COXSACKIE — State Attorney General Barbara Underwood ordered UMH Properties Inc., a real-estate trust that invests in manufactured housing communities looking to develop in the village of Coxsackie, to reform its rental practices following a probe last month into allegations of illegal down payments charged to tenants in an illegal rent-to-own plan.
UMH agreed to a settlement with tenants but has denied any wrongdoing.
The attorney general’s office announced Oct. 18 that eight companies — Garden Homes Management, Harper Homes, Hoffman Homes, Horizon Land Company, JKLM Communities, Kingsley Management Corporation, Sun Communities and UMH Properties offered illegal rent-to-own plans for tenants of their manufactured home parks.
Under the terms of the settlement with all eight companies, the attorney’s general office will allow renters to rescind their purchase agreements and be refunded for their deposit and any repairs to the home within 45 days of their decision. The park will also be held responsible for injuries on the property.
Park owners that violate the state law will face fines from $1,000 to $5,000 depending on the number of contracts in place, according to the attorney general’s office.
“New Yorkers across the state are already struggling to afford a home and these companies took advantage of that struggle, promising home ownership and instead leaving families with default, eviction and financial devastation,” Underwood said in statement.
“This settlement holds these manufactured home park owners to account and provides rent-to-own tenants with much needed protections and relief,” Underwood said. “We’ll continue to work to further reform the industry and ensure all New Yorkers have the protections they deserve, no matter where they live.”
Representatives of the Freehold Township-based UMH have maintained their company did not take part in any shady rent-to-own plans.
“The company paid the $1,000 settlement to resolve the matter cost-effectively,” UMH said in a statement. “There was no admission of liability associated with the settlement.”
Coxsackie Village Mayor Mark Evans said he was not aware of the settlement.
In March, UMH filed a Notice of Claim for damages against the village of Coxsackie alleging officials unlawfully disregarded its applications to build a manufactured home park on a 110-acre parcel at 25 Van Dyke St., to be named Mountain View Estates.
UMH invested $3 million into the property, UMH Attorney David Engle said in March. This amount is based on the cost to purchase the property in 2005, engineering and design services and a plan to protect the area’s endangered owls and wetlands, according to Engle.
In the notice on March 15, UMH accused the Coxsackie Village Board of failing to act on the applications, ignored requests for UMH to be heard Jan. 5 and changed the law in an impermissible fashion to deprive the company the full use of its 110-acre property, which caused the company to incur substantive costs.
On Jan. 11, the Coxsackie Village Board voted 4-1 to approve Local Law No. 6-A that repealed Local Law No. 4 of 2008, which is set to regulate the location, development and operation of mobile home parks in the village, according to the resolution. The law would force the company to reduce its plan to build 160 homes on 47 acres to 80 homes on 110 acres.
“The board’s action in changing the law was a last-minute effort by the board to block UMH,” Engle said in March.
Evans declined to comment on the pending litigation with UMH, which is not related to the rent-to-own plans.
Renters in the rent-to-own agreements were subject to making large non-refundable deposits and often lost that investment, did not receive titles of the properties until after the payment period and had to take the titles as-is, were responsible for all repairs to the home and the park did not assume any liability for tenant injuries on the property, according to the attorney general’s office.
“Title to the manufactured home does not pass when the rent-to-own contract is signed, nor do the contracts guarantee ownership of the manufactured home at the end of the rental period,” according to the attorney general’s office.
“However, contracts do require the optionee to make significant financial investments in the manufactured home in the form of non-refundable down payments and responsibility for all repairs and maintenance. This creates an enormous financial burden for low income optionees, in particular because the rent-to-own contracts require the optionee to accept the manufactured home in as-is condition without the benefit of a home inspection.”
*Editor's note: This story corrects an earlier version. The Notice of Claim UMH filed in March does not say the value of the claim is $3 million. The figure is an estimation from UMH attorney David Engle.