April 28, 2022
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Manufactured Home Community Bill Expected to be Signed into Law - JD Supra

On April 19, the Iowa Senate passed HF 2562. HF 2562 had previously passed in the House, so the bill will now go to Governor Reynolds for her signature or veto, which will likely take place in the next 30-45 days due to the end of session signing deadlines. The Governor is expected to sign the bill.

HF 2562 is the manufactured housing community omnibus bill negotiated between the Iowa Manufactured Housing Association (IMHA) and a coalition of lawmakers led by Representative Brian Lohse. This bill contains several amendments to Iowa Code Chapter 562B relating to manufactured home communities, as well as a few minor tweaks to Iowa Code Chapter 648 relating to evictions.

Companies that own, operate, and manage manufactured home communities (MHC) in Iowa need to take note of this expected new law. This blog post contains a detailed summary of the bill, and there will be additional updates and guidance in the upcoming weeks.

Background

In recent years, a coalition of Iowa state lawmakers, led by Rep. Lohse, had proposed legislation that contained certain provisions that the manufactured housing industry viewed as unreasonable, unnecessary, and an afront to property rights and the freedom to contract, including, among others, provisions establishing rent control; eliminating a landlord’s right to choose whether to renew a tenancy; mandating a written justification notice to tenants for any rent increase; mandating prior notice of any potential sale of a community to all residents; and increasing the notice period for rent increases and non-renewals from 60 days to 180 days. There were numerous subcommittee meetings, hearings, and other discussions at the State Capitol in those recent years, with the Iowa Manufactured Housing Association’s executive director-lobbyist, Andy Conlin, and general counsel, attorney Jodie McDougal, providing lawmakers with the perspective from MHC owner-operators. Fortunately, this year, the IMHA and the lawmakers were able to agree upon a compromise bill, containing beneficial provisions for both tenants and landlords while excluding the most onerous provisions for landlords as noted above. For further background on the events leading up to the passage of the bill, please feel free to contact Jodie McDougal.

Summary

Below is a summary of the changes that will affect MHCs, including their practices, policies/forms (including, as applicable, rental agreements and rules and regulations), and evictions. Remember that this is a general summary of the bill, and each MHC needs to contact their counsel for advice specific to them and/or otherwise await the form updates that will be published by the IMHA. The provisions of the bill that equate to the most significant changes, positive and negative, are bolded.

Bill Provisions: Landlord Practices and Policies/Agreements with Tenants

Likewise, the new law will require that MHC-landlords must give at least 90-days’ written notice in order to terminate a rental agreement. This is an increase from the 60 days now required and equates to another compromise reached between all involved.

Thus, MHCs will need to change their practices, and form notes, in regard to the prior notice needed to be given for rent increases and renewals of leases. Further, if your rental agreements or rules and regulations reference the current/prior 60-day notice, contact your attorney regarding the implementation of changes to such document.

  • Prior Notice for Rent Increases, and Notice Period for Non-Renewal of a Lease, Increases from 60 to 90 days. (Division II). The new law will require MHC-landlords to give at least 90-days’ written notice before any rent increases. This is an increase from the 60 days now required. The 90-day requirement was a compromise from previous versions of the bill that would have required 180-day notice.

This provision would be immediately effective upon signing by the Governor.

  • 90-day notice of utility rate increase (Division III) – MHC-landlords will be required to give at least 90-days’ written notice before any increases in utility rates or charges, such as with increases to rent. There is an exception to this requirement under the law if the MHC-landlord did not itself receive at least 90-days’ notice from the utility provider, in which case no prior notice is required prior to the rent increase. This provision would be effective July 1. Contact your counsel regarding the implications of this provision within the bill.
  • Written Notice of Denial for Applicants Wanting to Purchase Existing Home from MHC Resident. (Division V) – If a current tenant attempts to sell their home and their prospective buyer’s park application is denied, the landlord must give a written notice of denial and a general reason for the denial. The landlord is not required to give the specific reason for the denial. Many landlords already do this; others do not. If you do not have a form denial letter, please contact your counsel. This provision would be effective July 1.
  • Written contract for the sale of manufactured homes. (Division VII) – The new law requires that any landlord that sells manufactured homes do so by written agreement that includes certain essential terms such as total cost of the home, finance charges, annual percentage rate, and frequency and amount of payments. Many landlords already do this; others do not. If landlords fail to comply with these requirements, a court may invalidate the sale and award damages, including attorney’s fees. Any landlord that sells manufactured homes should contact their attorney to confirm their written contracts conform with this new law. This provision would be effective July 1.
  • Prohibition on requiring certain home modifications (Division VI) – A landlord will not be able to require a tenant to modify their home in a way that substantially impairs the ability for the tenant to move the home, with broad exceptions written into the law for all modifications to manufactured homes required by federal, state, or local law, those required by the manufacturer’s instructions, and those necessary for safe and proper installation of the home. Landlords should confer with their attorney to determine if their lease contains such requirements. This provision would be effective July 1.
  • Definition of “Rent” expanded (Division II) – This provision of the bill was one of the IMHA’s affirmative items. The law would expressly confirm that the definition of “Rent” includes base rent, utilities, late fees, and other payments due under the lease in a given month. This clarification should eliminate the lack of judicial consistency across the state as to whether Notices of Nonpayment of Rent can include utilities and late fees. In other words, once magistrates are educated as to the law, landlords should be able to include base rent, late fees, and utilities in their Notices of Nonpayment of Rent. This provision would be immediately effective upon signing by the Governor.
  • Provisions that align Chapter 562B and Chapter 562A with regard to tenant remedies/rights:
    • Retaliatory presumption increases to 1 year (Division I) – The presumption that a landlord acted in a retaliatory manner after certain actions taken by a tenant is being expanded from six months to one year to align with Iowa Code Chapter 562A. This provision would be effective July 1.
    • Liability for failure to supply running water or essential services (Division IV) – This provision is identical to the requirement placed upon landlords under Chapter 562A of apartments, single, and multi-family dwellings in terms of a landlord’s liability of damages if a landlord deliberately or negligently fails to provide running water or other essential services to manufactured homes within their community. This provision would be immediately effective upon signing by the Governor.

Bill Provisions: Continuation of Lawful Nonconforming Uses

HF 2562, at Division IX, is one of the IMHA’s affirmative items. Division IX makes small, but important amendments to the two sections of the Iowa Code implemented in 2019 to ensure cities and counties do not unlawfully prevent an MHC’s lawful continuation of a nonconforming use as it pertains to the replacement of homes. This provision would be effective July 1.

Bill Provisions: Abandoned Mobile Home Actions

HF 2562, at Division XI, is one of the IMHA’s affirmative items. The law will allow broader use of an action for an abandoned manufactured home, including in situations where there is a lienholder noted on the certificate of title. This was not previously available in Iowa. Further, the new law confirms that an abandoned manufactured home action can be brought against a deceased tenant’s estate and heirs in cases where the deceased tenant was the sole owner of the home. This provision would be effective July 1.

Bill Provisions: Evictions

HF 2562, at Division XI, is one of the IMHA’s affirmative items. Division XI makes small, but important clarifying amendments to Chapter 468 on evictions. This provision would be effective July 1.

First, Iowa law requires that the initial hearing for an eviction be held within a certain number of days from the filing of the petition. Certain magistrates have taken this to mean that the hearing cannot be continued beyond that initial timeframe for any reason. The new law confirms that the hearing can be continued beyond the initial court date with the consent of the landlord.

Second, the bill will eliminate inconsistent rulings across the state in terms of how days are counted for service purposes when the method of service is mailing for which four additional days are added before a document is deemed served. The bill expressly provides that in computing the time for competition of service, the first day shall always be excluded and the fourth/final day shall always be included regardless of whether the fourth day is a Saturday, Sunday, or federal holiday.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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