By Rawdon Crozier, barrister from KBG Chambers and Ibraheem Dulmeer, Legal Adviser at LEASE
June 2018
This article outlines the buying and selling process for pre-owned (second hand) park homes on a pitch on a protected site within the meaning of the Mobile Homes Act 1983. It also considers a recent decision of the Upper Tribunal (Lands Chamber) relating to the buying and selling process. The article is an outline, and not a substitute, for obtaining independent legal advice from a suitably qualified solicitor; that is one with experience in dealing with the buying and selling of park homes.
Introduction
Park homes are not equivalent to bricks and mortar and the procedure for buying and selling a park home is not subject to usual conveyancing protocols.
Following the introduction of the Mobile Homes Act 2013 and the Mobile Homes (Selling and Gifting) Regulations 2013 in England and equivalent legislation in Wales, from the 26 May 2013 in England and 1 October 2014 in Wales, a compulsory procedure was introduced for the buying and selling of a pre-owned (second hand) residential park home on a residential park home site.
Although some aspects have not been without criticism, having a regulated procedure has:
- curbed abuses in the ad hoc selling schemes that operated on some parks by substantially removing park owners from the sales process;
- created a measure of certainty; and
- given occupiers greater protection.
Buyers and sellers of park homes do, however, now have much more responsibility to ensure that the transaction is completed properly, and not following the procedure could affect the effectiveness of a sale and lead to potentially costly disputes.
The procedure
Until 26 May 2013, an occupier was required to obtain the consent of the site owner before selling or gifting a mobile home. In relation to protected sites, s.10 of the 2013 Act removed such a requirement. The procedure involves some or all of the following steps, depending upon whether the park home agreement is a ‘New Agreement’ or an ‘Existing Agreement’. The definitions are dealt with under ‘Common Questions’ below.
Step 1 (New and Existing Agreements)
Once a price for the home has been agreed between the seller and buyer, the seller must provide the buyer with a form called a ‘Buyer’s Information Form’, together with copies of certain key documents.
The form and other documents must be supplied to the buyer at least 28 days before the date when completion of the sale of the home is to take place, unless the buyer has agreed to a shorter period.
The key documents that must be sent include: a copy of the seller’s Mobile Homes Act agreement/written statement; a copy of the current park rules; written details of any charges payable in respect of electricity, gas, water, sewerage or other services supplied to the park home, including when these charges are payable and when they are next due for review; written details of any other charges relating to the home or the park, including any charges for the use of a garage, parking space or outbuilding; a copy of any current warranty for the home; and a copy of any structural survey of the home, the base or the pitch which the seller has had carried out in the previous 12 months.
If the seller is unable to provide any of the documents mentioned above, they must provide a written explanation as to why this is the case.
Step 2: (existing agreements only)
The buyer and the seller must both complete a ‘Notice of Proposed Sale Form’, and the seller must then send this form to the site owner at least 21 days before the proposed completion date. This form tells the site owner that the seller intends to sell their home, and transfer their agreement to the buyer.
Step 3: (Existing agreements only)
If the park owner wants to object to the proposed sale and assignment they must apply to the First-tier Tribunal (Property Chamber) in England or Leasehold Valuation Tribunal in Wales (‘Tribunal’) for an Order to prevent the sale going ahead and must notify the seller that they have done this, within 21 days of receiving the notice. The site owner can only object to the sale if the buyer (or someone who is intending to live with the buyer) does not meet any minimum age rule on the park, wants to keep any animals of a type which are not allowed, wants to keep vehicles of a type which are not allowed on the park, or wants to park more vehicles than the maximum number allowed under the park rules.
Step 4: (New and existing agreements)
If the site owner has not applied to the Tribunal within the 21-day period, then the sale can go ahead on the agreed date. On the day of completion, the buyer and the seller must both complete and sign an ‘Assignment Form’ to transfer the occupation agreement to the buyer. The buyer and seller should both keep a completed copy of the form. On completion the buyer must then pay the seller 90 per cent of the agreed sale price, holding back the remaining 10 per cent for the commission payable to the site owner.
Step 5: (New and existing agreements)
Within seven days of completing their purchase of the park home the buyer must complete and send to the site owner a ‘Notice of Assignment’, which must tell the site owner the name of the buyer(s) and the names of anyone else who intends to live in the park home with them, the date when the agreement was assigned, the price paid for the park home, the amount of commission payable to the site owner, and the seller’s forwarding address.
Step 6: (New and existing agreements)
After receiving the Notice of Assignment, the site owner should tell the buyer the details of the bank account where they want the commission to be paid – the buyer must then pay the commission to the site owner within seven days of these details being provided.
Common Questions
The Leasehold Advisory Service (LEASE) receives many enquires relating to the buying and selling process. Among the most common questions are those that follow…
Q: I bought my park before 26 May 2013 in England (or 1 October 2014 in Wales) and now want to sell it. Is there a procedure that I must follow?
A: Yes. Agreements commenced before 26 May 2013 (or 1 October 2014 in Wales) which have not been assigned or transferred since 26 May 2013 (or 1 October 2014 in Wales), are defined as ‘Existing Agreements’ and the procedure set out above must be used.
Q: What if my park home agreement started after 26 May 2013?
A: If the occupation agreement commenced after 26 May 2013 or 1 October 2014 in Wales, or started before that date but has been assigned since 26 May 2013 or 1st October 2014 in Wales, it will be a ‘New Agreement’. In that case, the buyer and seller should follow all of the steps set out above except for steps 2 and 3, as the seller under a New Agreement does not need to give any prior notice of sale to the site owner.
Q: What if I want to gift my park home?
A: Where the park home owner wants to give their park home to a member of their family they must follow the procedure set out above (depending on whether the agreement being transferred is an ‘Existing’ or a ‘New’ agreement), except that rather than using the Notice of Proposed Sale form for an Existing Agreement the park home owner should instead send the site owner a “Notice of Proposed Gift” form. The site owner is entitled to ask the park home owner for proof that the proposed donee is a member of the donor’s family. There is also no commission payable to the site owner on a gift of a park home.
Q: Where can I get these forms?
A: All of the prescribed forms referred to in this article can be downloaded free of charge from the Forms section of LEASE Park Homes Advice website.
Q: Is there recent case law on the buying and selling process?
A: In the recent Upper Tribunal (Lands Chamber) case Elleray v Bourne [2018] UKUT 0003 (LC), it was held that there was no rule that, in every mobile home sale, the commission was to be paid from the purchase price; the agreement between the parties could provide otherwise. The Upper Tribunal also found that the wording of the standard assignment form prescribed by the Mobile Homes (Selling and Gifting) (England) Regulations 2013 was contradictory, and, for it to make sense, the phrase ‘from the purchase price’ had to be disregarded. The dispute arose because, while the buying and selling forms indicated that £145,000 was the price to be paid by buyer and that the sum of £14,500 was to be deducted from the sale price and paid directly to the site owner’s bank following completion of the sale and the assignment of the pitch agreement, the Assignment form indicated that £145,000 was to be paid for the mobile home and that the seller was to keep the whole of this sum, while it was for buyer to pay the commission of £14,500 to the site owner. The earlier forms had been made ‘subject to contract’ and this operated to prevent either party becoming bound by terms agreed in principle. The result was that the 10 per cent commission had to be paid by the buyer to the site owner and the seller was entitled to the full purchase price without deduction.
It was commented that, on the facts of the case, there would have been a strong claim for rectification of the Assignment Form to bring it into line with parties’ shared intention but that the First Tier Tribunal did not have power to grant the remedy of rectification so as to correct a defective instrument and make it accord with the true bargain reached between contracting parties. The case rather highlights that the buying and selling procedure is not without pitfalls.
Q: What about sales by the site owner? Does the buying and selling process outlined above apply?
A: The procedures set out above do not apply where someone is buying a park home direct from the site owner. This article does not cover direct purchases but it should be noted that a site owner cannot make it a condition that a park home on a protected site once purchased should be sold through the site owner. If site owners seek to impose such a condition, residents should report the matter to the Council and/or seek legal advice.
Q: Do I need to use a solicitor?
A: Although using professionals such as solicitors and surveyors is not compulsory for park home transactions, both the Government and LEASE strongly recommend that buyers and sellers seek their own independent legal advice from a specialist in park homes before deciding whether or not to proceed advice avoid issues.
