You think that’ll impress me?

So far, in examining the ruling (available here in .pdf) that remanded back to district court a series of actual questions about whether the Paradise Park residents were entitled to the New Jersey Mobile Home Protection Act, we’ve seen that the appellate court – even though it cannot rule on facts – gave the residents multiple Christmas presents:

The more we read the decision, the more presents we found!

1. A definition of ‘in contemplation’ that it appears certain the factual record will support – meaning that the residents’ right of first refusal should be triggered.

2. A finding that the seller, Mr. Somers, has to form a good faith view – meaning that more than likely, Mr. Somers will agree that notice should have been given.

3. A road map for plaintiff counsel as to what evidence to put before the trial court as to whether a change in use was ‘in contemplation, and some heavy dicta indicating the appellate court thinks it was.

On March 4, 2005, the parties passed papers, and on March 5 the seller gave notice to the residents that they had a new park owner.

All hell broke loose:

On April 1, 2005, the residents of the Park filed a certificate of incorporation formally creating the Paradise Park Homeowners Association.

Behind the scenes, the residents were frantically rushing about to organize themselves.  This takes time.

Three days later, the Association filed a notice of rights under N.J.S.A. 46:8C-16(b), with the office of the Monmouth County Clerk. The notice was formally recorded on April 26, 2005.

As a public-policy matter, I really favor notice provisions.  Statutory rights are useless unless they are manifested by action, and the beneficiaries of those rights, who are normally just plain folks, have no reason to be expert in the real estate business and no justification for coming together as a group until they are galvanized by an external event/ threat.  So it takes them time to get their act together, find out what rights they have, assemble a team to help them with those rights, and become a viable counterparty.  A notice period is entirely appropriate, provided hat notice doesn’t turn into obstacle (as in Mitchell-Lama) or pillory (as in LIHPRHA).

I was just trying to exercise my contractual rights

Meanwhile, as a practitioner, I have sometimes spent a lot of management strategic time debating whether our client has to give a notice, and if so when, and what the notice should say.  A notice once given cannot be ungiven, and a notice that imprints people’s consciousness with fear does damage even if one’s motives are entirely pure. 

From May to August 2005, the sellers made several attempts to record the deed.

From this, I cannot infer whether the buyers had or hadn’t paid the cash consideration; sellers have the obligation to record title because they are the owner of record and the county clerk won’t recognize someone who isn’t on the current title.  Because the residents’ association had filed its notice of rights, the county clerk also was doing what he or she should have

The Clerk’s office rejected these attempts because the deed did not contain the affidavit required under the Act. The deed was finally recorded on August 2, 2005.

The record is silent on how that one got recorded.  Sometimes a clerk’s office just slips up.

Hope that’s not recorded

Ever since then, the plaintiffs have been suing Mr. Bollerman, seeking to secure what they believe is their right of first refusal to purchase the land, and hence to preserve their homes.  They previously lost on summary judgment in district court, in an opinion remarkable for its narrow-mindedness:

The motion judge accepted defendants’ arguments. Referring first to the exemption in N.J.S.A. 46:8C-13(a), and the affidavit filing requirement under N.J.S.A. 46:8C-14, the court then reasoned as follows:

[T]he contemplation of the parties is not just what the parties to the transaction will tell the Court they intended. Instead it is also reflected by the contract as well as the consideration paid at closing.

Here, the consideration paid at closing was identical to that provided for in the contract. As such, the contract was clearly not a ruse for a different deal.

As we saw above, the appellate court blew up this syllogism.  As it said:

Try another argument

We also hold that the trial court improperly narrowed the focus of its analysis to the “four corners” of the written contract between Bollerman and Somers, thereby ignoring a wealth of probative evidence of defendants’ state of mind concerning the future use of the Park property.

Not content to demolish one trial court conclusion, the appellate court tackles another one, the trial judge’s conclusion that:

In addition to that, I accept the certifications everyone filed saying that they have no intention of changing the use, no intention of doing anything further.

The appellate court blew this up also, citing the need to consider all the evidence.

Keep trying …

If I thought for one minute there was one scintilla of evidence here that they were trying to do this deal to circumvent the law, I would not be making the decision that I am making here today. There is no evidence in this record anywhere that that was the case. It is clear to me from the consideration paid and the language of the contract that that’s not the case.

Jaw.  Drop.

Evidently the appellate court was as stunned as I was, for its ruling says early on:

Plaintiffs now appeal, arguing that the trial court erroneously limited the focus of its analysis to the terms of the contract for sale, thereby ignoring a plethora of evidence showing defendants’ true state of mind.

Specifically, plaintiffs argue that the trial court should have considered Bollerman’s conduct during contract negotiations in light of his attempts to change the property’s zoning scheme to permit high-end residential development. According to plaintiffs, this, together with Somers’s refusal to modify the contract to reflect the buyers’ true future intent, amounted to clear evidence that the sale was made “in contemplation” of changing the property’s use as a mobile home park.

[Big snip]

According to plaintiffs, these letters and subsequent negotiations leading to the extension of the due diligence period are probative of the parties’ true state of mind with respect to the future development of the Park property. Plaintiffs argue that the trial court’s dismissal of this evidence in the context of deciding to grant defendants’ motion for summary judgment amounted to reversible error.

*

We agree with plaintiffs’ position.

That, dear readers, is what victory reads like.

I love the smell of judicial decisions in the morning

Why is this important?

Aside, that is, from the very human story of the residents who are fighting to preserve their homes?

We keep trying to attract attention

This is a big decision, for listen to how the appellate court speaks to the policy issues:

Although not expressly stated in its text, it seems clear that the Legislature adopted the Act to promote and enhance the ownership of mobile home parks by the residents of such parks. Toward that end, the Act provides for the formation of self-governing boards or associations by mobile home owners.  N.J.S.A. 46:8C-15.  Continuation of the use of park lands for such purposes is the indispensable adjunct driving this public policy.

Whether or not you like a mobile home park in your town, says the court, the legislature has decided that existing mobile home park residents are entitled to protection, and the law must carry out that policy conclusion.

Judicial review of individual statutory sections of the Act must, therefore, be guided and informed by these two overarching legislative policies:

1.  Tto continue the use of mobile home parks on lands currently used for such a purpose; and

2.  To encourage and promote ownership and self-governance by the residents of these parks.

The residents have to have a chance to organize and use the rights the legislature has granted, else the legislative intent is frustrated.

So much for legislative intent

A consistent theme running throughout these exemptions is that none of the transfers or conveyances carry a significant risk of changing the property’s use to something other than as a mobile home park. That is, if properly carried out in good faith, none of these transactions undermine the Legislature’s commitment to encourage park-ownership by mobile home residents, and self-governance in mobile home communities.

In other words, for a sale to be exempt from triggering resident rights, it must not increase the threat to those rights.

This is an entirely sound public-policy principle, one that finds its expression in numerous affordable housing preservation statutes.

Mobile homes are the dark matter of the affordable housing universe – significant, important, and ignored.

Good faith is the linchpin of this analysis. If courts permit interested parties to utilize these statutorily recognized transactions as legislative loopholes, i.e., as a means of circumventing the procedural and substantive rights bestowed to mobile home park residents in N.J.S.A. 46:8C-11 and N.J.S.A. 46:8C-12, then the public policy rationale embodied in the Act is frustrated.

Conclusion

The decision is well reasoned, complete — much useful information in the framing in Sections I and II.  The parol evidence of Mr. Bollerman’s history of negotiating with Mr. Somers to buy the park only after securing significant victories on uncorrectable easements is very powerful in undermining the presumption that the Somers-Bollerman sale price represented true market value … and hence did not have ‘in contemplation’ a change in use.

The court’s clarity of standard about legislation intent, where the burdens of exemption light, and how to construe ‘contemplation,’ are important advances in terms of making this law adjudicable and enforceable.

Since any summary judgment request requires that all facts in question be construed against the asker, the judge could not give the residents summary judgment.  However, the judge’s findings as to substance are very important and make it highly likely the residents will win on the retrial of the factual issues.

The residents won as much as they possibly could win at this stage.  While 2009 will see more litigation, for now the court has given the Paradise Park residents a huge Christmas present

Reversed and remanded for further proceedings consistent with this opinion.

Thank you, Your Honor – you know my clients are always the good guys

Merry Christmas, and Happy New Year, Paradise Park.

Say goodbye to 2008

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You think that’ll impress me?

To reach the ruling (available here in .pdf) whether the Paradise Park residents were entitled to the New Jersey Mobile Home Protection Act to Paradise Park, the New Jersey Appellate Court first wrote an operational definition of ‘in contemplation’ and then looked at the record, starting (yesterday) with the active lobbying to change the property’s zoning to be something other than a mobile home park. 

The reasonableness of a seller’s belief that the sale is exempt under N.J.S.A. 46:8C-13(a) must necessarily be dependent upon all [Our emphasis – Ed.] of the attendant circumstances surrounding the parties’ negotiations leading to the execution of the final contract, up to and including the date of closing of title, when presumably the seller delivers to the buyer a duly executed affidavit of compliance as required under N.J.S.A.46:8C-14. 

Given that the seller and buyer were actively lobbying to change the property’s permissible use at the same time they were negotiating a contract under circumstances highly coercive to the seller and advantageous to the buyer, that’s powerful evidence that Something Was Up.

Then comes:

2.  The consideration paid

In his filings, Mr. Bollerman argued, curiously, that of course the property’s buyer and seller had no contemplation of changing the use, because if that had occurred he would have had to pay more.  The way Mr. Somers put it:

In fact, [Somers] had received and rejected other “significantly higher” offers from other buyers because they included development approval contingencies. He was willing to make less profit from the sale in order to avoid any entanglement in a protracted process of obtaining governmental approvals. As he explained: “Selling it as a mobile home park, I knew, meant selling it for less money. That is what I agreed to. That is what I contemplated.” Somers thus candidly admitted that he did not notify any of the Park’s residents because he viewed this transaction as exempt under the Act.

We’ve already seen that Mr. Somers knew about the Act, and as we’ll see in a minute, he took it very seriously indeed.  In any case, the park sold for a depressed price – a price everyone tacitly concedes was well below full market value – to the one person who could compel a depressed price because he was holding a successful summary judgment against the seller that he knew the seller could not fulfill without “staggering expense” (buyer’s words):

Bollerman instructed his attorney, immediately after he prevailed on the liability part of his encroachment action, to negotiate a contract with Somers using this legal victory as leverage.  This resulted in a settlement of the damages part of the case, which was ultimately incorporated into and made an express part of the contract for sale.

The buyer traded his probably-uncollectible but certainly enforceable judgment into a bargain price:

How big a discount was it?  Expert testimony required

As argued by plaintiffs, this undermines one of defendants’ principal arguments; namely, that the consideration reflected in the contract is consistent with the continuing operation of the Park as a mobile home community. Expert testimony may provide a basis to quantify the value the settlement added to Somers’s contract, as well as the amount of damages to which Bollerman would have been entitled to if Somers was physically unable to remove the encroachment. These factors could affect the actual consideration Bollerman paid for the property.

That paragraph is another Christmas present to the plaintiff homeowners: it’s providing a roadmap for their trial strategy. 

From here to the courthouse

What would the property be worth if it could be redeveloped?  What is the cost of curing the judgment (the “staggering expense” Mr. Bollerman mentioned)?  Prove those and you not only demolish the price paid, you also start to quantify the amount of value to be gained by the buyer if the tenants were deprived of their rights – and, by extension, the damages that could potentially be owed to the residents.

3.  Correspondence of counsel

The unmistakable evidence that the seller and buyer knew what was afoot – what the plaintiffs’ brief describes as the ’smoking gun’ is the tussle between seller and buyer over who, if anybody, has to certify as to the exemption:

Bollerman certified that he first became aware of the existence of the Act in early January 2005, through conversation with a third-party. He then immediately directed his attorney to research the issue.

We know that Mr. Somers knew of the statute six months earlier, and we know the court has found this is the seller’s obligation – but Mr. Bollerman might well not have known about it.

In response, Edelson wrote a letter to Somers’s counsel advising him that the seller’s title insurance company required proof of Somers’s compliance with N.J.S.A. 46:8C-12.

Mr. Edelson, the court noted, has since been disbarred, which calls into question the credibility of any conclusions he might have reached during this phase, or the advice he might have given Mr. Bollerman. 

Hidden surveillance cameras of Mr. Bollerman and the reporting oblgiation

In any case, he sought to put the certification monkey onto Mr. Somers’ back

Specifically, Somers had to provide the affidavit of compliance required under N.J.S.A. 46:8C-14 in order to record the deed. Edelson asked that Martin Barger (Somers’s attorney) notify him immediately if this was going to be an issue, because the due diligence period would expire on January 31, 2005.

Mr. Somers emphatically flung the monkey off:

Not my responsibility!

Somers made the following comments with respect to Bollerman’s plans for the development of the property:

Lastly, at all times in the correspondence and conversations with Sandy Hook [Developers] and Mr[.] Bollerman and all other proposed purchasers, I was adamant that I was selling a mobile home park — an operating business and such a sale would be subject to only the normal “due diligence” criteria — Title, tenancies, pollution etc that would be done in any income property. It was made abundantly clear from the outset that there would be no conversation about Planning and Zoning, CAFRA or any other agencies that would need to be consulted to change the use of the property. I pointed out the Statute that requires me to offer the property to the current residents if I offer it for sale in contemplation of change of use. This letter is asking me to violate that Statute. 
 

Aside from its being a smoking gun – I agree with the plaintiffs – something about this phrase makes me like Mr. Somers more.  He’s calling what he sees and you’re in no doubt about his views. 
 

And by the rules, you’re out
 

The “development of the property” is absolutely none of my concern. The “requirements of their lenders” is irrelevant in a cash deal. They represented in the Agreement that they had the cash to close. These issues were discussed, made crystal clear and agreed to in my negotiations with Mr[.] Bollerman prior to executing the contract with “Sandy Hook” and Mr[.] Bollerman was authorized and appointed to execute this agreement. Sandy Hook will be negotiating with FEMA, lenders, contractors, tenants and anyone else they involve while they are operating a very substantial business and enjoying the income from the property. 
 

Mr. Somers is also clearly unhappy with the drift of events:
 

The chaos created by these one year leases is working to the benefit of Sandy Hook in that there will be more vacant spaces and those available for resale will be available at a very reduced price. During this current period, I get aggravation from tenants, prospective purchasers and local realtors on a daily basis. (Emphasis added by the court, boldface by Ed.)
 

As a matter of future litigation, it’s entirely possible Mr. Somers and the seller group may well turn out to be the residents’ allies.  The court has placed them squarely in the dock as defendants, and given them the burden of proof of exemption.  Mr. Somers’ conduct shows he knew of the statute, respected it, sold his property for less than conversion market value, and categorically refused to certify to something he didn’t know.  
 

After one further postponement, closing of title took place on March 4, 2005. According to Bollerman, throughout the due diligence period, Somers generally responded to any questions about the complexities of the site with the phrase: “It’s not my problem,” and emphasized that he was selling the property as a “trailer park.”
 

Mr. Somers, who has now sold his property and settled with Mr. Bollerman, has nothing at stake in this litigation, so he will be a perfect interested but disinterested witness, particularly under oath in a court of law.  
 

I remind you again not only are you under oath, you’re on television
 

The court did not add, although it easily could have, a fourth indicator of evidence:
 

4.  The buyers’ efforts to prevent application the statute
 

The seller and buyer consummated their transaction on March 4, 2005.  The very next day, the tenants first learned that the land under their property had been sold:
 

On March 5, 2005, an employee of the sellers hand delivered a notice signed by Somers advising some of the residents of the Park that the property had been sold to the Bollerman group. At the time there was no homeowners association in place, or even discussion of creating one.
 

At this point, the fat was really in the fire:
 

Legal notice!

[Continued tomorrow in Part 4.]

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As we saw yesterday, to make In the ruling (available here in .pdf) handed down two days before Christmas regarding the applicability of the New Jersey Mobile Home Protection Act to Paradise Park, a story I’ve been following this story for 2½ years (early posts in Part 1, Part 2, Part 3, Part 4, Part 5, and slow expulsion from Paradise), the court has to define what this meant:

a. Any sale or transfer of the property of a private residential leasehold community which is not made in contemplation of changing that property to a use or uses other than as a private residential leasehold community.

Now I might do it pat, now he is praying;

And now I’ll do’t.  And so he goes to heaven,

And so am I revenged.

Statutes are written by people striving to produce particular results, not are seldom those who have to administer the statutes they write.  They thus can use phrases which are easy to understand and very hard to discern when in dispute.  Further, the court cannot go back and ask the legislature to clarify its intent – that legislature is long since dispersed, and in any case it is a presumption of jurisprudence that legislatures meant what they wrote and wrote what they meant.  The court, therefore, has to proceed from written evidence in the statute, and from the body of law pertaining to a statute.

The means used by courts to accomplish this task are well settled. In interpreting a statute, we must determine the Legislature’s intent. D’Annunzio v. Prudential Ins. Co. of Am.,192 N.J. 110, 119 (2007). To determine that intent, we start with the plain language of the statute, and “ascribe to the statutory language its ordinary meaning.” Ibid. “If the plain language leads to a clear and unambiguous result, then our interpretive process is over.” Richardson v. Bd. of Trs., Police & Firemen’s Ret. Sys., 192 N.J. 189, 195 (2007); Patel v.N.J. Motor Vehicle Commission, 403 N.J. Super. 373, 376 (App.Div. 2008).[1]

The court held that:

We now define the term “in contemplation” of changing the use as denoting a state of mind involving less commitment to action than would an “intent” to change the use.

This makes perfect sense.  Precisely because conscience does make cowards of us all, I can contemplate many things that I did not intend to do; indeed, it’s hard to imagine that I intend something without having spent an interval, even if a brief one, contemplating whether doing it is worth the risk or cost.  

and am I then revenged,
To take him in the purging of his soul,
When he is fit and season’d for his passage?
No!

This is an inner state of mind, something a court cannot adjudicate, so the court converts this metaphysical abstraction into a concrete obligation, and places squarely on the contemplator:

In this context, we further hold that a seller invoking such an exemption must have a rational, good faith basis to believe, under all of the attendant circumstances, that the sale was not made “in contemplation” of changing the use of the property.

While I wasn’t there, I suspect that at this moment the original seller (Mr. Somers) and his legal counsel both sat up as straight as if touched by a taser.

I’m responsible?!?

Based on the evidence presented to the trial court, we are satisfied that a rational fact finder could find that Somers, as the seller, did not have a good faith basis to invoke the exemption in N.J.S.A. 46:8C-13(a). We thus reverse the trial court’s grant of summary judgment and remand.

The sellers had thought themselves merely as bystanders in a dispute between Mr. Bollerman as buyer and the Paradise Park residents – and now the court was saying – is saying, subject to a factual trial where everyone including the seller will be under oath – that the seller is not free from this controversy.

Bummer, dude

What’s the evidence regarding ‘contemplation’ of a change in use?

In seeking for the elusive ‘contemplation,’ the court looked at the trial record regarding three things, and found “a wealth of probative evidence of defendants’ state of mind concerning the future use of the Park property” (Page 36)

The contract was subject to a ninety-day due diligence period. On October 21, 2004, approximately two months after the signing of the contract, Bollerman’s attorney Gary Edelson [Since disbarred – Ed.] wrote Somers’s counsel a letter requesting that the due diligence period be extended until February 26, 2005 [Which, as we will see, was granted – Ed.]

1.   Lobbying activities of the seller and buyer

The record makes crystal clear that the seller was fully cognizant of the New Jersey law.  During the summer of 2004, while the seller was losing the zoning/ encroachment litigation, the seller sought to persuade the Borough of Atlantic Highlands to rezone his property:

If only it were as easy as giving them a cake

On June 4, 2004, Somers wrote a letter to the Highlands Planning Board, intending that it be accepted in lieu of his formal testimony.   Under the then prevailing zoning requirements for front, rear, and side yard clearances, only fifteen or sixteen modern mobile homes could fit on the site.  According to Somers, it had become necessary to apply to the Zoning Board of Adjustment for a variance whenever a mobile home was replaced.

Zoning changes with whim and fashion, and with the evolving modern American home.  What was big enough fifty years ago is anachronistically obsolescent today.  Ordinarily this doesn’t matter to the owners of existing homes, but because mobile homes fall into a netherworld, neither real estate nor truly movable chattel, they get caught up in these absurdities, such as applying for a rezoning each time an existing home is swapped for another existing home.

Arguing that the site’s mobile home use had become obsolete, Somers asserted that the park, as presently constituted, would not be able to accommodate the modern mobile homes sold in today’s market.  Somers thus urged the Board to re-zone the park property to permit the development of single-family type homes.

At this precise moment, it seems Mr. Somers was ‘in contemplation’ of a change in use – from mobile homes to single-family stick-built homes.  Further, the record suggests he intended this to happen via an orderly transition, not a wholesale redevelopment.  Let me reiterate – this is perfectly reasonable, and from a real estate perspective understandable, as it improves the locality’s basic budget algebra:

My parents can’t afford to pay for schools

In so doing, Somers made the following statements about the potential development of the site, and the resulting benefits to the municipality:

[snip]

5. The Boro collects no taxes on mobile homes. They are specifically exempt under the State Statute.

Still more evidence that mobile homes are in a netherworld, neither property nor chattel.

(The right policy answer, by the way, is that they are real estate the same way a condo or co-op unit is real estate, and should be seen as such.)

Correct-amundo!

That does not apply to town homes, of course. This rezoning will provide a permanent and reliable higher tax base. I suspect there will also be some building fees.

Mr. Somers knew full well that a resident-protection statute applied:

Somers noted the “very serious State laws long in effect that govern the closing/ conversion of Mobile-home parks.”  He added that residents of these parks had “the most protected type of tenancy in New Jersey.”  Any potential relocation expenses would thus be “provided for at no cost” to the municipality.  In his certification in support of his motion for summary judgment, Somers asserted that, at the time he submitted this letter to the Planning Board, he did not have any oral or written understanding or agreement with Bollerman because he was in the midst of the litigation instituted by Bollerman concerning the alleged encroachment.

He certified that he wrote the letter in response to a newspaper story about the Planning Board reviewing the master plan, thinking that rezoning his property might benefit himself and the town. He claimed that the letter was thus “not related to any sale of the property.” 
 

The picture of Mr. Somers emerging from the court’s decision is of an individual who becomes entangled with his neighbor, loses a judgment that he cannot satisfy by any meanings short of selling the property, and suspects his neighbor intends to do something he would not.
 

On June 10, 2004, six days after the date of this letter, the Planning Board held a public hearing at which Bollerman testified under oath. According to Dibble’s certification, Bollerman testified about “redevelopment plans.” Conversely, Bollerman claimed that his appearance was not related to any application for development. He was simply invited to testify as a local property owner to discuss the master plan.  It is undisputed that both Bollerman and Somers sought” zoning flexibility for the property. 
 

Trust me, you won’t notice the change
 

At the time of the Board meeting, Bollerman and Somers were engaged in active pre-contract negotiations, eventually leading to the agreement signed by them on August 26, 2004.
 

As the court put it:
 

The Lobbying Activities of Seller and Buyer: The record shows that during contract negotiations, and even after the signing of the final agreement, both Bollerman and Somers engaged in conduct which can be fairly characterized as lobbying to change the municipal zoning code to permit the development of the property for a use other than as a mobile home park (our emphasis).
 

If you think that’s good evidence that change in use was ‘in contemplation,’ wait until you see what follows:
 

What follows?

[Continued tomorrow in Part 3.]

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I taut I taw a tummawy judgment!

Last Tuesday, the New Jersey Appellate Court gave a big Christmas present to the beleaguered owners of mobile homes in Paradise Park, a 61-home mobile home park ideally situated on the waterfront in northern New Jersey near New York Harbor. 

I’ve been following this story for 2½ years (early posts on Paradise Park may be found in Part 1, Part 2, Part 3, Part 4, Part 5, most recently in a two-part post a month ago highlighting the slow expulsion from Paradise via a war of attrition, and drawing attention to the upcoming appellate court decision seeking to reverse a remarkable – one might even say ludicrous – district court summary judgment in favor of the defendants (that is, the park buyer and seller).

Now the appellate court has ruled the district court was wrong, and the residents will have the chance to prove that they do have the right to buy the park, and hence protect their homes.  In so doing, the ruling (available here in .pdf) defines and clarifies the New Jersey law in important, helpful, and really interesting ways.

The ruling’s header (partial)

Facts on the ground

All litigation starts with an actual dispute in which facts are contested, and the story here is particularly complicated and relevant, not so much for the law but for the people living in Paradise Park.

Readers interested only in the legal aspects should jump down to The law and the facts, but those of you with a prurient interest in land disputes should stay with me for this part:

Wanna take a peek at land use facts?

Paradise Park is located at the foot of Locust Street, between the Sandy Hook Bay Marina and the Borough of Atlantic Highlands. As of 2004, the Park totaled approximately 3.776 acres, and contained fifty-eight existing spaces for mobile homes and three “stick-built” homes, for a total of sixty-one housing units. The property has been used as a mobile home park for more than fifty years.

Sixty-one homes on 3.776 acres is over 16 homes to the acre, or about 2,700 square feet of land per home.  Let’s call that a rectangle 80 feet long by 35 feet wide. Considering that even a small mobile home is 15 feet wide by 40 feet long, it’s evident that the homes are crammed chock-a-block on the site. 

Somers purchased the Park property in March 1972 through a wholly owned corporation named Oakland Service Company (”Oakland“). Oakland transferred title to the property to Riverdale Management in 2000 “for tax reasons.” According to Somers, although his son and daughter assisted him in operating the property, “they relied upon my management decisions related to both the operation of the mobile home park, and the sale of the mobile home park.”

Meanwhile, the marina next door had been purchased by Mr. Bollerman, via his company Sandy Hook Developers.  A border dispute arose:

You stay on your side of the border, comrade, and we’ll stay on ours

On October 10, 2003, Sandy Hook Developers filed a five count complaint against Riverdale Management asserting encroachment and trespass upon the marina property. The complaint alleged that Riverdale Management: (1) was renting portions of the marina property land to its mobile home trailer owners as parking spaces; (2) had wrongly granted an easement over marina property to the local electrical utility company in order to provide electrical service to the Park’s residents; and (3) had directly, or through its predecessor in title, added fill to the marina property in the mid-1990s, thus causing damage and deterioration to the property.

Evidently it was, because in short order, Mr. Bollerman won:

On June 23, 2004, the court granted Sandy Hook Developers’ motion for summary judgment.  

Meaning that Mr. Bollerman had a valid and enforceable claim against his abutter, Mr. Somers, owner of the land on which Paradise Park sits.

The court limited the remedy afforded Sandy Hook Developers to injunctive relief, directing Riverdale Management to “remove all encroachments of the Defendant, its tenants, agents [,] servants or employees” from the marina property within sixty days of the date of the order.

The unique feature of real estate, as we’ve seen before, is the obvious one – you cannot move it. 

That’s “moving chattel,” not moving cattle!

So ‘removing encroachments’ is no mere matte of picking up your chattel and depositing them back on your own property, but of fundamentally changing the site configuration – and in some cases that may be impossible.

Based on these legal developments, Bollerman acknowledged that he could now bargain with Somers to acquire the mobile home park from a position of strength. He thus instructed his attorney to explore settlement options with Somers that specifically included the purchase of the Park property.

Shall we discuss a settlement?

Here, as elsewhere in the case, Mr. Bollerman’s conduct suggests an Occam’s Razor theory of his motivations.  Every action he took is consistent with him wanting to acquire the Paradise Park site, combine it with his existing marina, and eliminate the mobile homes. 

When in doubt, the simplest theory is the best

He made this point clear in his certification submitted in this case in opposition to plaintiffs’ motion for summary judgment.

It was at that time I directed [former attorney] Gary Edelson to explore options to settle the matter by way of a purchase of the Paradise trailer park property. I came to realize at that time that it was virtually impossible for Donald Somers to comply with the Court Order. By that time, we had a very clear focus on the extent of the encroachments on the property. There were many encroachments and some were very substantial, even the power lines supplying the property with power, and ran off of poles which had been illegally placed on property owned by Sandy Hook [Developers]. Mr. Somers would have had to incur staggering expense to relocate the entire encroachment son his property, if, indeed, it was possible at all.

…

I knew that Mr. Somers was in a virtually impossible position, and, quite frankly, saw it as a potential opportunity to purchase property and clean up a mess on an adjacent property that effected [sic] my investment in Sandy Hook Bay Marina. I also had concern that Mr. Somers may devise a solution that would exacerbate a bad situation. (Emphasis added.)

There’s nothing whatsoever wrong with Mr. Bollerman’s desire to change the abutting land’s use.  From a purely real estate perspective, it’s almost certainly higher value than a mobile home park, and a use that most bystanders in the Borough of Atlantic Highlands would favor.  All the real estate economic logic in the world favors such a conversion.

Logically, you can’t make a redevelopment without breaking tenancy rights

If the record is any guide, it wasn’t until later that Mr. Bollerman discovered a barrier to his plan – a state-level resident protection statute that, if applicable, would entirely scupper the conversion.

We’re protected by statute

But there’s one important obstacle – a state-level statutory protection.

The law and the facts: sale of a mobile home park that ‘contemplates a change in use’

At factual issue is whether, in 2004, when the owner group (controlled by Donald Somers) agreed to sell to their abutter, an entity controlled by James Bollerman, a conversion away from a mobile home park was contemplated. 

I wonder what ‘contemplate’ means?

This matters because:

[Under] the Mobile Home Protection Act (”the Act”), N.J.S.A. 46:8C-2 to -21 [,] under certain circumstances, the Act grants mobile home park residents a right to certain notices triggered by the sale of the property, and a concomitant right of first refusal. N.J.S.A. 46:8C-11; N.J.S.A. 46:8C-12.

The seller and buyer asserted that no such right of first refusal was available to the residents because:

[Section] 46:8C-13, denoted as “sales or transfers not subject to §§ 46:8C-11 and46:8C-12,” … delineates a total of twelve separate transactions or transfers of title that are exempt from the right of first refusal provisions discussed herein. These are the exemptions:

a. Any sale or transfer of the property of a private residential leasehold community which is not made in contemplation of changing that property to a use or uses other than as a private residential leasehold community.

Was a change in use ‘contemplated’?  In their contract, the seller (Somers) and buyer (Bollerman) made self-serving statements that no Sirree, they had no contemplation of a change in use.

No change in use, no Sirree!

Defendants countered by emphasizing that the only reliable indicator of the defendants’ state of mind during and after the contract negotiations is the contract itself. They asserted that the court’s focus should thus be limited to whether the contract contains any indication that a change in the property’s use was ever contemplated. According to defendants, the obvious answer to this query is “no.”

That’s what they said.  The plaintiffs (the mobile home owners) argued one had to look at what they did:

Plaintiffs argued that from its inception, the buyers showed an interest in developing this site as part of the larger parcel of land comprising the marina area. According to plaintiffs, the encroachment litigation and its settlement, the defendants’ efforts to amend the municipal zoning scheme, and the attempts, by both seller’s and buyer’s counsel, to conceal the true nature of the transaction in order to avoid the notice requirements of the Act, are indicative of the defendants’ state of mind.

Trust what I said, not what I did!

What does ‘in contemplation’ mean?

Having heard the parties, the appellate court had to interpret the statute’s legislative phrase ‘in contemplation,’ a challenge in statutory construction.

Under N.J.S.A. 46:8C-13(a), a seller may claim that the transaction is exempt from this statutory scheme because the sale was not made “in contemplation” of changing the use of the property as a mobile home community.

This the court did:

[Continued tomorrow in Part 2.]

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[Continued from yesterday's Part 1.]

With New Jersey mobile home park residents covered by a comprehensive Mobile Home Park Law, you’d think that sub rosa attempts to winkle them out of their rights would be thwarted by swift justice. 

At least, because we think we’ll win

As we saw in yesterday’s how we got here, you’d be wrong.  From the Paradise Park Homeowners Association ‘dear friends’ letter:

Finally, 2 ½ years after the residents began, they have reached the New Jersey Court of Appeals:

Not all of those who originally sought protection are still pursuing the case.  From Ms. Dibble’s email to me:

The war of attrition is been hot and heavy. We originally had many more homeowners. Mr Bollerman has gotten about 15 of the homes. Some through the death of the homeowner, at which point he then says that the lease is canceled.  Then the estate needs to sell and there are no buyers because everyone knows that the park has been purchased by a developer, so they end up selling dirt cheap to Bollerman – one home went for $4,000.

Unique among real estate asset classes, mobile homes do not appreciate in value.  As my friend in government Mr. E. put it:

Put these three factors together and you find that virtually every one of the six homeownership attributes can be compromised, or entirely confiscated, by an unscrupulous mobile home park operator. 

1. Unlimited appreciation can be eaten by higher space rent.

2. Right to sell can be economically neutered by higher space rent to an incoming tenant.  (Many states have laws prohibiting move-in or move-out fees, but changing the rent on turnover accomplishes much the economic same thing while conforming legally.)

3. Financeability.  I have heard numerous horror stories that, in general, lenders will not refinance an existing mobile home because the aging collateral is not economically recoverable.

4. Controllable occupancy cost.  Clearly absent in any year-to-year space rent situation.

5. Improvability.  Available to some limited degree.

6. Secure tenure.  Only if you can cope with rising space rent.

A modern double wide, a vastly improved physical structure

The scorecard?  One half out of six.  As I commented in the homeownership attribute post:

US counterexamples, as we have seen, are in mobile homes, which sit atop land leased to the home owner by the mobile home park operator.  It should be no surprise, therefore, that some states and localities have adopted anti-eviction laws or relocation benefit requirements, or even rights to buy at negotiated or formula prices.  To do otherwise places the mobile home owners at risk of the cruelest blow of all — being evicted. 

These impossible economics revealed themselves in Paradise Park:

When a seller does find a buyer he discourages the buyer or refuses to qualify them for a lease and argues the price downward. He has used his first option to purchase several times to prevent a pending sale.

As a general rule, I dislike rights of first refusal, which chill markets and inhibit owner value.  Here the park owner has a stacked deck: he has a right to match the last price, and he has a right to approve any buyer.

Make a bid, any bid

He can guarantee he’ll win the game by refusing to let anyone capable play against him.

The homes had been left empty but recently he has started to rent them out to a lovely class of people. Most of the people who he has leased to are friends and relatives of the resident super for the park.  The super has had a brisk business selling off or accumulating the fixtures, furniture, and other household goods of the people whose homes his employer has leveraged the purchase of.

The images so conjured are horribly Dickensian.

‘Street urchin’ sounds much better than ‘homeless child,’ don’t you think?

Then there are these charming details:

Elsewhere in the world, we speak of anti-poor governments, and it’s with a shock that we discover them right here at home, cloaked in the arcana of zoning:

Only I know the mysteries of the zoning laws

One of the things that happened in the re-zoning of the park is that they removed manufactured housing as a use in the zone and now we are a non-conforming use.  We would like the council to add MH housing back into the MD zone as a permitted use. That would be better for us when we win!

From the perspective of pure real estate economics, mobile home parks are a high-cost, low-benefit use, as I pointed out to a local reporter (whom I later quoted on the blog):

Mr. Eaton would serve both his clients and the city well if he produced a memorandum of law and fact setting forth the situation at Paradise Park, the law as it would apply if there were no rezoning, how it would apply with a rezoning, and a financial analysis of the two scenarios. Then we could see how much money is at stake.

However, from a purely financial standpoint, Smith supports the intellectual underpinnings of those seeking to rezone the mobile home park. Citing a 2001 study [More like an analytical essay — Ed.] by Richard Genz entitled “Why Advocates Need to Rethink Manufactured Housing“, Smith said that with an average mobile home community, a municipality typically pays more to provide services than the property produces in tax revenue. This can be explained because the typical mobile home park does not produce a great deal of real estate tax revenue while it consumes a great deal of utilities and typically places a high number of children in the school system.

To be completely clear, my point is simply that, if a locality is an economic enterprise – which it is – then there are better investments for its land than mobile home parks.

From the municipality’s perspective, Smith argues “more or less any other use of the property has a better cost-benefit analysis.”

The park’s existence on this magnificent site is a historical accident … but that having been said does not ipso facto give the locality the right to evict the residents without regard to their legitimate expectations and their rights under the law.

Given that it has an obvious conflict of interest, one has to wonder at the town’s impartiality:

The other major thing that you don’t know is that the town also rezoned the other MH park in Highlands, called Shadowlawn. They have rezoned this for two high-rise towers which is totally inconsistent with the Master Plan. 

Local economics running roughshod over principle?

People were outraged about it and they mounted the same petition challenge that Paradise Park did. The town actually hired a special attorney to invalidate the petition so that they could pass the zoning without a super majority.

When one can’t get the votes, change the number of votes you need!

Or let some people vote twice

Fighting local tyranny often requires outsiders:

This is one of the reasons that a nationwide organization called RocUSA [Short for resident-Owned Communities – Ed.] Paul Bradley, President, has been developed (based on the New Hampshire model developed by the New Hampshire Community Loan Fund).

New Hampshire has strong resident-protection laws; many other states (like California) do not.  There are some preservation efforts:

Carolyn Carter of the National Consumer Law Center […] just helped the MH homeowners in Delaware to draft a law that is much better than New Jersey’s and which was just signed into law.

New Jersey has a RocUSA technical assistant provider for conversions of MH communities to cooperatively owned communities. The group is called READSUSA and the initiative is COOP-NJ.

But all the technical assistance in the world doesn’t help if we can’t enforce the opportunity to purchase law in New Jersey – or we have this very narrow interpretation of the “contemplation of change of use.”

Ms. Dibble’s ‘dear friends’ letter does a good job framing what is at stake, not just for her community but throughout New Jersey:

While it may end in a damages/ compensation case, Paradise Park Homeowners is about something other than money: establishing a mobile home owner’s standing to remain in the community:

I wanted to clear something up. We have never wanted to leave the park. We argued for the compensation in the event that we lose and have to go.

Even if the legal process calls a halt to eviction and conversion, and grants the residents a shot at buying their land, they have another hurdle to surmount:

We are still hoping to purchase the park but we have had to go back to our potential lenders and ask about different loan scenarios, if we purchase the park we will not have the same income as we thought we would have originally.

The seals are just nice and I can see them in the winter from my front porch.

If I can give you any more information I would be happy to do so.

Thank you for all of your help and please wish us luck.

Good luck, Lori.

It is necessary that the decent people stick together and stay under cover. – Voltaire.

And have the scratch to buy back your rights

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