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Answer: That is a good question. First, to be clear for our readers, a "security agreement" is any agreement that serves as "security" on the property. For example, a trust deed is recorded on real property, and secures the promissory note. If the note is not paid, the holder can turn to the security, and sell it to satisfy the unpaid indebtedness.

Since manufactured homes are not real property, the document is different, but the concept is the same. A Retail Installment Contract is defined in ORS 83.510(12). Its purpose is to retain a lien upon the manufactured home to secure a buyer's obligations under the contract. Form 2A informs the buyer that the seller/dealer is claiming a security interest in the home for the duration of the contract, and that in the event of default the seller/dealer will have certain remedies to foreclose and/or repossess the home. Upon a buyer's full payment and performance under the Retail Installment Contract, the seller/dealer is required to mail to the buyer good and sufficient instruments to indicate payment in full and to release all security rights in the home.

If the sale transaction is closed in escrow, there is nothing more for the seller to do to secure his/her security interest in the home, as escrow will submit the necessary documents to the Oregon Department of Business and Consumer Services.

However, if the seller/dealer does not close the transaction through escrow, they will have to perform the following steps themselves:

1. Submit to the Department of Consumer and Business Services (DCBS) an application for an ownership document on behalf of the purchaser.
2. The application must be on a DCBS-approved form, and include the following:
   1. The year, manufacturer's name, model if available, and identification number for the home;
   2. Any existing ownership document for the home or, if none, the homes certificate of origin or other document evidencing its ownership;
   3. The legal description or street address for site where the home is or will be placed;
   4. If the home is sited in a manufactured housing community, the name of the community;
   5. The name and mailing address of each person acquiring an interest in the home;
   6. The name and mailing address of each person acquiring a security interest in the home; and
   7. Any other information required by the DCBS by administrative rule.
3. If the seller/dealer is unable to comply with Sec. 2, above, within 25 business days of the sale/closing of the home, he/she must provide a notice of delay to the purchaser. The notice must contain:
   1. The reason for the delay;
   2. The anticipated extent of the delay; and
   3. A statement of the rights and remedies available to the purchaser if the delay becomes "unreasonably extended."[1]
4. Fail to comply with the above could result in the seller/dealer becoming subject to revocation or suspension of their license or being placed on probation by the DCBS pursuant to ORS 446.741.
5. If they fail to comply with Sec. 2, above within 90 days of the sale/closing, they could become subject to criminal penalties under ORS 446.746 (1)(h).
6. However, if the home buyer is not in compliance with the payment terms of their purchase or security agreement with you by the 20th calendar day after the sale/closing, the seller/dealer is not required to perform the steps in Sec. 2 until 25 calendar days after the home purchaser is in compliance with the payment terms. [Note: This does not excuse a seller/dealer from complying with Sec. 3, above, even though the purchaser is late on his/her payments.]

[1] Note: The statute does not define "unreasonably extended," nor does it identify any particular remedies you might suggest. If such a delay occurs, you should contact your own legal counsel, since you do not want to write such a letter to the purchaser identifying their "legal remedies" - that would be up to the purchaser's attorney.

Answer: That is a good question. First, to be clear for our readers, a "security agreement" is any agreement that serves as "security" on the property. For example, a trust deed is recorded on real property, and secures the promissory note. If the note is not paid, the holder can turn to the security, and sell it to satisfy the unpaid indebtedness.

Since manufactured homes are not real property, the document is different, but the concept is the same. A Retail Installment Contract is defined in ORS 83.510(11).[1] Its purpose is to retain a lien upon the manufactured home to secure a buyer's obligations under the contract. Form 2A informs the buyer that the seller/dealer is claiming a security interest in the home for the duration of the contract, and that in the event of default the seller/dealer will have certain remedies to foreclose and/or repossess the home. Upon a buyer's full payment and performance under the Retail Installment Contract, the seller/dealer is required to mail to the buyer good and sufficient instruments to indicate payment in full and to release all security rights in the home.

If the sale transaction is closed in escrow, there is nothing more for the seller to do to secure his/her security interest in the home, as escrow will submit the necessary documents to the Oregon Department of Business and Consumer Services.

However, if the seller/dealer does not close the transaction through escrow, they will have to perform the following steps themselves:

1. Submit to the Department of Consumer and Business Services (DCBS) an application for an ownership document on behalf of the purchaser.

1. The application must be on a DCBS-approved form, and include the following:
   1. The year, manufacturer's name, model if available, and identification number for the home;
   2. Any existing ownership document for the home or, if none, the homes certificate of origin or other document evidencing its ownership;
   3. The legal description or street address for site where the home is or will be placed;
   4. If the home is sited in a manufactured housing community, the name of the community;
   5. The name and mailing address of each person acquiring an interest in the home;
   6. The name and mailing address of each person acquiring a security interest in the home; and
   7. Any other information required by the DCBS by administrative rule.

1. If the seller/dealer is unable to comply with Sec. 2, above, within 25 business days of the sale/closing of the home, he/she must provide a notice of delay to the purchaser. The notice must contain:
   1. The reason for the delay;
   2. The anticipated extent of the delay; and
   3. A statement of the rights and remedies available to the purchaser if the delay becomes "unreasonably extended."[2]
2. Fail to comply with the above could result in the seller/dealer becoming subject to revocation or suspension of their license or being placed on probation by the DCBS pursuant to ORS 446.741.
3. If they fail to comply with Sec. 2, above within 90 days of the sale/closing, they could become subject to criminal penalties under ORS 446.746 (1)(h).
4. However, if the home buyer is not in compliance with the payment terms of their purchase or security agreement with you by the 20th calendar day after the sale/closing, the seller/dealer is not required to perform the steps in Sec. 2 until 25 calendar days after the home purchaser is in compliance with the payment terms. [Note: This does not excuse a seller/dealer from complying with Sec. 3, above, even though the purchaser is late on his/her payments.]

[1] Retail installment contract" or "contract" means an agreement, entered into in this state, pursuant to which the title to, the property in or a lien upon a motor vehicle, which is the subject matter of a retail installment sale, is retained or taken by a motor vehicle dealer from a retail buyer as security, in whole or in part, for the buyer's obligation. "Retail installment contract" or "contract" includes a chattel mortgage, a conditional sales contract and a contract for the bailment or leasing of a motor vehicle by which the bailee or lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that the bailee or lessee is bound to become, or for no other or for a merely nominal consideration has the option of becoming, the owner of the motor vehicle upon full compliance with the terms of the contract. (Note, this statute defines a "motor vehicle" or "vehicle" to include mobile homes.)

[2] Note: The statute does not define "unreasonably extended," nor does it identify any particular remedies you might suggest. If such a delay occurs, you should contact your own legal counsel, since you do not want to write such a letter to the purchaser identifying their "legal remedies" - that would be up to the purchaser's attorney.

Answer. There is no such form. Perhaps there should be. But first, let's address some threshold issues, such as:

• Who owns the structure?
• Who has the duty to maintain it?
• What happens to it when the tenant vacates the space?
• Who would likely be held liable for injuries to persons/property using the structure?

If the structure was there when the resident first rented or leased the space, there isn'tmuch question but that the landlord "owns" it, if it remains there when the space is re-rented or re-leased. Although most rental/lease agreements and rules require the resident to "maintain" the space, in most instances, the text of these provision generally apply to landscaping-type activities. If the structure is expressly identified in the park documents, and allocates maintenance responsibility to the resident, then the issue is clearer. But it is my opinion that if the documents are silent about park-owned structures on the space, the duty to maintain, paint, etc., lies with the landlord. Why? Because the landlord drafted or selected the documents for the resident to sign, and accordingly, could have delegated the responsibility in whatever manner he/she saw fit. Having failed to do so, means that the agreement or rule will most likely be construed most strictly "against the drafter" - i.e. to the landlord.

Clearly, if the structure was on the space at the inception of the tenancy (therefor presumptively belonging to the landlord), when the resident departs, it would remain there. Similarly, if some liability occurred, it would fall on the landlord, unless it was from an event caused by the resident.

For example, say there is a storage shed located on the space at the start of the tenancy, and nothing is said in the park documents about maintenance responsibility. The resident uses the shed to store family items, including old photos and collectibles. Unbeknownst to the resident, the shed is not completely water resistant, and over the course of the winter, they are destroyed. Unless there is some evidence the resident knew about the leakage and did nothing to protect their belongings, this is likely a landlord liability.

Is this an instance in which the landlord could protect themselves by having a release of liability agreement saying that the resident assumes all responsibility for destruction or loss of any valuables stored in the shed? Possibly, but not absolutely. In other words, the more specific the agreement was, the better the chances are it would be enforced to the benefit of the landlord. But a simple statement saying that the resident assumes all responsibility for the contents stored in the shed, might not go far enough. Remember, absent the resident's duty to maintain the shed, if the landlord has the maintenance responsibility, management is arguably somewhat responsible for making sure that the shed is watertight - at least that's the argument the resident's attorney would make. So how can the landlord, who has the duty to maintain the shed, abdicate responsibility for not maintaining it in a secure manner?

Accordingly, to have a more enforceable release agreement, I submit that landlords should also have an agreement providing that: (a) landlord does not have a duty to maintain, inspect, or secure it; (b) landlord does not warrant or guarantee that the shed is waterproof, or free from mold and mildew; (c) before use, the resident should assure himself/herself that it is suitable for storage of the specific contents intended to be stored there; and (d) that the resident covenants and agrees to maintain the exterior and interior of the shed for the duration of the tenancy. Only then can you expect a full release and hold harmless clause to be effective, since by signing, the resident is now making an informed decision about the scope of responsibilities under the agreement going forward.

So the take-away here is that if you have not addressed these issues for park-owned structures in the lease, rental agreement and/or rules, you should do so upon turnover of the space. Until then, it would likely be difficult to shift responsibility onto a resident, when it was not expressly bargained for at the inception of the tenancy.

Similarly, even though a resident builds the structure, you may want to address these issues in a separate written agreement before the structure is built. In addition, you want to make sure that the construction of a tenant-built structure conforms to all applicable building codes and ordinances, including, where applicable, the taking out of one or more building permits. And if the resident hires a contractor, you will want to use MHCO Form No. 52.

And importantly, you will want to address whether the resident has a duty to remove it upon sale of the home. Alternatively, you can provide that the landlord reserves the right to make that decision if/when the resident who built it gives notice of intent to sell or remove the home. And if it stays, you'll want to have an agreement with the new resident, addressing the issues described above.

Lastly, if the structure is something built for children to play on, e.g. swing sets, ladders, slides, etc., I strongly recommend that you require the resident who built it, take it with them. Under no circumstances do you want to lease or rent space to another resident with this apparatus there. It creates too much liability for management, and even if it remained after a resident left, I would remove it before permitting possession by new residents with small children.

Answer. Subject to the caveat that I am not a First Amendment lawyer, here are my thoughts:

The First Amendment to the U.S. Constitution provides:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Section 8 of the Oregon Constitution provides:

No law shall be passed restraining the free expression of opinion, or restricting the right to speak, write, or print freely on any subject whatever; but every person shall be responsible for the abuse of this right.  (Emphasis added.)

How these two laws have been legally interpreted, and the scope of each one vis–à–vis the other, is beyond my skill-set.

First, there is only one statute in Oregon’s landlord-tenant law that addresses this issue, and it is broadly crafted to permit expression:

90.755 Right to speak on political issues; limitations; placement of political signs. 

(1) No provision in any bylaw, rental agreement, regulation or rule may infringe upon the right of a person who rents a space for a manufactured dwelling or floating home to invite public officers, candidates for public office or officers or representatives of a tenant organization to appear and speak upon matters of public interest in the common areas or recreational areas of the facility at reasonable times and in a reasonable manner in an open public meeting. The landlord of a facility, however, may enforce reasonable rules and regulations relating to the time, place and scheduling of the speakers that will protect the interests of the majority of the homeowners.

      (2) The landlord shall allow the tenant to place political signs on or in a manufactured dwelling or floating home owned by the tenant or the space rented by the tenant. The size of the signs and the length of time for which the signs may be displayed are subject to the reasonable rules of the landlord. [Formerly 91.925; 1991 c.844 §18; 1995 c.559 §40; 2009 c.816 §17] (Emphasis added.)

So as to political signs, it appears that pro- and anti-Trump signs are clearly protected. What about pro-life signs, which could be viewed as a political statement? Same question for gay rights. Confederate flags might be regarded as political, but I believe in this day and age of hypersensitivity, it has become viewed less as emblematic of southern heritage, and more as having racial undertones. In short, community management might have an easier chance of prohibiting the flag than a sign.

What is interesting in Oregon’s law is that the rights of expression, speech, and press, are modified by the clause “but every person shall be responsible for the abuse of this right.”  Again, I do not know how this law has been judicially interpreted, but clearly, it suggests that the freedom is balanced against an abuse of the right.

In this vein, ORS 90.740(4)(j) provides that one of a resident’s legal duties in a community is to:

Behave, and require persons on the premises with the consent of the tenant to behave, in a manner that does not disturb the peaceful enjoyment of the premises by neighbors.

So, my take, is the following:

• Each situation must be viewed on a case-by-case basis, depending not only upon the signage, but the demographics of the community itself. In other words, certain signs in certain communities may not be viewed as provocative or inflammatory, and therefore be permissible. 
• However, here’s the rub: All it takes is one person with a provocative sign that offends an entire community, to enlist the aid of the ACLU, and you may quickly confront the reality of the legal cost for protecting the “peaceful enjoyment” of the rest of the community.[1]

So in the final analysis, my belief is that the “peaceful enjoyment” language of ORS 90.740(4)(j), protecting the community’s residents as a whole, coupled with Oregon’s constitutional protection against abuse of the right of free speech, together provide a legitimate basis for prohibiting non-political signage that could be deemed offensive to the rest of the community. However, such proscriptions should only be broadly spelled out in management’s rules, rather than expressly deeming certain topics permissible, and others impermissible. For example:

“Residents shall not post on their spaces or homes, signs, emblems, flags, slogans, or similar expressions, which, by their nature, could be viewed as offensive or inflammatory to other residents, and thereby interfering with their peaceful enjoyment of the Community.”

However, if the signage relates to political candidates, campaigns, politicians, and legislation, etc., ORS 90.755 appears to give residents broad rights, subject only to the size of the signage and length of time it may appear.  Lastly, I would believe that the use of profane or vulgar images or text in political signs may be reasonably prohibited by management.

[1] This is why community management should carry sizeable liability insurance.

Fair housing law bans not only sexual harassment, but also harassment based on race or color, and other protected characteristics. As a general rule, community owners may be liable for illegal harassment by managers or employees, when they knew or should have known about it but failed to do enough to stop it. Moreover, the FHA makes it unlawful to intimidate, threaten, or interfere with anyone exercising his fair housing rights.

Take all necessary steps to prevent—and address—discrimination or harassment at the community. You don’t have only your employees or staff members to worry about—you could face liability for tenant-on-tenant harassment under certain circumstances. Under HUD regulations, communities may be liable under the FHA for failing to take prompt action to correct and end a discriminatory housing practice by a third party, where the community knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct and end a discriminatory housing practice by a third party depends upon the extent of your control or any other legal responsibility you may have with respect to the third party’s conduct.

Example: In November 2019, HUD announced that it reached a $80,000 settlement to resolve allegations that the owners and manager of a Georgia community ignored complaints by African-American residents of repeated racial harassment by white neighbors.

Three African-American residents filed the HUD complaint, alleging that the community refused to investigate and address their claims that their white neighbors subjected them to racial harassment and verbal and physical assaults, including attacks by dogs. The community denied the allegations but agreed to the settlement requiring payment of $20,000 to each of the three residents and to create a $20,000 fund to compensate other residents who may have been subjected to racial harassment.

“No one should ever have to face threats or be subjected to physical violence in the place they call home because of their race,” Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement. “The agreement we’re announcing today is a reminder to housing providers everywhere that HUD is committed to ensuring that they meet their obligation to comply with the nation’s fair housing laws.”

UPDATE:

Tenant-on-Tenant Harassment

In the January 2020 lesson, Fair Housing Coach highlighted an appeals court ruling that a New York community could face liability under the FHA for failure to stop an alleged campaign of racial harassment against an African-American resident by his neighbor. In recent action, the appeals court agreed to a rehearing in the case; oral arguments are scheduled for September 2020.

In his complaint, the resident alleged that his next-door neighbor engaged in a months-long campaign of racial harassment, abuse, and threats against him. According to the resident, he contacted police and notified management about the neighbor’s abuse at least three times, but management failed to intervene. Ultimately, the neighbor was arrested and pleaded guilty to aggravated harassment.

The resident sued, accusing the community of violating fair housing law by failing to take action to address a racially hostile housing environment created by his neighbor. A district court ruled against the resident and dismissed the case.

After a series of proceedings, a panel of the appeals court reversed, ruling that the resident could pursue his claims against the community for intentional discrimination under the FHA by failing to do anything to stop the neighbor from subjecting him to a racially hostile housing environment [Francis v. Kings Park Manor, Inc., New York, December 2019].

Answer:  In a word – No.  Or, to be more precise, as discussed below, if you do not renew the lease, it will automatically become a month-to-month tenancy on the same terms as the lease.  In other words, your non-renewal will not result in forcing the tenant to vacate the space.

When this law was first being discussed, this issue was addressed.  Prior to enactment, there was an open question whether fixed term tenancies [i.e. leases - those with definite start and ending dates] were even legal.  From the tenants’ perspective, under the manufactured housing landlord-tenant laws, since a landlord cannot terminate a tenancy “without cause,” a lease that expires without renewal is the same thing i.e. termination without cause.  Accordingly, ORS 90.545was enacted, which provided protections to tenants against the possibility of unilateral nonrenewal.

Is this unfair to a landlord, such as yourself, when an applicant is approved, ostensibly based upon a satisfactory application, who then becomes the “Tenant From Hell?”  Some would say that the landlord’s best protection is at the front end of the business relationship, since he/she is given a full and complete opportunity to set out all screening criteria and performing a thorough vetting of the applicant’s financial, rental, and criminal background. But once the landlord approves the applicant – presumably because he/she passed the vetting process - they have the right to remain at the space, so long as they don’t commit certain material violations, such as nonpayment of rent, breach the rules, rental agreement, state law, or commit certain actions outrageous in the extreme.   

Here is how the fixed term tenancy law, found at ORS 90.545 and 90.550, works:

• At least 60 days prior to the ending date of the lease term the landlord must provide to the tenant a proposed new lease, together with a written statement that summarizes any new or revised terms, conditions, rules or regulations.
  •  The new rental agreement may include new or revised terms, conditions, rules or regulations, if:
    • They fairly implement a statute or ordinance adopted after the creation of the pre-existing lease; or
    • They are the same as those offered to new or prospective tenants at the time the new proposed lease is submitted to the tenant and for the preceding six-months prior to submission period;
    • If there have been no new or prospective tenants during the six-month period, the new lease terms must be same as are customary for the rental market; and
    • They are consistent with the rights and remedies provided to tenants under ORS Chapter 90; and
    • Do not relate to the age, size, style, construction material or year of construction of the manufactured dwelling [or floating home] contrary to ORS 90.632 (2);[1] and
    • Do not require an alteration of the manufactured dwelling [or floating home] or alteration or new construction of an accessory building or structure.
• The tenant may accept or reject a landlord’s proposed new rental agreement at least 30 days prior to the ending of the term by giving written notice to the landlord.
• Note that if a landlord fails to submit a proposed new rental agreement as allowed, the tenancy renews as a month-to-month tenancy under the same terms as the prior lease, except that the landlord has the right to increase the rent unilaterally, pursuant to ORS 90.600.
• If the tenant fails to accept or unreasonably rejects a landlord’s proposed new rental agreement, the fixed term tenancy terminates on the ending date without further notice and the landlord may take possession through the eviction process, assuming the tenant does not vacate the space and remove the home.
  • However, if the tenant surrenders possession of the space prior to the filing an eviction, he/she has the right to enter into a written storage agreement with the landlord, and then has the same rights and responsibilities of a lienholder during an abandonment, i.e. pay storage fees, maintain the space, and sell the home within six months [rather than 12 for lienholders].  See, ORS 90.675 (19).

Conclusion.  My suggestion is that if your tenant is continually causing problems, paper your file thoroughly, showing the efforts you’ve made to work with that person. If there are complaints from other residents, document them. Eventually, the tenant will slip up – doing something that gives you the basis for an eviction.  If he is a chronic late payer, consider using the three strikes law, found in ORS 90.630(8). Then find a good landlord attorney and discuss the best method to evict the tenant.  You will then be armed with good evidence for the judge or jury to show that you walked the extra mile with this person, but they simply refused to cooperate.  And remember that although there are restrictions on the contents of the new lease you offer, it may contain provisions that will give you a better foundation for the eviction.  Good luck!

[1] This specific protection was important to the tenant lobby, since until it was enacted, there was an open question as to whether landlords could impose as a condition upon accepting an applicant who was purchasing an older home, that it must be removed upon subsequent resale. In addition, ORS 90.632 was enacted which permits landlords to expressly require that homes be repaired due to damage or deterioration.

Editor's Note:  The following article was provided by Northwest ark Brokerage. For more information on manufactured home communities for sale or an assessment of your community call Bill Jackson of Northwest Park Brokerage at (206) 652-4100 or email Bill at: billj@nwparks.com.  

*****

Everybody is wondering what type of year 2020 will shape up to be.  Elections, international unrest, political infighting, tariffs, taxes and a laundry list of other issues has kept everyone guessing.  None of us know what the future will bring, but in the housing industry two things will help us stay healthy and grow steadily – low interest rates and a strong economy.  

CAP RATES. From what we have seen recently CAP rates can vary greatly, depending on the age and quality of the park/community and its location. 

Low interest rates combined with rising Net Operating Incomes are minimizing CAP rates in most areas of the country.  Coastal metropolitan areas account for lower CAP rates than other regions, where quality, larger communities are demanding CAP rates in the 4% range, and some have been sub-4%.  Buyers target high caliber parks in this CAP rate range, and they sell within weeks of listing.  This is something we haven’t seen before but there is limited inventory available for buyers targeting quality larger communities, and as private housing costs rise out of reach for many residents, demand for manufactured housing communities will continue to compress CAP rates.  If you are a potential seller of a larger quality community, we would love to talk to you.  We have the buyers.  Older communities in rural areas on septic systems and wells have seen CAP rates as high as the 7% range, but if they can be converted to central, local utilities they have a potential and there is still a strong demand for these properties.

INTEREST RATES.  In December the Federal Reserve signaled that it wants to hold off on further interest rate cuts for a while.  At its last meeting the Fed kept the federal funds rate between 1.5% and 1.75%.  Fed Chair Jerome Powell has been in his current position since November 2, 2017 and he expects that the economy will remain stable, but again emphasized that the future path of Fed actions will depend on many different possible events.  

The bond market has also been very stable, as rates have changed very little over the past few months.  The yield curve – the gap between rates on short-term and long-term bonds has maintained its historically normal upward sloping line.  This indicates that investors are not worried much about a possible recession occurring this year or next. 

If the economy slows the Fed will have a much smaller margin of error.  If market turmoil develops (think war or trade challenges) then the Fed will likely cut rates at least one more time.  However, that could result in the Fed gradually raising rates in 2021 according to a variety of economists and prognosticators. 

THE ECONOMY. Most economists seem to agree that the 2020 economy will look much like the 2019 economy.  Long gone are the days of 2007-2009 where real estate foreclosures and bank closures (remember Washington Mutual?) where the daily headline.  Today businesses are by-in-large doing well, unemployment is low, liquidity is plentiful, the stock market is steadily setting new records and many economists believe things will actually get even better in 2021.  The biggest area of uncertainty remains international trade and if that clears up 2020 might even be better than expected.

The “demand side” of the economy will be a little subpar, giving a small break to the supply side.  But when spending improves the supply limitations of low labor force growth and slow productivity growth will diminish, leading to increasing demand for products and services and a demand-supply balance.  Households are growing their incomes slightly more than they are growing their spending.  As a result, the savings rate is moving slowly upward.  That’s ideal, as a higher savings rate puts the economy on a more sustainable path.

Finally, the growth of income and spending has not been as great in 2019 as in 2018 because job gains are lower.  That results from the tight labor market.  Businesses would hire more if they could find additional qualified workers.  Wages have not risen much, so the income growth rate is lower than back in 2018.  However, the jobs picture is solid, leading to good incomes and a positive attitude among most consumers.  Look for them to continue growing their spending moderately in 2020 and into 2021.

Oregon Legislature

Senate Bill 586 Becomes Law on January 1, 2020

When Senate Bill 586 became law on 01/01/20 it amended several landlord-tenant laws.  Most industry representatives feel the new mediation aspects of this Bill are the most important. Notably, the provision that requires mandatory mediation if either the landlord or the tenant initiates a request for mediation.  They are most likely to be disputes relating to compliance with the rental agreement or modifications in the rules or regulations within the community. 

Interestingly, there are a number of types of disputes excluded from mandatory mediation, unless both parties agree otherwise.  They include facility closures, facility sales, rent increases, rent payments and/or amounts due, unauthorized occupants, disputes involving domestic violence or sexual assaults and disputes arising from termination of tenancy under ORS Chapter 90 (Oregon’s Residential Landlord-Tenant Law). 

If a community has a mediation policy, it must include a detailed process and format to initiate mediation, the names and contact information for mediation services made available by the Housing and Community Services Department, a clause stipulating that all communications during the mediation process be held in strict confidence, and it may include specific disputes between the landlord and one or more tenant, or a dispute between two or more tenants. 

All parties must participate in the mediation by making a good faith effort to schedule mediation within (30) days after it is initiated, attending and participating in the mediation process and cooperating with reasonable requests of the mediator. 

Californians Are Moving North

A new study by United Van Lines shows California is ranked among the top 10 of “most moved from states” last year, coming in at number 7.  One of the hot spots people are moving to?  Boise, Idaho.  According to the Boise Valley Economic Partnership, in a span of about five years approximately 7,200 Californians have moved to the Boise area.  And if you have visited Boise recently you can attest to this fact by navigating their increasing crowded roadways, bustling restaurants and newly constructed hotels, motels and shops. 

Forbes Magazine recently named Boise as the fastest growing metro area in the US, crediting the area’s robust tech sector and job growth.  The median home price is Boise is $332,698.  In San Francisco?  $1,325,000. 

Gas prices in Boise are a dollar less than in California and most of the other typical items that make up a family’s cost of living are all significantly less in Idaho.  Also, manufacturers are attracted to the Treasure Valley because of the favorable climate and geological attributes.  Boise is not an area where floods, earthquakes, tornados and hurricanes are a threat, and large companies find that very appealing when investing in large brick-and-mortar factories, data centers and distribution hubs.

Oregon is experiencing the same migration, but it’s been going on much longer.  Californians disproportionally move to southern and central Oregon when compared to other parts of the country.  Southern Oregon has been growing at a rate of about 5% per year, but 12% of net migration is from California.  Most other Californians move to the Portland area and the Willamette Valley.  On average 39,320 Californians move to Oregon annually.  But an average of 19,523 Oregonians also make the move south, leaving Oregon with a net gain of 19,797 new residents from California every year.  Also, in central Oregon, Bend has seen a net gain in population from Washington state in recent years.  This is unusual, but in each of the past few years, central Oregon has gained population from all parts of Washington including the Seattle area and SW Washington. 

THE NORTHWEST BENEFIT

All of this data bodes very well for the housing industry and in particular the manufactured housing industry.  There is a severe housing shortage in Oregon and the Boise, Idaho region, as well as parts of Washington state.  Manufactured housing can provide a quick, affordable, well built and energy efficient housing solution to all these former Californians looking for a better life up north.  This is evidenced by recent reports of increased new and pre-owned manufactured home sales and production. Retailers and manufactures report solid 4th quarter sales and production results in Oregon, Washington and Idaho. 

CrossMod – A New Class of Manufactured Home

The Manufactured Housing Institute – MHI – recently introduced the official name for the new class of manufactured homes.  “CrossMod is a reflection of the industries commitment to elevate the industry by bringing the quality and innovation that can be found in all off-site built housing, including Manufactured Homes, Modular Homes and now CrossMod homes, to even more home buyers” MHI said in a prepared statement.   The term was developed with involvement from multiple professional agencies and teams of industry participants to serve as a mark of distinction for this new HUD code home category. 

“As housing affordability challenges continue to grow, families of all economic backgrounds are searching for attainable, high-quality homes that do not create an unsustainable financial burden.  CrossMod homes are place on a permanent foundation, qualify for conventional financing, help challenge exclusionary zoning ordinances and are virtually undistinguishable from higher-price, site-built options.  Best of all, this new class of off-site built home can be appraised using comparable site-built homes.” 

MHI partnered with market research firm Landor to test a variety of names directly with over 1,000 consumers.  Their impression of the term CrossMod included “modern and sleek”, “combines different models and styles”, “sounds secure and safe” and is an “innovative and smart home”  While just 9% of respondents said they would consider purchasing a manufactured home, 46% said they would purchase a CrossMod. 

Find out more at www.manufacturedhousing.org  

Financing a Manufactured Home Community

The latest interest rates for manufactured housing community financing or refinancing on West Coast remain at or near these rates, which continue to fluctuate and have remained steady in the past few weeks.  Here are some of the lowest rates available for $1 - $10 Million:

Three-year fixed 4.40%, five-year fixed 4.161%, seven-year fixed 4.255%, ten-year fixed, 4.366% and fifteen-year fixed at 4.322%.  ARM’s are as low as 2.9%.  Rates can be found as high as 5.483% for 20-year fixed rate loans and underwriting requires complete and detailed historical operation data. Rate locks are available up to 90-days prior to close in most cases. 

The larger REIT’s and investment funds continue to offer and expand a variety of tax-saving and tax-deferred structures to sellers interested in something other than a 1031 tax-deferred “up leg” exchange or an all-out cash transaction.  Resident purchases are also on the rise.

4th Quarter Production Rises

According to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD) and verified by the Manufactured Housing Association for Regulatory Reform (MHARR), HUD Code manufactured home production increased in October of 2019 according to the latest reports.  Just released statistics indicate that HUD Code manufacturers produced 9,415 homes in October 2019, up a strong 9.6% from the 8,588 new HUD Code manufactured homes produced during October of 2018. 

On a cumulative basis industry production for 2019 totaled 79,912 HUD Code homes, a decline of 3.6% from the 82,942 HUD Code homes produced during the same period in 2018. While this marks a decline in year-over-year production and shipments and margin has narrowed and industry experts are predicting stronger production and shipment numbers in 2020 as a result of newly introduced products and increased consumer awareness of the affordability and quality of today’s manufactured home. 

For more information on manufactured home communities for sale or an assessment of your community call Bill Jackson of Northwest Park Brokerage at (206) 652-4100 or email Bill at: billj@nwparks.com

Make sure that your contractor is licensed and bonded with the Construction Contractor's Board ("CCB")

The person submitting a bid to perform work at the park should provide you with their CCB number. The number should appear on their business card and on any proposal to perform work. Do not accept an oral representation that a person is registered with the CCB - get the number and then check the contractor out with the CCB. Using the number will allow you to verify whether the person is registered, and determine whether there are any open claims against them. This can be important, since even though CCB licensees must be bonded (in the amount of $15,000 for general contractors and $10,000 for specialty contractors[1]), too many claims at one time can deplete the bond. Additionally, licensing requires that the contractor maintain public liability insurance in the amount of $500,000 for general and specialty (non-residential) contractors.[2]

Additionally, should the work not be performed according to industry standards, if the worker is licensed, you will have up to one year within which to bring a claim against him through the CCB. If the CCB determines that correction must be made, it will require that the licensee perform the work. If the licensee fails or refuses to do so, you may file a claim for the cost of repair against his bond

Make sure your contractor provides proof of worker's compensation insurance.

"Employer" means any person... who contracts to pay a remuneration for and secures the right to direct and control the services of any person. ORS 656.005(13)(a). Thus, if you hire someone to perform certain work, say, to repair or re-roof the clubhouse, and they incur an on-the-job injury, you would likely be deemed to be the "employer" if they have no insurance If the injured worker received medical treatment, Oregon's State Accident Insurance Fund ('SAIF") would send you the bill for reimbursement. Depending upon the injury, this could amount to thousands of dollars.

The best way to protect against using an uninsured worker is to make a habit of only hiring contracting companies who employ their own labor force. Generally, the larger the company, the less risk there is that they are "going bare," i.e. not paying their workers compensation insurance premiums. The expense

of such insurance can cause some small contractors to forego the cost, but represent to consumers that they do have such insurance. Verification is the best policy.

Avoiding Disputes Regarding Unpaid Liens.

If you have work performed through a general contractor, i.e. he or she is employing one or more subcontractors, it is imperative that you make sure the subcontractor(s) are paid on time. If you pay the general, but the general does not pay the sub, the sub may still retain lien rights against you. If the general contractor becomes insolvent, or otherwise fails to pay the sub, the park owner could be placed in the position of having to pay the sub to avoid the filing of a lien on the property - even though the general contractor has already been paid for the same work.

There are several ways to keep this result from occurring: (a) pay the sub directly and obtain a lien release; (b) pay the general when he or she provides you with a lien release from the sub; (c) never pay the general beyond the value of the work performed (i.e. don't let the general be paid for work that has not yet been done) (d) make sure you verify that the payment is for work that has actually been done on the job; (e) pay attention to the Notice of Right to Lien forms that you receive, so you know which subs would actually have valid lien claims.

Similarly, you want to make sure that your general contractor stays within his budgeted amount for the job, and does not submit for payment beyond the agreed-upon amount, or for work that has not yet been performed or supplies that have not been delivered.

Selection of Contractors.

As with the selection of all professionals, the best way to select a good contractor is by word of mouth - i.e. referrals from satisfied customers. This is the best advertising one can have. While there is nothing wrong with starting out with the Yellow Pages, it is prudent to ask any selected contractor for a list of references. Check a few of them out. Questions to ask would include (a) Did the contractor do the promised work? (b) Was the work done on time and in a professional manner? (c) Were there any hidden costs, charges, expenses, or add-ons that weren'tdiscussed in advance? (d) Would the customer use them again?

And most important, don't accept the first bid that you receive. Some contractors do not expect to get all of the jobs they bid - so bids can vary wildly from company to company. When you receive a bid from a contractor you may be interested in using, have a conversation with him or her, just to make sure their approach to the project is the same as yours, and that the two of you are compatible.

Never hire a contractor without a written contract. It doesn'thave to be fancy - but it should be professional looking. It should cover (a) the scope of the work; (b) the price of the job; (c) the completion date[3]; (d) any warranties for the work to be performed (e.g. one year for all workmanship and material)[4]; (e) the payment schedule.[5]

One last thought: While mandatory mediation and arbitration is favored by many lawyers and can be a useful tool in the resolution of disputes, if there is such a clause in the contract and a dispute arises, the contractor may prevent CCB involvement if they give timely notification to the CCB. Although this is not necessarily bad - some alternative dispute resolution processes are very good - park owners should keep it in mind when reviewing the terms of the contract. If you want to retain CCB involvement in the event of a dispute, you may not wish to agree to an alternative dispute resolution provision in the written contract - and visa versa.

[1] ORS 701.085 (2), (3).

[2] ORS 701.105 (a), (b), (c).

[3] Most contracts will contain a force majeur clause, i.e. a provision saying that they will not be responsible for delays relating to weather, war, strike, acts of God, change orders, or matters outside of their control.

[4] Even if there are no express warranties, the requirement that the work be performed according to industry standards, still applies and may be enforced by the CCB.

[5] It is prudent to have a hold-back arrangement so that a final percentage is paid upon completion. You always want your payments to be slightly behind the completed work, so you can see what you're getting before payment.

How Age-Restrictive Rules Can Violate the Fair Housing Act: Lessons From the Plaza Mobile Estates Case

The Plaza Mobile Estates Case

United States of America v. Plaza Mobile Estates, et al., 273 F. Supp. 2d 1084 (C.D Cal. 2003) is a federal district court decision which is a cause for concern to all landlords, particularly owners of manufactured home communities. The United States and residents of several mobilehome parks sued the owners and managers, seeking a declaration that various park rules violated the FHA based on familial status, and sought injunctive relief to preclude any further publication or enforcement of the discriminatory rules. The court found that the rules at issue were discriminatory on their face because they treated children, and thus families with children, differently and less favorably than adults-only households.

The decision was reached by the district court, not the Court of Appeals, and therefore is not binding precedent on federal appellate courts, or state courts. However, it is a published decision which can be cited as authority in federal district court litigation, particularly within the central district of California.

Rules Found Discriminatory

The court invalidated the “preambles” to the rules of several of the defendant mobilehome parks which stated that the park was “designed and built as an adult facility” or “designed as an ADULT facility.” [Emphasis added]. The court found that these preambles were clear examples of illegal “steering.” The court recognized that while the preambles were not outright refusals to sell or rent to families with children, they clearly suggested a preference for adults only and discouraged families with children from applying for residency.

The specific age restrictive rules invalidated by the court fell into three categories: (1) absolute prohibitions; (2) adult supervision requirements; and (3) hours of access restrictions.

The absolute prohibitions included those rules that: (1) prohibited all children under 18 (or 21) years old from using the billiard room and from riding bicycles; (2) prohibited all children under 16 (or 18) years old from using the therapeutic pool; (3) prohibited all children under 14 (or 18) years old from using the sauna or jacuzzi; (4) required all children under 8 years old to be confined to rear fenced yard of family residence; and (5) prohibited all children from playing on park streets and any other common areas.

The court found that while the health and safety of the children and other residents of the park were legitimate concerns, these absolute prohibitions were not the least restrictive means to achieve such ends. It noted that any concerns that the community owners may have had were not necessarily linked to age, and any concerns about problem behavior could be addressed with the use of non-age related rules. The court held that requiring adult supervision rather than imposing an absolute ban was clearly a less restrictive means of achieving the park’s legitimate goals. However, the court also invalidated a number of adult supervision requirements.

Adult supervision requirements invalidated by the court included those rules that required adult supervision for: (1) children under 18 years old using recreational facilities (recreation building and/or clubhouse), swimming pool, sun deck, saunas and laundry room; (2) children under 14 years old using recreational facilities, swimming pool and tennis courts, and riding bicycles; (3) children under 10 years old using recreational facilities; and (4) all children walking around the park.

As with the absolute prohibitions, these adult supervision requirements were likewise found not the least restrictive means to achieve any health and safety objectives. The court commented that the park’s concerns could be addressed by the use of rules, and that bicycle and pool safety would be better served with a proficiency requirement.

The hours of access restrictions included those rules that prohibited use of the swimming pool and sundeck to children under 18 years old except during specified hours. The court summarily rejected defendants’ attempt to justify these swimming pool hours restrictions as “equitably accounting for the interest of tenants,” noting that this clearly was not a compelling interest. The court further noted that the interest or desire of the adult tenants to discriminate against children could never justify such discrimination.

Compelling Business Necessity Standard

Having found that the age-restrictive rules were discriminatory on their face, the court held that the burden passed to the community owners to justify the rules. The standard applied by the court was whether the owners had a legitimate justification for the discrimination rising to the level of a compelling business necessity as to which the least restrictive means to achieve such end was used. Both criteria, compelling business necessity and least restrictive means, must be satisfied to defeat the claim of unlawful discrimination. The court in Plaza Mobile Estates found that the owners had failed to make this showing.

HUD Approval: No Defense

What is particularly distressing about the Plaza Mobile Estates opinion is that the court invalidated rules which had been approved as part of a Conciliation Agreement entered into with the intervention and approval of HUD. The owners contended that HUD’s approval of the Conciliation Agreement required the conclusion that the rules approved thereunder did not violate the FHA. The court noted that it is the court, not HUD, that is the final arbiter in determining whether the rules are in compliance with the FHA. It therefore appears that a community owner cannot even rely upon the opinion of HUD or the state enforcement agency as a defense against a claim of discrimination.

How Community Owners Can Protect Themselves

In view of the Plaza Mobile Estates decision, landlords need to carefully review their rules and regulations and revise them to eliminate rules which appear to discriminate against families with children. Particularly suspect are rules which expressly refer to children, or persons under age 18. Other rules, which may not contain an express age restriction, are still subject to attack if they have a disparate impact on persons under age 18 or tend to “steer” toward an “adult only” preference.

For instance, community advertising and residency documents obviously must not contain discriminatory phrases and language, such as “adults only,” “retirement community,” or “community for active adults.” In “all-age” communities, there should not be any “adults only” restrictions on the use of common areas, recreational facilities or equipment (except where authorized by state law or regulations). Access to the community’s facilities should not be prohibited to children, and unreasonable supervision requirements must be avoided.

Also, review signs posted throughout the community (whether in the clubhouse or the laundry room, by the swimming pool, or along the streets) for discriminatory words or phrases.

For approval of new tenants, have written policies and guidelines and follow them consistently. Always offer an application to a potential resident, and keep those applications you reject (as well as those you accept).

In speaking to prospective residents, avoid words which might discourage a family with children; avoid “steering” someone to another community or to limited areas within your own community; do not ask about the ethnic, religious or national background of any applicant; do not discuss the problems which a disabled person may encounter in a manufactured home or in your community. Certain words should be avoided, such as: compatible (as in, “Your type is not compatible with our community”), prefer (as in, “We prefer married couples”), discourage (as in, “We discourage children because we have so many elderly residents”), or suitable (such as, “A mobilehome park is not suitable for small children”).

Even if you have adopted good policies and procedures and have trained your management team to be aware of fair housing principles, there is the chance that the policies are not followed. Make sure your staff does follow through!

The following are some additional suggestions:

--Always take an application from any interested person.

--Deal the same with all prospective residents: be pleasant, courteous and non-judgmental. Answer all questions.

--Keep a record of each inquiry and try to obtain as much information as possible about each person. Also, keep all tenancy and application records for at least two years.

What age-restrictive rules are still permissible? At least in California, it is probably still permissible to require children under the age of 14 to be supervised by an adult (but not specifically a parent) when using the swimming pool or spa pool. This is based upon section 65539 of Title 22 of the California Code of Regulations (“CCR”), which provides that, where no lifeguard service is provided, a warning sign shall be placed in plain view which shall state, “Children Under the Age 14 Should Not Use Pool Without an Adult in Attendance.” Interestingly, even this code section only says “should,” not “shall.” Local counsel should be consulted regarding similar provisions in other states.

For years in California, the CCR language has been used by analogy to require adult supervision for the use of other recreational facilities. It is no longer safe to do this. The community may still be able to require adult supervision where needed to minimize risk of injury or death in situations in addition to the swimming pool and spa pool situation referenced in the CCR. Again, the adult supervision cannot be restricted to a parent; any responsible adult can perform the required supervision.

A park may be able to prohibit an activity which is more likely to be engaged in by children than by adults if there is an express ordinance in the municipality where the park is located prohibiting this activity. A primary example of this would be a municipal ordinance prohibiting skateboarding.

It must always be kept utmost in mine that the basic test is that any age-restrictive rule or regulation must satisfy both criteria stated by the Plaza Mobile Estates court: There must be a compelling business necessity for the policy, and the rule must be the least restrictive means to achieve that policy. This is a standard which is difficult to satisfy. Community owners should consult with legal counsel in reviewing and revising their rules to minimize the risk of liability under state and federal laws prohibiting discrimination against families with children.

Robert G. Williamson, Jr. and Linda J. Lester are attorneys with Hart, King & Coldren in Santa Ana, California. They specialize in manufactured housing issues.

Answer. Notwithstanding the fact that you do not have anything in your Rules or Rental Agreement prohibiting the use, growing, or selling marijuana does not mean you cannot prohibit the activity. Granted, it would be far better if you had something in the park documents about this topic, but the still require that residents obey state and federal laws, rules, and ordinances.

Here is the short version of my answer:

Under the Federal Controlled Substances Act, 21 U.S.C. _ 801, et seq. ("the Act"), it is illegal to manufacture, distribute, and possess marijuana, also known as "cannabis. Under the Act, possession of marijuana, even when used for medical purposes, is a violation of Federal law.

In Oregon, medical use of cannabis is legal, subject to the limitations set forth in ORS 475.300 to 475.342. Commencing on July 1, 2015, subject to certain limitations and restrictions, the recreational use of marijuana also became legal.

Federal law supersedes state law where there is a direct conflict between these laws. This means that even though Oregon permits medical and recreational use of marijuana, and marijuana products, Federal law controls, and these activities remain illegal. (See, Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, 348 Ore. 159, 230 P.3d 518 (2010)).

Accordingly, find the sections in your Rules and Rental Agreements requiring that residents obey the law. Include it in a 30-day notice under ORS 90.630(1)(a), which provides:

'_the landlord may terminate a rental agreement that is a month-to-month or fixed term tenancy for space for a manufactured dwelling or floating home by giving to the tenant not less than 30 days' notice in writing before the date designated in the notice for termination if the tenant: (a)Violates a law or ordinance related to the tenants conduct as a tenant, including but not limited to a material noncompliance with ORS 90.740 (Tenant Obligations);

ORS 90.740(3) (Tenant Obligations) provides:

Behave, and require persons on the premises with the consent of the tenant to behave, in compliance with the rental agreement and with any laws or ordinances that relate to the tenants behavior as a tenant.

You may also cite ORS 90.740(4)(j) in the 30-day notice. It provides that tenants must:

Behave, and require persons on the premises with the consent of the tenant to behave, in a manner that does not disturb the peaceful enjoyment of the premises by neighbors.

You should then enact a rule change, and institute a policy that prospectively prohibits the use, cultivation and selling of marijuana and marijuana products.