes formalizing the abandonment process. Currently the laws we rely on in dealing with abandoned mobile homes are scattered through title 33 of the Arizona statutes. Our bill would have consolidated and clarified them. This poor organization leads to misunderstandings by many and some unnecessary challenges by lienbholders and formar homeowners to the abandonment process.
Wade v. MHC # 3. This is a case that has made its way to the Arizona Court of Appeals. We represent the park. The heir to a dead tenant is challenging a landlord lien sale that took place after the death of his mother. The Superior Court upheld the sale and the heir appealed. The case involves complex issues involving probate law and principles concerning relitigating claims previously decided in other courts. But among the many issues in the case is a broad challenge to the right of a park to conduct a landlord lien sale of a mobile home.
The case was argued last Tuesday. Melissa had written the brief we filed but she is now on bed rest and unable to appear in Court (she is working full time from home however). So we had Mark argue the case at the Court of Appeals. Mark brought "fresh eyes" to the case and did a really fine job arguing it. A You Tube video will be released by the Court of the appellate hearing and I will post it here when it is out.
We expect the case to be decided on the probate issues and doubt the Court will even consider the landlord lien sale challenge. But anything can happen so we are a bit anxious awaiting the decision.
The decision should be released in early summer.
April 10, 2015
RV Parks Maintaining Mobile Home Registers. Mobile home parks have long been required to maintain registration cards furnished by the Department of Revenue showing information on homes in the community along with ownership and lienholder data. These are typically kept in file or card boxes in the park office.
In addition they are required to file monthly reports with assessor offices when homes move into or out of the park.
What is not generally known is that these same requirements apply to RV resorts and parks. The reason is that the definition in the tax codes applicable to these requirements is quite different from our landlord-tenant law definitions of mobile home and RV. Here is the tax code definition:
42-19151. Definition of mobile home
In this article, unless the context otherwise requires, "mobile home" means a structure that is transportable in one or more sections including the plumbing, heating, air conditioning and electrical systems that are contained in the structure and that, when erected on site, is either of the following:
1. More than eight feet in body width, thirty-two feet or more in body length and built on a permanent chassis.
2. Regardless of the size, used as a single family dwelling or for commercial purposes with or without a permanent foundation.
This captures park models, and most other RV's. Tax laws treat residence for more than 30 days as a residential use. Using this definition, ARS 42-19154 requires the monthly reports to be filed with the local county assessor.
The Department of Revenue publishes these forms.
Here is a link to the site where you can get the register forms. http://www.azdor.gov/LinkClick.aspx?fileticket=U56_xLI90rY%3D&tabid=262&...
Here is a link to the site where you can get the 30 day report forms: http://www.azdor.gov/LinkClick.aspx?fileticket=DrMpklIpw2s=
April 1, 2015
Jeffrey Matz. Many parks have encountered this man. Many park managers have been led to believe that he is a lawyer. While he once was, he no longer is, and he was never an Arizona lawyer.
The State Bar of Arizona sued Mr. Matz over what it claimed was his unauthorized practice of law. On March 31, 2015 a Preliminary Injunction was entered against Mr. Matz.
Any park that has encountered Mr. Matz or encounters him in the future should read this injunction and perhaps print it out and keep it in the office.
Any park that believes Mr. Matz has violated the terms of this injunction on or after April 1 should immediately contact the unauthorized practice of law section at the State Bar and give them the details. An explanation of the unauthorized practice of law and contact information is here.
The Injunction is only three pages long and is easy to read.
Read the Injunction here.
March 29, 2015
MHCA Pub;lications. I have just completed updating of four important MHCA publications: The Blue Book (mobile home space rental forms) the Grey Book (explanation of MHP laws and practices), the Orange Book (RV space rental forms, both long term and short term) and the Turquoise Book (explanation of RV park laws and practices).
These updated publications will be available at the upcoming MHCA Conference in June and hopefully before that by special order. If calling to order them be sure to specify you want the 2015 editions.
These books are sold by MHCA which can be reached at (480) 345-4202 or (800) 351-3350.
Change in Use. A number of older parks in various parts of the state are being looked at by buyers whose plans involving closure of the park and conversion of the land to a different use. These are very tricky and sometimes dangerous transactions for park owners to get invloved in. Sometimes they involve local politics. A couple of years ago the City of Flagstaff interjected itself into a park sale to a company planning to close it and replace it with student housing. Although the City had no legitimate role in the sale it used its zoning authority to intimidate the parties and ultimately resulted in the sale being canceled.
There is little doubt that land in developing urban cores or desirable rural areas with rundown trailers scattered on them can be more productively and profitably used and developers are on the outlook for them. Current owners of parks need to be sure that they do not commit themselves to a closure before escrow closes when the buyer asks them to give a head start on the process by sending out the early closure notices before closing on the sale. A seller who does that may wind up with a vacant piece of land if the deal blows up and the buyer walks away.
Here is a flyer prepared for MHCA explaining how the change in use process works.
March 21, 2015
Assistive Animal Homicide Case. I have had a number of people ask how this case went. We filed an immediate eviction action against the tenant who shot and killed her two pit bulls that were fighting in her front yard. She appeared and defended on the basis that when the dogs got into the fight she ran into the house, got her gun and came out to break up the fight.
The tenant said that one of the dogs then attacked her and she graphically and emotionally described how the dog jumped her and went for her throat. So she shot the dog in self defense. After that she saw how badly the other dog had been mauled and when neighbors who had gathered around urged her to "put it out of its misery" she shot and killed that dog too.
What she didn't explain was why the dogs were loose out front to begin with; why when going into the house she did not call 911, amimal control or the police instead of getting the gun; and why if the dogs were pets and assistive animals she could not calm them down without killing them.
This is a family park and a number of children were present at the scene. Though the bodies had been removed before the police arrived, blood stains and brain fragments were all over the ground as shown by photographs. She had to be a pretty good shot to shoot each dog in the head under such streeful circumstances.
This woman had the gall to insist what she did was justifiable and in self defense, and to file a counterclaim against the landlord for "wrongful eviction." Of course the counterclain was decided in favor of the landlord and dismissed. And the Court granted the eviction and ordered her out in 24 hours.
In speaking with the park manager after the case was over he told me the police had confiscated the gun and that she had been using hollow point ammunition. Even in a 22 caliber (which was used here) a hollow point can do enormous damage as it did to these dogs. One wonders what a stray round would have done to one of the children at the scene.
2015 Legislative Program. Once again this has been a season of lost opportunities. Instead of getting something accomplished, landlord and tenant organizations wound up simply opposing what each other were trying to get done. My understanding was that at the beginning of the legislative session, AAMHO and MHCA agreed to jointly support a single bill making a number of changes to the MHP LTA. This followed a series of negotiations and compromises on what would go into the bill.
But then AAMHO was discovered to be submitting its own bills going beyond anything agreed on and the agreement to jointly support a single bill evaporated. The end result was that the AAMHO bills died and MHCA never got a bill introduced.
Even in the best of circumstances it would be tough to get much done with a new governor, many new legislators, and a headlong rush by the Legislature for an early adjournment this year. But its still frustrating.
March 15, 2015
Tenant Government Complaints. We are used to seeing discrimination compliants filed with the City of Phoenix, the state Attorney General and HUD. And we are also used to seeing complaints filed with the FBLS Department and referred to the Office of Administrative Hearings.
But recently other government agencies have taken a more prominent role in this area. within the last coule of months the Department of Real Estate, apparently thinking a mobile home was a house subject to its jurisdiction investigated a com[plaint against a MHC for alleged misrepresentation in the sale of the mobile home. The state division of Adult Protective Services has recently investigated a complaint of "elder abuse" made by a tenant against an age 55+ park on a variety of concocted grounds. And the Consumer Affairs Division of the Attorney General's Office routinely receives and forwards to landlords tenant complaints about almost anything with a demand the landlord responst promptly.
The problem here is that while government investigators may not know anything about MHC's and may not even know they have no jurisdiction over a complaint, they have the power to make life very uncomfortable for a landlord.
Any government agency investigative request or demand, no matter how stupid it sounds should be taken seriously since the investigator has a lot of power resulting from his position with the government agency. If not promptly and accurately responded to, these complaints and investigations can take on a life of their own and get expensive to deal with.
Even complaints referred by the Better Business Bureau or received from tenant attorneys should be meaningfully answered.
If you get one of these and are uncertain how to respond, refer it to your lawyer. An ounce of protection here is worth a pound of cure.
Indecent Exposure. This past week we had two referrals of elder person indecent exposure cases. In one the resident has a recent history of trying to damage community bathroom facilities in the clubhouse. In the other, the most recent incidents were part of a pattern of erratic behavior by the resident.
We are always getting these sort of cases coming in. Almost always it happens in age 55+ parks and generally is part of a pattern of deteriorating mental conditions and irrational behavior.
Whule indecent exposure is a crime and can justify termination and eviction, in these cases it also seems to be part of mental deterioration possibly resulting from medication or perhaps just part of the aging process.
In any event it may be the consequence of conditions qualifying as disabilities. When confronted with these situations, try to talk to the resident, family members or neghbors. If it looks like the result of a disability see if someone can get the resident medical or mental health treatment. Of course call the police since it is a crime but suggest the resident may need medical observation.
Eviction in these cases should be seen as a last resort.
March 11, 2015
Assistive Animal Homicide. A tenant had two pit bulls approved by the park as assistive animals. They got in a dog fight while loose on the disabled tenant's front yard. The tenant came out with a pistol and shot both of them, killing them. She quickly had the bodies removed leaving a blood soaked front yard. No arrests were made since the bodies had been removed. But we will be filing an immediate eviction against the tenant.
March 10, 2015
Rental Documentation. I don't know why but we are being asked by a great many parks to review and update their rules and regulations as well as statements of policy and rental agreements. Most are seriously out of date, and many parks want restrictions added concerning the condition of the space after homes are removed and the addition of rights of first refusal to buy tenant homes being sold to buyers intending to remove them from the park.
No doubt this is due to the poaching going on in the industry. In particular a last gasp splurge of poaching is being engineered by a disgraced ex-lawyer being sued by the State Bar for the unauthorized practice of law. He is working with a transporter who is telling people the guy is a lawyer or a "retired lawyer". Of course this is all made possible by other parks being willing to deal with these people and buy the homes they poach.
In any event it is a good idea to update a park's rental documents, especially when they aven't been reviewed in quite a while. The cost is modest. It does not look like much is going to come out of the Legislature this session affecting parks so now is probably as good a time as any to have the park documents updated.
Incidentally it is almost always a mistake to buy a home being poached from the poacher to prevent it from leaving since he is almost invariably marking the price up over what he paid. Also this only encourages more poaching from you and others.
March 4, 2015
Rental Tax. All landlords know there is a local tax imposed by cities and towns on residential rental receipts. In the last couple of years there has been confusion and debate over if and how it applies to utility charges. Generally it does apply to landlord charged utilities.
This is a regressive tax. Those most affected by it are folks for whom coming up with the monthly rent is difficult, folks often a pay check away from homelessness. Its sort of like a food tax--a government imposition on something essential to staying alive.
The tax rate is set by the local government. It generally runs between one and two percent of the gross rent.
Arizona is one of only a very few states that allow cities and towns to impose residential rental taxes.
There is a heated battle now going on between the League of Cities and Towns (which desperately wants to keep the tax) and the Arizona Multihousing Association and other groups which are pushing for the legislature to eliminate the authority to impose these taxes. A bill, HB2254 has been introduced eliminating this taxing authority, and it has made progress. It could pass. I certainly hope it does. You can read about the bill in this article
February 27, 2015
Department of Fire, Building and Life Safety. The Director of this Department has reportedly resigned effective March 16, 2015. He was a political appointee and favorite of former Governor Jan Brewer but brought to the job no background in any of the functions of the Department. In his five years there I never met or spoke with him and never saw him at any functions involving the manufactured housing industry, though I did see him testify once at a legislative budget hearing.
In my opinion he will leave no mark when he departs and will not be missed by anyone other than his friends; his departure is no loss to the manufactured housing industry. In all fairness however, one thing that did end under his watch was the wholesale looting of the Mobile Home Relocation Fund. If he had something to do with ending that, then we are indebted to him.
Hopefully this vacancy will be filled by someone who is a positive addition and will further the interests of this industry. Although the State Fire Marshall is also in the Department, that is a largely meaningless function and the real importance of the Department is in licensing and discipline of various occupations involved in manufactured housing, and in being the Arizona liaison and counterpart to HUD's manufactured housing regulatory responsibilities.
I would imagine more change is coming, though I have no inside knowledge.
Sexual Orientation/Gender Identity Discrimination. I made a presentation this week to a group of residents of a planned community about sexual orientation and gender identity discrimination, and the importance of realizing that discrimination by gays and lesbians against straights is just as violative of non discrimination principles as the opposite.
Sexual orientation/gender identity is not a protected class under federal or Arizona fair housing laws--yet. But it is protected under fair housing ordinances in many cities including the City of Phoenix. Common sense says not to discriminate on this basis anyway.
That afternoon I learned of a memo from the State Supreme Court to all judges advising that if they choose to conduct marriage ceremonies, they cannot refuse to conduct same sex marriage ceremonies even if doing so violates religious beliefs.
February 21, 2015
Legislative Session. This is the nastiest legislative session I have ever seen. In the past, things got done in areas affecting the MHC industry because landlord and tenant groups managed to negotiate in good faith with one another and arrive at a concensus for bills both could live with that actually solved problems and improved the industry as a whold. Also outside group[s with their own interests stayed out of our affairs.
All that has changed. This session has been marked by a leadership change at AAMHO in mid stream. Coincidentally, a deal to submit a single compromise bill has been breached with AAMHO instead submitting piecemeal bills without first discussing them with MHCA. Instead of seeking to compromise and negotiate with MHCA, AAMHO has tried to generate public support with e-mail blast campaigns directed at legislators.
While there is nothing inherently wrong in lobbying this way, the problem is that it quietly violates an understanding reached before the session began. This in turn results in behind the scenes maneuvering to defeat bills instead of trying to negotiate.
It has become the night of the long knives. In the end it is not likely that anything is going to get through this session and there really is a need for a couple of fixes to actual problems. Tenants want something done about tree maintenance whild landlords want abandonments addressed. Both sides are hurt by unscrupulous poachers and that needs to be addressed. The existing caregiver statute is probably illegal under federal law.
But in a year of backstabbing and broken promises nothing is probably going to get done.
Flagstaff Relocation Ordinance. Several months ago a proposal was being considered by the Flagstaff City Council to impose huge requirements on MHC's wishing to close and relocate tenants. MHCA in the person of Susan Brenton went up to a Council meeting and testified against the proposal. I wrote a letter to the Flagstaff City Attorney explaining such a law would probably be struck down in Court since the State had pre-empted the field with the relocation fund statutes.
Apparently the City got the message and it appears it will not try to enact its own law but will first try to get the legislature to change the relocation statutes to allow cities to do such things. Read about it here.
That is good since we apparently won't have to sue Flagstaff over its pordinance. But is is bad since we have enough problems down at the legislature already and do not need this thrown into the mix.
February 14, 2015
Abandonments. We are making some changes in our abandonments program.
Starting the end of March Chris will begin working for us on a part time basis. Chris has a real estate license and loves sales. He has been wanting to get more involved in his real estate activities so he will only be working part time for us starting in the spring.
Vanessa, our long time legal assistant has returned to us from three months' maternity leave. She is being moved up to become our primary mobile home abandonment manager. She will be working Mondays, Wednesdays and Thursdays while spending time with her family the rest of the week.
Vanessa brings with her a great deal of knowledge about landlord tenant laws and procedures as well as how our internal computer management system works. And she will continue to have access to Chris' in depth knowledge of the abandonment process.
We expect that between Chris and Vanessa our abandonments desk will be staffed on a full time basis.
Park Rules, etc. Many parks are having us review and revise their rental documents. It is surprising how many of them are obsolete. In our review we focus on ensuring they build in protections against poachers and that they take into account many of the bills pending at the legislature that we believe may pass.
Poachers. At least one investigation is going on involving certain poachers. I have no inside information on this and can only speculate, but I would not be at all surprised to see a criminal prosecution referral for some of the fraudulent conduct being engaged in by certain poachers. Some park owners thinking they can remain anonymous seem to be in bed with some of these poachers. It is likely their involvement in this activity will eventually become public.
According to the Courthouse News Service, one poacher who masquerades as a lawyer has been sued by the State Bar of Arizona over his unauthorized practice of law.
Anyone who has been approached or intimidated by someone purporting to be a lawyer, or a "retired lawyer" involved in poaching homes should contact the State Bar to report the person. Here is an explanation of how the Bar restricts this activity and how to report it. An e-mail address of the person responsible for this program is at the bottom of the page.
February 6, 2015
Legislative Session. There is a lot of action going on at the Legislature that could affect MHC's and RV Parks. I doubt much of it will get through but one never knows until the session is done.
AAMHO is trying to shift tree maintenance responsibility to landlords in parks unless nearly impossible conditions are met. They are also trying to get an ALJ process created for park model owners in RV parks. They are trying to generate tenant support by asking them to e-mail their legislators in blast e-mails on the park model ALJ bill. Of course there is no need for such a law but it makes AAMHO look like it is doing something and help it to generate more membership and more dues.
MHCA is trying to get a bill through cleaning up the MHP LTA. Legislation clarifying how MH abandonments are handled is included as is new language on caregivers, new provisions covering assistive animals, and new provisions trying to curb some of the most abusive practices of poachers. In addition, meaningful statutes dealing with homes owned by tenants who die is being sought and provisions covering personal property left in tenant homes after they have been removed as the result of an eviction are being sought.
The legislative process is not pretty. Although registered as a lobbyist for MHCA I am not cut out for that work. I draft bills but try to stay away as much as I can from the horse trading and other things that go on to get laws passed. In addition my presence at meetings involving AAMHO and now Legal Aid tends to make the meetings unproductive since neither of them regards me with much favor.
As the old saying goes:
"If you like laws and sausages, you should never watch either one being made."
February 1, 2015
MVD Contractors Handling Abandoned Homes. Our firm handles landlord lien sales and bonded title procedures when home are abandoned in parks. To do it properly and legally the process takes time, invloves sending a number of notices to folks having an interest in the home, and observing waiting periods required by law. To do it right costs money and our charge is normally about $600 per homes including out of pocket costs.
The MVD authorizes certain independent contractors to perform a number of tasks that the MVD used to do in-house, including transferring titles to manufactured homes. It is possible for these contractors to get a title transferred without complying with the laws we follow.
MVD contractors also do Level One inspections on homes and can perform a number of valuable services. We utilize a number of these around the state including Sierra Title and Desert Title. These are good reputable companies.
But like everything else there is an exception to the rule. We have seen instances of a few other MVD contractors solicing this business offering a cut rate price. We have seen enough of those contractors' work to question the degree of compliance with applicable law.
Our concern is heightened when otherwise reputable MHC management companies recommend these cut rate contractors to their clients in their quest to minimize expenses.
A contractor either ignorant about the law or who just does not care is able to produce a title to an abandoned home in less time and for less money than we can.
But if the legal process prescribed by Title 33 of the Arizona Revised Statutes is not followed, those titles are essentially frauds, obtained by false pretenses. While they will be assumed to be valid and the MVD will honor them, a civil lawsuit for fraud and conversion of the home against a park obtaining such a title is likely to be successful.
Just because the MVD issues a certificate of title does not mean the title is legally valid if the legality of the procedures that resulted in it being issued is challenged.
We have no problem with competition and we do what we can to minimize our charges. But our foremost concern is that the title be valid and that it can withstand a challenge.
Be careful using cut rate vendors for complex legal transactions.
January 24, 2015
Drivers Licenses for Unducumented Immigrants. A new federal court decision requires Arizona to issue drivers' licenses to undocumented immigrants who have been granted deferred action from deportation--"Dreamers". Read about it here.
The Judge noted that Arizona refused to accept federal work authorization documents issued to Dreamers, even though the state had long accepted those same documents for other immigrants seeking driver’s licenses. It was this inconsistent treatment that resulted in the decision.
This highlights the fact that many folks without lawful residence status will still have Arizona drivers' licenses as well as Social Security Numbers and work histories. It also raises the question of how this affects landlord screening practices.
The purpose of fair housing laws is to prevent discrimination on the basis of protected class. Nothing forbids fair screening guidelines and applying them equally to all applicants. The question is whether you treat applicants differently because of protected status. If your criteria are blind to minority status, and you apply it consistently, you may turn down applicants who do not qualify.
The key is making the process fair - ensuring it does not directly or indirectly discriminate on the basis of protected class. You may have a rule that requires all applicants to show photo ID, and you could turn down applicants who cannot produce a photo ID. The practice becomes illegal if you apply the rule inconsistently.
Photo ID is not going to automatically screen out all non US citizens. Everyone should be able to produce some form of photo ID--now including Arizona Drivers' licenses by undocumented residents.
Just stay away from doing anything to restrict residency because of national origin. As long as an applicant can prove who he/she is and has an acceptable credit and criminal background, the applicant is eligible for tenancy regardless of national origin or, for that matter, immigration status.
January 21, 2015
Fair Housing Disparate Impact Case. This week the Supreme Court will try to create standards on federal enforcement of the Fair Housing Act of 1968 in a Texas case about placing low-income housing in racially segregated neighborhoods.Oral argument takes place today.
The case is Texas Department of Housing and Community Affairs v. The Inclusive Communities Project and involves a dispute over a federal law that affects the everyday lives of many minorities.
The dispute is over what theory of discrimination is applied to housing offerings that treat renters differently based on race, color, religion, sex, disability, family status, or national origin? Does the law only prohibit housing bias that was intentional? Or does it also prohibit rental policies that have a negative impact on people with the protected characteristics?
An intentional bias claim is considerably more difficult to prove, because it requires a probe into motives that may not be obvious or clear.
But in a disparate impact situation if a challenger claiming a violation shows that there was a discriminatory effect of a rental policy, the landlord must prove that the practice was necessary to achieve a substantial, legitimate, and non-discriminatory interest. If the agency or landlord succeeds on that point, then the challenger must show that the interests could be served in a less discriminatory way.
The State of Texas filed with the Supreme Court, raising the question in this form, as granted by the Justices on October 2: “Are disparate-impact claims cognizable under the Fair Housing Act?”
If this case does go to a decision on the merits, without a prior settlement, a final decision is expected in late spring or early summer.
January 20, 2015
New MHCA Newsletter. You can see it here.
January 14, 2015
New WZP Newsletter. A new firm newsletter is out. Read it here.
January 12, 2015
Age 55 Community Survey Requirement. Fair Housing Laws require that all Age 55+ communities conduct a survey every two years to confirm that at least 80% of their occupied spaces have at least one resident over age 55. Without the two-year survey on file in the community, it may be disqualified from limiting tenancy to older persons. There is a court decision from the U.S. Court of Appeals for the 9th Circuit that includes Arizona, indicating this.
The requirement is set forth in HUD regulations implementing the “Housing for Older Persons Act of 1995". The MHCA Blue Book has a form for this purpose along with instructions for use.
January 10, 2015
Constable Training. I will be presenting a four hour training class for new Arizona Constables and Civil Sheriffs' Deputies on January 13 at The Arizona Peace Officer Standards and Training Board facility in Phoenix.
So far about 22 new Constables and Deputy Constables as well as around 30 Civil Sheriffs' Deputies from across the state are signed up.
The unique background of our firm members makes us popular with law enforcement and other government agencies for education on landlord tenant law and eviction procedures, and law enforcement training is a service we frequently offer that community.
Many sheriffs' deputies require parks to let homes be removed despite provisions in the MHP LTA requiring rent be current and a clearance for removal be obtained. When this happens we will file a notice of claim and if need be and the client wishes, sue the County for rent due if they don't pay after getting the notice of claim. Prevention is the key to this, however which is why I like to get the sheriffs' deputies into these training classes.
January 1, 2015
Happy NewYear. 2015 is going to be a year of great change in our law practice.
To begin with, our coverage arrangement with the law firm of Hull, Holliday and Holliday has been terminated. Those of you for whom we do evictions who got to know Andy Hull or Kevin Holliday when they covered our cases will now either be dealing with me, Scott, Mark or Melissa, or with our new coverage firm, Koglmeier Law Group. Having coverage arrangements where we cover their cases in some courts while they cover our cases in others enables us to get cases set to be heard at the earliest possible date. We still cover trials and difficult cases no matter where or when they are set.
There will be changes coming in our abandonment program in March. I will write more about this in the coming weeks.
We have a new governor and I have reason to believe that we will be getting new leadership in the Fire, Building and Life Safety Department. I am hopeful that sanity will be returning there after the past 12 years.
We have a number of new MHC operators in the Arizona market. Of course the biggest is Sun having taken over the American Land Lease portfolio and in the process, having become the second largest national operator behind only ELS. We have several Florida park operators that have acquired parks in Arizona in recent months. And there are others.
One of the things drawing new operators to Arizona is our favorable legal climate for MHC's. MHCA and I personally have worked hard to preserve that environment over the past 30 years and we have been pretty successful. Our ambitious 2015 legislative program will hopefully carry that tradition forward.
A good legal environment means that both landlords and tenants benefit. It requires responsible landlords to avoid kneejerk legislative fixes to problems brought about by bad ones. And an economically sound environment lets landlords keep rents down which obviously benefits tenants. Arizona MHC rents are among the lowest in the nation as a result.
2015 Legislative Program. MHCA has developed a comprehensive legislative agenda this year. It has been coordinated with AAMHO, the FBLS Department, and Community Legal Services.
We hope to simplify the abandonment process, deal with issues following death of a tenant, assistive animals, caregivers, control local tax abuses, and place regulatory restraints on poachers including transporters, dealers and salespersons.
It is an ambitious agenda but we are hopeful we can get something done.
2015 Training. I have updated the Seminars and Appearances page to show currently scheduled MHCA training classes I am scheduled to conduct.
The information contained on this site is not legal advice and does not create an attorney-client relationship with the user. Landlord-tenant and fair housing laws are always changing and are subject to interpretation. You should always consult an attorney before taking any action.
This is an attempt to collect a debt. Any information obtained will be used for that purpose.
Michael A. Parham
Williams, Zinman & Parham, P.C.
7701 E. Indian School Rd., Suite J
Scottsdale, AZ 85251
Phone: (480) 994-4732
Fax: (480) 946-1211