Thursday, July 12, 2012

Mobile Home Park Lot Tenancies - You Own Your Home But Rent the Lot

A good portion of my practice in the past couple of years has been from residents in mobile home/manufactured home parks where the resident owns there home, but rents the lot.  The parks are governed by Fla. Stat. 723 and regulated by the Department of Business & Professional Regulation ("DBPR"). But with the protection of the statutes and regulation by the State of Florida, many residents find themselves in a terrible predicament when the rent increases price them out of their homes. A surprising number of people are walking away from their homes and find no comfort in knowing they have legal rights, but the high cost of litigation is a barrier to justice.

Here's how it usually happens and unfortunately it happens to our elderly most often.  A family decides to move/retire to Florida.  They come to Florida looking for a place to live and see these great advertisements about mobile home/manufactured home parks with all the amenities (clubhouse, pool, golf, shuffleboard, fishing, library, etc.). They are given literature that encourages them to enter into a lifetime lease rather than investing $35,000 or more in buying a lot. They are even given a chart that shows the amount of the lease is estimated at approximately $3,756 a year with the estimated annual rate to be approximately $3,756. The * means there is fine print that says the rent will increase the greater of 5% or the increase in the consumer price index. Only it's not worded that way. What it actually says is the greater of 5% or the government Consumer Price Index (CPI)." See the difference? One tells you it's going up at least 5% while the other implies it could go up 5% but may not. It also says that if you invest the $35,000 at 6% interest you will only be paying around $1,856 a year for rent if you apply the interest to the rent. It also says that if the rent is increased 5% you should also have a 5% increase in your Social Security and pension.

So, what goes wrong?" you ask.  The rich park owner increase the rent 5% each year no matter what -- that's what's wrong. Your Social Security does not increase for three years straight, but your rent goes up that 5% each year. Then there are the pass-through taxes. That's right! That ad that said you never pay property taxes means you never pay them to the county, but the park owner collects them from each lot and pays them for you. Two problems with that -- 1) the park owner gets the tax deduction and 2) the increase in property taxes each year is added to your base rent so your rent really increases 6% to 12% each year.

Why would anyone agree to this you ask? Why didn't they read the fine print you wonder? Because they are given the advertisement when they visit the park and are sold a home, but they are not given the actual contract, called a prospectus, and the lot rental agreement until they show up at the gate with all of their possessions on one truck, their new home on another and their former home has been sold with no chance of getting it back. They are literally given the documents at the gate and the deposit is non-refundable! Close to $10,000 lost if they back out of the deal.

The new resident goes ahead with the deal and moves in because they are put on the spot and don't know what to do.  Remember, at this point they do not know about Fla. Stat. 723 or DBPR. So now they're living in their new home for two years, which by the way they may have gotten the first year's rent for $99, which further hides the true costs of this deal, when they get the first rent increase and realize they are paying property taxes and other fees. Moving is usually not an option because these homes are pretty much permanently attached to the ground. They can be moved just like a house can be moved, but the price tag is around $30,000 and the structure is usually compromised some in the move.

As if the resident is not feeling warm and fuzzy about moving to Florida now, the park owner decides the resident needs to re-sod the lot. That's right -- the owner wants you to pay for major upkeep to a lot you do not own. And you might also end up paying the water bill for the irrigation system to water common areas because the irrigation system is tied into your lot if you live in the right spot!

Welcome to Florida!!! How much money do you have to lose?

By the way -- the U.S. Department of Justice revealed Florida is the number one state for corruption in this country.  And I always thought that title belonged to my home state.


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