Most communities of factory-built homes in Florida are what we call land-lease communities. The homeowner rents the lot on which the home stands.
The most contentious issue for these homeowners is the ever-increasing lot rents. More complaints are filed each year with the state Department of Business and Professional Regulaton on rents and rent increases than on any other subject. Unfortunately, the DBPR has no authority to regulate rent increases. The court system is homeowners' only resort.
Homeowners in land-lease communities are fortunate because they have what some consider a form of rent control. Chapter 723 of the Florida Statutes requires the park owner to provide a prospectus to every lot renter. It states:
"The park owner shall describe in the prospectus the manner in which lot rental amount of user fees may be raised as follows:
* "In the case of lot rental amount, a statement that the mobile home owner shall be notified of increase at least 90 days prior to the increase."
* "Disclosure of all components of lot rental amount."
* "A description of all factors, including cost where applicable, for each type of charge which may result in an increase of those charges to the home owner."
* "The current dollar amount of each type of charge shall also be stated in the prospectus and rental agreement."
Many Florida prospectuses spell out how rent increases will be handled. For example, in my community, the prospectus stipulates that the park owner may increase rents equal to the annual CPI index, or up to 5 percent. This informs a potential homeowner what may be anticipated in lot rental increases over the years.
Unfortunately, most home buyers, in the emotion and excitement of buying a home in a community, fail to read their prospectus and fail to calculate, using the maximum potential rent increases, what rent they will be paying in 5, 10, 15 years or more. When my wife and I decided to move to a land-lease community, I read the prospectus and had my lawyer read it. I projected out over 10, 15, and 20 years what my rent might be if the park owner raised rents to the maximum each year, so I knew what to anticipate.
In other words, Chapter 723 provides some valuable information and protection for owners of factory-built homes.
I hear all the time from readers who want tight rent control laws that limit how much the park owner can raise rents, or that freeze the rents after a number of years. My first response is to point out that most rent control laws have been found to be illegal. Second, I am convinced that rent controls work against the homeowner.
Let's assume that, at our park, rents are capped at $500 for an interior lot. Once the rent reaches that level, faced with inflation that makes operating costs exceed income, the owner is going to stop maintaining and improving the park. The owner is entitled to a reasonable rate of return on investment. Once rent controls cut into that reasonable rate of return, the owner has no alternative but took look for ways to reduce expenses. That may include selling the park to a buyer who evicts everyone. Rigid rent controls are not the answer.
Many homeowners feel their owner is greedy. I can't change their minds. I can only say that it's in the owner's best interest to keep homeowners reasonably happy. Contented residents are the park's best marketing tool. One of the reasons we bought in our community was the overall positive response we got from residents before we made our purchase.
Why are owners of factory-built homes in Florida so lucky? In most states, laws such as Chapter 723 do not exist. Park owners are free to do whatever they please about rents. In some states, rents are raised more than once a year. In many states, park owners raise the rent to the maximum they think the market will bear.
Chapter 723 provides for homeowners and homeowners associations to meet with the park owner every year and obtain a detailed explanation of how the rent increase was determined. It provides for a negotiating committee or statutory committee to meet with the park owner and review and question rent increases. This is not a perfect solution; however, it is a lot better than what homeowners have in most states.
Next: Market rents - what they are, how they work and why they are less understood and cause more problems than the annual lot rent increase.
Send comments or questions to Len Bonifield at elb@gate.net or fax to 863 853-8023, or phone (863) 858-1557. Please include your e-mail and mailing address. Bonifield is a manufactured-home resident, a past HOA president and former officer of the FMO District 1 board of directors.
