Lot Rental Increases


#1

RENT INCREASES AFTER LEASE ANNIVERSARY DATE

Has anyone ever dealt with the issue of purchasing a mobile home park a couple months after the anniversary date for the lot rental increase has passed? I was confronted with this issue today. First, I checked the prospectus to determine when the lease anniversary date is. Since the prospectus did not state when the lease anniversary date was, I checked prior valid rental increase notices to determine the lease anniversary.

date. Also, I checked the prospectus and discovered I could charge “prevailing market rent.”

In Florida the law is clear that lot rent can only be raised once yearly on the anneversary date. The Division has taken the position that if the anniversary date is missed a park owner may not be able to raise the rent until the next year-anniversary date. In Florida, Ad Valorem taxes can be passed on at anytime during the lease term with 90 days prior written notice, providing such is allowed to be collected as stated in the prospectus. Therefore, I could pass on ad valorem taxes for the current year and the previous year, (Since the statute allows ad valorem taxes to be charged for the current year and the prior year) when they have not otherwise been collected. When the homeowners association has the meeting to discuss the taxes I will negotiate a rental increase and only collect one year’s ad alorem taxes, instead of two… This can help to increase income more immediately. In Florida, I think this will be permissible so long as the HOA agrees to the rental increase. If the Division challenges my rental increase, I will have support from the Judge because I can show that I was reasonable by not charging more than one years worth of ad valorem taxes in exchange for the rental increase. Also, I will leave the rent slightly under the market to further solidify my case. Lastly, I will establish that the HOA consented to the increase. It is important to remember that Courts have authority to overturn decisions made by administrative agencies.

The policy argument is that it is unfair to give residents a windfall simply because their rents were not raised sooner. The residents are not entitled to be unjustly enriched (get cheap rent for an entire year) simply because a park owner made a mistake and didn’t raise the rent soon enough. If I don’t try to collect rent for the months that I missed and simply request the increase from the time the notice is effective until the end of the lease term for the particular year, I should be ok. Then, the next year, which may only be six or so months away, I can also raise the rent on the lease anniversary date. Also, the residents would have a difficult time trying to argue that the increase was unexpected. It is reasonable for residents to be aware of their lease anniversary date.

IF ANYONE THINKS ABOUT TRYING THIS AT THEIR PARK THEY SHOULD CONSULT AN ATTORNEY WHO IS FAMILIAR WITH MOBILE HOME PARK LAW. THE LAW IN EACH STATE MAY VARY. IF YOU ASK AN ATTORNEY FIRST, YOU MAY BE ABLE TO SAVE A LOT OF MONEY BY AVOIDING LITIGATION.