The REAL Deal – A Few Select Rules And Regulations

Whether you have owned your community for years or are considering a MHC investment, the bedrock stability of any community lies in contracts with Residents, Managers, insurance underwriters, business associates, lenders and vendors.  Your community’s curb appeal and NOI are actually embedded within the administration of these critically important contracts. The R&Rs describe the method by which your particular community became its smoothly operating and profitable investment. The continuity in their administration assures Residents that the VALUE of their homes will continue to be well preserved. The “REAL DEAL” of the LLT relationship, (as an adjunct to  your Lease Agreement) is the Rules and Regulations (R&R) also known as the Guidelines For Living (GFL).   The designation GFL softens the appearance of the community’s landlord-tenant power structure which is especially important in MHCs dedicated to persons 55+ under HOPA. This and future articles will take a deep dive on the R&R aka GFL. 

Regardless of what you call them, these guidelines establish and affirm the granular details of your vision of community while affirming the management style for your MHC.  This assures an optimum Resident environment while establishing the basis for Residents’ and Landlord’s responsibilities.  If written and administered correctly, they are an invaluable tool.        

With proper adherence, even communities with just three page guidelines have spaces/homes which exhibit pride of ownership; more often however, the converse is the case with a multi-page document. Regardless of the number of pages and provisions in your R&Rs, managers must consistently enforce all provisions across the entire tenant base.  As a reminder, RCW 59.20.045 (3) allows for rules enforcement if “…They apply to all tenants in a fair manner;”   Rules should not contain or duplicate provisions which should be in your rental agreement but work together where appropriate.  For example, the rental agreement may state:  “Tenant agrees to have no animals or pets of any kind on the Lot without the Landlord’s prior written approval,” while the R&R would contain more specific guidelines regarding behavior, leashes, licensing, etc.

Occasionally, Managers amend R&S when a specific incident is not addressed. As an example, with a minor’s use of a slingshot, we needed to amend R&Rs at one MHC.  Onsite personnel should keep a folder with ideas to periodically freshen up this all-important document. When amending it, the law requires you to provide a thirty-day notice to all Residents and a three-month grace period during which time you cannot issue a violation, but rather just a warning of violation.

In this first R&R’s article we will review a few items:

PETS – Several years ago, before climate change incurred substantial losses to insurance portfolios, our industry experienced large insurance personal injury claims resulting from pets.  Shortly thereafter, upon annual insurance renewals, company underwriters required a closer look at our policies and procedures for pets.  RHA has a MHC Pet Agreement that can be customized for your community.  You can either use it as an addendum/rider to your lease or incorporate elements of it into your R&Rs.  It specifies prohibited breeds and gives management the unilateral ability to have a pet removed from the community; while this extraordinary action is very rarely used, operators must have this important paragraph to control of any animal that causes personal or property damage/danger.  NOTE: For reasonable accommodation purposes, HUD prohibits discriminating against a certain breed unless that animal has a history indicating a dangerous animal.  Any and all pets should be registered and credentialed by its owner and veterinarian.  Pets can be an important element to Residents’ lifestyle, regardless of your community’s demographic.  At any age, an animal can serve as a reason to have a healthy walk and comfort to its owners.  Judicious administration of pet regulations is however,  required.    

FENCES – As with any other tenant improvement, written approval from management is required prior to any new construction. From a managerial, safety and esthetic standpoint, building of fences is not advised.  Damage to underground utilities, disputed/incorrect location of lot lines, destruction of the open look of yards, ability to allow pets off-leash are just a few issues which arise. The visual obstruction a fence may cause does not allow for easy review of improperly stored items, ill-maintained landscape, the presence/spillage of prohibited items (oil, paint, etc) illegally parked cars and other problems arising from fencing.  However, a small fenced/screened “pen” for outside storage of garbage cans should be required.  On occasion, we have asked Residents to sign a sunset paragraph stating that when their home sells, their fence must be taken down. It is submitted to escrow or with the screening approval to the applicant for tenancy.

PROVISIONS FOR MAINTAINING 55+ HOPA STATUS – For those of us that have communities falling under the Fair Housing Act, there are a few items that you should include in your R&Rs aka GFL. We include the following language:   XYZ, A 55+ Residential Community is an age 55 or older housing Community under the Fair Housing Act (Title VIII of the Civil Rights Act of 1968, as amended 42 U.S.C. 3601-3619) and the Housing for Older Persons Act of 1995 (Rule. L. 104-76, 109 Stat. 787.) Under the Occupancy Standards section we include provisions: Pursuant to Federal Law, all lots must be occupied by registered Tenants who are 55 years of age or older.  Under no circumstances will anyone under 55 years of age be allowed to reside in the Park.  The Management and the Tenant must comply with the Policies and Procedures regarding the Housing for Older Persons Exemption under the Fair Housing Act. Federal law requires an “occupied by at least one person age 55 or older” minimum standard and many MHCs go with that. However, nothing in HOPA prohibits a housing provider seeking to qualify for the exemption for "55 or over" housing from setting age restrictions that are more stringent. This would be subject to reasonable accommodation provisions for caregivers and the like who may be under age 55. It depends on the type of MHC. If you have ever been audited by any Governmental agency, you know that you must update/recertify the status of each homesite periodically.  Again, of importance here, is how you hold your community out to the public.  A future article will be dedicated to the cook-book methods we use to secure your Housing For Older Persons Act status outside of the general guidelines set forth in the R&Rs.

In summary, the R&Rs, aka, GFL are the vitally important scaffolding upon which your MHC is administered.  It assures the health, safety, quality of life and welfare for your Residents. Pets, fencing and age status are a few standard guideline items that must be consistently enforced.  

Joel Erlitz has owned and operated MHCs in the four Northwestern States over the last 40+ years. He was appointed twice by Governors to represent MHCs of Washington on State funded task forces. He has been active in State politics as they related to MHCs, and has provided expert testimony on issues relating to management, ownership, appraisal and lending practices for land-lease communities.  If you have any questions about this article, please contact Mr. Erlitz Jserlitz@comcast.net.