Anyone else seen this? This is wowsers - among all sorts of other free market-killing clauses - it also seeks to deny licensure if the owner/operator has a “history of unjustifiable rent increases” - neglects to say of course who gets to determine what “unjustifiable” means nor explain why it is doing away with the free market. Michigan Legislature - House Bill 4298 (2021)
Does this have a ghost of a chance of passing into law? Looks like it disappeared into committee in 2021
It also seeks to require licensure of park owners not simply operators - and the way I’m reading it - if some unnamed authority in the future decides that in the past the park owner raised rents in a manner which this future authority deems “unjustifiable” - the Michigan state government can then revoke or deny renewal of license to simply own property the park owner already has - forcing them to sell. So - the Michigan House passed a bill that would revoke current property ownership rights to individuals or corporations which in the past engaged in lawful-at-the-time activities now deemed arbitrarily “unjustifiable”
Sounds Orwellian…
Many of these types of ordinances are deemed unconstitutional. Many states try to take away our Constitutional property rights, but end up losing in court.
I know it feels like the Sky is Falling sometimes. In actuality, 99% of park owners are great owners. These ordinances are designed to dissuade the “Bad Actors”.
One thing you can do to defend yourself from such accusations is to compile a company policy.
For example:
We have a Standard for Tenant Screening. Each park is a little different but the standards are all pretty similar. IE 3x the rent worth of income. Verifiable income is required. If the person has a large cash sum in the bank then that sum must cover the Rent for 60 months.
Also, We have a policy to raise the Rent to either 110% of the current rent or to Market Rent whichever is higher upon tenant turnover. In addition to an annual rent increase based on inflation and actual park operating expenses. IE if inflation is low like it was from 2008 to 2020. We raised the rent between 3-5% annually to reflect the actual operating cost increases. Labor goes up, capital improvements happen, etc.
A good defense to these accusations is a written policy that can be produced for the tenant upon request. Prepare it in advance so you cannot be accused of arbitrarily creating it to suit the situation.
| Dunes Ranch | ||
|---|---|---|
| Updated Tenant Screening Policy | ||
| Credit | ||
| Applicants must meet the following | ||
| 1 | 600 Fico | |
| 2 | No Current Collection accounts | |
| 3 | No 60 day lates in the past 12 mos | |
| 4 | No BK’s | |
| 5 | No unpaid judgments | |
| 6 | At least one trade line open for 24 months no lates/no 30 day/no 60 day/no 90 day. | |
| Income | ||
| 1 | Applicant must earn 3 times the current space rent | |
| No previous eviction in past 5 years | ||
| No criminal convictions |
You should see New York State. A large company bought a MHP in western ny and doubled rent. Lawmakers responded with a 3% annual increase, 6% if you can show expenses increased by that much, any higher and you have to apply. Then a Native American Casino bought a 200 pad park for the land and evicted everyone. Lawmakers responded with a law a tenants committee has the right of 1st refusal and will fund the residents, you have to wait 5 years after you buy a mhp to shut it down, and then you need to pay each tenant up to $15,000 for relocation expenses.
SD guy, this is a very good idea. By having your criteria in your rules you can’t be accused of arbitrarily denying applicants or unreasonably denying approval
The reality is that rent controls are nothing new and although hard on businesss there are may go arounds for smart landlords that are reasonable and responsible in managing their properties.
SDGuy is correct in suggesting that the sky is not falling.
Regretably long term tenants are the hardest on business under rent control. Once you understand and embrace tenant turn over as being good for business you can restructure your practices to work around rent controls.
Just remember to always increase your rents anually.