ATTORNEY GENERAL OF THE STATE OF NEW YORK In the Matter of Assurance No__|% 01 2 Investigation by BARBARA D. UNDERWOOD, Attorney General of the State of New York, of KINGSLEY MANAGEMENT CORPORATION, INC. Respondent ASSURANCE OF DISCONTINUANCE ‘The Office of the Attomey General of the State of New York (“OAG”) commenced an investigation of Kingsley Management Corporation, Inc., (“Kingsley”) pursuant to the provisions of Executive Law (“EL”) § 63(12), into potential violations of Real Property Law, and Landlord- ‘Tenant Common Law in connection with “Rent to Own Agreements” entered into since January 1, 2015 (the “Relevant Period”). * For the purposes of this Assurance of Discontinuance, "Rent 0 Own,” “Lease to Option,” “Option to Purchase,” or similar programs whereby tenants make a monthly rental payment toward the purchase of a rented manufactured home, are referred to as “Option to Purchase Agreements." It is understood that Option to Purchase Agreements may take various forms, including arrangements similar to installment loans, however, the essential features ofthe ‘option contract are the same; & tenant or prospective tenant of = mobile home park enters into an agreement with the ‘owner or operator of the park, or an entity related to the park owner or operator, whereby the tenant agrees torent a ‘home in the park and is given the right to purchase the home atthe end af a designated period of time. In all cases, title tothe subject property does not transfer to the optionee unless and until the option is exercised atthe end of the (4 Page 1 of 1SThis Assurance of Discontinuance (“Assurance”) contains the findings of the OAG’s investigation and the relief agreed to by the OAG and Kingsley, whether acting through its, respective directors, officers, employees, representatives, agents, affiliates, or subs diaries, etc, (collectively, the “Parties”) OAG’s FINDINGS 1. Kingsley is a Utah corporation whose principal offices are located at 4956 N. 300 W.., Suite 200, Provo, Utah 84604. 2. Kingsley owns and operates manufactured home parks in New York State. 3. Kingsley rents individual lots and manufactured homes to tenants at each of its manufactured home parks, 4, Kingsley entered into Option to Purchase Agreements with certain tenants during the Relevant Period, 5. Pursuant to an Option to Purchase Agreement, a tenant makes montily rental payments toward the purchase of their rented manufactured home. 6. Option to Purchase programs afford tenants who may not otherwise have the opportunity, due to poor credit history or limited financial means, to achieve ownership of manufactured homes, Option to Purchase programs appeal to low-income individuals who view such programs as a means to achieving home ownership. 7. After making timely rental payments for a defined period, an optionce has the exclusive right to purchase the home for its agreed-upon purchase price. (al!‘8, Until the optionee exercises the option to purchase, the parties are subject to the rights and responsibilities of landlord and tenants who rent a manufactured home in a ‘manufactured home park as well as those agreed upon in the option contract. Accordingly, title to the subject property does not transfer to the optionee unless and until the option is exercised at the end of the term. Until the option is exercised, as a ‘manufactured home tenant, as such term is defined in Real Property law §233(a)(1), the optionee is subject to summary eviction proceedings for late rent and default. 9. NYAG finds that certain Option to Purchase Agreements violate various provisions of the Real Property Law §§ 233(m), 235-b, 235-c, General Obligations Law § 5-321 and established tenant protections in so far as such agreements contain inconsistent provisions that treat the optionee as both a tenant and an owner before title is transferred. Specifically, the NYAG finds that the following provisions waive important tenant rights and remedies: a. An indemnification provision that purports to hold a manufactured home park owner harmless against any and all damages, claims and penalties arising from injury to the buyer/tenant, their families or guests occurring anywhere in the manufactured home park violates Real Property Law §§ 233(m), 235-b, 235-c and General Obligations Law § 5-321, except for injury caused by buyer/tenant, their families or guests, b. A provision that purports to make optionees responsible for all non-minor repairs, restoration, extermination and maintenance to the leased premises before such time as, title is transferred to the optionee violates Real Property Law §§ 233(m), 235-b and 235- c. A provision that requires the buyer/tenant to make all monthly lease payments, WW