Future ownership of Pocasset Mobile Home Park subject of trial
BARNSTABLE — Ownership of a local mobile home park is at the center of a trial playing out in Barnstable Superior Court this week.
The trial opened Monday with both sides outlining their arguments.
Crown Communities LLC, a Wyoming investment firm which owns and operates mobile home parks in the U.S., wants to buy The Park in Pocasset, where about 170 people live, and entered into purchase-and-sale agreement with owner Phil Austin in November 2019 for $3.8 million.
Earlier: Residents of Pocasset Mobile Home Park look to own the property
The residents' Pocasset Park Association wants to exercise its right of first refusal and buy the park itself and has submitted its own offer.
Pushing for a judge to determine the rightful buyer, Crown filed a complaint in February 2020 against both the association and Austin, bringing the matter to court.
"Our intention is to fix the community," testified Crown managing partner Heath Biddlecome.
The trial is jury-waived, which means Associate Judge Gregg J. Pasquale will decide the case.
Two parties seek to buy park
After he learned the Pocasset park was for sale, another Crown managing partner, Alexander Cabot testified that he arranged to tour the park with the owner.
Cabot described the park as built in the 1950s to 1960s with "major deferred maintenance." Problems exist with the infrastructure, including the water system and trees that need maintenance, and several abandoned homes that should be removed.
Cabot called those vacancies "appetizing targets" to bring in new residents. Improvements could cost about $1 million, according to a Crown estimate.
"Basically, it was what I call 'a turn-around,'" Cabot said.
He was "vaguely aware" of Massachusetts right of first refusal statute that grants homeowners in mobile parks the right make an offer if their park is offered for sale. Fifty-one percent or more of the residents must want to buy the park, according to the statute.
Cabot said he believed it only applied if the company intended to redevelop the park for another purpose. Crown planned to keep the park a mobile-home community, he said.
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Thomas W. Aylesworth, the residents association lawyer, noted that the company did not consult with a lawyer licensed in Massachusetts and instead used a Michigan lawyer.
After receiving notice of the impending sale, the residents scrambled to form an association and submit their own offer. They worked with New England Resident Owned Communities that's partnering with the Cooperative Development Institute.
The organizations assist residents secure ownership of their mobile home parks and help them get loans to match private bidders and cover any capital projects needed on the site.
Cooperative Development Institute has also lent advice to the association and financed an engineering report, environmental report, an appraisal and legal costs, which will be paid back through a mortgage given to the homeowners.
If they are successful in buying the park, the homeowners association would set the rent that goes toward paying the mortgage and park maintenance. It would also establish an escrow account for future capital improvement projects.
But Crown Communities argues in the complaint that the homeowners association has not retained signatures from the required 50% of tenants. Some have been rescinded under the basis of forgery, misrepresentation, or duress, meaning the company has the right to buy the park.
In addition, the complaint indicates that Austin gave residents “unseasonable notice” about the sale.
In court, Austin's attorney said he and his client will play a limited role and are waiting for the court to decide the rightful buyer.
Both claims of misinformation
Attorneys for both Crown and the residents association claimed in court that the other side had spread misinformation.
Aylesworth said letters Crown sent to residents amounted to "scare tactics" and "are a source of misinformation." One letter warned the residents about the estimated $1 million in improvements and implied that residents would be personally liable.
The letter reads: "A question to ask is: ‘Who is going to do all this hard work’? The new 'association,' which is really the current tenants?”
"You're telling the residents ... they individually will be responsible for the improvements," said Aylesworth.
Cabot said the letters were not meant to suggest that and instead were making the point that the improvements would be time-consuming and require specialized skill.
Meanwhile, Crown claims rumors about the company's plans spread at the mobile home park, including plans to raise the $520 rent to $1,000 and to build condos or houses. The talk led to the company's letter-writing campaign to residents.
"We came to the conclusion a lot of the residents were not being given a straight story about who we were," Cabot said.
Promises to residents included a reimbursement of up to $5,000 in remodeling costs for their homes and a two-year rent freeze with the assurance it will not increase more than 3% each year. Crown Communities is also offering $10,000 over the appraised value of a resident's home if they want to sell during the next three years.
"You can't escape the fact that we want every home to look nice," Cabot said.
But Aylesworth countered that such promises were meant to entice residents to withdraw their support for the residents' association.
Background on Crown
Heath Biddlecome, a managing partner at Crown, was accused by federal regulators in 2009 of defrauding investors who put nearly $10 million into a fund to invest in mobile home parks.
In May 2011, a judge for the U.S. District Court for the Southern District of California ordered Biddlecome to pay $141,818 to the receiver of Homestead Limited LLC, the fund he set up with the investors. The judge also found that Biddlecome was liable for a civil penalty of $65,000.
Biddlecome also was barred from trading stock with the right to reapply for association after three years by the U.S. Securities and Exchange Commission.
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