Down to the Nitty Gritty on this purchase

Quick overview on a park I’ve had under contract and working on for months. Basics are a great purchase price with lots of upside. The problem is the city hates the park. They have went as far as to put “no new homes can be moved into the park” on the zoning letter they sent to me.

Been working through an attorney to resolve as the park is clearly legal non-conforming. The city attorney has promised us a position letter early next week. So I’ll have to file suit should the letter come back negatively.

Any input on the best way to approach a law suit against the city since I am not the owner but simply have it under contract?

We deal with this all the time. There are no less than 5 state Supreme Court cases on this topic, and the park owner has won all 5 cases (look up the two latest by Googling “MIssissippis Supreme Court Mobile Home Park” and “MIssouri Supreme Court Mobile Home Park Heck”). If you have a certificate of zoning that states that the park is legal non-conforming (grandfathered) and that it has X lots, then the city has no right to restrict the usage of those X lots unless it is detrimental to public health (which it’s not unless the park does not meet the fire code, or the park is served by a lagoon sewer system that can’t handle the additional output). Effectively, a mobile home park is a parking lot and the cars (or trailers) can come and go at will without the city’s intervention.

Despite the fact that this right is legitimate, most cities hate mobile home parks because they don’t like the fact that each kid costs the school district $10,000 to educate yet the property tax on a home and lot in many states is only around $500 per year. So they try to come up with every argument they can to stop new mobile homes from filling vacant lots. The problem for the city is that all their brainstorms are not supported by the law and they lose every time.

To get what you want, you will have to enlist the services of a “municipal” lawyer – effectively a lawyer that sues cities. It’s an unusual specialty, yet most big firms have one to service their real estate developer clients. To find one, make a list of all of the largest law firms in the largest metro area nearest the park. Call each and ask to talk to their municipal lawyer (the person that sues city government). Then ask this person if they can sue the city of ____________ (the problem is that many are also city attorneys so they can’t sue themselves).

Once you find one, have them call the city and try to work it out over the phone, The city attorney knows the laws of grandfathering and will tell the city employee to back down. If you can’t get what you want, you can also file a lawsuit (it does not cost that much to file) and see what happens. With the stakes now raised, many cities will then back down (smaller cities simply can’t waste taxpayer money on something like that).

If you can’t find a municipal lawyer on your own, contact your state mobile home association (MHA) and see who they recommend.

As far as the seller goes, this should really be an expense they should pay since you need this resolved in order to make the property worth the sales price. However, some old moms & pops refuse to pay for it. We often absorb the cost ourselves (typically $2,000 to make the call and write the demand letter). If you can’t solve it in a call or further saber rattling, then you may want to drop the deal, as the cost to actually go to court could be $25,000 + and there’s no guarantee that you’ll win (even though you should).

The sellers will have to be a party to the “suit” as they are the actual owners, not you. They will have to understand the necessity to get this solved. Don’t lot them tell you it’s “your problem”.

I think our score on these type of issues is something like 50 wins and 0 losses, so you have a really good position going in. That being said, make sure you understand all the details of the property and how it came to exist. Some structures (like a PUD) may have an end life that negates grandfathering. Also read up on your state grandfathering laws (or talk to the MHA about it).

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Great info Frank! I have such a great price on the park even $25k in attorney fees would be worth it to resolve the problem.

I had considered approaching the seller with a lease/purchase option to give me operational rights to the property and allowing me to sue the city from that stand point. If that is feasible from a legal standpoint I may approach the seller with the two options:

They are party to the suit OR they lease/purchase to me until resolved.

Any other ideas on what I can give the seller for options? I have already renegotiated the price and seller finance terms so I don’t want to push that any more as the terms/price are very favorable.

Received the “position letter” from the city attorney. It basically restates the zoning departments position that no new homes can be moved into the park. The letter sites a Florida case that a property owner lost that was wanting to put a newer larger home on a non-conforming lot. It was not a mobile home park and totally not applicable. Looks like law suit will have to be filed against this particular city.

You might also consider approaching the city with the idea of zoning the park as adult only. This may elevate some of the cities concerns over tax burdens. Adult only will also provide you a much higher quality tenant base and a more easily managed community with higher standards. Adult only communities are becoming much more desirable, and popular, with our aging population.
This is a move away from “affordable” housing to a retirement community which the city may appreciate.

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Not a bad idea and worth consideration. Thanks!