By: Erin Glover-Frey, Senior Attorney
One of the issues our firm is seeing more and more of are dramatic increases in lot rent in mobile home communities. Most often, these communities are 55+ communities, meaning the vast majority of the residents are retirees, who thought they were moving to Florida to live the good life, but instead have been shouldered with ever-increasing expenses while still trying to live on a fixed income.
This phenomenon is not limited to Florida and is happening nationwide. In September, a class-action lawsuit was filed in Illinois against the nation’s largest mobile home park management companies, alleging a conspiracy to inflate lot rental prices for older and low-income residents. How do management companies do this? Don’t these people have contracts that would prevent such drastic rent increases? Unfortunately, the answer is often no.
In Florida, mobile home parks are governed by a document called the “prospectus.” The prospectus sets out the terms of living in the mobile home community. Often the prospectus sets a “maximum” amount that rents can go up, such as tying rents to the Consumer Price Index (“CPI”). If the CPI goes up 5%, then rents go up 5%. Simple. But maybe not.
Florida law also provides a way for mobile home park owners to increase rents beyond that authorized in the prospectus. They simply have to give owners 90 days notice of the increase and provide evidence of comparable rents in other parks, presumably to show that the cost of living has increased in the community at large, and so should rents increase to keep up. Here is where the collusion with other park owners comes in. If all the companies agree to a set price they can artificially make it look like the rents are the “market” price for rent. The silver liming is that the rent increase process is technical, and park owners must follow it to the letter or else they may not succeed in raising rents.
Another way that park owners raise rents is when new tenants move into the park. Generally, all lot leases in the park start on the same day of the year – typically September 1. When a new tenant buys their mobile home and leases the lot, they take over the lease of the previous tenant for the remainder of the year. However, when September 1 comes around, this new tenant has to enter a new lease that the park owner will set at the “market rate,” which is generally set much higher than whatever rent the previous tenant was paying. Again, collusion comes into play to set the “market” price. The more new tenants who move into a park, the higher the average rent becomes, and the more park owners can justify raising rents for everyone to keep up with the market. It’s a vicious cycle.
The attorneys at Kistemaker Business Law Group are experienced with challenging mobile home park rent increases. While not every rent increase is unjustified, a skilled attorney may be able to assist you with challenging your rent increase.