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Paradise Park Homeowners Association, Inc. v. Riverdale Management Associates

404 N.J. Super. 309, 961 A.2d 752( App. 2008)

MOBILE HOMES — The Mobile Home Protection Act places the burden on a mobile home park owner to give notice to its tenants upon receipt of a bona fide sales offer, and qualifying for an exemption from the notice requirement based on the sale not being made in contemplation of a change in use is to be tested by reference to the buyer’s and seller’s state of mind, not merely the written terms of the offer or sales contract.

A seller of a mobile home park failed to notify home park residents of the park’s sale. The buyer was an adjacent landowner of a marina property who had previously filed an encroachment action against the seller and had been granted injunctive relief directing the seller to remove all encroachments. Based on these legal developments, the buyer believed that he could explore settlement options that specifically included purchase of the park property. During the course of the encroachment litigation, the governing municipality was revising its master plan for land use. In a letter to the municipality, the seller urged the municipality to re-zone the park property to permit the development of single-family type homes. The buyer likewise testified during public hearings as a concerned businessman seeking flexibility for redevelopment plans.

Mobile homeowners and their association brought an action against the seller and buyer of the mobile home park under the Mobile Home Protection Act (MHPA) for claims arising out of the sale of the park. The association and owners alleged that the MHPA gave them a right of first refusal to buy the park. The seller and buyer alleged that they were not required to give notice to the residents or the association pursuant to an exemption under the MHPA for sales not made in contemplation of changing the property to a use other than as a private residential household community. Both seller and buyer presented certifications to the lower court attesting to their intention to keep the property as a mobile home park. Their contract did not contain any contingencies for developmental approvals. This, they argued, was consistent with a sale not in contemplation of changing the property’s use. The lower court found for the buyer and seller on a summary judgment motion, holding that the association and owners failed to establish that the sale was made in contemplation of changing its use. The association and owners appealed, alleging the lower court erroneously limited the focus of its analysis to the terms of the sale contract, while not examining other evidence of the parties’ state of mind.

The Appellate Division reversed and remanded, ruling that the public policy behind adoption of the MHPA was to continue the use of mobile home parks on lands currently used for such a purpose and to encourage and promote ownership and self-governance by park residents. The Court held that the MHPA places the burden on the mobile home park owner seeking an exemption from notifying park residences of a bona fide sales offer. The owner has to show that the proposed sale is not in contemplation of a change in use. Such contemplation requires less focus on an action than on the intent to change the use. Thus, the Court held there was a genuine issue of material fact as to whether the sale of the park was made in contemplation of changing the park’s use and this issue precluded a decision by summary judgment. The Court was mindful of the lobbying by the buyer and seller to change the zoning code to permit development as other than a mobile park and the fact that the buyer had leverage in contractual negotiations because of the injunctive relief given in its encroachment action against the seller. The Court also observed that both parties’ attorneys had requested an extension of time before closing in order to perform due diligence as to the requirements of the MHPA and its possible notice requirements before stating specifically in the affidavit of title that the sale was exempt from such a requirement.

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