Hi MHU community, I’m about to buy a park which has quite a few POHs. The lender will finance the purchase and it wants to be a lienholder of those POHs so that it will get 50% of sales proceeds when I sell a POH. The potential issue I’m seeing is that, upon the closing, we as buyer will take weeks to get those titles transferred to our name, and then the bank will work on its part to list itself as a lienholder under the title certificates. The bank may be concerned about the time involved in this whole titling process. Is there any alternative approach to bank being a lienholder? Is it common for bank to be a lienholder of POH? What’s your general thoughts on bank being a lienholder for POHs in terms of pros and cons? Thanks
The lienholder stuff should (?) be on the initial title transfer so it’s not like there’s two separate processes, one for you to get title and another to add the bank’s lien. The bank is going to have to abide by the time it takes in any event, so they’re probably aware of and okay with the amount of time it takes.
I think it’s pretty unusual to collateralize the homes but it’s not unheard of.
The biggest drawback is just going to be the hassle of dealing with the lien release when you sell a home. Is the bank going to say, “you sold it for too little” or " you screwed up this or that" and then you have to somehow unwind the sale?
Of course the bank wants extra collateral but maybe you can talk them out of it. The homes are a depreciating asset anyway.
Is the bank giving you extra funds in exchange for taking those homes as collateral? If you drop the homes from the bank’s loan will your loan terms change? (Maybe for the better?)
Thanks Brandon. The bank indicated that the titles will need to be changed to the buyer’s name and then the blank will take titles to the DMV to get the bank listed as a lienholder. So it does look like a 2-step process based on what bank said.
We didn’t get extra $ in exchange of having bank as a lienholder for those POHs. I agree it can be a little bit hassle to deal with down the road when we want to sell homes. From the bank’s perspective, it will get the loan repaid earlier by receiving 50% of sales proceeds, but should the bank be more interested in making money out of loan instead of seeing the loan is repaid earlier? Any talking points to persuade the bank not to collateralize the homes?
We have never had a bank collateralize homes. It is more trouble than it is worth, and it makes it harder for you to trade your homes. I suggest shopping for an alternative bank. I usually make contact with 10 to 15 banks for each deal to find the right fit. Seems like you do not have the right fit.