Closing gone wrong...legal proceedings to follow?

Question

I was about 5 days from closing on my first place (an up/down duplex + cottage)...when the lenders (a typical residential / investment lender) said he would not fund the transaction...because the appraisal came back saying that it was a "raised mobile home" - and they don't fund mobile homes.

It wasn't obvious that this was a mobile home by sight - apparently it was just the foundation of the mobile home that was used and then was re-finished (new siding, new roof, etc).  The appraiser found the hud tag on the i-beams when he did his inspection.

This was never disclosed either before or after signing the purchase & sale agreement and nothing was said about it in the building inspection.

So a few questions:

1.  Does it still make sense to go through with this transaction? The seller's agent said he had a lender that would lend on it.  But from what I've read, there's basically no market for it because most lenders will not lend against it (so it will make it very hard to resell in the future).

2. I'll get my deposit back, but I have at least $2k in other fees (appraisal, home inspection, legal, etc).  Since it seems like the seller obviously knew about this and never disclosed it - and the seller's agent at the very best was ignorant about it - does it make sense to sue to recoup these losses?

Scott Taylor · Answer

Account Closed Good point on the title search.  I had actually authorized it - but haven't gotten charged for it (at least as of yet).  That's another $1000+ out of my pocket (maybe).

I never heard anything back on the title search - I'm not sure if it's been conducted yet.

Jerry Lucker · Answer

Too much info folks. Let's keep it simple.

1) Seller's agent said he had lender that would do the deal - Do the Deal!

2) If seller's agent was blowing smoke then walk.

3) Don't waste time and emotional energy on it in addition to losing a few bucks.

4) Focus on the next deal instead of the misery of this one

Jay Hinrichs · Answer

@Scott Taylor  the manufactured homes laws are federal.. so they apply in each state although some jurisdictions may have further limitations on a design and build that preclude those.

Like in Charleston were I am building in fill there is a project called Hunley waters. ALL the homes were built in a factory.. transported there and erected in less than 5 days.

they are factory built but not in the style we are thinking of a box mobile home towed down the road.

Or like we have done in Oakland CA over the years.. predominantly low income areas were we provide a new house.. but stick built is not feasible so we drag in the manufactured homes.

And trying to get a RE agent to lose his license is pretty tough.. unless you just are plain mean. LOL over 2k get over it.. if you really want to make a claim .. you can of course .. and they will turn it over to their E and O..

but this frankly is just the cost of doing business.. move on .. be well   forget about it.

Mark Brogan · Answer

if you are a buy and hold investor I don't know why you would care as long as it cash flows well every month @Scott Taylor

You should never buy looking for appreciation

But if that is one of the reasons you are buying when you sell just finance it for end buyer and get appreciation that way

Jay Hinrichs · Answer

Chris Mason  not being a retail lending expert.. the folks that bought the manufacotred duplexs from us got loans maybe of a commercial nature and not FNMA

the stuff I am doing in Oakland now is all SFR.. so no issue there. and NO I don't tear the tag off.

we affix it to a permanante foundation it becomes real property. I have been doing this since about 1981... :)  just drive around Oakland and you will see our handy work.

Jay Hinrichs · Answer

Chris Mason  manufactures of Of these units by ALL means made multi family duplex units I have bought and installed many .. in Oakland no less.

as long as they are affixed to a Permanent   foundation and removed from the motor vehicle registration they are considered stick built homes.. I have financed many in Oakland and I am currently building a few as well in that area.. No problem getting them financed.

I suspect this is a hybrid of Manufactured home and stick built add on .. not sure where that falls.

but buy a manufactured or factory built home and affixing it to a permanent  foundation creates a home that is financeable like any other.. at least in all the one's I have done.. and will continue to do in your fair city.

Also in Charleston SC were I am quite active there are a lot of factory built homes.. they are different than the west coast trailer style but none the less they are factory built.

Scott Taylor · Answer

Chris Mason - yes, ultimately I'm looking for cash flow, but why limit my options?  I'm not going to bet on appreciation, but that doesn't mean that I want to cut myself off from it's possibility of happening.

Jay Hinrichs · Answer

@Scott Taylor   E & O = Errors and Omissions  insurance.. virtually every realtor has it.

and if you make a monetary claim against a realtor they usually turn it over to the E & O carrier if the

claim is sufficient enough.. many of these policies have 5k deductables.

Also in most forms and we are going through this right now on a deal I am the seller on in PA were the buyer literally backed out day of closing and wanted their 10k back.. and of course I told them no greaking way.. so we are going to mediation.. and mediation is cheap there only 250 an hour.. the buyer has not appointed an attorney and my Agents will represent me.. If you do this you may have to fly there.. so only compounding the dollars out of pocket.  But do read the purchase and sale agreement if its a standard board of realtors form it probably has a mediation clause in it.. which is exactly what your type of squabble is best suited to argue out if in deed you think its worth it for your damages..

Mark Brogan · Answer

Forget about the cottage being I mobile,what are the numbers on the investment

The numbers will tell you if it's worth it,in the end if you sell you can finance the sale and get appreciation that way

Manufactured homes can be incredible money makers

Good luck

Scott Taylor · Answer

@Jay Hinrichs What is the E&O department?  Do you see those mobile homes on solid concrete appreciate in value the same way a typical house does?

Closing gone wrong...legal proceedings to follow?

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