If you own a mobile home park that you want to sell in Oregon, you’re going to run into the Opportunity to Purchase rule. That’s a guarantee. This is a relatively new rule that went into effect in January 2015, so not a lot of people know about it. The problem is that if you don’t know about it, and you don’t follow it to the letter, you’re not going to be able to sell your park. Proving you complied with the rule is easy. It’s knowing when you have to that causes problems.
Oregon’s New Opportunity to Purchase Rule
The first thing you need to know about Oregon’s Opportunity to Purchase rule is that it exists. I know that might seem obvious, but I can’t tell you how many times I’ve seen closings delayed because people selling their parks weren’t aware of this right of first refusal requirement. Only about 16 parks in the state of Oregon have been purchased by tenants, so it’s unusual for them to exercise this right, but even still, you have to notify them if you want to sell.
In a nutshell, the law requires mobile home park owners to notify their tenants, or tenant organizations, if they are planning to sell their park, or when they receive an offer to buy. This is so tenants can either form a committee to buy the park, or join a committee already in existence. That committee will then have the opportunity to match any offers to buy the park that a seller gets. If you sell your park and go to transfer the title of your property to the new owner, you’re going to have to prove you gave this notice. Most of the time, the process ends at this and the sale can move forward, as tenants rarely take advantage of this rule.
Why Tenants Don’t Take Advantage of the Opportunity to Purchase
Here’s the deal. Tenants rarely exercise this right. That’s because it’s not just a matter of buying the park itself, but taking over all the responsibilities of park ownership, from common area maintenance and repairs, to managing financials. They have to be prepared to hold a reserve of cash for major issues that pop up—but, tenants are tenants for a reason. They usually don’t have the desire or the capital to purchase homes, or prefer the simplicity of renting.
Most often when these Opportunity to Purchase sales go through, they’re completed by nonprofit organizations who sponsor the tenant’s group, like Oregon’s Community and Shelter Assistance Corp (CASA). But, nonprofits like CASA have a lot of red tape and regulations to face, so getting them on board for such a sale is pretty unlikely. As the rule was enacted to ensure that low-cost housing remains available to everyone, most of the nonprofits that get involved will need the tenants to show a serious financial need for their help, like a high amount of disabled or extremely low-income residents.
If tenants can’t get a non-profit organization to help, it’s pretty unlikely that they’ll form their own group for the purpose of purchasing the park. And, if the sale is just a transfer of ownership, and not made for the purposes of closing the park, then the nonprofits usually won’t get involved anyway, because the whole reason they sponsor sales is to prevent the loss of low-cost housing. If the park isn’t closing, then that risk of loss doesn’t exist.
When Tenants Do Decide to Take the Opportunity
While it rarely happens, it’s not completely unheard of for tenants to decide to buy the park. If they decide to compete in the sale process, they have to respond in writing within ten days of notification. Specifically, they have to let you know of their interest in making the purchase, as well as the name of the tenant organization that will compete for the sale.
Tenants might decide to do this if they are able to gain the backing of a nonprofit, or if they believe that together they’ll be able to pool enough money to compete for the sale. If they do, then life gets a bit more complicated as they’re entitled to certain disclosures regarding the overall value of the park. These include:
- The asking price of the mobile home park
- Total income collected for the park for a 1-year period
- The annual cost of all utilities covered by the owner
- The annual cost of all park insurance policies
- The total number of homes in the park
- The number of vacant homes in the park
These disclosures can drag out the sales process significantly and, often, the tenants will decide later in the deal that they don’t want to buy the park after all. They might realize they can’t afford it, or the costs of utilities and insurance premiums are much higher than expected. Whatever the reason, once they decide they don’t want to act, your disclosure requirement is considered complete—you are now unhindered in the sale of your park. Also, if the tenants don’t respond at all within that initial 10-day period, you can move forward with your sale free and clear without any further complications.
The key here is notice. That’s really the big requirement of Oregon’s Opportunity to Purchase rule. For the most part, your tenants aren’t going to try to form a committee to buy the park. After all, if they wanted, or were able, to own property, they probably wouldn’t be renting. As long as you can show you gave this notice, you can move forward with the sale of your park to a buyer of your choice.
One important thing to remember when it comes to this rule is that tenants are far more likely to fight the sale of the park if they believe they’ll have to move. When it’s just a change of management, they’ll be less concerned because they know they’ll still have a place to call home. Most tenants just want life to be disrupted as little as possible during a park sale, which is why working with me is the best option. I get these sales done quickly, discreetly, and I don’t buy these parks to flip them. I buy mobile home parks to run them with care and respect.
So, if you’re considering selling your park in Oregon, first you want to get yourself familiar with HB4038, the bill that covers Oregon’s Opportunity to Purchase rule. The next thing you’ll want to do is contact me to get a fair quote from an experienced mobile park owner-operator.