Commitments, Contingencies and Legal Matters

12 Months Ended

Dec. 31, 2014

Contingencies, Commitments and Legal Matters [Abstract]

COMMITMENTS, CONTINGENCIES AND LEGAL MATTERS

NOTE 12 – 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 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 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.  The Company filed a Motion to Dismiss plaintiffs’ amended Complaint which plaintiffs opposed.  The District Judge issued a decision granting our motion in part and denying it in part.  This litigation is ongoing. The Company continues to believe the action to be without merit.  The Company’s insurance company is supporting our defense of this action.  The Company is 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.  The Company has received approval from the municipality for the first phase of the development and is currently obtaining bids for the construction work.

The Company has entered into definitive agreements to purchase four manufactured home communities with a total of approximately 623 developed home sites.  These communities are located in Pennsylvania.   The aggregate purchase price of these communities totals approximately $12.9 million.  One acquisition of 141 home sites, with a purchase price of $3,800,000 was completed in January 2015 (See Note 15). Subject to satisfactory due diligence, we anticipate completion of the remaining acquisitions during the first half of 2015.

In November 2013, the Company entered into an agreement with 21st Mortgage Corporation (21^st 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 December 31, 2014, there were fifty-nine transactions under this agreement with a total original loan amount of approximately $3.0 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 December 31, 2014, the total loan balance was approximately $3.0 million.