The process of converting a mobilehome park to resident ownership is a lengthy and complex process. The process is made even more complicated and fraught with fear due to extensive misinformation about the process and protections ultimately afforded to residents during the conversion process. Focusing on the protections given to residents in a subdivided park, we will try to clear up some of the misinformation.
One of the first questions I am typically confronted with is "Will I have to leave the park if I do not want to buy the space?" The answer is emphatically, NO. Under the Mobilehome Residency Law, there are very explicit times when a resident may be evicted (or forced to move) from a mobilehome park. Since the conversion to a subdivided park is not one of the permitted reasons, the tenant is given the right to stay and rent as long as they continue to comply with the lease and rules and regulations of the Park (including paying rent).
The second question is typically "how much will my rent be increased?" When a conversion is first contemplated by a park owner or resident group, the details of purchase price of the lot and "fair market rent" for the park after the conversion are unknown (because the process takes so long its hard to say what the market will be at the time). So while I am not able to give a dollar amount, residents should rest assured that they will be protected through what is commonly referred to as the "Map Act Rent Control" protections.
If there is local rent control or rent stabilization ordinances, upon the completion of the conversion, the park is no longer subject to those local ordinances. However other rent protections do commence to provide protections to all residents of the park. Additionally, if the tenant is on a long term lease, the terms of that lease will continue.
So what are the Map Act Rent protections? Government Code Section 66427.5 splits resident into two categories, low income residents and non-low income residents. The income limits are published annually and are based on the County that the Park is in. For low-income residents, the maximum amount that the rent can be increased is the lower of (i) the average of the increases that took place over the 4 years prior to the conversion, or (ii) the CPI increase. This protection remains in place for as long as the tenant remains in the Park and is low income, and more importantly, there are no pass-throughs permitted under this code section. Therefore, for low income residents, the Map Act Rent protections are typically more protective than local rent control ordinances.
For non-low income residents, the calculation is a little different. The park owner is allowed to bring the rents to "market", but it is done over 4 years (technically 5 rent increases). The "market" rent is determined by an appraiser.
These protections are in place to ensure residents can remain in their home, as either a renter or an owner of the lot. Stories of a conversion being done to "get out of rent control" are generally just rumors as park owners must still comply with the Map Act Rents, which provide detailed protections to residents. Residents should understand the process, the protections and their rights under the law. For more information see our Frequently Asked Questions on Conversions. If you have additional questions or would like further information regarding mobilehome park conversions, please call the experienced mobilehome conversion attorneys at The Loftin Firm today.