The residents of a San Diego mobile home park, Terrace View Mobile Home Estates (“Terrace View”), recently won a case which will change the law in California. For the first time, a jury found that a park owner may not charge unreasonable space rent rates to residents on a month-to-month lease.
In the past, mobile home park owners believed that they could set the rents in a park at any rate they desired. The only time the amount of rent charged was restricted was when there was rent control.
In California, there has always been a legal principle which required parties to a contract to operate in good faith. This meant that if a party had the sole right under the contract to set rent rates, then the rates needed to be reasonable.
This concept has been applied to other business relationships but never in a mobile home park.
The residents of Terrace View were being charged $1,600 per month or more. The neighboring parks charged $850-$950 per month. The high rents at Terrace View made it impossible to sell a home for a fair price so the residents could not escape the rents without walking away from their homes.
The jury found the rents unreasonably high. They awarded 10 spaces $1,289,000 in damages. Further, because the defendants knew they were defrauding the residents the jury awarded $57,000,000 in punitive damages.
Now in California, there is a legal mechanism to limit the amount of rent a mobile home park owner can charge a resident on a month-to-month contract.
If you find yourself in a similar situation to the residents of Terrace View Mobil Home Estates, please contact Allen, Semelsberger & Kaelin LLP at ASK Law Group.