Bank not paying lot rent

One of our nicest homes (2003 4/2, double wide, 2 car garage) located on one of our nicest lots was owned by an older women who then got very ill and had to move to an assisted living home. The women had/has a large loan with a local bank on the home and garage. Her daughter, who does not live in the park, started managing the home as a rental; yet when the owner of the home (i.e., the old women) filed for bankruptcy, the daughter called and said the bank is now in control; the bank started collecting the rent from the tenants (who are still there). We immediately contacted the bank who said to send them a lot lease agreement and they would pay the lot rent once the bank got title to the home. Well, it has been 9 months, and the bank says that the title transfer is being held up and will not pay until they get title. The county still has the home’s title in the old women’s name. The bank gets the rent on the home but refuses to pay the lot rent. Unfortunately the previous owner/manager of our park did not have a lot lease agreement in place on this home. How would you deal with this issue?

Nine months ago you should have served the homeowner with an eviction notice for non payment. You should definitely proceed immediately with the eviction now. You need to know who to now serve but the fact remains that the no pay no stay policy must be enforced. That should get an immediate response from the bank.

Bottom line is I would inform the bank that you do not care what their policies may be your bank expects payment and so do you.

Apply for abandoned/Lien Title. One of the first steps in process notifies the lienholder and usually they become more communicative.

Those are all good ideas, but another idea is to file a Possessory Lien Notice. This gives the bank 10 days to pay or remove the home and, if they don’t, the rent becomes a mechanics lien. That’s what we do. You can do that any time a mobile home goes abandoned and has a lien on it. Next time, do that within days of it being abandoned and the rent not paid.

The key, regardless of the situation or action, is to react quickly. All too often I speak with landlords that are having issues with tenants not paying that are months in arrears. I never understand how this is allowed to happen. Usually what it results in is a tenant living rent free for months before they eventually walk away scott free.

My tenants get only one warning, after that I serve them with notice the day after their rent is late. No exceptions.

One of the nice things up here in regards to late payments is that every time a tenant is late if I serve them with notice it will cost them $170. This is a serious incentive to pay on time.

Frank – Is the Possessory Lien Notice something we can do ourselves or should an attorney be engaged? Should the Possessory Lien Notice be filed (i.e., recorded?) with the County and/or mailed to the bank? Are the 10 days you mention specific to a certain State? I am not sure how to proceed. Please remember that the previous owner of the park did not have a signed lot lease agreement with the owner of the home yet they did make lot payments for several years.

You can only collect rent due from 10 days after they receive the Possessory Lien Notice – all back rent is lost. That’s why you want to send them out the minute the tenant abandons the home – if there’s a lien on it. I would call the manufactured home association for your state and get the basic information on it, or another park owner, or a local lawyer (maybe one recommended by the MHA). You definitely want to follow the correct procedure for your state, because it may not be universal in all states.