Contingencies, Commitments and Other Matters

3 Months Ended

Mar. 31, 2015

Contingencies, Commitments and Other Matters [Abstract]

CONTINGENCIES, COMMITMENTS AND OTHER MATTERS

NOTE 8 – CONTINGENCIES, COMMITMENTS AND OTHER MATTERS

From time to time, the Company may be subject to claims and litigation in the ordinary course of business. Management does not believe that any such claims or litigation have a material adverse effect on the financial position or results of operations.

In 2010, a rainstorm bringing 13 inches of rain in a two-hour period caused flooding at Memphis Mobile City. All homes owned by the Company were fully restored as were the homes of all residents who elected to make repairs. On May 9, 2011, the Company was notified that a lawsuit (Memphis 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. 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.  This case has been settled. In conjunction with the settlement, the Company paid $125,000 to its insurance company for the Company’s share of the settlement and the Company will have no further liability. This amount has been included in the Company’s Community Operating Expenses for the quarter ended March 31, 2015.

The Company is working on redeveloping Memphis Mobile City 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.  The Company has received approval from the municipality for the first phase of the development and has awarded the contract for the construction work.

The Company has entered into definitive agreements to purchase three manufactured home communities with a total of approximately 482 developed home sites.  These communities are located in Pennsylvania.   The aggregate purchase price of these communities totals approximately $8.8 million.  The acquisition of two communities totaling 324 developed homesites, with a total purchase price of $5,300,000 was completed in April 2015 (See Note 10). Subject to satisfactory due diligence, we anticipate completion of the remaining acquisition during the second quarter of 2015.

The Company has an agreement with 21st Mortgage Corporation (21st Mortgage) under which 21st Mortgage can provide financing for home purchasers in the Company’s communities. The Company does not receive referral fees or other cash compensation under the agreement. If 21st Mortgage makes loans to purchasers and those purchasers default on their loans and 21st Mortgage repossesses the homes securing such loans, the Company has 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. This agreement may be terminated by either party with 30 days written notice. As of March 31, 2015, there were seventy-two transactions under this agreement with a total original loan amount of approximately $3.7 million. Additionally, 21st Mortgage previously made loans to purchasers in certain communities we acquired. In conjunction with these acquisitions, the Company has agreed to purchase from 21st Mortgage each repossessed home, if those purchasers default on their loans. The purchase price ranges from 55% to 100% of the amount under each such loan, subject to certain adjustments. As of March 31, 2015, the total loan balance was approximately $2.9 million.