An Introductory Guide to Manufactured Housing Park Cooperatives

A manufactured housing park cooperative is a group of people organized for the purpose of owning and operating a park for the benefit of its members on a not for profit basis. Each member owns one share or membership interest in the corporation. Like other types of cooperatives, manufactured housing park co-ops are democratically managed: one home, one vote. Members elect a Board of Directors who manage the co-op. The corporation holds one mortgage on the land for the entire co-op, collects the "rents," makes the mortgage payments, pays the property taxes on the land, pays the bills, does the bookkeeping and maintains the property. The corporation is responsible for major repairs and upkeep, insurance, replacement of worn out septic systems, etc.

There are many benefits to living in a cooperative, which include control of monthly charges ("rents"), lifetime security against unfair evictions, repairs and improvements done as soon as they are needed, liability protection (members are not personally liable for co-op loans), extended services (such as day care, crime watches, laundry facilities, whatever residents agree to), and a strong sense of community. Everyone has a say in the way their park is run, and major decisions are made democratically–the members decide by voting.

Manufactured housing park cooperatives are most successful when a few specific procedures are followed:

The conversion of manufactured housing parks into cooperatives is becoming more commonplace in New Hampshire, and has been utilized for years in Florida, Arizona, California, and other areas where the escalation of land values has caused large rent increases and mass evictions of manufactured housing owners and tenants.

Residents form a special type of corporation, called a cooperative, that owns the land. Each resident owns one share of the corporation. The homes themselves are still individually owned but the land underneath is controlled as a single piece by the collective shareholders of the corporation. The number of shares in the corporation is limited to the number of households that have chosen to become members.

Each member household has one vote and all major decisions are made by at least a majority vote. The members elect a Board of Directors who make the day-to-day decisions. The Board decisions are also made by a majority vote. This way no one person can control the cooperative and decisions can be made efficiently.

All households are welcome to join at anytime as long as they pay the membership fee. Once paid, this entitles the household to a lifetime lease on their lot provided that they abide by the park rules and do not endanger the effective operation of the co-op. If a current resident household decides not to join the cooperative they can remain as tenants and instead of paying a landlord, they pay rent to the cooperative. Because non-members have neither paid a membership fee nor contributed their time, their rent is generally 10-20% higher. Once the park is owned by the cooperative, any new resident moving into the park must become a member.

The value of the membership certificate is fixed at the original price of the membership fee. If a member plans to leave the park their membership share can only be bought back by the co-op, and at the original amount. This way the cooperative is kept affordable for future residents and the co-op is provided with some working capital.

Your landlord owns your manufactured housing park as a business venture. Therefore, your rent has to pay for more than just the costs of operating a park–you have to pay for the owner’s profit. Every month, a portion of your rent goes directly into the landlord's pocket.

When residents form a cooperative to own the park, it too is a business, but it is not-for-profit. The sole purpose of the business is to keep the housing affordable to the residents. In a cooperative, 100% of your "rent" (as owners you pay "carrying charges" not rents) goes back into the park’s operating and maintenance. The profit drain out of the park is eliminated.

Given the rise in the value of land over the last 10 years, more and more parks are being dismantled to make room for more profitable commercial and residential uses. Tenants have been given an 18-month notice and told to find another place for their home. The high cost of land and restrictive zoning can make finding a place for a manufactured home nearly impossible.

In a cooperative, however, the land is secured for the sole purpose of providing affordable land for manufactured housing. Once the residents own the land, no one can sell it out from under them.

Soaring land prices have resulted in soaring rents. Each time a park is sold, the new landlord must pay off a larger mortgage. So it is no surprise that rents often go up by 30-50% after a sale. Unfortunately, there is no law in New Hampshire that limits the size or frequency of rent increases.

However, if a cooperative buys the park, the land is taken off the real estate market, it cannot be sold again, and that source of rent increase is eliminated. Becoming your own landlord is the only way to control park rents.

Quality of life in a park, particularly those not on town water and sewer, depends in part upon regular maintenance and improvements. However, decisions on how and when to make these improvements are now made by the landlord. The tenants get involved only when the bill comes and the rent increases.

In a cooperative, the members themselves decide what type of preventative maintenance system to implement and when to make improvements. Moreover, through their Maintenance Committee, they have the option of doing the work themselves and keeping the costs down or contracting out the work.

Park rules impact your day-to-day life. Right now the landlord determines the rules. There is nothing tenants can do about a rule unless it violates law RSA 205-A, which regulates manufactured housing parks. Even then, to get an illegal rule changed often requires the tenants to hire an attorney.

When an outsider determines the park rules, the rules often do not reflect the desires of the residents. But in a cooperative, the residents develop their own rules.

In general, the landlord's service to the residents is to provide land, roads, and hook-ups for manufactured housing. This may be sufficient for your park.

However, with a cooperative, residents have the option of extending these services if enough residents agree it would be beneficial. There are a number of possibilities from building a kid’s playground, to trying to lower the price of hearing oil by having all residents voluntarily contract with one delivery service or even developing a laundry facility–the choices are unlimited.

A. Your combined rents currently pay the costs to operate the park and meet the owner's mortgage payments. Any remaining funds now go into the landlord's pocket as profit. As a cooperative, the 'profit' can instead be used for park improvements. There is no quick and easy way to determine what you can afford–it requires your help conducting infrastructure and confidential income studies of the park.

A. The co-op treasurer and the finance committee will be responsible for collecting all funds due the cooperative and making all payments. Unusually large expenditures will have to be approved by the Board of Directors or the entire membership.

A. Members of a cooperative, like any corporation, are not personally liable for the cooperative's mortgages or other debts. The cooperative will also carry liability insurance for the park in case someone is injured on the premises.

Q. I do not earn as much as others in my park. How can I afford to become a member since I can't pay the fee all at once?

A. People with lower incomes or those with small savings are able to pay a monthly amount towards their membership fee with the cooperative. As a member paying over time, you are given full voting rights once you have put up the minimum down payment amount (generally $50-100) and agree to pay an additional amount (say $20-40) every month until the total fee (generally $500-1000) is paid off. The amount of the membership fee is decided upon by the cooperative.

A. The cooperative has two "charges" for the member resident. The first is the lot rent or carrying charge which is collected monthly to pay for operating expenses (taxes, insurance, trash, etc.) and debt service (mortgage payments). The second is the onetime membership fee. Members can either pay this fee in full when the cooperative buys the park, or in monthly installments until fully paid. Once the membership fee is fully paid, the member then only pays the lot rent.

A. Fine. You may remain a tenant and pay rent to the cooperative. Since members pay the membership fee and participate in the work of the cooperative, non-members pay a higher rent (generally 10-20% higher than members do).

A. Both exist to benefit residents. A tenants association is organized by tenants in landlord-owned parks for the purposes of negotiating with the private owner, generally in response to rent increases, park maintenance, other injustices, or to buy the park. A cooperative is legally organized for the purposes of owning and managing the manufactured housing park. The structure and leadership of the tenants association may become that of the cooperative at purchase.

A. Yes. You can sell your manufactured house as you otherwise would and its value may be greater because it is located in a cooperative park where the residents have control over the land use and rent increases. When you sell your home your membership share is bought back by the cooperative. The buyer of your home then purchases a membership share from the cooperative. The cooperative screens potential buyers and approves new members.

A. The cooperative can choose to either self-manage the park or hire a manager. In the self-management case, management is done on a voluntary basis with member time and therefore comes at no cash expense to the cooperative. Members participate on either the Board of Directors or on one of the committees (maintenance, finance, social, membership, and grievance) to manage the park. All members participate at membership meetings to make major decisions that affect the park.

Cooperatives may hire a manager or financial management company to collect the carrying charges and rents, maintain the park, and manage the affairs of the park under the direction of the cooperative. The drawback is that a manager will cost the cooperative money and possibly reduce the cooperative's amount of control.

A. As with any business venture, there are up-front costs associated with analyzing the opportunity. In order to raise money for incorporating with the state, signing a technical assistance contract with the NHCLF, hiring an appraiser, retaining an attorney, and hiring an engineer, groups must decide on a joining fee. The joining fee is the initial payment each new member makes toward their membership fee. If the cooperative does not buy the park, the joining fee is lost. That is why it is also called "risk capital." However, if the cooperative is successful in buying the park, the joining fee is subtracted from the membership fee and the member only pays the balance due. By having many members pay something, the group spreads the risk and cost of buying their park. If they don’t have enough, co-op groups can raise additional money through such things as raffles and bake sales.

A. While both Co-ops and Condos manage common land, collect rents and provide services, they operate under different laws. For more information on the differences between cooperatives and condominiums see the next page.

	Cooperative	Condominium
Town Approvals	No requirements when continuing same use	Site plan approval required Subdivision approval required, generally one acre minimum
State Approvals	RSA 301-A (Cooperative Law) Articles of Incorporation	RSA 356 C (Condo Conversion) Articles of Incorporation Condo Permit from Attorney General's Office
Legal	Creates one legal entity therefore needs only one attorney for the group When a home is sold, no title and legal cost for land	Separate legal and real estate documents required for each unit and lot therefore everyone needs an attorney Title and legal work required anew each time a home (and land) is sold
Financing	Secure financing only once and co-op holds one 'blanket mortgage' for the group Banks lend on the strength of the cooperative organization not on individual credit records NHCLF can lend downpayment when group buys land as a cooperative	Each homeowner must get own financing including land cost each time home is sold Banks lend on basis of credit worthiness of individual homeowners Each homeowner must come up with downpayment on home and land value each time home is sold (NHCLF does not lend directly to individuals)
Ownership	Each home is owned individually Park land is owned by the cooperative with the homeowners owning and controlling all the shares of the co-op	Each home and land plot is owned individually Condominium Association owns any extra common land
Management	Co-op can manage park through required member participation and/or contract services	Condominium Association can manage park through required participation and/or contract for services
Cost of sale of home	No transfer tax on sale of shares because shares are not real estate	Pay real estate transfer tax on land value each time home is sold

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Manufactured Housing : Home Owners