Who Holds the Title in a Lonnie Deal?

Question

I just got off the phone with a park manager at a MH park by me. I explained to them what I am trying to do with owner financing and they said that to be a resident you need to be on title.

My question is when you sell the MH with owner financing are you holding onto the title until it's paid off or do you hand the title over and create a lien on it? The park manager said that title would have to be in their name and you (i) can create a lien on the MH, otherwise I can rent it if I want to hold onto title... I was a little confused and hadn't thought about this in advance when she asked me if I was going to hold title or not till it's paid off...

What are the advantages/disadvantages of holding title or creating a lien and handing over title while you owner finance?

Thanks!

J Scott · Answer

Another vote for what Cole said... We generally transfer title to the buyer with our company as the lien-holder. Terry - The lien is recorded with the title at the time of registration. The park managers generally take our word for it when we say we've sold the home, so even if we were to keep the title in our name until the final payment, most park managers would know the difference. This is just our experience... Btw, the other issue is taxes and insurance. Depending on who the home is registered to will determine who receives the tax bill and who can get insurance. Take these things into account when deciding which route to take.

Terry Drake · Answer

Cole, to do a straight sale and file a lien on the title, who do I file the lien with? The park manager AND the DMV or just the DMV?

Cole Haynes · Answer

Bill, I am an honest guy, lol. It's embarrassing to say, but I didn't even know what a UCC filing was! That is exactly why I have been on this site for hours everyday, there is SO much to learn! Actually, I have been part of a pretty large group that invests in mobiles homes and mobile home parks. This has never been mentioned. I will bring it up though. The park manager is an important part of this little niche. If you are proactive in your relationship with the manager they will love you. Because you are truly offering a service to them and the park. Some parks, usually the nicer ones, won't allow straight rentals. If you work the lease option strategy you have to explain why it's beneficial to the buyer, park, and you(investor) to wait to transfer title until "buyer" has paid for a while. Jason, Like I mentioned I have never used a trust and don't know the process. John Fedro, uses this strategy though. Maybe you could ask him. I don't know your area, but I would suggest you don't over complicate things. If this is your first mobile home deal you might flat out hate it. Servicing these notes is a lot like dealing with a kid sometimes. For example, I just had a buyer call me after 8 months of payments telling me he wanted to meet up to give me the keys. I explained it was a loan and he still has 28 payments of $250/month, etc. Not only did he feel it was unfair for me to hold him to a contract he signed. He also explained that he was in the hospital for the last 3 weeks and felt it was UNFAIR he had to pay while he wasn't staying there! Crazy right? How do you reason with that? Qualifying is huge and this deal was a mess from the start. This was the deal I previously wrote about that took me 25 applications or so to get someone approved, and it was this joker! But Jason, it all goes back to the numbers. You need to make your money when you buy. Do your research, talk to manager, etc. Work to have all of your money back out of the deal within 6 months. 12 at the most. Hope that helps!

Bill Gulley · Answer

Hi, Cole has my vote! Might check if a lien holder holds title with a lien, some state do, some don't. Do you MH dealers file UCC filings for appliances when you finance them? How does the park manager know how has title if renters are there? Just wondering. Bill

Cole Haynes · Answer

Robert, You have a lot of options on how to structure a sale of a mobile home in a park. If you work this strategy often you will probably use most, if not all of them depending on your situation and area. 1) You can do a traditional sale of the mobile and record a lein on the title. You would then keep physical title until buyer paid you off. 2) You could lease/option the mobile and keep property in your name until "buyer" exercises option. 3) You could do a straight rent. 4) I have heard about using trusts and transfering beneficiary.... I haven't dont this. I would like to learn more about it though. John, mentions that he uses this strategy. I am sure there are different ways to skin this cat. Bottom line you want to look at what method is most beneficial to YOU as the investor. Cole

Jason Ballesteros · Answer

Cole, Would it not be more expensive for you to do it in a land trust as it costs to create the land trust? Or do you have a trust already that you would just put the property into? I would think the first two ways you gave would be more cost efficient, or no? Newbie trying to learn a little more about mobiles. Seems interesting for the amount of investment you are putting out there for the possible return. Thanks Jason