Park Owner Solutions?

Park owners commonly offer two alternatives to a rent stabilization ordinance as a way of showing that government intervention is really unnecessary. Their solutions are:

EXECUTION OF A LONG TERM LEASE

The GSMOL Lease Manual should be consulted on this issue. Since leases contain many problems of their own, they could compound, rather than help the problem, by authorizing pass-throughs or hidden rent increases. Unless the lease is truly fair, and is negotiated in a fair manner, this can amount to being no real alternative at all, and can make passage of an Rent Stabilization Ordinance more difficult by neutralizing the voices of those residents on long-term leases.

RENT SUBSIDIES OR DEFERRALS

Another popular park owner solution to high rents is to offer individual rent subsidies or deferrals to those residents who can least afford the increase.  Homeowners should examine these types of hardship programs very carefully, since all or some of the following characteristics are usually present:

• The program is usually discretionary; it can be offered or refused to anyone management wishes, and can be terminated at any time.
• The program will usually apply only to a small group of residents, who must prove entitlement to benefits by disclosing private information.

Many programs "defer" rent, as opposed to "subsidizing" it. The distinction between these two concepts is important. A rent "deferral" program does not necessarily mean that rent is being reduced or forgiven. It may mean that a portion of rent is being deferred for collection at a later date. In the meantime, the park owner may be authorized by the deferral agreement to place a lien on the home which will increase each month. Many homeowners may not understand this, and will be surprised to one day find that the park owner has a sizable lien on their home.

Given these limitations, such a program is often illusory, and hardly a useful solution to the issue of widespread rent increases.

Source: The GSMOL Mobilehome Rent Stabilization Ordinance Handbook, Second Edition: Guidelines for Drafting and Enacting a Mobilehome Rent Stabilization Ordinance.

Prepared by: Bruce Stanton, Esq., Corporate Counsel

Image courtesy of Marcolm at freedigitalphotos.net.