Don and I are not just buying a home, we are buying into a new, carefree lifestyle. We decided to lease (rent) the land portion of our home in a 55+ senior manufactured home community for several reasons. Naturally, we plan to enjoy all the conveniences, such as recreational facilities, security and services, but we also believe that leasing land at our age makes a lot of financial sense. Money that would have been put into a land purchase can now be placed into income producing investments. Our capital is retained in case of emergencies, travel or for any other need.
By taking advantage of a land lease we avoid paying property tax on the land, enjoy reduced insurance costs and take advantage of the benefits of discount group rates for cable TV and trash collection. Our lease also pays for a full time staff to provide care for the landscaped grounds, common areas, recreation facilities and clubhouse maintenance. As anyone who lives in a site-built senior community knows, homeowner fees can be steep. In our senior community there are no homeowner fees and all recreation facilities are available to residents at no charge.
I want to say a thing or two about manufactured home community leases (rents) in general. Not all leases are created equal! It’s important to take time to read the lease agreement carefully. That’s why Don and I asked the sales manager for a copy of the lease agreement to review at our leisure and he had no problem giving us the information. Before signing anything we wanted to make sure our lease would be long term (20 years) and be renewable and transferable to the kids in case of our death or disability.
We looked for a section of the lease that puts a cap on rent increases. The sales manager told us our long-term lease is tied to the Consumer Price Index and the Civil Code of the State of California and therefore can’t be arbitrarily increased. We asked for a copy of the California Civil Code and looked carefully at the Mobile Home Residency Law section before we made a commitment to buy. Having this guarantee in writing helps give us peace of mind that our rent will not increase more than a few percent a year.
Our lease agreement is a 10 page legal document that clearly describes the property, the term of the lease, when the rent is due, annual rent adjustments, utilities, late charges, breach of lease, removal on sale, use restrictions, option to terminate, insurance, disputes, responsibility of owner, park management, rules and regulations and other written provisions. It was necessary for Don and I to complete a Residency Application to verify our age, income and credit history. This requirement is basically a pre-qualification for all Sun Meadow residents.
We looked at quite a few communities or parks to compare services, amenities, rental agreements, installation costs, rules, regulations and restrictions. The most important thing we did was read the lease agreement carefully – taking our time, asking questions and getting everything in writing.
To learn more about superior insurance for manufactured homes visit Foremost.com. If you are an AARP member go to AARPForemost.com.
