Signing 12 Month Leases 4 Mos after Rent Raise

mobile home university
1

I have a MHP under contract in MI. We are in due diligence and we requested copies of leases. The seller increased rent in January and is now signing 12 month lot leases with tenants during our due diligence. This seems odd to me since this will lock us out of raising rents until May 2027.
Has anyone else experienced this? Does this seem odd to anyone else?

2

A few thoughts:

  1. I just googled Michigan leases; Michigan requires written leases, so he could be covering his butt. 125.2328 Owner or operator of mobile home park or seasonal mobile home park; unfair or deceptive practices; action by tenant; violation of water utility tariffs; qualification of owner for regulation as water utility; report. (g) Renting or leasing a mobile home or site in a mobile home park or seasonal mobile home park without offering a written lease.

  2. I would not be too happy with him locking you into a May renewal/raise date.

  3. Check the PSA immediately. There should be some provision for lease adjustments, etc.

  4. I’d ask for copies of all the new leases and related documents.

  5. I would also ask the seller to stop signing new leases or lease amendments without your written approval.

This could be innocent, or he could be hiding a sweetheart lease to Cousin Joe. i.e., no rent increases for 20 years, or the lease includes an expensive (for you) perk.

edit: Link to Michigan law cited above:

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3

He is complying with your request. Only ask for leases that are currently in place.

4

Thank you. The seller violated the terms of the PSA by not getting my written approval of the new leases.

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5

Interesting but probably and hopefully innocent enough. Tenants knowing the park was being sold may have wanted signed leases to reflect the rent increase from four months ago which is their right. You will get it sorted out when you get a look at them. The Michigan legislature is bantering MHP rent controls and if it mirrors Washington may be locked into a set percentage or only cost of inflation. “New” park owners can raise rates one time initially once they purchase the park… but then they are locked down with current owners. Depending on what the duration is on these newly signed leases your timing is going to be important.

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6

Maybe justified but the fact that he did not consult with you is a red flag. If they are retroactively and he is covering his butt that may be on him, but if they extend into a future term, then it negatively affects your business plan. You need to ask him about this.

7

ugg…

If you feel damaged, you may want to speak with an attorney. I am not sure if that’s a hill I would want to die on, but for sure I’d ask for some type of “you just screwed me” discount.