What would you do? Buyer late on lot rent, and payments

11 Replies

Short version: Buyer 2 months late on lot rent, 15 days late on payment

I sold a trailer to a couple 1 and half years ago, on a 3 year note. They pay slow all the time, but always pay the late fee. Last month they paid 3 weeks late. I know he lost his job, couldn’t find work, and then got a new one. He gave me the proof he had a new job which is why I was fine with the lateness (even though looking back I have allowed it too much, they always paid the late fee though so I was too soft) Anyway, the park owner called yesterday and said they have not paid lot rent for 2 months and they are ignoring all her attempts to contact, including notes left on the door. I told her he owed me as well. I also told her he got a new job 3 weeks ago and told me he would be caught up this Friday. When I spoke with him I did not know lot rent was late. She said if she is not paid Friday she would have to file Monday. We spoke and she said it would probably be better if I filed in court instead of her, since her filing would be an eviction to move the trailer, which my contract with the seller prohibits, plus he can’t afford to, whereas mine would just get me the trailer back.

The tenant is really hard to get in touch with. He will respond to texts but never on the phone. I want to tell him if the park owner and I are not paid in full on Friday (we won’t be) “look, this isn’t working, I have to file on Monday” but trying to steer it towards just giving them a couple hundred bucks to get out and get it clean. If I get them out this way it will cost me my back payments (fine with me), 2 months lot rent (I have to make up what he already owes which sucks) plus the money I give him, if I even give him any, but it will be faster and easier. Even if I give him like 600 bucks that is two more months of lot rent I would owe by the time I got him out due to the time it takes in court, plus 2 months more of lost rent pay.

What would you guys do?

Give him the choices and explain that you don't wan to put an eviction on his record so he can pay his back rent and keep going or he can leave now with no eviction on his record. This is commonly called "Cash for Keys". If he is not will to do those then you will file for eviction. give him the proper notice and paperwork for evictions in your state.

I agree with Austin.  Remind him that with an eviction on his record, he will be very hard pressed to find a place to live, period.  In the long run, it is best to have them gone.  Start fresh with another buyer; preferably a buyer that has been well screened.  

So, Mr. non payer, you have two choices:  we part peaceably, no hard feelings, you move on - or I have to get legal with this situation and you probably get your wages garnished, you get an eviction on your record, you can't find a decent place to live, blah, blah.  

I have had to tell my tenants, "look, it's not personal, but I have to do this to protect myself.  It's my duty".  They get it.  

Good luck Eric.  I know it is stressful.  Chock it up to experience.  See the bigger picture.  Next ones will be better.  

If you are saying that these people purchased the mobile home, then you are actually looking at a foreclosure. You may need to start looking into taking the home back, and getting it back on the market. Just make sure to screen the tenant/buyers very carefully, and look at their financial stability. Also check out the BP guide on how to screen tenants. If you do foreclose on them, you will make back some money when you get a down payment from your next purchaser (something to consider). Good Luck.

Originally posted by @Orlando Paz :

If you are saying that these people purchased the mobile home, then you are actually looking at a foreclosure. You may need to start looking into taking the home back, and getting it back on the market. Just make sure to screen the tenant/buyers very carefully, and look at their financial stability. Also check out the BP guide on how to screen tenants. If you do foreclose on them, you will make back some money when you get a down payment from your next purchaser (something to consider). Good Luck.

 Orlando - A chattel loan only requires foreclosure in one state. Everywhere else it is a repossession which is substantially different. As other posters wrote, there is such a thing as a voluntary surrender and repossession which does not require court in most states, and if the operator knows what they are doing 90+% will be voluntary.

Best case - If you want to help the people...

Pay the space rent so you aren't in a tight spot with the park. Let them pay you back in extra payments over 6 months or so. BUT make it the last ditch effort to get back on track.

Next incident - As already mentioned - Get them to move out in lieu of eviction. 

@Bill Neves I cannot do that. I will be in this situation again soon enough. These people are the biggest pains I have. Every month is late with an excuse. I was too nice initially and it has bit me in the behind ever since. Plus, since their monthly payment is so small I let things slide more than I should. This situation is my fault as much as their's for not setting true expectations straight away. I have learned my lesson here. Also, they have already had their one last ditch effort.  

I told him yesterday both myself and the lady who owns the park have to be paid in full by Monday morning. I will then try cash for keys and if that fails go the legal route. 

I don't have to worry about being in a tight spot with the park. I got a couple units in there (1 I own with a tenant and I pay the lot rent, always on time). The owner knows I will make it up if I have to get these people out. 

@Kevin Miles "look, it's not personal, but I have to do this to protect myself. It's my duty". I have told a tenant the exact same thing when they got behind and then I went to the courthouse. They understood, got caught up, and we have been 9 months since with on time payments, good communication, and a good relationship. 

I don't know how many of these conversations you have face to face with this person but I would definitely do so this time. If he isn't used to seeing you in person it will give him a better sense about how serious you are. It will also give you a chance to assess the situation with the trailer and the tenant, if he looks to be sleeping on a mattress on the floor he's a candidate for $200 bucks. If he's got matching lazy boys lined up in front of the flat screen I would say he's not. Extract yourself as cheaply as possible because you aren't going to get that money back.

Don't beat yourself up over it, we've all had the tenant who didn't pay on time and we let slide a little. For me I got the guy out and he was making up payments after he left - then he died and I ended up eatting the loss. Live and learn.

good idea.  I will go by there hoping to talk face to face. I cant call him because he can only use google voice on his phone and has no home wifi. He texts me from work and the library. Also, I am not upset about this. I keep a level head. I know I made a mistake letting it get this far but every challenge is a learning opportunity including this one. Luckily I am close to even on this unit already so if I have to take the 2 month lot rent bump as well as what he owes me I will survive.

(Sent from my phone)

Originally posted by @Eric F. :

good idea.  I will go by there hoping to talk face to face. I cant call him because he can only use google voice on his phone and has no home wifi. He texts me from work and the library. Also, I am not upset about this. I keep a level head. I know I made a mistake letting it get this far but every challenge is a learning opportunity including this one. Luckily I am close to even on this unit already so if I have to take the 2 month lot rent bump as well as what he owes me I will survive.

(Sent from my phone)

 Eric - It helps to have a written checklist of expectations with a copy for the non-performing borrower as well when you have the face to face and get all parties to sign it as an acknowledgement to adhere to those expectations.

Over the years, given my outside finance company and my captive finance companies, we have taken thousands of homes back. They were a very small percentage of the loans we made because almost all of the ones that came back were because of a life event:

  • Death
  • Divorce
  • Jail or Prison
  • Job Loss that could not be replaced
  • Serious Illness

Proper underwriting and screening eliminate almost everything else even with prospective borrowers with poor credit. It sounds like you may have either a credit criminal, or someone who has no real ability to repay, both of which could, and should, have been screened for. I would get rid of him and move on, and chalk this up to learning.

In the future, you might consider what we teach our clients:

  • In 5 days, everyone on the loan gets a phone call, and an email reminding them they are late and asking for immediate resolution.
  • In 15 days, everyone on the loan gets a phone call, an email, and a letter, demanding payment that day or an explanation of why they haven't paid and how they will correct it. (We rewrite some loans at this point with longer terms and lower payments if their reasons make sense.) Failing immediate payment, we negotiate (if possible) for them to clean up and repair the home, sign a voluntary surrender agreement, and give them 15 days to get out.
  • If they don't want to pay immediately, and they won't agree to the above, we make sure they know we are going to take them to court to repossess and all the costs involved will be added to what they owe us. We also let them know that we will, to the full extent of the law, pursue them for what is owed until they are dead and in the ground (of course we will go after the estate) or the laws force us to quit pursuing them. 

Don't give up, just learn from the mistake.

@Eric F.

By 'tight spot in the park', I meant, late rent. Some park managers won't say anything about late rent until very late and on the verge of eviction. Then you get a call that rent's 3 or 4 months late. Not good.

Sounds like you have a plan.

Have fun!

The good news is the park and I are both fully paid up. I explained from now on we both have to be paid on time and the next time he is late I am filing for repossession as soon as possible 

Thanks all

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