Hi- I need advice from anyone who has any Mobile Home (MH) experience. I'm a lender to a mobile home owner whose MH is residing in a private MH park. The owner has defaulted on his loan already with me and is also not paying rent to the park. As such, the park has taken him to court last Thursday in an attempt to evict him. As of today, the owner is still in his MH and is claiming he will pay the park (he has not done so). I'm in a compromising position because the title of the MH is under the owners name with me as the lien holder. We have a contract with me as lender. However, the MH Park has been and is holding on to the physical title in their locked up files. So here are my questions:
1) as lien holder to title, Don't I have right to get physical title back from the Park?
2) dont I have right to repossess the MH?
3) the Park is telling me that I am now responsible to pay them for the backed up rent incurred by owner (approximately $2,000). And If I don't, I face losing possession of the MH to the park. Is this true? How am I legally responsible for paying the owners rent?
Any advise & suggestions?
If they are still in the home then they have not been completely evicted yet. That means you might be able to find some solutions, assuming they are worth finding.
My first questions are what is the year the mobile home was built? What size is the home? How much do they owe you without any late fees? What was the original loan amount? Also- why in the world is the park owner holding the title to this home in a locked box? How do you know this for sure? Have you talked to the borrowers? What is the problem with their finances that they can't pay? What is their plan to get caught up with the park? As far as the park is concerned (you have to ask them) are you off the hook for the lot rent if the borrower catches up?
My opinion is that the people living there are on the hook. The home didn't sign a lease:)- These parks make up their own rules all the time thinking nobody is ever going to bother taking them to court. If the home is worth anything, you and the borrowers could work together to sell it to another park that needs homes. This will leave the park,that is messing with you, with a vacant site and the only way to fill it will be for them to another home in and that's expensive! On the flip side, if the home is old and clunky the park might be better off seeing it go away and replacing it with a new or newer home.
never heard of a park holding the title. Park owners I have dealt with will block moving the trailer, if there is outstanding lot rent, though I doubt you are legally liable. You have the right to repossess. I use lease purchase. Take an option payment as down payment, and lease payments are calculated based on interest rate, term amortization. I hold the title.
I guess I am confused. What exactly was the collateral against which you loaned money? A mobile home that is on leased/rented land i.e. in a MH park is, in essence, the same as a car loan. If you actually loaned money to someone for a mobile home without requiring them to give you the title to the asset, then you are in a very, very difficult position. The answers to the questions poised by @Marc Faulkner will be crucial in your next steps. Sadly, it's entirely possible that it will be cheaper to simply walk away and treat this as a learning experience. You have given out a loan on something that you don't appear to have clear title to. If you didn't at least file a chattel lien, or whatever your state equivalent is, then you may not even be able to prove that you have any right to the asset in question.
OK. I am jumping in on this. As a long time lender, I have several observations:
- How did the park get the title in the first place? Titles when properly executed are supposed to be mailed by the titling authority to the primary lien holder in almost every state unless it was an electronic filing in which case the park would not have the title.
- You, as a lender, should have had a written agreement with the park as to you, the lender's relationship with the park that should spell out any obligations you have or don't have to the park and any obligations they have or don't have to you the lender.
- The park does not have the right to stop your repossession, but they may, depending on the state, place an additional lien on the home for back lot rent if you do not have a written agreement with the park to the contrary. In some states they can legally prevent you from removing the home until their lien is satisfied.
If I were in your position, I would be talking to the ownership of the park. If you are willing and able to make future loans in their park, that should be of value to them and gives you something to negotiate with.
The lesson here is never, never, make a loan on a manufactured home in a land lease community if you do not have a decent relationship with the park owners and a written agreement regarding lot rent and other fees the park may feel is due them. Lesson two may be that you need to handle titling more professionally.
Thanks for the great advise from all. Im very lucky to be part of the BP community! I managed to receive the title from the park and will work with the DMV to have a clean title under my name. ill try hard to convince the MH resident to leave before the park evicts him, even though he is obviously avoiding me. The Park informed me that once the court has an eviction order, the DMV will send me a note to pay his lot rent balance or surrender the MH. I’m scratching my head how is that even possible that as a lender I have any responsibility for his balance with the park. Any thoughts?
@Doran Rice - Woah there!!! You may want to hold off on processing this title into your name and, answer the above questions first.
The first question is why and how is it that the park was holding on to this title? If the reasons were NOT legal then you may have some leverage over them.
What is the year, size and condition of the mobile home? It may not be worth the liability of ownership and you may claim that you have no ownership interest, if this is the case. When is the last time you have seen the inside of the home?
Am I missing something, or as a lender you don't "get the title in your name" you simply get a lien on the title?
@Marc Faulkner - I will be visiting the MH this weekend and hoping that its not a war zone. Ive invested a good amount of money fixing it so ill hate kissing my investment goodbye. My plan is to take possession of the MH, if its in okay condition, and resell it.
@Wayne Brooks -I have a lien, however as the owner defaults in paying I am taking possession of the title. In NJ at least it looks like not that complicated procedure via the DMV.
Again-I am curious as to why the park was ever holding this title??? The answer may give you some leverage with your situation here. Also-how old/what year is the home?
I almost had to deal with this situation and it was my understanding I would have to pay the back lot rent. However, the buyer got caught up so it did not become a problem, but I was pretty sure I'd be paying the back rent.
I am with Marc though, how the heck was the title in a lock box in the park office? Mine are like @Ken Rishel said, mailed to me as the primary lien holder and in my darn safe.
I do like Ken's idea about getting a written agreement regarding lot rent with the park owner. I got a few homes in the same park and the owner and I communicate every month and she lets me know what is going on. When the one person was behind we were working together to get him out. I would have owed lot rent to her but I always took that as part of the game.
How long did you know this guy was behind on rent? Was he equally behind on payments?
#1, possession of the title means little; whose *name* is on the title is what matters. If the seller /lender is on title as legal owner /lienholder, it's simple to file for lost title. And the point is moot, as OP days he has regained title from the Gollum ("my PRECIOUS!! ")
#2, In WA, if an owner of a MH owes back rent, and there's a lienholder, the lienholder is responsible for rent ONLY from the point of RECEIPT of proper notification from the park. Here,"proper notification" is certified mailed, return receipt requested. So, back rent is not the lienholder's problem.
This is my state ; check your state's laws.
#3, if the house is trashed, don't feel guilty about signing the title for release, and mailing it to the home. If the deadbeat gets it, or if it's returned to you in the mail, not your problem anymore. Sometimes you have to cut your losses.
As a landlord and past towing company owner, I wouldn't care who's name is on the title or who the lender was, if lot rent was owed to me I'd want to be paid. I'd hold the home hostage / impound till it was paid all the while accruing billable months. I would think you'd be on the hook for any past rents if you want to keep control over that mh. I think those mh parks have a lot more power to enforce rents than you might imagine. My guess is If you're in the NY/NJ metro area they will want to see the old homes go and replace them with new modern homes that they can sell at a handsome profit and jack up the lot rents.
Lenders get stuck in this position with cars, boats and mh's often enough. Last year I saw where a bank after 7 years came to recover an abandoned boat from storage area of the marina where I have a slip. The bank paid $14,000 in storage fees for a boat that was worth maybe $4000 cleaned up. The marina owner was so happy. I've seen this scenario played out with cars in our impound lot, houses in foreclosure. Sometimes its best for the lender to walk away from their collateral then to "spend good money after bad".
Most times you'd just have to go through the legal process of foreclosing if the title is still in the buyer's name. Interesting to hear the physical title was being held by park management.
@ Doran Rice I am CONSIDERING lending on a MH in NEW JERSEY. i would like to know your outcome if you are still here on Bigger Pockets please message me.