Operating a Mobile Home Park? Not a Walk in the Park

DPSI
// December 8, 2016

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This is a time when the need for inexpensive and temporary housing has never been greater in our country. More and more people are opting out of homeownership and choosing to rent.

This trend has contributed to the increased popularity of mobile home parks or manufactured housing. The types of tenants extend across generations, including 20-year-olds and baby boomers who don’t want to buy, retirees who are ready to downsize and snowbirds who are seeking an inexpensive vacation. Mobile home parks come in a variety of shapes and sizes and fit this range of lifestyles. With the correct management in place, these parks can be nice, comfortable places to live or vacation.

Mobile home parks can either be operated like a parking lot, in the sense that tenants rent an actual parking space and park their personally-owned homes there, or the tenant can rent out a mobile home that is owned by the park owner. The latter scenario runs a higher risk for a loss because there is an increased liability exposure for the responsibility of the home and premises. In addition, the tenant does not have a vested interest in the upkeep of the home and premises.

To circumvent this increased liability exposure, mobile home park owners can implement risk management procedures to help prevent claims. The implementation of best practices will help the park owner attract a better tenant and improve the park’s overall profitability.

Here are some free or inexpensive best practices for park owners:

  • Maintain an accurate and up-to-date rent roll of your tenants; you want to know who is legally on your site at all times
  • Have lease agreements in place with each tenant: It is optimal for the lease term to be for at least six months at a time; this clearly holds the tenant and the park owner to certain standards and obligations, while reducing a high turnover rate
  • Require tenants to have their own personal or homeowners insurance policy
  • Ask an attorney to review lease agreements; it is important that your contracts are fair and lawfully valid
  • Run criminal background checks on potential tenants; this cost can be reduced through our Business Resource Center
  • Be certain that your contractors have insurance; when they cause a problem, the park owner is responsible for the bill
  • Enact professional systems of rent collection; the number one reason for eviction is non-payment
  • Enforce the rules and ensure that if a manager is on site in place of the owner, the manager enforces the rules
  • Within state laws, enforce a pet policy so residents have official guidelines regarding breeds and weight for acceptable pets
  • Maintain a written log of all complaints and problems; include the date of the incident, the name of the person placing the complaint and the steps management will take to resolve the issue
  • Have tenants sign a smoke detector warranty letter, affirming that the smoke detectors in their unit are functioning; if there is a fire, the park owner is liable for negligence
  • Begin the eviction process as soon as the law allows; don’t wait to resolve any ongoing issues because problem tenants will disrupt the peace of other tenants

Additional best practices revolve around more expensive, structural changes to the property and premises. Such practices include proper tree removal, road repairs and water or sewer system repairs. Roads that are solid, cleared of debris and devoid of any potholes will prevent trips and falls. Tree removal can prevent property damage to mobile homes or common buildings should a significant storm strike. While these updates may be costly, they are implemented to mitigate the most common and the most expensive claims seen by mobile home parks.

Mobile home parks are increasing in demand, and, at Devon Park Specialty, we are here to help insureds find the proper insurance policy. We can write liability for up to 500 pads per location and have recently expanded our eligibility guidelines to accept parks with up to 100 percent park-owned homes that are rented out to tenants. We can also write property coverage for the common buildings in the park.

Contact your underwriter with any questions, and we’ll help you hit that quote out of the park!

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As always, thank you for your support and business.

Molly_McsheaWritten by Molly McShea
December 8, 2016

Cheryl-RussellContact Cheryl Ryan,
Executive Vice President, Division Leader | 844-438-6775 Ext. 2582

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