Promissory Note - how to secure or any ideas to help in this situation?

Question

I sold a mobile home giving Owner Financing (OF) (never again will I offer OF).  The buyer had the mobile home demolished.  Crazy I know.  She is now in arrears 3 months and has agreed to deed the land back to me and take a Promissory Note for the balance 30K.  I think this arrangement is better than nothing or me taking her to court to only get the land back.  I know she can stop paying on the Promissory Note as it attaches to nothing.  Any ideas appreciated?  She is a real estate agent but rents so no property to place a lien on.

Chris Seveney · Answer

Sorry to hear this but its good that you share this as people only see $ signs when the think seller financing. In this instance what I would do is get the deed in lieu from the borrower so you ahve the property again and get a note from them but have an attorney draft it to see if you can include a confession of judgment - meaning if they do not pay then you can get a quick judgment and possibly garnish wages.

I would also have them put a small down payment as part of the note and only accept a check that way if you ever did garnish you have a copy of a check so you know where they bank.

unfortunately you are right they can stop paying on the note and its unsecured so its a risk but out of all the options this is your best option.

Chris Seveney · Answer

you can garnish monies from a  bank account

Elaine Ericson · Answer

1. Agree

2. 20 year old single wide.  Land is valuable as I could purchase a new mobile home and install and less costs since utilities are already on the land.  I could potentially make 20K flipping a new mobile home install.

3.  Not true in Florida.  Once you retire the title and place a mobile home on its own lot then our county taxes as real property and we pay property taxes like a stick built home vs a mobile home in a mobile home park which is taxed like a car - vehicle tag.

4.  Yes, I've reached out to our attorney and my stated plan is best option.  I was hoping for some idea to secure the Promissory Note but it seems that's not available.

Thanks for your response.  Appreciate it.

Elaine Ericson · Answer

If it were a stick built home instead of a mobile home there probably would be less risk as long as property was insured.

Yes, this is my plan to get the land back, have attorney and title company check all the legal boxes and ask my CPA to write it off as a loss

Buyer is going to deed the property back to me and I'll take a Promissory Note.  I do like your idea of including a "confession of judgment".  I have not heard of that before.Do you know if a Deed in Lieu of Foreclosure is different that Buyer just deeding the property back to me?

I do like the idea of a check and when she pays closing costs ($515) for the title company and I'll pay attorney fees I'll have her write a check and get a copy of it.  Plus, I'm going to push either Title Company or attorney to get her SS# and License #.  I think the title company must have these to close.

Thanks for great advice.  Much appreciated.

Don Konipol · Answer

1. The buyer is already willing to do everything you could possibly receive in court + more.  2. What was the value of the mobile home?  Was it a new double wide or a 20 year old single?

3.  A mobile home is almost NEVER considered real property.  To permanently affix a mobile home to the ground requires a foundation - just “tying” it down doesn’t qualify.  Very few mobile homes qualify under this definition.

4. Seek qualified legal guidance

Ken M. · Answer

If the mobile was not "legally" tied to the ground, you should have two contracts. One for the mobile and one for the land. They are treated differently.

Elaine Ericson · Answer

Thanks but as I mentioned in post she's a Real Estate agent and she is paid a commission based on sales and does not earn wages.  Not sure if you can garnish commissions and if I could then she might just move to another broker.   I think it's a long shot.

Elaine Ericson · Answer

I did get the property deeded back in my name and a Promissory Note created by attorney.  Buyer has already ghosted me and I doubt I'll ever see that 30K.  Hard Knocks lesson.  I'll speak to litigation attorney and see if there is any hope but as grandma use to say: "you can't bleed a turnip". The girl as no assets to go after.

Chris Seveney · Answer

some states you can try and garnish wages. often times its futile

Promissory Note - how to secure or any ideas to help in this situation?

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