by David Loop
Dave Loop is a private attorney and the GSMOL Vice President for Resident Owned Parks and sits on the GSMOL Board
There have been some emails lately about getting organized as a homeowners association (HOA). I am convinced that while it’s good and important for manufactured home owners to seek action from outside sources, the action most directly affecting your life happens right in the park where you live.
Your life is primarily impacted by:
- The condition of your park
- The maintenance of your park
- Management practices in your parkRent levels and rent increases at your park
- Health and safety issues (Title 25) in your park
- Reduction of services in your park
Park owners love it when the residents are disorganized. It is way easier to control (or mess with) residents who are not organized.
Conversely, it’s difficult to ignore an organized group that asks for issues to be addressed.There are various ways your resident group can get organized. The most effective, I believe, is to form an HOA that is also a mutual benefit nonprofit corporation (MBNP).
This is not abstract legal theory. Many times, I have seen the MBNP model work to successfully address the issues listed above. Formation of a MBNP also begins to establish your resident group as a potential buyer of the park, when it is offered for sale.
Here are the steps to forming your MBNP:
Step 1 – ESTABLISH a MBNP homeowners association by filing articles of incorporation with the Secretary of State. This is a simple process and not expensive ($30). Only one person is required to complete the filing paperwork (that person is called the incorporator).
[Ed Note: Dave now thinks this is an important step, but not necessarily the first step. You don’t want to spend time with the filing, while still trying to get the park owner to negotiate. Contact Dave directly if you have questions on this.]
The articles must also contain a statement like this:
The specific purpose of this corporation is to provide its members with a forum for review and discussion of topics and concerns common to their residency in (Name of Park); to provide unified representation for members in matters dealing with owners, management, government or any other organizations involved with the maintenance, conditions, legal or financial issues involving the Park. An additional purpose is to pursue the purchase and ownership of (Name of Park) by the corporation.
If you contact me, and I’ll send you the sample articles and filing instructions.
Step 2 – ANNOUNCE: When you get your filed articles back from the Secretary of State, let the residents know. A flyer delivered to each home is best. Announce your first meeting on the flyer. Pick a date for the first meeting (Saturday mornings can be best) and a place for the meeting (you have the right to use the Park clubhouse for your meeting). At this first meeting, these topics would be covered:We are forming a HOA to have a stronger position when dealing with the park owner.We will have regular meetings.We are creating bylaws to guide HOA operations.We will have nominations and a secret ballot vote to elect the HOA Board of Directors.We would like resident input on park issues or problems, so we can focus on what things we are trying to accomplish.
Step 3 – FOLLOW UP: Have someone take minutes at your first meeting. There will be action items resulting from the meeting. Make sure you follow up on them.
I am convinced these three steps will help you create an effective HOA, and make positive change happen in your MH Park.
A few other points:You will need to apply for tax exempt status from the taxing authorities (California Franchise Tax Board and IRS). If you do not, you’re HOA will face an alternative minimum tax.Your HOA will not be a 501 c (3) charitable corporation, because it is not a charity.Your HOA will not be subject to common interest development law (Davis-Stirling Act) until such time as it actually owns the park real estate.Some time and effort will be required of your HOA board, but odds are good it will be worth it.
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 email@example.com, or calling 831-688-1293.