Tax Lien Sales & Past Lot Rent

[Nancy Allen]

Does anyone know if the successful buyer of a tax lien becomes responsible for back lot rent once they obtain the property deed?

[Wayne Brooks]

Huh? From who, to who, for what?

[Curt Smith]

Past threads in this forum have discussed the risks to the lonnie deal model due to the whims of the park manager, owner and how their attitudes re investors can change quickly.

Before bidding on a MH lien I'd talk to the park manager.

In theory the owner of a MH in a park owns lot rent.  But it's fuzzy since you wouldn't have a lease with the park.  They could force you to move the home, but that is not in the parks best interest.  If they where smart they'd offer to buy it from you.

I'd have an agreement with the park manager/owner that they'd offer you up to $xxx if you get the title after no redemption period times out. If they refuse then they'd try to squeeze you for monthly rent.  It's all in that critical discussion with the park, which is why being a lonnie dealer is such a up and down model.

Ok so they give you 2 months no lot rent for you to fix up the home and find a renter.  Now your the landlord of one of the toughest property types to be the manager of.  It would be a better deal to sell the home to the park for what ever they give you. Just my view.

Your ace card is once you get the title, you threaten to move the home.  Parks hate this.  But if its old, they may have one on YOU, if it's too old for your state / county ordinances for moving MHs, now you are stuck leaving the home in the park.  Talk to the park before getting into this.  :)

[Nancy Allen]

Hey Curt...excellent advice.  Thanks...

[Curt Smith]

Hi Nancy, I should say, We've moved to exclusively buying doublewides on their own land. Near major freeways and some size of town for jobs and transportation. We rent to own, then seller finance. We avoid the tough rental problems this way. We buy from banks as REO and off auction sites. All deals hit MLS then we find them. Zillow has a "manufactured" filter, we put in < $30000.

I too am now calling the local counties for when they auction off MH titles for back taxes.  Some GA counties don't bother with liens on MH titles, they sell the actual title.  Poof, now you own it.  But I'll only buy MHs on their own land.  I've talked to one investor who goes to auctions.  You call the local parks, find out who would buy used homes.  You buy the titles, if you can't work out buying the land,  you sell to the parks and they move the home.  I don't know the profit vs effort vs cash at risk.  Just getting started in this angle.   

But rent to own of MHs on land has a very high cap rate.

[Wayne Brooks]

@Nancy Allen @Curt Smith

"Property deed" generally refers to the "land" (along with structures built on/attached to it).  Are you guys saying that in your neck of the woods, there is "property tax" on the Mobil home itself, Not the lot that it sits on, that gets foreclosed on for property taxes????  Here, and everywhere else I know of, the "property tax" is on the land, and the mobile home may, or may not, be considered "attached", and included in the sale.

[Curt Smith]

Hmm!  In Ga MHs like cars have annual tags.  On MHs you stick them in a window.  $300-$400 or so a year.  Like a car. I'm calling a few Ga counties.  Some do nothing and are scrambling to collect all that back tax.  One county sends out a summons to court.  More counties run late taxes a few years through the Tue Auction process.  They pick one month a year to auction MH titles.

[Ken Rishel]

Originally posted by @Nancy Allen:

Does anyone know if the successful buyer of a tax lien becomes responsible for back lot rent once they obtain the property deed?

 Nancy - It depends on the state. In Illinois, for example, when they have tax sales of titled manufactured homes, the buyer receives a clean title free of any obligations. If there is a lender, their lien interest is wiped out, same for community owner liens and since it is being sold for taxes, no tax liens either. From a buyer's perspective, they should be talking to the community owner the very next day and working out what is too happen from that day forward. Community owners don't want to loose good homes, so once they understand the government screwed them, they will likely work with the tax buyer.

From the perspective of the community owner: We have someone at every tax sale to buy the homes (in Illinois, you don't buy the taxes, you buy the home.) in our communities, or if we do not want them to let someone else buy them that we get contact information on so we can talk to them about getting the home out of the community ASAP. 

From the perspective of the buyer: We also attend selected auctions to buy homes to either move or sell to the community in which they are located. If the community owner wants to buy them from us for a price we set, they can. If not, we move them to where we can make more money on them by selling them to a prospective owner. Rarely, would we buy anything we wanted for our communities, but that is because we only put new homes in open slots.

From the perspective of the lender: We only have a very few older loans left where we are not escrowing the taxes, but we would be at any auction where a home we had a lien on was coming up for auction. It is sometimes cheaper to buy the home at auction than it is to pay the taxes, so most of the time we wait for the auction and we are going to be the highest bidder.

What state are you talking about? State specific questions require identifying the state. We would have entirely different answers for Wisconsin than we have for Illinois.