Updating Manufactured Home Community Rules
Mobile and manufactured home communities (MHCs) are increasingly becoming an important and valuable commercial investment opportunity for real estate investors. The Oklahoma real estate market boasts many tens of thousands of mobile and manufactured homes, which is increasing all the time, and many of which are located within MHCs.
One of the key strategies that investors can use to improve the life of MHC residents while typically increasing the value of all property within the community is to update any covenants and community rules (or community guidelines).
Updating manufactured home community guidelines also has the added benefit of raising the value of the entire operation for the benefit of the owner.
How to update residential community rules and guidelines:
Under a specific section of Oklahoma landlord-tenant law (Oklahoma Statutes title 41, section 126), a landlord can adopt new rules and regulations within a development. However, the situation must qualify for a landlord-tenant relationship as defined by the Residential Landlord and Tenant Act; this means that only traditional residential lease relationships, where the landlord retains full ownership of the property, can utilize this statue. By default, that means any lease-to-own, rent-to-own, seller-finance, purchase money transactions, or retail installment sales contracts (RISCs) require the landlord to use other statutes or contract language to revise community rules.
What changes can you make to the existing rules?
The summary below is not all-inclusive. Generally, the new rules:
- Must be related to the convenience, peace, safety, or welfare of tenants or preserve the landlord’s property
- Must apply to all tenants equally
- Must be clear enough to put all tenants on notice of what actions are prohibited
- Must give fair notice of the rules and regulations
- Cannot be used by the landlord to evade landlord obligations under Oklahoma law
What if tenants are already residing on the property?
Another restriction that should be considered is that if a rule or regulation is adopted or amended after a tenant is already in place, and a new rule substantially modifies the tenant’s bargain (such as their lifestyle, the value they receive from the lease relationship, etc.), the new rule will not be enforceable against the tenant without the tenant agreeing to the new rule in writing.
What if the tenants have a lease-to-own, rent-to-own, or seller finance contract?
The rules for these relationships are subject to the language used in the specific contract you have in place with the buyer. If you are unsure about whether you can update community rules under your existing agreements, contact Avenue Legal Group for a contract review.
Other helpful information for MHC investors:
- Oklahoma Mobile (Manufactured) Home Guide
- Selling a Mobile Home and Land in the Same Transaction in Oklahoma
- For Sale By Owner (FSBO) Real Estate Transactions in Oklahoma
Consult an attorney for specific advice on how to update and revise your community’s rules for tenants. The attorneys at Avenue Legal Group have the experience you need with all aspects of MHC acquisition and divestment, custom agreements and contract management, and MHC management, including the process of updating community rules.
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