by David Loop
When a mobilehome park is put “on the market,” its residents usually miss the opportunity to buy it. They most often learn the park was for sale after it has been sold to a new “investor-owner.”
Why don’t park owners give the residents a chance to buy the park?
One reason is that most owners believe the residents aren’t organized, or can’t get the necessary financing. They are not “on the owner’s radar” as potential buyers. This is sad, because often the owner’s best possible buyer is the resident group.
Some park residents believe California law gives them a “right of first refusal” to buy the park when it is put up for sale.
This is not true.
In recent years, bills have been introduced in the California Legislature to give “right of first refusal” to mobilehome park residents. None of these bills has become law.
One California city (San Marcos) includes “first refusal” in its rent stabilization ordinance. However, in a recent lawsuit by residents against a local park owner, the judge said that “first refusal” was unconstitutional in that case – a taking of the park owner’s property rights without compensation. Of course, a resident group and a park owner could make a contract giving “right of first refusal” to the residents. These agreements are very rare – park owners see little benefit in signing one.
So what do park resident groups have?
They have Mobilehome Residency Law Sec. 798.80. This law lets residents tell the owner they’re interested in buying the park.
Please read the law to understand its details. Essentially, MRL 798.80 says: The park owner can be required to give the residents written notice that he intends to offer the park for sale. However, the residents must first request this notice from the owner, in writing.
Taking advantage of MRL 798.80 requires little effort. A resident association of at least 3 people (a president, a secretary and a treasurer) needs to be formed. The association does not have to be incorporated. All that is required is sending a letter to the park owner once each year.
Saying “we’re interested in buying your park” is a good start. But how can you motivate the owner to really consider the residents as “park buyers?” I suggest that in your annual letter to the owner, you also say:
- The resident group will pay a very fair price for the park;
- The group believes it can get financing to buy the park; and,
- Selling to the residents can give the owner tax benefits available from no other buyer.
These statements are true, and should help your group’s credibility as a buyer of the park. Any positive response from the owner would lead to “next steps.”
Your group would interview “park purchase” consultants and check their backgrounds. Then, you would select one who can prove his or her substantial experience in helping residents buy their parks. Before you hire a consultant, they should explain to your group:
- The method that would be used to buy the park (“co-op,” “subdivision,” etc.)
- Exactly how the purchase would be financed; the financial plan for successful operation of the park after the residents own it.
Many benefits come with mobilehome park “resident ownership.” You can use MRL 798.80 to remind the owner that your group wants to buy the park.
With very little effort, you can at least be “on the owner’s radar” when the park is to be sold.
David Loop is a real estate attorney and past homeowners’ association president at resident owned Aptos Knoll Park, near Santa Cruz. You can ask him questions by sending an e-mail to deloop1, or calling 831-688-1293.