I’m closing soon on a park with 1 vacant POH that the seller wants to retain ownership. I’m ok with this as it’s just 1 and I’m going to have them sign the same lot lease everyone else does at closing.
I’m wondering if I should do it month to month or 12 months?
I normally do 12 months that goes month to month on owner/occupied lots, but as this is vacant and they have plans to sell to a future resident on terms I’m wondering if I should just start out with it as month to month.
Not sure it makes a huge difference either way. I’ve also found it useful to have an addendum or separate agreement outlining the work to be completed and a timeframe. Helps so that you’re both on the same page with the project.
If they insist on owning it, then they should comply with your terms, which are 12 months. However, if they find a buyer, then you can release them from the lease early if the newly found tenant is acceptable, which brings up another point. You, should have the owner of the home agree that you will make final decision to underwrite and approve or reject any potential tenant that they find.
Good point, they are asking for “goodwill” of 90 days to move the home, but I came back to them saying that the home is taking up 2 lots that I could be putting homes on and selling, so they’re taking money out of my pocket by occupying it.
I would not give them the same lease that you give TOH residents. I suspect that your residents enjoy some pretty significant protections. ie eviction rules etc.
My assumption is that they are planning on Keeping the home for rental.
Many states have different rules for non-owner-occupied MHs. Double-check if there are any benefits to offering a commercial-type lease/storage agreement.
When I have a dealer selling a new MH in any of my parks I do not offer them a Residential lease. I have a storage agreement.
Some things to consider adding.
- $1.0MM insurance policy listing your park as additionally insured.
- Right of first refusal to buy the home
- Higher late fees
- Charge for any notice you have to give his residents (ie $50/rule violation)
- Include all the park rules plus add some that the renters must follow. IE They have to pay $5.00 per guest to use the pool.
Don’t freely give them protections that they otherwise do not deserve.
So, is seller living in the home? Or will they be subletting out the home (like an investor renting out the home)?
One of my parks allows investors to rent out their homes. Essentially, it’s their home and they rent our lot/pad. We use the term “subletting” here.
This can be profitable for you.
Any lot rent must be paid by owner of the home. We try to mainly deal with the investor, though some operational items do end up having us deal with their tenants from time-time. We typically up-charge lot rents to investors, plus charge an extra fees. “Sublet processing Fee” of $150 per each new tenant placed. Plus an additional $75 /year “Sublet Mgmt Fee” for us having to deal with multiple parties.
They plan to move or sell it. So not occupying it. I worked it out and will charge them lot rent until they sell/move which should be soon.
But you make an interesting point of the extra fees for non owner-occupied units. We inherited one home that is not owner-occupied and I’m trying to figure out how to structure it as I learned the lease that we have is signed by the owner of the home and not the occupants. I was planning to have them sign a separate lot lease so they would be subject to the terms in the lease agreement, are you saying not to do that?
You may do it however you would like.
For simplicity AND the fact that the owner of the home is definitely who we want involved, we have the owner sign the lease. In our experience, if any issues crop up, the owner/investor is typically very responsive to resolving it. This is because they dont want to get fined, risk eviction, and be forced to move their home from our park (at a cost of several thousand dollars). They are incentivized to handle any problems.
If you ever have to evict, you can always file the eviction naming your investor/owner “and all occupants.”