December 14, 2025

By Nadia Cabrera-Mazzeo, Esq.

In the 2025 legislative session, House Bill 426 sought to give residents of manufactured housing communities, formerly known as mobile home parks, the right to collectively purchase the land they call home (when the owner wants to sell it). Similar versions of this bill have been introduced since 2010 to no avail.

The initiative behind HB 426 would go a long way to providing housing security to residents in some of the 380 manufactured housing communities in the state, which often get bought up by out-of-state investors. HB 426 passed the House of Representatives but stalled out in the Senate Judiciary Committee.

Residents don’t have to wait for legislative action

HB 426 and similar initiatives would require owners of manufactured housing communities who want to sell the land to first offer to sell it to the residents themselves if at least 50% of residents are interested. The bill would give the residents some time to organize into a resident association, secure financing, and match the purchase price offered by a third party to the owner-seller.

Legally speaking, however, even without passing the bill, there is nothing stopping folks from organizing into resident associations, securing financing, and offering to purchase their manufactured housing community. So, bill or no bill, what would that look like?

OVERVIEW

Step 1:
Owner wants to sell and is willing to entertain an offer from residents

Step 2:
Residents form a resident association

Step 3:
Residents secure financing

Step 4:
The resident association purchases the property, pays its mortgage, and maintains and manages the community

Step 1:  Upcoming Sale

While a law like HB 426 would require an owner to sell to interested residents who can match a third-party offer, some sellers would likely be open to selling to residents even if not legally required to do so. Residents interested in collectively purchasing a property should broach the topic with the owner and keep tabs on whether the owner plans to sell.

Step 2:  Organizing Residents

Residents interested in purchasing the land they live on should create a resident association. The legal structure for the resident association could vary but the most appropriate legal structure is likely a cooperative association (created under Chapter 53, Article 4 of the NM statutes). Under state law, a cooperative association is a type of nonprofit corporation that is owned and democratically controlled by members. Individuals may pay money to become a member-owner and get the benefits of membership (in this case, mainly, affordable housing and a vote on how things are done). Residents who move out of the community would stop being members of the resident association and would likely get their buy-in money back.

Once residents create the resident association, then the resident association would take on a legal life of its own, powered by the resident members. The resident association would be the official voice of the resident community and would have the power to enter into contracts, take on debt, own property, sell property, hire employees and contractors, etc. These are all things that a legal “person” can do and the point is that the entity can take on these risks, like debt, while protecting the individual resident members from having to personally foot the bill if the entity can’t pay its debts. (NOTE: negative consequences, like foreclosure, will happen if the entity can’t pay its debts, but the individual members won’t go bankrupt). This is what we mean when we talk about the liability protection that legal entities like LLCs and corporations (and cooperative associations) can provide to business owners.

The process of forming and maintaining the resident association will require folks to come together and make collective decisions. Cooperative associations must be democratically governed, meaning every member has one vote no matter what, regardless of whether they invested a lot of money. The bylaws of the cooperative association should lay out all the rules members will follow to make the association run smoothly.

Step 3:  Securing Financing

Unless the residents are wealthy enough o front the money for the purchase themselves, the resident association will need to borrow money from a lender. This will likely be the biggest hurdle in the process because lenders like to get personal guaranties from people in order to be sure that the loan will be repaid, if not by the primary borrower, then by someone else (the guarantor). Did you know almost all mortgages in the U.S. are guaranteed by a third party? The federal government guarantees 70% of mortgages through the congressionally-created companies Fannie Mae and Freddie Mac.

For loans to startup businesses, the lender usually requires the business owner to personally guaranty the loan. But established businesses with their own credit history and proven steady income can often borrow money without a personal guaranty. In our case, the resident association would be most like a startup business—the lender will most likely want a guaranty and that’s not really an option here. But do not despair, there are options.

One option is to find a local bank willing to lend without a guaranty. Since the property itself would serve as collateral for the loan, it is possible that a bank would lend without a guaranty. The way that mortgages work is that the bank technically owns the property while the borrower is paying it off. As the borrower pays off the loan’s principal, the borrower’s equity, or ownership stake, grows until the borrower reaches 100% ownership when they pay off the loan. If the borrower can’t pay off the mortgage, then the bank can repossess the property and sell it to recoup its costs. Many banks say they are committed to community development, will they put their money where their mouth is?

Another option is to tap into the growing network of cooperative financing at the national level. ROC USA is a national nonprofit that provides financing and technical support for cooperative groups on the journey to becoming resident owned communities (ROCs). The National Cooperative Bank is an FDIC-insured bank dedicated to co-ops and has mortgage lending options. If these institutions do not agree to directly support your effort, they can surely recommend other resources.

Seller financing is also possible but less likely. Nevertheless, residents should maintain open communication with the seller. Real estate purchase timelines are often tight once the owner decides to sell. Residents should explore their options early to determine the feasibility of their collective purchase and to be as prepared as possible when the opportunity to purchase presents itself.

Step 4:  Maintenance After Purchase

Once the property is purchased, the resident association will be the legal owner of the property and will be responsible for everything that ownership entails, like paying debts, paying taxes, complying with laws and regulations, and maintaining the property in good condition. The resident association will collect rent-like payments from resident-owners to meet its obligations, including paying contractors and potentially hiring a manager or administrative staff. The association can also charge actual rent to residents who are not member-owners of the co-op.

The nonprofit part of all of this that I mentioned before is that housing costs for resident members are supposed to stay low, so the resident association should set prices high enough to pay the mortgage and other costs, but not at market rate to make a nice profit. Any profits, or extra income after expenses are paid, must be reinvested into the community/ property or returned to members in modest amounts. Running things in a for-profit manner will result in legal consequences for cooperative associations. For-profit co-ops absolutely exist but they are different types of businesses and not the subject of this article.

Want to learn more?

The term “resident owned community,” or ROC, is gaining traction in the U.S. and will yield relevant search results for folks wanting to learn more. There is a lot of ROC action involving manufactured housing communities in Florida, so many resources come from there.

The world of housing cooperatives goes beyond manufactured housing. The steps for the collective purchase of property in this article also apply to housing co-ops looking to purchase an apartment building or other property. There are two housing co-ops in Albuquerque that have been around for decades and may offer insight.

Law office of Nadia Cabrera-Mazzeo, Esq.

Small business and contracts lawyer

Based in Taos, serving clients throughout New Mexico

505 427 2025

nadia@honestcontracts.com

The information on this website is not legal advice and does not create an attorney-client relationship. The rates and fees listed on this website may not be the most up to date.