How to assist with pre-owned park home sales in six steps

Over the last few years, several government measures have affected the park home sales procedure. The Upper Tribunal (Lands Chamber) recently highlighted the need for more clarity in this area (Elleray v Bourne [2018] UKUT 0003 (LC)). This article recaps the process for buying and selling pre-owned (second hand) park homes in a protected site within the meaning of the Mobile Homes Act 1983 (MHA 1983).

Regulations

A compulsory procedure was introduced (from 26 May 2013 in England, and 1 October 2014 in Wales) for buying and selling pre-owned residential park homes on a protected park home site. This followed the introduction of the Mobile Homes Act 2013 (MHA 2013) and the Mobile Homes (Selling and Gifting) Regulations 2013 in England and equivalent legislation in Wales.

Benefits of a regulated procedure have included:

• greater protection for occupiers
• providing a measure of certainty
• curbing abuses in the ad hoc selling schemes operating in some parks which were substantially removing park owners from the sales process.

Some aspects of regulation have not escaped criticism, however. Buyers and sellers of park homes now have much more responsibility to ensure their transaction is properly completed. Failure to follow procedure could affect a sale’s validity and lead to – potentially costly – disputes.

Buying and selling procedure

Before 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, section 10 of the MHA 2013 removed such this requirement.

The current procedure involves some or all of the following steps, depending upon whether the park home agreement is a ‘new’ or ‘existing’ agreement .

• Existing agreements: agreements commenced before 26 May 2013 (or 1 October 2014 in Wales) which have not been assigned or transferred since that date are defined as existing agreements.
• New agreements: if your occupation agreement commenced after 26 May 2013 (or 1 October 2014 in Wales), even if it started before that date but has been assigned since, it qualifies as a new agreement.

Step 1: Buyer’s information form and key documents (new and existing agreements)

Once both parties have agreed a price for the park home, the seller must provide the buyer with a buyer’s information form, together with copies of certain key documents.

The form and other documents must be supplied at least 28 days before the sale completion date is due to take place, unless the buyer has agreed to a shorter period.

Key documents that must be provided include:

• seller’s Mobile Homes Act agreement / written statement
• 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 charges for the use of any garages, parking spaces or outbuildings
• any current warranty for the home
• any structural survey of the home, base or pitch that 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: Notice of proposed sale form (existing agreements only)

Both parties must complete a notice of proposed sale form, and the seller must send this form to the site owner at least 21 days before the proposed completion date. This form tells the site owner that the vendor intends to sell the home and transfer their existing agreement to the buyer.

Step 3: Site owner objections (existing agreements only)

If the site owner objects to the proposed sale and assignment, they must apply to the First-tier Tribunal (Property Chamber) in England or Leasehold Valuation Tribunal in Wales (the ribunal) for an order to prevent the sale going ahead. They must notify the seller that they have done this, within 21 days of receiving the original notice.

The site owner can only object to the sale if the buyer (or someone who is intending to live with the buyer) falls into one of the falling categories:

• they do not meet the minimum-age rule of the park
• they want to keep any animals of a type that is not allowed
• they want to keep vehicles of a type prohibited in the park
• they want to park more vehicles than the maximum number allowed under park rules.

Step 4: Completion and the assignment form (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, both parties must complete and sign an assignment form to transfer the occupation agreement to the buyer. Both parties should keep a copy of the completed 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 commission, which is payable to the site owner.

Step 5: Notice of assignment (new and existing agreements)

Within seven days of completing their purchase, the buyer must complete and send a notice of assignment to the site owner, which must include:

• name of the buyer(s)
• name(s) of anyone else who intends to live in the park home
• date when the agreement was assigned
• price paid for the park home
• amount of commission payable to the site owner
• forwarding address of seller.

Step 6: Paying commission (new and existing agreements)

After receiving the notice of assignment, the site owner should give the buyer the details of the bank account into which they want the commission to be paid – the buyer must pay the commission within seven days of these details being provided.

Recent case law

In the recent Upper Tribunal (Lands Chamber) (UT) case Elleray v Bourne [2018] UKUT 0003 (LC), the UT held that commission did not have to be paid from the purchase price in every mobile home sale; the agreement between the parties could provide otherwise. The UT 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.

Failure to follow procedure could affect a sale’s validity and lead to potentially costly disputes.

The dispute resulted from a contradiction between the buying and selling forms, and the assignment form. While the initial forms indicated that the buyer was to pay £145,000 in total – including £14,500 commission, which the buyer was to deduct from the sale price after completing the sale and pay directly to the site owner’s bank – the assignment form indicated that the seller was entitled to the whole sum of £145,000, while it remained for the buyer to pay the commission.

The earlier forms had been made ‘subject to contract’, which prevented either party becoming bound by terms agreed in principle. The judgment of the UT was that the buyer had to pay the 10 per cent commission to the site owner, while the seller was granted the full purchase price.

It was commented that there would have been a strong claim to rectify the assignment form to bring it into line with the parties’ shared intentions. However, the First-tier Tribunal did not have sufficient powers to grant this. It was unable to amend the form to accord with the intended bargain between the two parties.

This case highlights that the buying and selling procedure is not without its pitfalls.

Common questions

The Leasehold Advisory Service (LEASE) receives many enquiries relating to the process for buying and selling park homes. You can read some of the most common questions below.
These may be useful to be aware of, as you may get similar questions from clients or members of the public:

• Q: I bought my park home 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 that date are defined as ‘existing’ agreements. You will need to follow the procedure set out above.
  
  
• Q: What if my park home agreement started after 26 May 2013?
  A: If your occupation agreement commenced after 26 May 2013 (or 1 October 2014 in Wales) – even if it started before that date but has been assigned since – it qualifies as a ‘new’ agreement. In such cases, whether buying or selling, you should follow the steps outlined above (except for steps 2 and 3, as under a new agreement the seller does not need to give prior notice of sale to the site owner).

Both the government and LEASE strongly recommend seeking independent legal advice from a specialist in park homes

• Q: What if I want to gift my park home?
  A: If you want to give your park home to a family member, you must follow the procedure set out above except that (for an existing agreement) you should send the site owner a notice of proposed gift form, instead of using the notice of proposed sale form. The site owner is entitled to ask for proof that the proposed recipient is a member of your 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 the prescribed forms referred to in this article can be downloaded free of charge from the forms section of LEASE park homes advice.
  
  
• Q: What about sales by the site owner? Does the buying and selling process outlined above apply?
  A: If someone is buying a park home direct from the site owner, the procedures set out above do not apply. This article does not cover direct purchases, but you should note 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 local 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 you seek your own independent legal advice from a specialist in park homes.