Complete glossary at: https://mhphoa.com/glossary/#A-Z
Adjusting Rent to Market Rate or “Periodic Re-evaluation” of Rent
Some mobile home park leases have clauses that permit the landlord to re-evaluate current agreed-upon rent raise levels and change them (raise them). The homeowner agrees to accept rental rate hikes based on a “market rate study” done by a park owner’s employee or contractor. These studies and rent changes may be allowed periodically, such as every 5 years. Typically, the homeowners do not get to choose who does the study, nor determine its quality and factual basis. Some homeowners may not be aware that the rent increase levels they thought were locked into their lease can change periodically.
An additional service or benefit such as a swimming pool or basketball court, laundry room, pet park, etc. beyond the typical hookups for the mobile home
When the homeowner agrees to a lease clause that prohibits the homeowner from using the courts (suing) to resolve disputes, but instead must submit to a third-party professional arbitrator. Depending on the agreement, the arbitrator may be chosen by the park owner. Some professionals question the neutrality of such arbitrators, especially when their repeat business is dependent on the park owner being satisfied with them.
How the business is run. The behavior of a business owner in reaching a goal, or in completing tasks toward a goal. The discretionary practices of a park owner can determine the economic and health risk levels experienced by the residents of the mobile home park.
Best practices can be tailored for a certain goal. If a park owner wants to achieve maximum return on a mobile home park investment, the best practice for that business intent may be to raise rents as high as the homeowners will tolerate. They may also cut staffing and maintenance of the park and force triple-net style leases on the residents. Some may close other expense items such as clubhouses or swimming pools.
In contrast, a civil-minded good-citizen business owner may employ enough staff to monitor and maintain the park and be available to residents while ensuring that he makes a fair profit. This can enable lower-income citizens to prosper enough to grow and contribute to the economy.
Business practices can determine the health and safety of the park depending on the amount of attention given to park monitoring and maintenance. A good business practice for customer relations may be to train staff in the applicable laws and ensure that park residents receive copies of the law FAQs and Rules and Regulations of the park.
Chattel (rhymes with “cattle”)
Personal property, that is usually movable. As compared with “Real Property” which is land and its improvements. Improvements on real property are typically attached to the land permanently, such as a house on a foundation. Mobile homes usually are not on a foundation and, theoretically, can be towed away, although the moving of manufactured homes from parks is uncommon due to practical matters.
Contract of Adhesion
A one-sided, take-it-or-leave-it contract where the contract writer dictates the terms of the agreement which are non-negotiable. Many mobile home park leases are contracts of adhesion – where in order to rent land in the park, which is a necessity if the contractee is attempting to buy a home in the park, the potential homeowner has to accept all the terms of the park owner’s lease contract.
Economic Eviction (As Opposed to Traditional Eviction)
When a mobile home owner can no longer afford ever-increasing costs of living in the park, he may be forced to decide to sell the mobile / manufactured home and exit the mobile home park. This is in contrast to a legal eviction where the landlord makes the decision to evict.
Unlike apartments, the mobile home must first be sold to a willing buyer to transfer the continual rent obligation away from the financially evicted homeowner. These may be referred to as “voluntary evictions” that a homeowner imposes on himself for financial reasons – when rent hikes are beyond what the homeowner ever anticipated.
Enforcement of a law or rule helps to to give it strength. It is entirely possible to have a requirement that is poorly enforced, and profiteers may find that the consequences of violation are minimal while the profits are significant.
Many mobile home park business practices and lease contracts fall under civil law where disputes are ultimately settled in civil court. That is to say, there is no “cop on the beat” for mobile home parks nor a district attorney to prosecute – the homeowners have to do their own enforcement and pay their own legal costs. However, homeowners who sought to live in the mobile home park because they believed it would be affordable, are less likely to afford an attorney to sue for enforcement of the law or contract.
Enforcement is a required part of a law or a rule to make it effective. It may require governmental political will to make the law effective. Examples of demonstrated political will include budgeting to pay for enforcement personnel who must monitor and patrol, training of personnel to qualify them to investigate, cite and prosecute, and successful prosecution along with significant penalties for violation.
There are potentially two types of “law” in mobile home parks. The first is state, county or city laws that may apply. Those governments should to enforce their laws. The other is the contractual Rules and Regulations of the park that determine minimum standards of park quality and desirability. Those must be enforced by the landlord. In both cases, people are paying for enforcement regardless of whether they get it or not.
Another matter for enforcement is the contracts (leases) between landlord and mobile home lot renter. These fall under the category of civil law, as opposed to criminal law, and must be enforced by the contracting parties. If a contract is violated and the parties cannot reach an agreement, they may have to take the matter to court with a lawsuit and pay for their legal fees. Some pro-bono law firms may give free legal help to mobile home owners who are becoming destitute and cannot afford an attorney.
A law, alone, does not enforce itself and there are numerous laws that are weakly enforced, if at all. In mobile home parks, weak enforcement reduces the quality of the neighborhood because scofflaws may be able to proliferate and a park may deteriorate. A real threat of being caught and paying penalties is needed to deter abuse.
Exclusion From Rent Control
A clause in a lease contract where the homeowner agrees to not be protected by rent control or rent stabilization, regardless of the applicable laws. This allows the landlord to increase rents as stipulated in the lease, not according to any rent stabilization laws. In a take-it-or-leave-it contract (adhesion contract), the potential homeowner has to agree to these restrictions in order to live in the park.
Eviction (Traditional Eviction, Legal Eviction, Involuntary Eviction)
When a renter is served legal papers to leave the property of the landlord. Legal evictions are enforceable by law and can be challenged in civil court. These may be referred to as involuntary evictions as compared to the “voluntary evictions” that a homeowner may impose on himself for financial reasons.
Failure to Maintain Lawsuit (FTM)
A lawsuit filed against a mobile home park landlord by his tenants for failure to maintain the mobile home park. Usually, there are health and safety issues as the prime concern due to the landlord cutting operational expenses to a bare minimum. A leading example of a California law firm specializing in suing mobile home park slumlords is ASK Law Group. See “Slumlord Business Model“.
A financial loss on two fronts that mobile home owners may suffer as lot rents are increased. The homeowners lose use of their income as it is diverted to pay increased rent, and, due the increased rent, they lose equity in the resale value of the mobile home. A common saying for homes near the coasts in California is that for every 10 dollars of rent increase, house value drops by $100.00.
Home equity values drop due to pressure on the homeowner to lower his asking price for the home in order to attract buyers. As potential home buyers see higher rent being charged, the park becomes a less desirable place to live. But new buyers can be enticed to purchase a home by lowering the cost of the home to offset the higher cost of rent.
Additionally, a mortgage lender will examine both costs to a potential customer – the rent cost and the mortgage payment costs. If the two costs added together exceed what the lender feels is within the customer’s ability pay, and, considering that rent will continue to rise, then the lender will require the customer buy a lower-priced house to get approval for the loan. This knock-on effect causes home sellers in parks to have to continually lower their asking prices to satisfy a mortgage lender’s risk tolerance.
As mentioned in the Glossary definition of “enforcement”, the government and its citizens may have a long way to go from just having the legal authority to accomplish something to finally arrive at a point in time where they experience the desired outcome. Government practices are about having the political will, the budget, the staffing and the training for those that must enforce a requirement.
Government must reliably and consistently monitor and patrol for violations. Once cited, offenders must be brought to justice. There is time and effort required to prosecute and significantly penalize offenders. When any of those government practices are weak or missing, the desired change may not happen. You may have noticed that some jurisdictions are more exacting and stringent about enforcing laws and following through. The outcomes that affect a community are often determined by the practices of various governmental authorities, not just the laws alone.
The connections to water, electric, gas and sewage that a mobile home needs to be fully operable. Similar to RV hookups in a Recreational Vehicle park but intended for longer-term use. These can be metered.
Streets, lights, water, gas, electric, storm drainage, sewage and the like within the mobile home park boundaries. Similar to municipal infrastructure for site-built homes but owned and maintained by the landlord to the point where the park infrastructure connects to city services.
Land-Lease, Lot Lease, Space Rent Agreement
A rental agreement for land – the lot the mobile home is attached to, that covers a fixed amount of time, often ranging from 1 year to 20 years. Some claim that a lease is protective because it sets predictable rent increase dates and secures the land for a set period. Others point out that a lease can be unfavorable to the homeowner for other reasons, clauses in the lease that reduce homeowner options. Having a lease contract, alone, does not necessarily prevent rent raises or economic eviction. The devil is in the details of the contract.
Lot, Space, Rented Land
Lot and Space usually mean the same thing. They are the land and hookups that a mobile home owner rents in a mobile home park.
Houses that are primarily built in a factory. A mobile home is often a manufactured home. Mobile homes are factory-built to a width that allows for towing on streets and highways. They are trucked in a near-complete state to a location where they are placed for the long term. Another kind of factory manufactured home is constructed in large pieces that are hauled to a site and assembled on location, usually on a permanent foundation and more closely resembling a site-built home.
Although the Federal Department of Housing and Urban Development (HUD) has defined “mobile home” as those built before 1976, before HUD implemented minimum standards for manufactured mobile homes, the new naming has yet to catch on with the general public. After 1976, HUD defined them as “manufactured homes”, yet that name has not entirely caught on either. Today, is it common to hear “trailers”, “mobile homes” and “manufactured homes” all used interchangeably. This confusion does not help the homeowners because there are significant differences between the three.
MHP (Mobile Home Park), Land-Lease Community, Manufactured Housing Community
Typically, a tract of homes, also known as a park, where the residents own their own manufactured homes but not the land underneath. They rent the land and infrastructure from the landlord. The landlord owns the park land and infrastructure and the residents’ homes are connected to it. Unlike a trailer or RV park, the homes are virtually immobile and are more permanently sited on a lot where they remain. When exiting the park, the homeowner usually sells the home to a buyer who also agrees with the landlord to pay rent for the lot. There are rarer occasions where the landlord owns the mobile homes in addition to the land and offers to rent the entire package, both the home and the lot, to the tenant.
MHP House Rental
The renter does not own the house, but rents the house and land it sits upon. Similar to renting a cottage-style apartment or house.
MHP Land Rental
The renter owns the house, but rents the land underneath, similar to an RV park with hookups, but more permanent.
Minimum Rent Increase
A clause in a lease contract where the homeowner agrees to a minimum level of rent increase annually. There may be no maximum cap on the rent increases, but the landlord is guaranteed the minimum amount stated. This provides a guaranteed increase in revenue for the park owner and may contribute to the financialization of a park into an investment portfolio of parks sold around the world as high-yielding.
Often, minimum rent increases are stated as a percentage increase from the previous year’s rent level. This amounts to compounding rent increases which many homeowners don’t fully understand. Due to compounding, a 5% annual increase can result in the rent doubling in less than 16 years, or increased by 1/3 in 7 years.
Even though mobile home owners have a record of staying in their homes for long time spans, a predatory compounding minimum rent increase can economically evict homeowners in as little as 3 to 5 years. Any rent increase that exceeds CPI increases or fixed-income payment increases can eventually force a senior out of their mobile home.
AKA Manufactured home. A house constructed in a factory and towed by trucks to a place where it can be sited on land. The homes are typically placed on pillars, raised above the ground with the gap covered by skirting. The term “mobile” is usually a misnomer because they are not designed to be moved often. Practically all “mobile” homes are not really “mobile” due to high moving costs, lack of practical locations to move to, and park bans on receiving used homes over 5 years old.
Mobile Home Park (MHP), AKA Manufactured Housing Community, Land-Lease Community
Mistakenly referred to as “trailer parks”. A manufactured housing community is a tract of manufactured mobile homes. The homes are built in a factory, towed to the tract and permanently placed on prepared lots connected to utility hookups. The tract owner, known as the landlord, or park owner provides shared streets, infrastructure and amenities.
Mobile Home Residency Law
Usually a state law that governs the operation of mobile home parks. Often deemed necessary due to the uniqueness of mobile home parks and the common need to protect citizens’ need for affordable housing and home ownership. States laws for mobile home parks range from extensive to none, depending on the state.
Not applicable, doesn’t apply
Parks can be closed for a number of reasons, redevelopment is one. The tenants may need to give up their homes and leave the park. Controversy can arise when the tenants lose the value of the house and cannot relocate easily.
Site-Built House, Stick-Built Home
A typical house on a foundation, built on-site by a construction crew, where the owner owns both the house and the land. As compared to a manufactured mobile home that is built in a factory and rests on piers or pillars above the ground and the homeowner rents the land underneath.
A legal term or slang that describes the ability for a landlord to pass park expenses on to the tenants. This creates a lower-risk investment for landlords and may enhance business value because large or unexpected expenses do not detract as much from the investor’s bottom line profits.
Pay Park Owner’s Court Fees
Stipulated in the lease contract, if a resident, or organization of residents, sues a park owner and loses the case in court, they can be charged for the expenses the park owner incurred in defending himself. These expense payments may be spread out over time to lessen the financial impact and prevent economic eviction. It is advisable that park residents use competent attorneys that know mobile home park law and are consumer-friendly.
Rent Stabilization (Mobile Home Parks)
Usually a local city or county law that prevents landlords from exploiting the “trapped” or “immobile” nature of mobile homes. Jurisdictions recognize the need for affordable housing and the lack of direct competition and inability to move the homes, therefore they establish a profitable level for landlords and reasonable rent level raises. In California approximately 85% of all rent stabilization ordinances are strictly for mobile home parks, due to their reduced free market situation.
In some regions, rent control laws are more commonly adopted for mobile home parks. Reasons given for these laws include residents owning their homes while renting the land the home sits on, the high cost of moving mobile homes, and the loss of home value when they are moved. California, for example, has only 13 local apartment rent control laws but over 100 local mobile home rent control laws. No new mobile home parks have been built in California since 1991.
When a mobile homeowner, undergoing economic eviction, cannot sell his home to a willing buyer fast enough. He must continue paying the increased rent and continually lower his asking price to attract a buyer – a financial double-whammy.
By selling the mobile home to a new resident, the home seller avoids defaulting on rent and the potential confiscation of the home by the landlord. In such cases, the homeowner may recover a fraction of his equity.
In some cases, it can be better for the homeowner to give away the mobile home to escape ongoing unaffordable rent obligations. Sometimes, the landlord may offer to purchase the economically evicted home at a reduced price or, if the homeowner cannot pay rent, may confiscate the home for pennies on the dollar. The rent-trapped homeowner may take a huge equity loss. The landlord can then resell the confiscated home to recover lost rent, or even make a profit.
Right of First Refusal (ROFR)
A confusing name for a simple concept. ROFRs are agreements, contracts, or clauses written to guarantee that someone is first in line for an opportunity – such as for park homeowners to purchase their park if it is available for sale.
If the for-profit owner of the mobile home park is intending to sell the park, the residents get the first chance to buy it. This opportunity occurs automatically in states that have laws requiring park owners to give their financially trapped customers first chance to buy their park rather than have it sold to a large corporation that may raise rents relentlessly, or even close the park. For information about resident-owned communities, see website: ROC USA.
Resident-Owned-Park (ROP), Resident-Owned-Community (ROC). These mobile home parks are wholly owned by the residents within the park. That allows them to set “rent” levels (association fees) and determine how the park will be operated and maintained.
The mobile home owner typically owns shares of the park and pays a monthly fee that is usually far lower than typical privately-owned mobile home park rent. You can learn more about these low-rent communities here. A list of ROPs in California is here.
R&Rs – Rules and Regulations
A contract that states the park rules for behavior. Such as parking rules, pet rules, hours of operation, lot maintenance rules, and so forth. In some states, the landlord may have to obey his own Rules and Regulations.
Roll-Up Business Model
A business that grows by acquisition – buying more businesses and consolidating or aggregating them into one parent business. As compared to businesses that grow “organically” by developing new products or services internally or expanding on existing ones. Few mobile home parks have ben built since the 70s. Most were built by small businessmen and were family businesses. Large park aggregators are rolling up multiples of these mom-and-pop parks today and financializing and securitizing them into large investment portfolios.
A connotative term used by environmentalists to describe the destruction to nature inflicted to improve corporate profits – such as a toxic waste dump. Also used by minorities to describe themselves as a sacrifice zone when their community is disrupted and they are displaced for profit-seeking corporate activities or city development projects – where they have little say-so at the decision table as stakeholders.
The insinuation is that the wealthier promoters of the disruption live in exclusive better-protected areas that will never become sacrifice zones and they use the profits from the distant sacrifice zones to generate wealth for themselves
A way of turning a business or asset into an investment that can be sold to investors. The investors are usually not retail consumers but large investment organizations such as pension funds, sovereign wealth funds or large private equity funds. Such investment buyers want to know the risk level of the investment, its liquidity and prospective return on investment and its predictability.
By “securitizing” a portfolio of mobile home parks, the park landlords can obtain more cash with which to buy more mobile home parks in a roll-up juggernaut.
Site-Built House, Stick-Built Home, Typical House
A typical house built on site by a construction crew and sold to an owner who owns both the house and the land
Slumlord Business Model in Mobile Home Parks
There is no legal definition of a slumlord, but there is a general consensus about their business practices. Generally, a slumlord is an absentee landlord who maximizes profit by cutting expenses via cuts to services and maintenance on his rental property. This, along with maximizing rent and selecting tenants that are less able to fight back are major components of this business model.
Esther Sullivan, who attended one of Rolfe and Reynolds’s Mobile Home University seminars in California while researching her book, summarized the advice that they offered participants: “Look for a park that’s got high occupancy and that doesn’t need a lot of investment. Take out any possible amenity you’d ever need to invest in, such as a playground or a pool that’s going to need insurance. Make sure it’s got a nice sign, and pawn off any maintenance costs onto your tenants.”What Happens When Investment Firms Acquire Trailer Parks – The New Yorker, March 5, 2021
Most tenants know they have a slumlord landlord when requests for repairs are ignored or delayed and then minimal work is done, if at all. Some living conditions can become abject. In apartments, rent strikes can be justified for health and safety reasons due to loss of habitability.
Employees of slumlords may be low-wage, untrained, inexperienced, and, like the renters, in a semi desperate mode of living – thus they are less likely to complain or whistle blow because they are in dire need of a job.
Mobile home park owners that practice slumlord techniques are subject to Failure to Maintain lawsuits (FTM) when a large number of residents organize and employ specialized legal help. See “Failure to Maintain Lawsuit (FTM)“.
However, the slumlord business model may continue to be practiced by landlords in spite of losing an occasional lawsuit. This can be due to the small number of cases brought against them compared to the large number of mobile home parks they own. The cost of losing a lawsuit is more than made up for by profits from the remaining parks whose residents tolerate the slumlord. Overall, throughout the slumlord’s enterprise, significant profits are generated and FTM lawsuits may be regarded as a mere cost of doing business.
Some mobile home park landlords appear to test the level of neglect that the residents of a particular park will tolerate. They can adjust their park maintenance expenses to the lowest level tolerated and do nothing more.
A wealthy slumlord may be maximizing his profits (at the detriment of his customers) in order to enable freeing cash for the purchase of more properties. After acquiring the additional properties, he may, again, work the slumlord business model to maximize profit, which, in turn, again, is used to purchase more properties in a rollup business model. Several mobile home park billionaires appear to have become wealthy in this manner- by leveraging existing properties to acquire more properties ad infinitum until stopped by competition, better legislation, or lack of remaining properties to buy.
Recommended: Wikipedia’s description of the term “slumlord”.
Today, a derogatory term misused by the uninformed to label mobile home parks. Today’s manufactured homes, often double-wide, are not “trailers”. They are primarily designed to be moved once, when they are placed in a park. They are usually designated as “wide loads” for highway safety purposes and must be moved by experienced and often licensed and trained specialists driving tractor-trailer diesel trucks.
Whereas the much smaller travel-trailers are in the category of recreational vehicles and are moved by their owners. This category includes travel-trailers, RVs, 5th Wheels, Campers, Camper-vans, tiny homes on wheels and other highly-mobile and highway-friendly recreational-style vehicles.
These recreationally-oriented shelters are usually not built with long-term residency in mind. They will often stay temporarily in RV parks although there are some more permanent parks that house trailers with residents that stay year-round.
Triple-Net Lease (NNN lease)
Another form of pass-through lease, where the renter accepts responsibility for covering three major costs to the landlord – which amounts to covering much of the landlord’s investment risk. Examples can be taxes, insurance, maintenance and capital improvements. Triple-net leases are common in business-to-business agreements (B2B). Usually, sophisticated businesses engage in triple-net lease agreements. Such businesses have experience, better access to attorneys and know what they are doing.
Business renters that sign NNN leases generally expect a discount on rent as compensation for absorbing the financial risks that would normally be upon the landlord. However, in mobile home parks, these lease clauses can be in used in parks with increasing compounded rent raises, not discounts.
Much of contract law is based on the “meeting of the minds” concept – the notion that both sides to the contract are equal in sophistication and understanding. Typical consumers renting land under their house in a mobile home park are usually not equal in sophistication to well-financed landlords and their associated law firms and investment portfolio managers.
Generally, when investment risk is passed onto the homeowners, it reduces the risk to the park owners, and to their investors. This raises the investment quality rating of the park investment portfolio while also raising the financial risks to rent-payers in the mobile home park.
A net lease is a type of real estate lease used primarily for commercial rental properties…Investopedia.com
But usage of B2B triple-net style leases in mobile home parks, a consumer retail situation, should be questioned. Consumers are usually not well-informed business professionals with a legal resources and a complete understanding of sophisticated real estate matters .
Voluntary Foreclosure (Strategic Default, Friendly Foreclosure)
When a homeowner formally and deliberately returns possession and ownership of the mobile home to the bank. When a homeowner can no longer pay the increasing rent, and he cannot sell the home to escape from the rent, he may decide to forfeit the home to someone else so he can be free of the mobile home lot rent obligation. Such forfeiture is usually the end result of an economic eviction gone badly – when the cash-strapped homeowner cannot find a buyer to take over his home.
Usually, when there is a mortgage loan in place, the homeowner will work with his lender to turn over possession of the house to the lender and move out of the building. This allows the lender to attempt to sell the home or move it, if it is movable.
A voluntary foreclosure does not solve every economically-evicted homeowner’s problem but it can help a homeowner improve his financial and reputational situation.
“Walking way” From An Economic Eviction
Used here to describe a homeowner who, due to suffering from economic eviction, abruptly leaves the mobile home park and abandons his home without following the formal procedures of voluntary foreclosure and transfer of the house title out of his name.
This impulsive act may cost the homeowner much more than if he were to follow the legal procedures to formally establish his default. The landlord can file eviction papers even though the homeowner has disappeared. An eviction record will make it hard to be approved to rent again. Back rent is still due until the house is sold, so the homeowner, and sometimes other inhabitants, may be turned over to a collection agency. Eventually the landlord will confiscate the house and resell it, but the previous owner, having walked away, may not get any portion of the proceeds.
It is not recommended that anyone ever terminate their obligations to landlords or mortgage lenders by abandoning them. Instead, they should work with professional house sale agents, attorneys and lenders to get the best protections upon leaving.
Municipalities may have legal restrictions on what can be placed on land and rules about how the land is used. These restricted areas are called zones. By creating zoning laws, cities or counties will favor certain kinds of land use in specific areas and outlaw uses to the contrary. This can be a good practice but can also be abusive, discriminatory and counter-productive. Zoning laws have effectively stopped the construction of new mobile home parks along with smaller, more affordable housing and have banned manufactured housing in many places.