What is a Lot Rent Lease Agreement?
A lot rent lease agreement is a contractual document between the owner of a manufactured home (also referred to as the "homeowner") and the owner or management of a manufactured housing community (also referred to as the "park owner"). The lease agreement gives the homeowner the right to use a site in the community to place and occupy his or her manufactured home, and to enjoy the community’s recreational facilities and services until it or its term of renewal expires or is terminated. Under the terms of such an agreement, the homeowner pays a monthly rent to allow him or her to receive these benefits.
This type of lease is distinguishable from a standard rental agreement on two fronts. First , it is typically a single document provided by the park owner to the homeowner outlining the terms of use for participation in the community. Second, it is a separate agreement than the agreement for the placement of the manufactured home on the site.
Many state laws governing manufactured housing communities do not encompass standard lease agreements due to the nature of the rental, which characterizes it as a "license" rather than a "lease." For this reason, under many state laws (including Florida), the owner of a manufactured home is classified as a "licensee," rather than a "tenant." A licensee does not obtain ownership rights to a particular parcel of land, but instead is granted the right to make use of a set area to place their home, in this case, in the manufactured housing park.
Essential Elements of a Lot Rent Lease Agreement
When entering into a lot rent arrangement, our attorneys work to establish all details of the agreement in writing to avoid problems down the road. The following are crucial components of all lease agreements regarding lots in mobile home parks and manufactured home communities.
Term and Renewal
An example term may be one year, with an automatic yearly renewal unless otherwise terminated by the owner or the resident. Other arrangements include a residential tenancy agreement that is only terminated when the homeowner sells their unit. However, it is important to note that while Florida law allows for a free assignment of leases with the same terms and conditions without any consent from the park, many lease agreements contain a provision that the leases are personal and may not be assigned without prior written approval by the owner. It is important to make certain that the buyer of a mobile home is able to continue to stay in the park if they were a tenant of the seller for the remainder of the lease term.
Payment Amount and Schedule
For most manufactured home communities and mobile home parks in Florida, lot rent is the main source of income. Therefore, in many circumstances, the amount due is the number one item setting the tone of the agreement. Usually, a lease agreement will include the established amount due, the method of payment, and when it is due, such as the first of each month.
The specific method of payment is important for different options provided, such as online payments, personal checks, money orders, and wire transfers. Procedures may also be established for late payments that trigger an automatic fee. All of these details should be clearly written in a lot rent lease agreement.
Tenant Obligations and Rights
Lot Rent Lease agreements are unique in that they are not regulated by any specific provincial legislation. Lot Rent is quite simply a rental fee (often monthly, sometimes weekly) paid by tenants to a Landlord for the use and occupancy of a unit and/or site within the mobile home park.
Prior to July 1st 2015, tenants of Mobile Home Parks were governed by the Mobile Homes Act ("MHA"). Section 10 of the MHA provided tenants with an automatic right to renew their Lease on the expiration of the Lease term "provided they have performed all covenants and conditions of the Lease including payment of rent and where applicable performance of improvements and other matters."
Given the "take it or leave it" approach taken by Landlords in these agreements, the bargaining power was heavily skewed in favour of the Landlord. Since the Lease did not end as long as the tenant was in compliance with the Lease, tenants would sometimes continue to pay rent and comply with the terms of the Lease even when the Landlord alternatively wanted to terminate the Lease. In these circumstances, the tenant was performing their obligations under the Lease while the Landlord was not, which resulted in the somewhat absurd result of the Landlord having the right to terminate the Lease and evict the tenant without any good reason what-so-ever.
In July 2015 the Mobile Homes Act was repealed and replaced with the Residential Tenancies Act ("RTA"). The RTA regulates all residential tenancies in the province of Nova Scotia including commercial leases in Mobile Home Parks.
Under the RTA, the general rule is that any fixed-term tenancy is renewed as a periodic tenancy unless either party provides the other with at least one months written notice that they do not wish to renew the tenancy. Where the lease term is longer than one month, notice must be provided at least one day prior to the end of the term for each month of the term (i.e. if the lease term is for one year (12 months), notice must be provided at least 12 days prior to the end of the term).
The RTA is not silent with respect to the obligations of tenants and does contain a few notable exceptions. In particular section 19(1) provides that the tenant is responsible for the following:
In addition the tenant is responsible for "keeping [the] unit and the rented premises in a reasonable state of cleanliness, fitness for habitation and repair."
The RTA also provides that a periodic tenancy continues until properly terminated by the landlord or the tenant providing the proper notice. In this way, tenants are afforded the opportunity to renew their Lease even if they are behind on rent payments. It is important to note that Landlords are still entitled to seek evictions on the basis of non-payment of rent, however this involves a formal application to the Residential Tenancies Office. In these circumstances, a tenant has the ability to appear before an arbitrator to argue their case for non-payment of rent.
The changes to the MHA and the introduction of the RTA are important as they provide tenants with access to the courts and allow them to seek compensation from the Landlord for improper termination of a Lease and/or eviction. Further, tenants are entitled to pursue claims against the Landlord for breach of any of the provisions of the Act including rent with less than 14 days notice and a lack of proper notice in effect extending a periodic lease into the next month.
The changes to the law and the introduction of the RTA has also served to temporarily shift the balance of power in favour of the tenants. The RTA places many new obligations and requires increased formality by Landlords. For example, the RTA requires the ongoing keeping of records by landlords, applications to the Residential Tenancies office, and the appointment of third parties to hear disputes. This increased formality may be costly particularly for small landlords which will ultimately be passed off to their tenants.
It remains to be seen how the law will impact the dynamic between the mobile home park Landlords and its tenants.
Landlord Obligations
On the other side of a lot rent lease agreement is the landlord. It, too, has responsibilities.
Lot rent leases contain a handful of requirements of the landlord that are similar to a typical Florida apartment lease but more specific to a mobile home park. First step is delivery. The landlord must furnish a copy of the lot rent lease to you prior to your execution of the lease (this is not a requirement for lease renewals). The lease is binding on you, even if the landlord fails to furnish a copy. However, you may pursue remedies against the landlord if there is no copy.
The landlord must provide appropriate services to you upon a written request. A common request is to repair any problems with the utilities, especially the water. Under paragraph 6(e) of the model lease, the landlord must respond to any request from you to repair the utilities within 48 hours and make the repair within 10 days. If the item is not repaired within this time frame, you can seek remedies.
Also, landlords are required to follow all applicable federal, State, and local laws when renting to you. This includes park regulations. Any violation of applicable laws can possibly give you remedies as well.
The landlord has additional responsibilities, so please read the lot rent lease thoroughly to understand yours and the landlord’s rights and responsibilities.
Common Issues with Lot Rent Lease Agreements
Disputes between the parties may include those related to:
Rent increases.
Lot rent gain-sharing.
Membership of lot owners associations.
Procedural defects in the execution or ratification of leases; and
The legal effect of state laws governing the use of the leasehold land.
Rent and lease provisions in leasehold documents are generally favorable to a landlord. For example, for the most part, the ground leases on which homes stand forbid the establishment of an association for the purpose of providing all residents common services. This permits a landlord to deal directly with a tenant.
However, tenants in some states are permitted, by statute, to organize associations . Even those groups, should they be allowed, are seldom permitted by the lease agreements to control rent increases, maintenance or other critical matters. Should a tenant group be unauthorized by a lease agreement, it may be disbanded by a court action brought by the landlord.
Lot rent gain-sharing provisions offer differing mechanisms to be allowed . . . or not. Most often, lots are offered at rent rates which will permit the landlord a return on its investment and allow it to realize a gain should a parcel be sold. If the resident has an opportunity to share in the gain, either by means of a required payment or other agreement, that property should be identified in the lease agreement in order to provide particular notice to future owners.
Advice for Negotiating a Lot Rent Lease Agreement
Tenants must be cognizant of special conditions before entering into a lot rent lease agreement. A mobile home is real estate, unlike many other forms of personal property lease agreements (e.g., apartment rentals, commercial office space leases, etc.). Lot rent leases are generally for long periods of time. If you do not request adjustments to the lease’s provisions and price of the premises upfront, you will not be able to seek an adjustment after you move in.
My first piece of advice is to seek the advice of a professional who am familiar with mobile home laws, including federal laws, state laws, and county/local ordinances. Often, there are federal laws that apply to your situation. A tenant may have more rights than he/she assumes. Keep in mind that you are entering into a long-term contract – possibly over 30 years! These contracts are packed with legal jargon that may be hard to decipher. However, an experienced legal professional can help you navigate through the lease document. Do not sign the lease until you understand everything in it and are comfortable with the terms.
My second piece of advice is to negotiate a lot rent lease that is best for your situation. Do not settle for the first price or terms you are offered. You are giving up a lot of rights by entering into a lot rent lease. Understand the rights you are giving up to your landlord and negotiate those rights back into the lease. This negotiation could apply to any provision of the lease. For instance, negotiate the length of the term of the lease, the amount of the rent at renewal, the amount of escalation during the renewal period, and the payment date. Also, remember that in Florida the lot rent assessment can be passed from the seller of the mobile home to the new buyer. Don’t be afraid to ask for a reduction of the lot rent payment or to receive a refund of the lot rent overpayment if the assessment was paid to the seller before the sale and the new buyer received the refund. Finally, do not hesitate to ask your landlord or manager to check with their corporate headquarters and see if the terms can be adjusted.
My third piece of advice is to know the laws that could impact the landlord/tenant relationship. Some laws are so favorable to tenants, the owner/manager will not risk a violation of the law. Often, these laws are not well known by managers. One such law is the Florida Highway Safety and Motor Vehicles – Homestead Tax Exemption Law. If the mobile home lot is your primary residence and the mobile home is real estate (deed does not have a lease designated on it), you will qualify to exempt up to $25,000.00 of the assessed value from property taxes. This is similar to the homestead exemption given to homeowners. Another such law is the Florida Mobile Home Act which applies to all mobile homes situated on leased land in Florida. This law gives home buyers rights & protections that often include protections from excessive rent increases; right to form a tenant’s association to address lot rent increase disputes; and rights to mediation for all disputes with the landlord/tenant concerning the lot rent lease agreement.
Changes and Renewal
Lot rent lease agreements in Florida typically run for a one-year period. A tenant is free to renew a lease at the end of its term by notifying the landlord of the renewal. However, the landlord and tenant may modify the terms and conditions of the agreement, including the rental rate, before the lease expires. The rent may increase or decrease. Tenants, however, should proceed with caution before signing any modification of their lease agreement. Once a tenant modifies an agreement, they may not be able to revert back to the original terms of the agreement. The tenant should make sure that they are not waiving any rights before modifying a lease. Tenants are encouraged to consult with an experienced community association attorney before changing a lease.
State Laws
State laws often regulate lot rent lease relationships, either directly or indirectly, through general landlord-tenant legislation or specific laws dealing with particular types of communities in that state such as mobile home parks. In states with a general landlord-tenant statute, those laws may apply to a lot rent lease agreement or some provisions of that law may be preempted in favor of specific protections for the lot rent tenant or some provisions of that statute may not be applicable to a lease of this type. For example, in long-term rental agreements, one of the most frequently excluded statutory restrictions on rent increases is a provision placing a cap on the amount by which the base rent can be increased each year. Some states, like Louisiana, have these types of rent increase caps but allow lot rent lease agreements to be exempt from that restriction by language in the lot rent lease agreement that demonstrates the mutual intent of the parties to the lease to be exempt from the restriction.
Some states have comprehensive laws regulating manufactured housing that also deal with some aspects of lot rent leasing agreements . In Michigan, for example, there are rights and responsibilities of both the tenant and the landlord established in the Mobile Home Commission Act which are triggered when a tenant’s occupancy is governed by that Act. Owners of land leases should pay close attention to whether their state has a similar law for manufactured housing tenants.
In states with mobile home park laws, probing the subject to determine whether the owner of the land lease is regulated by the statute is always a good idea. These statutes vary quite a bit and may impose serious restrictions on the owners’ rights to raise rents, impose duties to provide certain amenities and services or create the right to a cause of action for violation of the law. Because there is such a wide variety of choices available to the state legislature when drafting a Florida law applying to mobile home parks, it is important for a Florida owner to understand their rights and responsibilities before entering into a lot rent lease with a current or prospective tenant.