PARK CONDO CONVERSION
Q. We recently received notice from our park that it will be converted to a resident-owned condominium park. The park’s attorney told us that they cannot give us a lot price before they get city and state approvals but that prices will probably be over $125,000. He also said that when the park becomes a condo, city rent control will no longer apply to us but that government assistance may be available. Will homeowners who can’t afford to either buy or pay the higher rents without rent control protection be economically evicted?
A. Not necessarily. This is a controversial issue, as a growing number of mobilehome park owners have been utilizing a special provision of the state's Subdivision Map Act to convert their parks to so-called resident owned condominiums or subdivisions, thus exempting the parks so converted from local rent control after the sale of the first lot. Condominium interests in mobilehome park spaces must be offered to renting homeowners, and low-income homeowners who cannot afford to buy can continue to rent their spaces under a statute which limits rent increases, including “pre-conversion” pass-through fees, to the Consumer Price Index (CPI) or less. However, non-purchasing residents who are not low income no longer have rent control protection upon the conversion and may have their rents increased to higher so-called “market levels” over four years and may eventually have to move. The state’s Mobilehome Park Resident Ownership Program (MPROP) provides limited financial assistance to low-income residents to help them buy their interests in resident-owned condo parks, and some local governments may also have financing to assist some as well. New legislation to give local governments more power to regulate the conditions under which parks can be converted to “condos” is pending consideration in the 2007 legislative session. More information on this issue is available on this website under “Informational Hearing, February 29, 2007.”
RIGHT OF FIRST REFUSAL TO BUY PARK
Q. Recently we discovered our park owner is selling the park to another owner but he has never told us he was selling or offered us the right to buy the park. Isn’t the park required to offer residents the right of first refusal to buy the park when it’s put up for sale?
A. No. The Mobilehome Residency Law (MRL Section 798.80) provides that the park management must give the president, secretary, and treasurer of the park homeowners association a 30-day written notice of the park owner’s intention to offer or list the park for sale. The notice is not a “right of first refusal,” does not apply to sales other than to offers or listings initiated by the park owner, and is only applicable if certain conditions are met. In order to receive the notice, residents must form a homeowners association for the purpose of buying the park and register with the Secretary of State. The homeowners association must notify the park each year of the residents’ interest in buying the park. The notice requirement does not apply to the sale or transfer of the park to corporate affiliates, partners, or relatives, or transfers triggered by gift, devise, or operation of law, eminent domain, foreclosure, or transfers between joint tenants or tenants in common.
LAWS APPLICABLE TO RESIDENT OWNED PARKS
Q. The residents of our small park formed a non-profit homeowners association and purchased the property from the park owner. The park is now operated as a resident-owned non-profit stock cooperative. Recently there have been some questions from board members and residents about which state laws regulating the operation of non-profit resident owned parks apply to our park – the Mobilehome Residency Law, the Mobilehome Parks Act, the Non-Profit Mutual Benefit Corporation Law, or the Davis-Stirling Common Interest Development Act.
A. All these laws may apply, but whether they do in a particular park depends upon the circumstances in each case and may require consultation with an attorney. Therefore, the following answer is only intended to have general application:
Mobilehome Residency Law (MRL): For a resident-owned park, Civil Code Section 799.1 clarifies that Article 9 of the MRL, governing the relationship between residents and the park management (Civil Code Section 799 et. seq.), applies only to residents who have an ownership interest in the park, while Articles 1 through 8 (Sections 798 – 798.88), relating to rental parks, apply to any non-owning residents who continue to rent or lease their spaces in a resident-owned park.
Mobilehome Parks Act (MPA): The MPA governs health and safety (building) code requirements for both rental parks and resident-owned parks that were converted from formerly rental parks, but the MPA in most cases does not apply to resident-owned parks that were originally developed as manufactured housing subdivisions or communities under local development standards, not rental parks.
Non-Profit Mutual Benefit Corporation Law (Corporations Code Sec. 7110, et. seq.): This law applies to a non-profit corporation which is a homeowners association that operates or governs a multiple residential community for the mutual benefit of the members of the association. However, the Corporations Code does not apply to unincorporated homeowners associations that operate such communities, of which there are estimated to be but a few.
Davis-Stirling Common Interest Development Act: This act defines and regulates common interest developments (CIDs), including many resident-owned parks. In order to be a common interest development subject to the requirements of the Davis-Stirling Act, the park 1) must have a common area or common areas (such as roads, a club house, or other commonly used facilities) in addition to individual interests or residences; and 2) the park must file a declaration of intent to create a common interest development with the county recorder along with a condominium plan, if applicable, or a final map or parcel map, if applicable, for the common interest development. In most cases where a resident-owned park is a condominium, planned unit development (PUD), or subdivision, the Davis-Stirling Act will apply. But non-profit stock cooperatives or other resident-owned parks that are not subdivisions or condominiums may also be subject to the Davis-Stirling Act if a simple declaration creating the common interest development is recorded. Without the recording of such a declaration, however, the Davis Stirling Act does not apply.
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