Legal Question in Business Law in California

Directors of Resident-owned Mobilehome Park Require New Lease

Nonprofit mutual benefit corp acquires and operates MHP for benefit of member-residents. The occupancy agreements have been on a month to month basis for 17 years.Now our Board and corporate counsel say we must sign 5 year leases with no release clauses when we leave. Also we must agree to sign a new Occupancy agreement with any successor.The corporation owns all the real estate and our large mortgage is secured by the property. I feel that this provision isn't appropriate in our case. Members are up in arms but I see little recourse since we can't change Bylaws to preclude undesirable changes--or can we? Recall of directors requires 2/3 vote and little likelihood. Help


Asked on 8/11/02, 6:21 pm

1 Answer from Attorneys
Martin Snitow

Re: Directors of Resident-owned Mobilehome Park Require New Lease

Why did corporate counsel and the Board decide to do this? Possibly the mortgage lender required the leases to secure long-term rents to pay the mortgage.

The Board is supposed to act as a fiduciary for the benefit of the members. Unless there is a legitimate purpose behind the new requirement, it may be challenged.

I suggest you talk to the Board or officers and ask why they approved this. If you are still not satisfied, you should consult an attorney to protect your rights.

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Answered on 8/12/02, 12:54 pm


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