Effective July 14, 2019, the State of New York greatly expanded tenant protections with a large package of bills covering topics ranging from rent control to eviction restrictions to rent-to-own contracts for manufactured homes (MH). A majority of the law is aimed at protections for apartment renters in New York City and throughout the state. In addition to those expanded protections, the new law also creates new and expanded protections for owners and tenants of manufactured homes. Despite there being only one MH park in New York City, MH parks fill a vital affordable housing need across much of the rest of the state. The major impact of these new MH-related laws will mostly be felt by the owners and managers of MH parks. Additionally, the impact will be felt by investors, developers, or any other party looking to purchase an MH park with the purpose to change the use of the MH park to something other than MH site rentals.
The new protections for owners and tenants of MH include:
- MH park owners must provide MH owners and tenants at least two years of notice before beginning eviction proceedings if the MH park’s use will be changed to something other than for MH site rentals.
- Up to a $15,000 stipend per MH, if the MH park is being sold and the park’s use will be changed to something other than for MH site rentals.
- MH park owners must provide with each lease a copy of a document, produced by the New York Commission of Housing and Urban Renewal, detailing an MH owner’s and tenant’s rights.
- MH owners must be offered an annual lease for site rental, whether or not their site rental account is in good standing. Previously, New York law only required that an annual lease be offered if the MH owner’s rental account was in good standing.
- Late fees are now limited to 3% of the delinquent payment, and late charges may not be compounded or considered as additional rent.
- Previously, an MH park owner could collect attorneys’ fees from an MH owner incurred because of the MH owner’s breach of the lease by considering the attorneys’ fees as additional rent. This practice is now barred. MH park owners now may only receive attorneys’ fees if awarded by a court.
- Annual rent increases are now capped at 3%, unless the MH park owner can provide justification under the law for an increase above that amount. Despite this, in no case may an MH park owner increase the rent by more than 6% annually, unless specifically granted emergency relief by a court.
- Previously, New York law granted MH owners the ability to purchase the MH park from the MH park owner, if the park owner intended to sell the park to a third party that proposed to change the use of the MH park for a purpose other than site rental. This right of the MH owners to purchase the MH park has been expanded to make it easier for MH owners to purchase the park.
A major new addition to the law are provisions focused on rent-to-own contracts between MH park owners and MH owners. According to the new provisions, a rent-to-own contract is any agreement between an MH park owner or operator and an MH renter that provides that after a specified term or other contingency the MH renter will take ownership of the rented MH. The portions of the law detailing the rent-to-own agreements include many new provisions, including the provisions highlighted below:
- If an MH park owner is selling an MH in a rent-to-own agreement, they must possess documentation of ownership for the MH.
- Every rent-to-own contract must be in writing and must include, if applicable, various required information as provided by the new law. The required information includes provisions that the rent-to-own purchaser cannot be charged any additional fees to transfer ownership at the end of the lease and title transfers at the end of the rent-to-own agreement shall be free of superior interests, liens, and encumbrances.
- Valuation information used to determine the fair market value of the MH in a rent-to-own contract must be based on an independent party or system.
- Until ownership of the MH is transferred to the tenant, MH park owners are responsible for compliance with the warranty of habitability, including but not limited to all major repairs and capital improvements during the life of the rent-to-own contract.
- Annual leases must be offered to the MH tenant for at least the life of the rent-to-own contract.
- An annual itemized payment listing must be provided to the MH tenant.
- Any successor to ownership of the MH park will be bound by the terms of a rent-to-own contract entered into after July 14, 2019.
- If the MH park owner terminates an MH tenant’s tenancy during the term of the rent-to-own contract, all paid rent-to-own payments must be refunded to the tenant.
- MH park owners may not attempt to obtain a waiver from the MH renter of any protection or rights provided in the rent-to-own sections of the new law.
- If an MH park owner violates any of the provisions of the rent-to-own laws or evicts an MH tenant who is a party to a rent-to-own contract, a court may award the tenant treble damages, including all rent to own payments and attorneys’ fees.
- If an MH park owner fails to comply with any of the rent-to-own laws, the MH tenant has an unconditional right to cancel the rent-to-own contract and receive an immediate refund of all payments and deposits made on account of or in contemplation for the lease with the rent-to-own contract.
The new MH laws implemented in New York introduce numerous new protections for owners and tenants of manufactured homes and expand protections already provided. All MH park owners in the state will need to take steps to ensure they are implementing policies and procedures to ensure compliance with all of the new requirements. Further, for investors and developers in the state looking to acquire and develop an MH park for a reason other than MH site rentals, the new law increases both the lead time needed before a piece of land can be purchased and likely the total amount of investment necessary to purchase the property. New York is regularly regarded as a tenant-friendly state, and its laws are often a model adopted by other states. If your MH-related business is outside of New York, be sure that you are regularly receiving updates on new MH laws and updating your policies and procedures to meet any new or modified requirements.