Commitments, Contingencies and Legal Matters

12 Months Ended

Dec. 31, 2013

Contingencies, Commitments and Legal Matters [Abstract]

COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

NOTE 13 – COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

The Company is subject to claims and litigation in the ordinary course of business.  Management does not believe that any such claim or litigation will have a material adverse effect on the business, assets, or results of operations of the Company.

In 2010, a rainstorm bringing 13 inches of rain in a two-hour period caused flooding at Memphis Mobile City. All homes owned by us were fully restored as were the homes of all residents who elected to make repairs. On May 9, 2011, we were notified that a lawsuit had been filed in the United States District Court for the Western District of Tennessee on behalf of a purported class of all individuals of Mexican national origin who are current or former residents of Memphis Mobile City. The complaint alleges various claims based on federal and state discrimination and consumer protection laws, seeking monetary damages and injunctive relief. On September 30, 2012, the magistrate judge ruled that plaintiffs who had signed a security agreement with an arbitration clause would be obligated to arbitrate while the other plaintiffs would not.  The plaintiffs have filed a statement of alleged damages for each member of the purported class.  Plaintiffs have been ordered to submit releases to FEMA so that we might begin to evaluate their damage claims with respect to compensation they may have already received from that federal agency.  Plaintiffs’ counsel notified us in July 2013 that they have filed such releases as to many of the plaintiffs.  On June 25, 2013, in connection with a hearing on our Motion to Dismiss, the court ordered the plaintiffs to amend their Complaint to plead their claims with specificity.  Plaintiffs filed an amended Complaint containing allegations substantially similar to the initial Complaint.  We filed a Motion to Dismiss the amended Complaint which plaintiffs opposed.  We are awaiting a date for oral argument of this motion.  We continue to believe the action to be without merit.  Our insurance company is supporting our defense of this action.  We are working on redeveloping this property as a manufactured home community, using fill from adjacent land that we have purchased in order to comply with current codes.  The adjacent parcel is also slated for manufactured home development upon receipt of appropriate permits.  Redevelopment of these properties will be determined in accordance with market conditions.

The Company has entered into definitive agreements to purchase twelve manufactured home communities with a total of approximately 1,340 developed home sites.  These communities are located in Ohio and Pennsylvania.   The aggregate purchase price of these communities totals approximately $37.2 million.  In conjunction with the purchase of these communities, the Company will assume mortgages totaling approximately $27 million.  Subject to satisfactory due diligence, we anticipate closing this transaction during the first and second quarter of 2014.

In November 2013, the Company entered into an agreement with 21st Mortgage Corporation (21st Mortgage) under which the Company may refer purchasers of homes sold by us to 21st Mortgage to obtain loans to finance their home purchases. We do not receive referral fees or other cash compensation under the agreement. If 21st Mortgage makes loans to purchasers referred by us under the agreement, and those purchasers default on their loans and 21st Mortgage repossesses the homes securing such loans, we have agreed to purchase from 21st Mortgage each such repossessed home for a price equal to 80% to 95% of the amount under each such loan, subject to certain adjustments. In addition, we have agreed to waive all site rent that would otherwise be due from 21st Mortgage so long as it owns any homes on which loans were made pursuant to the agreement. This agreement may be terminated by either party with 30 days written notice. As of December 31, 2013, there have been no transactions under this agreement.

In conjunction with the acquisition of certain communities, the Company also agreed to repurchase certain loans made by 21st Mortgage to homeowners in those communities, if those homeowners default on their loans.  The purchase price of each repossessed home is equal to 55% to 100% of the amount under each such loan, subject to certain adjustments.  The total loans subject to repurchase amounted to approximately $4.2 million as of December 31, 2013.  The Company has a deposit of approximately $800,000 with 21st Mortgage regarding these loans.  This deposit is included in Notes and Other Receivables, net.