Illinois MH Taxes - unpaid MH taxes sold - Process Questions

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#1

I have a TOH in my MHP, the person who is physically occupying the MH has not paid the MH taxes. The taxes were sold and the time period is approaching where the person who bought the taxes will be able to apply for the MH deed…and essentially become the new owner of the MH. (If I understand the process correctly)

QUESTION - Has anyone been through this MH tax sale process in Illinois before?
How does this work - Does the new owner of the MH become my tenant once he deeds the MH, instead of the person who is physically occupying the MH?

#2

I’m not familiar with the law but my guess is that they don’t become a tenant. You would have to approve them and it’s up to you weather or not you want them as a tenant. If you don’t want them as a tenant you can offer to buy the home or you can require that they move it out - and you can probably charge them rent or a storage fee while the home is there.

#3

In OK. we are notified by the county if any resident’s homes are past due. Sometimes with a change in address the bill never gets to the right party. Ask your county tax commission for that information as the park owner to prevent unnecessary problems for tenants or you as the landlord. I would assume along as the home is on your property you should be able to collect. As to WHY someone would buy the MH could be some interesting story especially IF you have not personally communicated with the new owner or present tenant?? Buying the home from the new owner??? or maybe removed if really old??

#4

All of the notifications have been mailed over and over and all of the communications from the County have taken place, etc. In this case, the taxes were never paid and then the taxes were sold.

People buy RE taxes as an investment - they assume the home owner will not want to lose their home and eventually pay the taxes, then the investor receives their money back plus interest, etc. I don’t think a person who buys back taxes has to tell the homeowner because the process is administered and governed by the State. I do know the homeowner is required to pay ALL of the accumulated taxes, interest, fees, etc to the County - the County makes sure to get their money for the back taxes first and then settle with the investor who paid the rest.

Anyway, I was just reaching out to the group to see if there was someone with experience/knowledge who has been through the tax sale process with a MH in Illinois.

#5

What you are referring to is a tax lien, where (as you note) investors will pay the municipality the balance owed on the taxes in exchange for a lien against the property. The investor will then attempt to collect the amount owed from the current owner (your tenant) and collect the spread (inclusive of the original amount plus any fees + interest). This is the high level overview.

While I am not familiar with Illinois specifically, the process generally plays out the same anywhere I am aware of. And that is the investor can take over title of the home if the owner (your tenant) does not pay the amount due, becoming the de facto owner. At that point, the previous owner would then become a tenant of the investor and the investor would essentially become a Lonnie Dealer.

The implication, bottom line, is that the investor would owe you the lot rent and be responsible for adhering to the rules of your park (and ensuring his new tenant does the same).

I have never done a tax lien on a mobile home inside of a park and am struggling to visualize the best play for you here. However, you might consider reaching out to the investor and the current owner directly and trying to strike some kind of deal that ensures you keep the home in your park. However, if the investor is doing this specifically to become a Lonnie, that might not be a bad thing for you…

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#6

Good points from @NateW - my fear however, if an investor successfully buys one home from your park, he may attempt to buy several this way, and then at some point may have enough muscle to leverage against the park owner - which can be a massive issue.

I would attempt to keep control and not let an outsider have power within your business. My 2 cents.

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#7

I have been through this process several times. The new person owns the home, and may be able to move it, but you still have the right to screen them for occupancy in the park. Tip: watch the property taxes each year and be the guy that buys the lien (less than $100 in most instances) and then add it back to their rent (something authorized in my template lease).

Ferd

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#8

I am experienced in buying chattel taxes in Illinois. I have bought hundreds of homes since the inception of that change in law. When you buy them, you buy them free of any liens from lenders or park owners. Most people buying the taxes are investors and have no interest in living in the homes.

When I was still active in buying the taxes, I would offer the park owner the home for a price I believed fair. If they didn’t take it, I had plenty of other park owners who would buy and move the home. All of this happened within a week of clear title.

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#9

Thank you so much for responding! I agree with you that the investors are not interested in the MH - only getting their money back. The person who physically lives in the MH is not paying the MH taxes…he is also not paying lot rent or following the MHP Rules (but because of the Illinois eviction moratorium, the MHP is unable to take any action or evict). The trailer is old and in very bad shape now - due to a lack of repairs/maintenance - the MH should be demolished. I was wondering if I should file a lien on the MH for the back lot rent, but sounds like the best approach is to just wait it out.

The MH taxes were paid by the County Trustee, and I doubt the County Trustee is interested in owning the MH or being a MH landlord.

So I am unsure what the next steps are for MHP owners in this situation…