In almost every state, mobile homes and manufactured homes are transferred from buyer to seller via a slip of state-issued paper called a mobile home title. Single-wide homes have only one title. Double- or triple-wide mobile homes require accounting for two or more titles.
Mobile home investors often run into mobile home title challenges—especially when it comes time to transfer them into your possession. Common title problems arise due to a title being lost, the actual owner on title not being present, the title being missing, or the current seller not yet putting the title into their name. If a mobile home seller has a clear title with no liens, there will be little resistance in transferring the mobile home ownership from the current seller to the new buyer.
Cloudy titles, however, can dramatically complicate the process.
What Is a Mobile Home Title?
The state in which the mobile home resides issues the title. The title outlines pertinent information, such as the home’s vehicle identification number, serial numbers, make, model, year built, owner’s name, and lien holder’s information. A mobile home title is nearly equivalent to the title of your personal vehicle. Keep a mobile home title stored in a safe place.
Depending on your state, a mobile home title is typically transferred at your local department of motor vehicles, town clerk, or motor vehicle administration. Texas and California residents may prefer to mail in their documents—these states only have one or two mobile home titling department branches statewide.
A missing mobile home title might indicate more serious issues. Always verify with your state that yearly taxes have been paid and are current. If a seller has not transferred a title into his or her name, then he or she may not be up to date on paying taxes.
4 Common Mobile Home Title Issues
1. The title is lost or missing.
Sometimes, the seller simply doesn’t know where the title is. Or perhaps it was lost during a fire or natural disaster. Either way, you can’t proceed with the sale without the title.
If the current seller is the legal owner of record, then there is a simple and easy process to obtain a duplicate title. Call your local mobile home titling agency to inquire about specific steps moving forward. Typically the owner of record needs only to provide proof that he or she is the owner and pay a small fee.
2. The title is missing and the seller is not the actual owner.
Occasionally, when a new buyer closes on a mobile home, they do not immediately run down to transfer the title into their ownership. This happens for many reasons. However, legally the buyer is not the true owner until the title is registered into his/her name, or an entity he or she controls.
You will see occasions when buyers and sellers have “transferred ownership” via a separate piece of paper known as a bill of sale. A bill of sale acts as a meeting of the minds and as a receipt typically given when selling personal property. While this process may be sufficient for the buyer, seller, and even park manager, it is not sufficient enough to transfer legal ownership from one person to another. The original owner is still the legal owner and can come back any time to take possession of his or her home.
Solving this problem depends on whether the owner is available. If so, you must contact them immediately. Many times they will agree to obtain a duplicate copy of the mobile home title(s) if you pay for this small cost. There’s a good reason they’ll agree to do this: Otherwise, they’re liable for taxes or accidents on a property that they didn’t think they still owned.
Track down the owner before proceeding. Consider hiring a private eye or skip tracer if necessary.
But what if the owner passed away? First, check to see if you can contact the owner’s power of attorney or immediate family. If so, you will likely be able to obtain a duplicate title by filing the correct forms with your state. Otherwise, ask your state about the best course of action to obtain legal ownership. Keep in mind that obtaining clear title may or may not be possible.
3. The title is present, but the seller is not the actual owner.
This scenario is the most common hurdle you will see as a used mobile home investor. In situations like this, your seller will be in physical possession of the current original mobile home title. However, it may or may not be signed and dated by the current buyer(s) and seller(s). For instance, this may occur if the seller received the mobile home and title from their parent but never actually legally completed the transfer.
Be aware that most states charge a late fee for delaying the transfer of a mobile home title from a buyer to a seller if not completed within X number of days. This late fee will be paid when the title is eventually transferred into the new buyer’s name.
If the true owner on title has already signed on the seller’s line, then simply have your seller sign as buyer and quickly transfer the title into their name. Once the seller is the actual owner, they can now transfer their clear title to you without worry. Call your state to verify that this double transfer can be completed in one day.
If your seller has a title that is signed by the owner but the buyer’s signature lines are blank, it can be tempting to skip over your current seller and transfer the title from the legal owner straight to you. Most states consider skipping the chain of title illegal. Do this at your own risk.
The true owner must sign on the seller’s line before the title can be legally transferred into the purchaser’s name. Track down the legal owner to have his or her signature placed on the seller’s line.
Never forge documents. If you can’t find the legal owner, it may be tempting for you or your seller to forge the legal owner’s signature on the title. Some people can rationalize that as a victimless crime. With that being said, it is still a crime and illegal.
4. The title is present, but there are liens still showing.
If there are active liens still on the title, then the owner will not likely be in physical possession of the home’s title(s). It is most common for the lien holders to physically hold the title(s) until they are paid off in full. At this point, the state issues a new title showing zero active liens. Alternatively, the lien holder may signs a “Release of Lien” on the title or a separate form. Both of these methods show the home is free and clear from debt.
Make sure to do your own due diligence. Always call your state to verify the mobile home’s VIN or serial numbers and confirm if there any active liens. Some states will have this information at their fingertips. Others aren’t as technologically advanced.
Some mobile home sellers possess their title despite active liens. Is this an error? Or do they still owe money on the mobile home?
Stay with them as they call the bank or loan servicer to confirm a payoff. Once you know the amount of the lien, you can decide to move forward accordingly.
Go the extra mile to solve a seller’s problem. This way, you’ll compete with fewer investors and buyers. Determined investors working with motivated sellers can typically come to legal win-win solutions that accomplish the goals of all parties.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.