The mobile home story below mainly revolves around Cindy and Gail. When I found Cindy, she was selling her 3-bedroom, 2-bathroom doublewide mobile home located in a family-style mobile home park just outside of my city. Gail would not come into the picture for about another week.
When I first met Cindy, she seemed very knowledgeable about the home she had lived in for the last nine months. Cindy was very up front with regard to the minimal repairs that were needed and park safety. She seemed very candid with any other questions I had for her. Best of all, Cindy was a motivated seller who wanted to be out of her home and was already asking less than $10,000 when I found her.
After proper due diligence to make sure the park was safe and the home could be resold for a substantial profit, we agreed upon a price of $6,500. This $6,500 would be payable as $1,000 down at closing and monthly payments of $200 until paid in full. Cindy and I were both happy to create this win-win transaction, and we closed the deal less than two days later. In these two days, due diligence was performed and a park application was submitted and approved to allow me to invest within the community. We closed, and I was the new owner of this used 1980s doublewide mobile home.
The main lesson of this story does not pertain to negotiating, purchasing, or reselling the mobile home. Cindy was very happy to move on with her life and take the $,1000 down payment to help rent herself an apartment in a town nearby. As a mobile home investor, I was certainly happy to create this transaction that I knew would end up paying for itself once I was able to sell to a qualified buyer via monthly payments.
The Unhappy Mobile Home Seller, Gail
I make the extra point above to emphasize that my seller, Cindy, was very happy with the price and terms negotiated. Again, these terms were $6,500 payable as $1,000 down immediately and monthly payments of $200 for 27.5 months. This is when Gail came into the picture.
Gail was the previous seller who sold the 3/2 mobile home to Cindy less than 12 months earlier. When Gail sold the home to Cindy, Cindy promised to pay Gail an extra $1,500, which was past due, in a few months. This was something originally worked out between only Gail and Cindy and was never brought to my attention during any point of the deal. In fact, Gail failed to place a lien or another recorded notice on the physical title of the mobile home to prevent it from being resold to me.
Related: The 10 Most Common Problems with Older Mobile Homes
[Pro tip: If you ever allow a buyer to purchase your used mobile home and transfer ownership into their names before the buyer(s) pay you in full for the home, make 100 percent certain you are able to place a lien against that title/ownership to protect your interests. In states where only a bill of sale is used due to the age of the home, do not hand over a bill of sale until the home is 100 percent paid in full by your buyer.]
How Gail Alerted Me to the Issue
Less than a week after I purchased Cindy’s mobile home in a park, I discovered a letter taped to the front door. The letter read, “I understand you have bought this home from Cindy. She still owes me $1,500 on the home. I expect you to pay this to me or I will put a judgment against the title. Enclosed is my address. Pay or else I will be forced to contact the authorities.”
At the time, I was really scared. I was afraid of being sued, doing anything wrong, looking like a fool, and wasting my money. I wasn’t sure what to do moving forward. This feeling of fear only lasted until I called my mentor. My mentor was an eviction specialist and quickly let me know that as long as I had already transferred the ownership completely into my control, there was little to nothing that Gail could do to reclaim the home or go after me.
Since on the day of closing I had transferred the ownership/title(s) into my control, I knew that Gail could not take the home back due to this defaulted $1,500 from Cindy. However, I did send a letter to Gail explaining this fact and my regret for the situation she found herself. While I would have liked to pay Gail the $1,500 Cindy owed her, I had already agreed to pay Cindy $6,500 via payments for the home. I encouraged Gail to connect directly with Cindy at her new address and try to get her money from Cindy herself.
I learned later that Cindy did eventually pay Gail what was owed to her.
5 Tips to Help You Avoid Gail’s Predicament
- Do not trust a buyer without getting everything in writing.
- Do not transfer a title into your buyer’s name before it is paid in full.
- If title is transferred prior to being paid in full, make certain to place a lien on the title in your name or company name. If there is a lien on the title then the lien holder usually holds the physical title.
- Keep the title in your possession until it is paid in full.
- Once the home is paid in full by your buyer, make sure the ownership/title it fully transferred into your buyer’s name. This transfer should be completed so next year you will not be expected to pay taxes (if applicable) due to you not being the owner any longer.
Note: In some states, the actual owner listed on the mobile home title will be referred to as the “legal owner.” In these states, a lien holder will not be listed as “lien holder,” but they will often be listed as the “registered owner.”
In conclusion, let this story of what happened between Cindy and Gail be an example for us all. People can agree to almost anything. If everyone does exactly what they promise to do, then there are usually few issues. However, contracts, agreements, and liens exist for when things do not go as planned. While aiming to regularly help local buyers, sellers, and parks, keep yourself protected and in control of any deals you do. If you are dealing with any specific mobile home-related titling issues, never hesitate to comment below or ask further questions in the forums section of this website.
Have you ever run into a situation where previous sellers or other title issues have caused a sticky situation?
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