I’ve always done a yearly lot lease with tenants, but I am leaning towards month-to-month.
Once the 12-month lease is up, lot rent is raised and I have them sign a new 12-month lease with the higher lot rent. If I go month-to-month, I’m assuming I just have them sign a new 1-month lease for the higher rent price?
How does everyone else do it? 12 month or month-to-month? Kansas is very landlord friendly, so it’s fairly easy & quick to evict if I need to. If I keep them in a 12-month lease, it at least means the home can’t be moved for the year. If I do a month-to-month, they can move it whenever. Other mobile home parks in Wichita and surrounding areas will move tenant’s homes in for free (they advertise this all the time). So, it doesn’t really cost the tenant much to up and leave with their home.
I only use month to month. A 12 month lease does not give you any more security than month to month in preventing a home from being removed. It is a misconception on the part of landlords that a tenant wanting to move will respect a lease.
Month to month can make it easier to get rid of tenants without having to do a formal eviction.
Thanks Greg. I understand your point about the tenants not respecting the lease agreement. You’re right, if they want to leave, they’ll leave. After researching more on this forum, and re-reading Kansas laws regarding mobile homes/parks, I’ll be doing a month-to-month lease.
Does only having month-to-month leases impact the ability to finance/refinance the park? Obviously this is only relevant if you have a loan maturity coming up in the coming year or so, but I would think that lenders would not give full credit to a park full of MTM income that could walk away at any given notice (on paper).
I’m not sure because I’ve never been in that situation. I don’t think it would be an issue though. The lender probably looks at past monthly income (tax returns) and not at each lease. But I could be wrong. Hopefully someone else chimes in.
All of my leases are month to month and I’ve done 10 or so park refi’s with Freddie Mac and CMBS. None batted an eye at month to month leases, I think it’s fairly common in the industry.
Here is the language we use in our lease agreements for holdover tenancy:
7. HOLDOVER TENANCY. If the Homeowner remains in possession of the Lot after the expiration of the term of this Agreement, defined in paragraph 1.2, and has not executed a new rental agreement for the Lot, the Homeowner’s possession shall be considered a month-to-month tenancy. In such cases, the Owner may, upon providing a written 90-day notice, increase the Rent and other charges of the Park unless otherwise prohibited by law.
1.2 Term: The tenancy established by this Agreement shall have the following term:
(Check one:)
______ Twelve (12) months, starting on __________________, and ending on __________________.
______ Less than twelve (12) months, starting on _______________, and ending on __________________.
______ Month-to-month, starting on __________________________.
Thanks for the info. I like the wording you use for the Holdover Tenancy, so I’ll incorporate that into my lease. We’re only required to give a 60-day notice in Kansas.
Most of our tenants are on a month-to-month lease. It doesn’t happen often, but if we get a really bad tenant, we can get rid of them more quickly that way rather than waiting a whole year. Our lease have a holdover clause, so there is no need to sign a new lease every month or every year. The lease automatically continues on ongoing basis.
For rent increases, we send a letter to each of the tenants with the required advance notice. We do not have the new rent amount into any kind of a lease, but every five years or so we may have tenants sign a new lease. This is especially true if the lease has materially changed over the years.
We do 12-month leases. I do understand the reasoning with the month-to-month though. As someone else suggested, homes rarely move out. Some points brought up making me think twice is 1) ability to increase lot rent more frequently. 2). Competitors trying to scalp your tenants by offering moving incentives.
Additionally, as @SDGuy mentioned, we use a Holdover Clause too. However, ours is more aggressive and reads as now the property is treated as “storage “ and a per diem fee applies. This per-diem is higher than the lot rent.