By Mark B. Zinman, Zona Law Group P.C.
As investors are looking for a wider range of assets to invest in, it’s common for AZREIA members to purchase manufactured homes or manufactured communities to rent out. For the purpose of this article, we will refer to such matters as mobile homes. Renting out mobile homes may be more complicated than it would appear at first glance. For instance, there are two critical issues an investor must address when renting out a mobile home: (1) Are they renting out the home or the lot upon which the home resides, and (2) What is the structure? The answer to these two questions will control which law applies.
It seems like an odd idea that you could own a mobile home and rent it out, but you aren’t governed by the Arizona Mobile Home Parks Residential Landlord and Tenant Act (“MH Act”). However, this is very common and the deciding factor is whether or not you are renting out the structure or if you own the land and the person owns the structure. The MH Act governs: (1) The rental of a space (2) Upon which the tenant places and resides in his/her own mobile home (3) In a mobile home park. There are a lot of factors here, so it’s important to dissect each one.
First, the MH Act applies only to an MH community aka mobile home park, which is defined as “any parcel of land that contains four or more mobile home spaces.” Therefore, unless you meet this standard and you own one parcel with four or more MH lots, the MH Act will not apply.
Second, if you own a single parcel with for our more MH lots, the MH Act may still not apply even if you own the structure and rent it out. This is the critical difference in an MH community, if the landowner also owns the MH structure and rents it out, then that structure is governed by the Arizona Residential Landlord and Tenant Act (“Residential Act”), and not the MH Act. The MH Act only applies to a mobile home park rental where the tenant or a third party owns the structure and the landlord rents out the land. This is a critical difference because, in a traditional residential rental, the landlord has substantial obligations regarding the maintenance of the building. However, under the MH Act, the owner has very few, if any responsibilities regarding the structure, because the landlord/owner does not own the structure, they own the land. This means, for example, that an air conditioner in an MH could fail, and it would not be the landlord/owner’s responsibility because that landlord doesn’t own the structure.
On the other hand, if the landlord/owner does own the MH structure AND the land, then the Residential Act applies and the landlord/owner must maintain the structure. The fact that the home is a mobile home is not dispositive of who takes care of the structure. The question is whether the landlord is renting out the home or is renting out the lot in a mobile home park.
The next important question that must be answered is what type of structure you are dealing with. A mobile home is defined by law (ARS 33-1409) and depends on the size of the building and when it was built (1976 being the critical year). A person can’t conclusively tell what a structure is just by looking at it since it may be a park model or recreational vehicle. To make matters even more complicated, it’s possible that the RV Act may apply or the general commercial Landlord-Tenant Act may apply as well.
The lesson here is that before you buy anything, or before you rent it out, make sure you know what you are buying and what law may apply. Happy investing!