Landlordsí Consent Agreements Can Jeopardize Your Rights and
Subject You to Liability
Some lenders are now asking landlords of manufactured home
communities to sign a document labeled as a landlordís consent agreement or a
similar name when making a loan on a manufactured home already existing within,
or to be installed in the landlordís rental community. Most of the landlordís
consent documents that I have seen were not been by someone having an
understanding of Arizona law, Arizonaís manufactured housing industry or the
risks landlords are undertaking by signing such a document. In each such
instance to date, I have been compelled to advise my clients, as landlords, not
to sign such documents.
The landlordís consent documents essentially ask landlords
to voluntarily give up many critical rights and remedies, which can be a
dangerous practice for landlords. Below are some of the typical provisions and
potential problems I have observed:
The lender acquires the residentís rights under the
Rental Agreement, as partial security for the home loan to the resident.
The landlord is prohibited from modifying the Rental
Agreement, the Rules and Regulations or the Statement of Policy without
first obtaining the lenderís written consent. If you are a landlord, good
luck getting this accomplished, particularly years down the line. Thus, the
lender can prevent you from updating your policies and documents.
The lender is released from any liability for unpaid
rent, even if the tenant abandons the home. This is directly contrary to the
rights given to landlords under the Arizona Mobile Home Parkís Residential
Landlord and Tenant Act.
The lender can reassign the Rental Agreement or vacate
the premises, without any liability to the landlord. Therefore, Landlords
can lose control over the rental premises.
The landlord gives up its landlordís lien rights against
the home. This is a valuable right that landlords should not readily give
The landlord gives the lender the right to enter onto
the property, without liability, for purposes of removing the home.
If the resident defaults under its obligations to the
lender, the lender has the right to sell the home to someone else and to
force the landlord to accept the buyer as a tenant, subject only to some
limited rights of approval by the landlord.
The landlord must agree not to terminate the residentís
Rental Agreement, no matter what the resident does, unless the landlord
first gives the lender written notice of the default and then gives the
lender 60 or more days in which the lender can cure the default. In other
words, if the resident fails to pay rent, threatens or injures the
management or commits other serious breaches, the landlord cannot timely
pursue its legitimate legal remedies under the Mobile Home Act or otherwise.
Aside from the obvious provisions that are significantly
detrimental to landlords, giving up such rights and remedies can subject
landlords to potential liability. Under the Mobile Home Act, landlords have
certain obligations to all of the residents in their community. For example, if
a resident commits a material violation, the landlord may be required to take
timely action to address the violation. Similarly, if a resident files a
complaint with you or makes a demand that the landlord cure a material violation
caused by another resident, the landlord, can be in violation of the Mobile
Home Act and can be subject to a lawsuit or administrative complaint if you do
not timely address the situation. Unfortunately, if a landlord has given up the
right to timely enforce violations as required by law, the landlord is
subjecting themselves to unnecessary liability.
Landlordsí consent agreements may work in other States,
under different laws and possibly even in Arizona, if properly written.
Unfortunately, to date, I have not seen a consent agreement that has been
tailored to work in Arizona. I highly recommend that if you are presented with
such a document, you have it examined by an attorney who is knowledgeable in
this area of law so that you are not signing onto a long-term nightmare and
This article was originally published in 2008.