The short" session of the legislature begins this coming Monday

By Michael G. McClory

Attorney, Bullard Law. 

Mike can be reached at mmcclory@bullardlaw.com

While you were attending last weekend's record opening for Star Wars: The Force Awakens, Congress approved and President Obama signed the Consolidated Appropriations Act of 2016, which provides for $1.14 trillion in federal spending through the end of the fiscal year.  The 2016 Budget Act received bipartisan support (though it did not have universal support) and averts a government shutdown until at least October 2016 (just before the next presidential election).  

Rolled into the 2016 Budget Act's spending appropriations is the following spending prohibition:

SEC. 542.  None of the funds made available in this Act to the Department of Justice may be used

By: Phil Querin, MHCO Legal Counsel

Current Oregon Law. ORS 90.680 is the statute governing the on-site sale of homes in a manufactured housing community. It previously contained no limitations on landlords who required, as a condition of tenancy, that residents selling their homes must enter into a consignment agreement with the landlord. That will change on January 1, 2016.

New Oregon Law. ORS 90.680 is now amended as follows:
1. It defines the term "consignment" to mean a written agreement in which a resident

authorizes a landlord to sell their manufactured dwelling or floating home in the

community for compensation.

2. It prohibits landlords from requiring as a condition of occupancy, that residents enter

   into consignment agreements with the landlord.

3. It prescribes the specific conditions under which a landlord may sell a resident's home

   on consignment:

a. The landlord must be licensed to sell dwellings under ORS 446.661 to 446.756;

i. The license may be held by a person other than the community owner, so long as there is common ownership between them;

b. The landlord and resident must first enter into a written consignment contract that specifies at a minimum:

1. The duration of the contract, which, unless extended in writing, may not exceed 180 days;

2. The estimated square footage of the home, together with the make, model, year, vehicle identification number and license plate number, if known;

3. The price offered for sale of the home;

4. Whether lender financing is permitted, and the amount, if any, of the

   earnest money deposit;

5. Whether the transaction is intended to be closed through a state-licensed

   escrow;

6. All liens, taxes and other charges known to be in existence against the

   home that must be removed before the resident can convey marketable

   title to a prospective buyer;

7. The method of marketing the sale of the home (e.g. signs posted in the

   community; Internet advertising; print publications, etc.);

8. The form and amount of compensation to the landlord (e.g. fixed fee

   with amount stated; commission percentage, etc.); and

ix. In determining the resident's net sale proceeds, the order by which the gross sale proceeds will be applied toward payoff of the liens, taxes, actual costs of sale, landlord compensation, and other closing costs.

c. Within 10 days after a sale, the landlord is to pay the resident their share of the sale proceeds, and provide a written accounting for all funds received;

d. The above-described process (i.e. through a written consignment agreement with landlord acting as the resident's representative) is the only permissible way a landlord may recover any commission, fee (however designated), or retain a portion of the sale proceeds of a resident's home in the community.

4. In cases in which a landlord is attempting to sell a home under ORS 90.680 and so is a resident in the community, the following new rules will apply:

1. If a landlord advertises a home for sale within the community, a resident selling their home may do so as well, by posting a sign in a similar manner and location;

2. A landlord may not knowingly make false statements to a prospective purchaser about the quality of a resident's home also being offered for sale;

3. Note: Nothing prevents a landlord from selling a home to a prospective purchaser at a price or on terms, including space rent, that are more favorable than the price and terms offered for homes offered by residents.

5. Miscellaneous:
a. If a landlord requires a prospective purchaser to submit an application for

occupancy, upon request from the purchaser, the landlord must provide, a copy

of the application;

2. Upon a prospective resident's request for a copy of the rental/lease agreement,

   the landlord may require payment of a reasonable copying charge;

3. If the prospective purchaser agrees, a landlord may provide these requested

   documents in an electronic format;

4. When a landlord considers an application for tenancy from a prospective

   purchaser of a resident's home, the landlord shall apply substantially similar credit and conduct screening to a prospective purchaser of a home from the landlord;

5. A landlord or resident who sells a home located inside the community is required to deliver title to the purchaser within 25 business days after completion of the sale;

6. If the sale by the landlord or resident includes paperwork whereby the seller is carrying back a contract or security interest and the purchaser is paying some or all of the purchase price with installment payments, where applicable, the landlord or resident is required to notify the county that the purchaser is responsible for property tax payments;

7. If a person violates ORS 90.680 three or more times within a 24-month period, a person damaged thereby has a cause of action against the violator for the damages caused as a result of the third or subsequent violation or $500, whichever is greater.

By: Phil Querin, MHCO Legal Counsel

Current Oregon Law. ORS 90.680 is the statute governing the on-site sale of homes in a manufactured housing community. It previously contained no limitations on landlords who required, as a condition of tenancy, that residents selling their homes must enter into a consignment agreement with the landlord. That will change on January 1, 2016.

New Oregon Law. ORS 90.680 is now amended as follows:
1. It defines the term consignment" to mean a written agreement in which a resident

authorizes a landlord to sell their manufactured dwelling or floating home in the

community for compensation.

1. It prohibits landlords from requiring as a condition of occupancy

This morning MHCO and several other landlords filed a lawsuit against the City of Portland to declare invalid a portion of the Renter Protection" Ordinance which requires property owners to afford tenants a minimum 90 day notice for rent increases of more than 5%. MHCO believes the notice provision is an attempt by the City Council to push the envelope to challenge the current statewide prohibition on local rent control legislation.  

We are taking this action for the following reasons (you may have to ""cut and paste"" the links below into your browser):

1. The 90 day notice provision is directly preempted by ORS 91.225.  
2. The City Council has already stated its preference in legislative hearings to enact local rent control ordinances and would likely do more if it could overcome statutory preemption. Ironically

Update:  Last week the MHCO Board decided unanimously to make a major contribution to  "Say No To Rent Control".  This coalition will be working to overturn the new Portland City Code.  The MHCO Board believes that any trespassing on landlord's ability to raise raent needs to be strongly rebuked.  MHCO will be working with attorney John DiLorenzo at Davis, Wright, Tremaine LLP.  MHCO will keep you up to date as we move forward with this litigation.

In the meantime, MHCO Attorney Phil Querin has thoroughly analyzed the new code and provided a complete analysis of the new law.

By Phil Querin

Background.  On October 7, 2015, the City of Portland amended its Code to address what it believes is a shortage of available housing units for rent.  What is unique about this move is that it is directed not only at Federal or State subsidized rentals, but all rentals, whether they fall into the category of affordable housing" or not.  In order to accomplish this

Financing Your Community  

By:  J. DiMarco and Gerard D. DiMarco

Almost every community owner at some point in time will experience the need for financing of some kind. There have been many ups, downs, and complexities of the financial markets over the past 25 years, and the impact these fluctuations have had on available loans has been huge. In this article we will address some of the important issues that community owners may face during the lending process.

Lenders are back after the credit crunch of a few years ago

Since the financial crisis that began around 2007, the capital markets began to slowly re-emerge in late 2010 and early 201 for manufactured home community lending on a wide scale. Today's lending market, combined with historically low interest rates, is the strongest it has been in years. Lenders are eager to provide long term fixed rate, non-recourse loans with 30 year amortizations on manufactured home communities. We are currently helping a customer refinance a five year commercial mortgage-backed security (CMBS) loan that closed in March 2010 (our records indicate it was one of the nation's first CMBS loan post financial crisis) with a ten year fixed rate loan at less than 4.25%. The existing loan the borrower is paying off had a rate of 6.5%.

A few other real world examples include recently helping a client lock a ten year fixed rate loan at 3.51%! Additionally, another client just secured a 4.2% long term fixed rate, replacing a rate of 6.5% from the previous note. The market has improved dramatically!

There are currently numerous lending platforms and options available for community owners including conduit lenders (CMBS), life insurance companies, Fannie Mae, Freddie Mac, credit unions, and traditional bank loans. There are also a wide range of product options and features available in today's financial market including bridge lending, short term floating rate debt, interest only, mezzanine debt, and flexible prepayment options. With so many options available, finding loan that suits your specific needs as a manufactured community owner is possible.

How to obtain a mortgage

There are two major components that lenders review when analyzing a loan request; the guarantor, and the property itself. On the guarantor side, most lenders look for an individual to have a credit score of at least 600 and a sufficient net worth. Even though most of the loans we offer are non-recourse, our lenders still look for those minimum requirements. On the property side, as a general rule, our lenders require a minimum loan amount of $500,000, a minimum debt service coverage ratio of 1.25x, and paved roads. There are also numerous aspects to manufactured home communities that make them unique compared to other asset classes.

Every community can qualify for a loan!

We have financed deals with low occupancies, private utilities, and low populations. However, having a better understanding of what lenders prefer can be helpful in assessing your property, or a potential acquisition, in preparation for a new loan. The type of loan and benefits of the mortgage depend on the checklist" of items a lender reviews. Some of the key components that determine the rate and terms of a loan include:

• Community quality
• Borrower experience and equity
• Loan-to-value (LTV)
• Financial and occupancy trends of the property
• Infrastructure quality - roads

By:  Ken Pryor, Program Coordinator, Oregon Housing & Community Services, Manufactured Communities Resource Center

Mediation:

To anyone that owns or manages a manufactured home park, conflict is a given, a part of the landscape and as common as breathing. However, as familiar as we are with conflict, many might conclude the value of time invested in conflict pales in comparison to the value of the fistful of other urgent park duties and priorities. This short article is to remind park managers and owners of an inexpensive tool to help resolve conflict, build relationships and save everyone involved time and money.  Of course I'm speaking of mediation, but before going further, allow me to assure you I am not coming from a hypothetical, altruistic, touchy feely"