Long-term rent increases?

It might be in your and your neighbors best interest to find a copy of the governing documents for your Association.

To the best of my knowledge, no Association's "own" the subdivisions.

But going back to your governing documents should help to clarify a few things.

The management company probably doesn't "own" the park either, and is most likely a vendor working for your board of directors.

The documents should also indicate what percentage is the maximum that assessments can be increased without an owner-wide vote.

Which brings me to my next question.

What do you mean by "rents"?

Are not the owner of your unit?

If not, then who owns it?

Are none of the residents owners?

I'm somewhat confused.

Michele,

In answer to your questions, in Florida, there is an entire chapter of public law dealing with Mobile Home park tenancies. I'm intimately familiar with it and with our Association governing documents. In this state, there are several kinds of associations, some of which can own the park property. Ours is a 55+ manufactured home park. The park owner is located in another part of the state and has always used a management company to take care of his interests.

Our homes are not trailers. They do not have wheels, axles or towbars. They are 2-wide homes with a carport and a Florida room and/or lanai (screened porch) plus a small built-in storage shed. The lots are not owned by the homeowners, but we do own our houses. Therefore, we "rent" the space upon which the house is situated.

In Florida, the park prospectus is the primary governing document for the park. The Homeowners Association is a non-profit corporation set up by the homeowners. It is guided by its Articles of Incorporation and its bylaws. We are essentially at the mercy of the owners because state law does not put any kind of cap on rent increases. We do have the right to contest rent increases, but it involves expensive mediation or other litigation. At a whopping $16 per year HOA dues, we have few resources to hire a lawyer for a court battle, and the laws seem to be written on the side of the owners.

Don,

From what you describe, this is not an HOA issue but rather a landlord-tenant issue.

But tell us - what do you think would happen if the majority of renters didn't buy into the proposal? And also, is it a $30 increase in 2009, another $30 on top of the 2009 increase in 2010, etc., or $30 flat covering 2009-2016?

John (continued),

We have 599 homes here, not a small park. The rent situation here is really skewed. A 1 BR home between 2 others, having been sold 5 times may pay a rental of $700/mo+, while a one-time owner 3-BR unit on corner lot next to a pond may be paying only $450. We pay all utilities, etc. The only service we get is lawn mowing and grass watering. Most rent increases in comparable parks are based upon the cost of living index and are put forth as a percentage. We are guaranteed nothing in return for filling the owner's wallet in these difficult times when all wallets are being unfairly drained.

My original question was "Has anyone heard of any long-term proposal like this?

Thank you for your interest.

Don

How locked in are the members to the Management? By assigning your right to the Board, just what are your rights? Have the Peons ever held a Townhall meeting? Do you have any sort of a formal recognition in any documents or leases you sign. Who signs your leases? Are there any other management layers?

What comes to mind about this locked in increase is the possibility that these owners are looking around to borrow some money and they may need some long term collateral..........just a guess.

Don,
A direct answer to your question.
No, I have not heard of this in a mobile home park.

But the above is not an answer to the "can they do this."

Certainly a Long Range Plan for a HOA or Condo could contain language that the fees will be 75$ in 2009 and will raise to 125$ by 2012. No agreement signed there of course but the members could be asked to vote on it as written. Another pitfall and a bad practice, to me, is the automatic increase that can be built into the documents that allows for a CPI annual increase. Have you ever looked at the government tables on different CPI for different regions? But over a span of time the % increase you are talking about could easily be exceeded by an automatic CPI.

I would look for some kind of a financial need that the owners have so they can do something somewhere else.

This kind of a requirement certainly deserves a authoritative legal opinion, other than what is presented by the owners.

If you can convince the owner that 80% of the people will move out I think you could start serious discussions. Which brings up another subject. Is it possible this land is worth more as something else besides a Mobile Home Park? Just a thought.

Dwight,
Well put, however it is not an answer to the post? Has anyone experienced a similar situation? I would believe the residents or members of the association should have some input into the amount and the commitment of funds over such a period of time. Even though averaging it out may not seem a unreasonable amount, does it have any hidden traps that might set the stage for something in the future?
I don't know but I think I would be interested in finding out and the owners of this place must have some obligation to the residents that send in their money. I am afraid this could be a can of worms, which of course could be avoided with the owners making efforts to be transparent and open. Maybe they are, again, I don't know.

Robert,

Please define "locked in". In Florida, when a homeowners association is formed, it (by law) must be registered with the state as a corporation and comply with public laws regarding such associations. Having done this in 1989 (before my time here), residents automatically become HOA members upon purchase of a home and agree that the HOA will be their representative in all matters involving the applicable laws. As park lot rents are covered to an extent by the laws, representation is automatic.

I think you may be on the right track regarding collateral or something related thereto.

Don

Robert,

Thanks for your continuing input. The park owner here has a manufacturing company on the other side of the state. He is a well-known manufacturer of manufactured homes. Florida's construction industry is presently deeply more deeply depressed than most of the rest of the country and he is obviously not raking it in as in the past. Ours is the only park he owns. It is his little cash cow.

Mooo!

Don

Don writes:

>>>We believe the present long-term proposal is based upon locking in a guaranteed income base for the owners for the next eight years.<<<

Let's assume that's true.

But as opposed to what? And again, based on my earlier calculations, what do you find so unreasonable?

John,

First of all, the average rent rate in this park is $541/month. It is not a golf or fly-in community, just people from all over America who wanted to retire reasonably in Florida.

The average rent rate in the state of Florida for parks with similar amenities and size runs at about $420. By amenities, I mean a pool and community center. What many of the much lower rent parks get in return for their investment includes many more services than are available to us, such as included cable TV, water and sewer, maintenance of trees (of which we have thousands), resodding of lawns when necessary, proactive park security, lawn weed and pest control and many others. All these services also come out of our pockets.

In Florida, when an annual rent increase letter goes out, the residents have a fixed period of time (30 days) to contest it if they so wish. They must form a committee of 5 and meet with the owners or their agents to attempt to negotiate. Our owners are always adamant in maintaining their position. That failing, we must go to state mediation, which requires the hiring of a lawyer. Our treasury cash base does not permit the retention of much of a lawyer. The owners have millions to put into a team of crack lawyers and mediation becomes a study in futility. The only course of action after that is litigation, which would bankrupt us. Therefore, we are caught between a very heavy rock and an extremely hard place. We have been through this process as recently as 2006 and got little for our efforts.

What we find to be unreasonable here is that in these hard financial times, the cost of living is spiraling much faster than our incomes. For many residents, coming up with the money for day-to-day living is getting more difficult. We are not cheap people, just folks who retired after working hard all their lives to achieve it. All we want is some relief from our greatest expense (living space) until the financial crisis is past and we can breathe a bit more confidently.

Don

John,
My read. Based on what John is saying, I think he is suspecious about what is going on. It is obviously not the increase in the rent if taken year to year for eight years. It is the request (direction, whatever) from the owner of the land to have them sign an agrrement to commit for eight years.

I suspect that is the caution about all this.

Don,

So sorry I can't answer your question but this is what can happen if you rent. Florida for years has sought seniors to come here to live but the times they are changing and now that Florida no longer needs seniors the state could care less. Low taxes in our state are partly responsible for our children getting a poor education, etc. The low taxes were also to attract seniors and it has not been good either for the seniors or for families. I am a senior and feel for the financial crunch we find ourselves in but am fortunate that I was able to buy a small townhome (no amenities). Even so, I was forced to get a reverse mortgage to live decently. I wish you good luck.