Question: What are my rights and options if a park owner requests that I sign a long term lease?
By Bruce Stanton, GSMOL Corporate Counsel and GSMOEF Secretary
The Situation:
You live in a mobilehome park and have a month-to-month rental agreement or perhaps a lease with a one-year term that is expiring. Your park management gives notice that a new multi-year lease is available for review and signature. What is the relevant law and what are your available options as a homeowner?
Long-Term Leases in General
It is first important to know the applicable law concerning what we refer to in the industry as “long-term leases”. The Mobilehome Residency Law (MRL) governs the enforceability and offering of mobilehome leases. Civil Code sections 798.17 and 18 are the key sections. When these sections were initially passed, the legislature intended that voluntary lease agreements might eliminate the need for allegedly “adversarial” rent stabilization ordinance fights. But no one counted on the lengths to which some park owners would go to coerce homeowners to sign leases, and several subsequent amendments to 798.17 have been enacted to protect residents from abuses. Any lease which exceeds 12 months in length is exempt from local rent control under 798.17. Although your local jurisdiction may currently have no mobilehome rent stabilization, the possibility exists that a Rent Stabilization Ordinance (RSO) could become law in the future, whether by City Council, a voter initiative ballot measure or a State “rent cap” law. It is thus important for each resident to carefully consider whether these offered lease terms are fair, or best for them, before signing away the potential for future RSO protection. Important: No resident who signs a long-term lease will be covered by any Ordinance until the Agreement term expires, at which time the last rent charged under the Agreement would be the initial rent charged under the Ordinance. So for every resident who signs this document, there shall be one less “voice” or concerned resident who might be motivated to participate in a process to pass future mobilehome rent control in your city.
Where an RSO exists, or might potentially exist, it is typical that park owners will offer long-term leases to keep as many residents as possible out of the “rent control activist” group. Fewer residents will be motivated to speak out, fewer will be affected by any action that the city might take, and thus the City Council will be able to more easily justify a decision to avoid discussion or passage of an Ordinance. Unfortunately, some residents feel compelled to sign offered Leases when they do not have to sign anything! The Civil Code makes it clear that after initial move in, no homeowner ever has to sign a new rental agreement or lease of any kind. In fact, no resident should ever sign a lease because they think they have to. They should only sign a lease where it is voluntary, they understand all of its terms, and because it makes the most sense for them. Always remember this rule when reviewing an offered Lease document! Note that prospective purchasers are not protected by the MRL provisions until they become tenants in the park, so a park owner can make a buyer sign a long-term lease unless there is a local RSO provision which states otherwise.
Residents should NOT sign any offered lease without first attempting to negotiate terms. Accepting a “take it or leave it” lease offer is often not smart or even necessary. Homeowners typically have far more power and negotiating leverage then believed, especially where there is an existing RSO or the potential for one. Where there is no RSO protection, it could be tempting to sign the offered Lease in order to achieve some sort of “certainty” about future rent increases. But be careful that you do not give up too much, for at some point “certainty” is not justified if it becomes nothing but “very bad” certainty! The best strategy is for park residents to unite and present a “common front” to negotiate a fair and reasonable agreement, as an alternative to the homeowners seeking an RSO. The threat of obtaining RSO coverage can be used by residents as leverage to get a better lease. If the terms are too onerous, the offered Lease should simply be rejected. I am fond of saying that “I never met a long-term lease I liked”. With few exceptions this has been true in my experience. Leases can be lengthy, and may attempt to induce residents to waive certain rights. Hidden rent increases may be present which are not readily apparent. Some common issues to analyze in an offered lease are:
1. How often are rent increases given?
2. Is there a “market catch-up” clause
increasing rent just before the term ends?
3. What is the amount of each rent increase, and
how is it calculated?
4. If CPI is used, which geographic index or
portion of an index will be utilized?
5. Are there any “pass throughs” in addition to
base rent? If so, which/how many?
6. Is there a mandatory arbitration clause?
7. Are there any “Release” clauses or express
waivers of rights?
8. What is the term of the lease? (Beware of overly long terms!)
9. Are rent increases allowed on resale? (aka Vacancy
De-control)
**Important: The Civil Code 798.17 (c) Election**
Civil Code sections 798.17 (c) provides an important protection for homeowners. If a resident does not wish to sign an offered long-term lease, they can reject it, instead request a one-year or month-to-month agreement, and the rent for the first twelve months cannot exceed what was offered during the first year of the offered long-term lease term. This is an important strategic maneuver that can be made to lock the rent in for a one-year period, while local RSO protection might be pursued, or State “rent caps” could go into effect. A form to make this election is included below. Choosing a one-year term covers an interim period and locks in the space rent for twelve months. At that point there might be new negotiations, although a park owner is never obligated to offer a long-term agreement.
Other
Protections and Tips
There are other offering requirements that
appear in 798.17-798.18 which should also be reviewed in conjunction with a
lease offering, including (1) a required 30-day review period and (2) a 72-hour
right to rescind your signature.
Choosing a one-year term would at least cover an interim period and lock
in the space rent to a specific amount for up to twelve months. At that point there might conceivably be new
negotiations, although a park owner is never obligated to offer a long-term
agreement. Knowing the amount of
starting rent is critical. One cannot
determine the amount of rent being offered when blanks are not filled in. Any resident receiving an offered lease
should ask that management fill in any blanks before they can consider
accepting it. Never sign anything
with blanks!
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NOTICE OF REJECTION OF OFFERED MULTI-YEAR RENTAL AGREEMENT AND
ACCEPTANCE OF MONTH-TO-MONTH AGREEMENT
[California Civil Code sec. 798.17 (c)]
The undersigned homeowner(s) hereby acknowledge that he/she/they have been offered a multi-year rental agreement by management with a term of ___ years and an offered starting space rent of $______ during the first twelve months of said Agreement. Pursuant to California Civil Code section 798.17 (c), the undersigned hereby confirm(s) by this notice that he/she/they elect to reject the said offered Agreement, and instead accept a month-to-month rental agreement to be effective on the same date, and which shall include for the initial 12 months of said month-to-month agreement, the same space rental charge of $________ that was offered by management for the initial 12 months of the rejected multi-year rental agreement, as required by Civil Code 798.17 (c).
Dated: ____________ _____________________________
Homeowner
Signature
Print
Name: _________________
Space
No.:________
Dated: ____________ _____________________________
Homeowner
Signature
Print
Name: _________________
Space
No.:________
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