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Sierra Corporate Management A Kort & Scott Company

  1. K&S
  2. SCM
  3. Leases
  4. Agreements

SCM Long-Term Lease Agreements

Be very careful when "considering" signing any long-term lease with Sierra Corporate Management (SCM). The standard 15, 20 or 25 year SCM long-term lease agreement may contain a sentence that locks you into a minimum 8.0%, 7.5%, 7.0%, 6.5% or 6.0% yearly space rent increase whether the cost of living (CPI) justifies it or not.

The first paragraph of the Sierra Corporate Management Lease Agreement may read something like this, it is in 12PT ALL CAPS, and should be FAIR WARNING that you are about to give up your homeowners rights if you sign the lease.

This agreement will be exempt from any ordinance, rule, regulation or initiative measure adopted by any Governmental entity which establishes a maximum amount that a landlord may charge a tenant for rent.
Sierra Corporate Management Lease Agreement

The above opening statement should be enough to prevent you from signing any Sierra Corporate Management Lease Agreement. But, if it is not, please continue reading.

Within your SCM Lease Agreement may be a section relating to the length of your lease (15, 20 or 25 years) along with an opening paragraph that may read like this...

The beginning monthly Base Rent under this Lease shall be $1,300.00 which shall remain in effect until the first anniversary date (or rent adjustment date) which is June 1st of each calendar year. Each anniversary date, then currently monthly Base Rent shall be adjusted based on 100% of the annual increase in the Consumer Price Index (CPI) for the Los Angeles, Riverside, Orange County area (1982-1984=100) utilizing the "All Urban Consumers" index as of the most recent month available at the time of the giving notice of the increase to Tenant.
Sierra Corporate Management Lease Agreement

Seems fair enough, this is what most Good Citizen mobile home park owners will do, keep their annual rent adjustments at, or under the CPI for your area. But, right after the above sentence may come one of these statements depending on the lease term (without the forewarning)...

The SCM 8/7/6 Percent Trap

In no event shall the CPI rent adjustment under this paragraph be less than eight (8) percent per month of the then last charged monthly Base Rent.
Sierra Corporate Management 15 Year Lease Agreement

In no event shall the CPI rent adjustment under this paragraph be less than seven (7) percent per month of the then last charged monthly Base Rent.
Sierra Corporate Management 20 Year Lease Agreement

In no event shall the CPI rent adjustment under this paragraph be less than six (6) percent per month of the then last charged monthly Base Rent.
Sierra Corporate Management 25 Year Lease Agreement

Limits Annual Rent Increase

Letter from Abe Arrigotti Promoting Leases…

The leases offer many benefits to you as a resident. One of the largest benefits is that it LIMITS your annual rent increase for the term of your tenancy at the park! In other words, you will be able to know how much the rent increase will be every year.
Lease Offer Letter from Abe Arrigotti

SCM Long-Term Lease Example

SCM long-term lease agreements are usually 15 years at 8.0%, 20 years at 7.0% or 25 years at 6.0%.

If you sign a 25-year long-term lease with a 6.0% minimum rent increase compounded yearly, based on a starting space rent of $1,600 per month, at the end of 25 years, you will be paying $6,501 per month for your mobile home space rent.

Once you sign that type of long-term lease agreement, here is what you can expect to happen over the next 25 years based on a $1,600 per month starting space rent.

Year 13: Your mobile home space rent will DOUBLE in 13 years, based on a minimum 6.0% annual space rent increase, from the date you sign that long-term lease with Sierra Corporate Management.

2x $1,600 = $3,227

Year 20: Your mobile home space rent will TRIPLE in 20 years, based on a minimum 6.0% annual space rent increase, from the date you sign that long-term lease with Sierra Corporate Management.

3x $1,600 = $4,856

Year 25: Your mobile home space rent will QUADRUPLE in 25 years, based on a minimum 6.0% annual space rent increase, from the date you sign that long-term lease with Sierra Corporate Management.

4x $1,600 = $6,501

Stop Predatory Park Owners

SCM Space Rent Calculator

The SCM Space Rent Calculator default example below uses a starting mobile home space rent of $1,600, with a 6.0% minimum yearly increase, over a period of 25 years. You can change the numbers to reflect your proposed lease terms and then click/tap the “5. How Much Will My Space Rent Be?” button.

Rounding of Rent Increases: Each time that there is an adjustment in rent, total rent will be rounded up, not down to the nearest one dollar ($1.00).
Sierra Corporate Management Lease Agreement

Instructions for Calculator Use

  1. Enter the proposed 1. Monthly Space Rent.
  2. Enter the proposed yearly 2. Minimum % Increase. Usually 8.0%, 7.0% or 6.0% depending on lease term.
  3. Select the proposed 3. SCM Lease Term. Usually 15, 20 or 25 years.
  4. Enter a 4. Starting Year.
  5. Click/tap the 5. How Much Will My Space Rent Be? button.
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Based on a Sierra Corporate Management long-term lease agreement period of 25 years, with a starting monthly space rent of $1,600, and a minimum 6.0% yearly rent increase, your monthly mobile home space rent over the next 25 years is shown below.

At the end of 25 years, you will be paying $6,501 per month for your mobile home space rent!

Rows highlighted in red represent DOUBLE, TRIPLE and sometimes, QUADRUPLE increases over the starting monthly space rent. What are you about to get yourself into?

Note: The Space Rent column in the table below is your rounded up adjusted space rent. The Lease Value column shows a cumulative total of the Space Rent you'll pay for the duration of your lease period.

Year % Increase Amount Calculation Space Rent Yearly Total Lease Value
1 2025 0.00% $0.00 $1,600.00 $1,600 $19,200 $19,200
2 2026 6.00% $96.00 $1,696.00 $1,696 $20,352 $39,552
3 2027 12.38% $197.76 $1,797.76 $1,798 $21,576 $61,128
4 2028 19.13% $305.88 $1,905.88 $1,906 $22,872 $84,000
5 2029 26.31% $420.36 $2,020.36 $2,021 $24,252 $108,252
6 2030 33.94% $542.26 $2,142.26 $2,143 $25,716 $133,968
7 2031 42.00% $671.58 $2,271.58 $2,272 $27,264 $161,232
8 2032 50.56% $808.32 $2,408.32 $2,409 $28,908 $190,140
9 2033 59.63% $953.54 $2,553.54 $2,554 $30,648 $220,788
10 2034 69.25% $1,107.24 $2,707.24 $2,708 $32,496 $253,284
11 2035 79.44% $1,270.48 $2,870.48 $2,871 $34,452 $287,736
12 2036 90.25% $1,443.26 $3,043.26 $3,044 $36,528 $324,264
13 2037 101.69% $1,626.64 $3,226.64 $3,227 $38,724 $362,988
14 2038 113.81% $1,820.62 $3,420.62 $3,421 $41,052 $404,040
15 2039 126.69% $2,026.26 $3,626.26 $3,627 $43,524 $447,564
16 2040 140.31% $2,244.62 $3,844.62 $3,845 $46,140 $493,704
17 2041 154.75% $2,475.70 $4,075.70 $4,076 $48,912 $542,616
18 2042 170.06% $2,720.56 $4,320.56 $4,321 $51,852 $594,468
19 2043 186.31% $2,980.26 $4,580.26 $4,581 $54,972 $649,440
20 2044 203.50% $3,255.86 $4,855.86 $4,856 $58,272 $707,712
21 2045 221.75% $3,547.36 $5,147.36 $5,148 $61,776 $769,488
22 2046 241.06% $3,856.88 $5,456.88 $5,457 $65,484 $834,972
23 2047 261.56% $4,184.42 $5,784.42 $5,785 $69,420 $904,392
24 2048 283.31% $4,532.10 $6,132.10 $6,133 $73,596 $977,988
25 2049 306.31% $4,900.98 $6,500.98 $6,501 $78,012 $1,056,000

Starting Monthly Space Rents

Below we’ve provided 17 graphic tables with starting space rents beginning at $1,000 and increasing in $100 increments up to $2,600 based on the KSFG DBA 25-year long-term lease agreements.

The MHPHOA have presented these graphic tables to many residents. Most residents are shocked when they see what they’ll be paying over the term of their leases.

$1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2,300 $2,400 $2,500 $2,600

Note: To save the above images, right click the button(s) and choose “Save Link As…”

Explanation of Table Columns

  1. % Increase: This is how much your starting space rent has increased in percentage points since year one (1).
  2. Amount: This is how much more you'll be paying per month year over year without rounding up to the nearest one dollar ($1.00).
  3. Calculation: This is how much your space rent would be without rounding up to the nearest one dollar ($1.00).
  4. Space Rent: This is how much your space rent will be rounded up to the nearest one dollar ($1.00).
  5. Yearly Total: This is your rounded up monthly space rent multiplied by 12 months.
  6. Lease Value: Lease receivables before deductions. Also total Space Rent paid.

California Health and Safety Code §18250

The Legislature finds and declares that increasing numbers of Californians live in manufactured homes and mobilehomes and that most of those living in such manufactured homes and mobilehomes reside in mobilehome parks. Because of the high cost of moving manufactured homes and mobilehomes, most owners of manufactured homes and mobilehomes reside within mobilehome parks for substantial periods of time. Because of the relatively permanent nature of residence in such parks and the substantial investment which a manufactured home or mobilehome represents, residents of mobilehome parks are entitled to live in conditions which assure their health, safety, general welfare, and a decent living environment, and which protect the investment of their manufactured homes and mobilehomes.
Health and Safety Code §18250

CALIFORNIA HEALTH AND SAFETY CODE §18250
1. Leases 2. Sample 3. Incentives 4. Unconscionable 5. Forbearance 6. Addendums