Park Owners Get Green Light For Unlimited Site Rent Increases!
A District Court Decision in Appeal 1711/2006, brought by Palmpoint Pty Ltd, and which annulled the earlier Tribunal Decision in Application MH020-05, has effectively given park owners the opportunity to propose any type of increase in site rent at any time, irrespective of what is stated in site agreement contracts, as long as the requisite two months notice is given.
This result, along with recent Court decisions in relation to termination of agreements, raises the question of the value of a signed, written agreement at all for the home owner.

The Manufactured Homes (Residential Parks) Act 2003 contains two sections allowing for increases in site rent.s69 which applies if an agreement provides for an increase and states how it is to be calculated.s71 which is used when a park owner proposes to increase the site rent and s69 does not apply.

The wording of s71 is ambiguous, and the fact that there have always been an array of differing opinions (including those of experts) as to its interpretation, provides testimony to this.
The interpretation of s71 by Palmpoint was that it was allowed to give an increase under s71 because home owners had a site agreement which did not include any provisions regarding site rent increases.

However, the Tribunal dismissed the Palmpoint application, interpreting s71 as only able to be used “if a site agreement does provide for an increase in site rent during its term but does not state how the amount of the increase is to be calculated……” (as required by s69) (emphasis added)

The District Court ruled on appeal, in part, that s71 “……covers the unlikely event of a park owner seeking to increase site rent either where no written agreement exists, or where there is a written agreement, but it does not contain a site rent increase provision”.

What was totally unexpected, and what causes great anxiety amongst home owners was that the District Court further ruled that in the case of home owners who do hold a site agreement containing clear terms as to how site rent will be increased, that “……s71 is a provision which enables park owners to seek to increase site rent……outside the terms of any such site agreement increase provision……” (emphasis added)

The question must be asked as to whether this is the true intent of the Legislators, or whether basically it is a matter of the lack of clarity in the present legislation which has enabled this unfortunate outcome with its daunting prospects for thousands of manufactured home owners.

Put simply, irrespective of what process, and at what time periods, site rents are permitted to be increased according to the mutual agreement between park owners and home owners as stated in the written agreement, the park owner may now (subject to two months notice), propose any additional increase at any time.

While challenge in the Tribunal is permitted within a very restricted time frame after notice, home owners must go through a process of writing to the park owner explaining that they do not believe the increase is fair, and then be prepared to defend their belief in the Tribunal. This “right” does not even come close to
counterbalancing the effect of this biased situation.

Further it is well acknowledged that the difficulty for home owners in procuring evidence, along with the time consuming and stressful nature of preparing a case, can frequently make such a task too daunting for the average home owner, who has been acknowledged by the Legislators as being frequently “elderly, single women, who are highly vulnerable to unfair business practices”.

While park owner’s financial superiority easily affords them the ability to employ expert legal advice for submissions, few home owners have this ability. Surely it was not the intent of the Legislators when they framed Section 71 of the Act, to produce such inequity.

There is great concern felt by home owners that the District Court was able to point to brief statements in both the Explanatory Notes to the Bill and in the then Minister’s second reading speech, to support its contention for s71.
Furthermore, some flawed aspects in the legislation would seem to be exposed if this has been the contention. What can possibly have been the value of s18(2) concerning the home owners “Information Document” where it requires this document to state “how site rent may be varied”, or the intent of s25(4) concerning requirement of written agreements including the site rent payable, when it is payable and how and when the site rent may be varied”, if s71 was intended to allow for site rent increases outside of this agreement?

Also raised is the aspect of the possible by-passing of the process of s22 of the Act, enabling proposed variations to a site agreement in respect of “Special Terms” only. If on the other hand, “how and when the site rent may be varied is not a “Special Term”, then it is not apparently open to the variation process.

MHOA Inc. has flagged the site rent increase issue as an area of considerable concern, for the purposes of the Review of the Manufactured Homes (Residential Parks) Act 2003.
Home Owners Need Protection

Authorised by Ronald Just
State Secretary
Manufactured Home Owners Association Inc