In the months since residents of Wildwood Villa first drew attention to rising space rentals in their manufactured home park, things have only gotten more disconcerting.
In April, a manager at the park sent out a newsletter urging those having trouble paying rent to seek emergency food boxes. In May, the park owner began promoting long-term lease agreements with 15-, 20- or 25-year terms. The leases offer no break in rent for signing up for longer terms and contain a minefield of other potential hazards for homeowners.
“You shouldn’t sign it,” Attorney Matthew G. Shepard cautioned residents considering the long-term leases. “There are companies, especially out of state companies, that have been moving into Oregon and buying up parks – 55 and older parks, generally – and they try to pressure residents tenants into signing long-term rent agreements with built-in rent increases.”
Manufactured home owners who live in parks like Wildwood pay rent on the space where their homes sit. It leaves them subject to market pressures when property values rise and the temptation to lock in rates can be strong. However remote, there is always the possibility of the market winds shifting and putting the home owner in a more solid position than the land owner.
“If you are month-to-month, it’s easier adjust to the fluctuating market,” Shepard said. If a tenant commits to a long-term lease, “Trial court judges generally don’t want to get into these issues and if there’s a long-term lease, they will hold the tenants to the signed contract.”
While the long-term leases would lock in an $825-a-month rate and an annual increase of at least 4 percent, there is no discount for signing up for a 25-year term over a 15-year term. Accounting for just the base rent of $825, that means a tenant with a 15-year lease would pay $148,000 of the life of the lease for property they have no prospect of owning. With each additional five years, the cost jumps nearly $50,000.
In addition to the smokescreen of locking in rents, the contracts being promoted to other residents are loaded with other questionable language.
Topping the list is that the contract put signers on the hook for paying a share of any capital improvements that take place within the park. Shepard doesn’t believe such language would hold up in Oregon courts, but there is no court case that’s challenged it as of yet.
“I think the landlord would have a great deal of difficulty enforcing that but a trial court judge might say the tenant signed it,” Shepard said.
Given that park owners cannot require existing tenants to sign the new leases, there is no mechanism for divvying up such costs either. If there are 100 homes in a park, but only 30 of the leases signed, it might mean those 30 residents will be the ones paying for the improvements.
The only such capital costs that park owners in Oregon are legally allowed to saddle tenants with is the cost of adding submetering stations to determine how much water or electric a specific home is using, he said.
Park owners would also be able to dictate improvements tenants must make regardless of whether they own the space. There are even lines in the contract left blank to be filled in at park owners’ whims. Shepard said this is in line with what is happening in other parks.
“The park owners legally possess things like carports in the rental spaces and they don’t want to fix them up when they deteriorate,” Shepard said. “Landlords come in and try to transfer title or maintenance responsibility of carports and sheds to the tenants.”
Tenants could challenge some of these stipulations in court, but it’s likely only the landlords would have the resources to see it all the way through an appeals process. The longer it’s drawn out, the more the outcome favors the landlord, but even there the new contract reviewed by Keizertimes binds signers to arbitration rather than the seeking justice through the courts.
Shepard said the one piece of better news in this area is that new rent controls enacted by the Oregon Legislature will force park owners to more carefully forecast maintenance and improvement costs in the future.
Perhaps most ironically of all, the long-term contracts establish a first right of refusal for park owners when a home in the park is sold. That means when a current tenant decides to sell their home, the park owner gets first crack at buying it and only has to meet offers made by outside parties. A first right of refusal that went the other way – allowing homeowners the first chance band together to purchase parks when they come of for sale – would be one of the strongest ways to protect the low income and elderly tenants that most frequently find themselves residing in such homes.