I’m new to MHP investing. If I happen to find a deal that has only a few POH’s in it and I decide to go for it, when carrying the paper on the POH’s, does that legally clear me of being liable for them in the same way that it would if I didn’t own them to begin with? (which I know is the ideal scenario). And what is the piece of paper called that actually proves a MH owner owns their mobile home?
You will continue to have a legal obligation to pay Personal Property Taxes and Insurance for POH’s until the Title (yes like a car) has been transferred to the Buyer. You will need to stipulate as part of your Agreement with the Buyer how repairs are handled. Each state has a database of mobile homes you can confirm the current ownership based on the Manufacturer’s Serial # and other information.
A lot of people as part of a Purchase will require the Seller to provide proof of and transfer Title for each home at Closing, and if they cannot then a financial offset is provided for the time and effort it will take you afterwards to obtain those titles. So if there are 5 POH’s and the Seller doesn’t give you title to any of them, your contract will ask the Title Company to reduce 3K-5K for each one from the Purchase price. If you only have a Bill of Sale it will take you 60+ days to get a Title via manual process, and filing fees with the State, lots of certified snail mail, time and frustration.
Be careful with this “offset” approach for a smaller park with lots of POH’s. I once had this provision in my contract on a Turnaround Park in Texas and the Seller was not able to come up with any of the Titles for his 10 pad all POH Park, and as a result the offset reduced the purchase price below the value of his Note from his Property’s Lienholder. After failed negotiations to have the Seller lower the price so that we could close I backed out and had my earnest money returned - with all the other problems this Park had the Titles was the final straw. If I cannot confirm ownership via State database I now request copies of the POH titles as part of the initial Document Request List, and check the Title Commitment very carefully to make sure this won’t cause the deal to flip upside down.
More than you asked for, but now you know about POH Titles…
Thank you so much @jhutson! I can never have too much information. That answered a lot of questions, thanks man.
@jhutson has a great answer.
Here’s my additional two cents.
“Title” is a nebulous concept of property law which is state-specific. Who the “state” declares the owner to be (through database, or Title Certificate, or whatever other state-specific means of identifying the home) may not be who the county or other taxing jurisdiction thinks is the owner, which may not be the actual owner according to bills of sale documenting the chain of title down to you.
All of these items count for something, and “behaving” like the owner counts for something too. If the home is abandoned the landowner can usually get title free-and-clear through the state’s abandoned property process. Since you are the potential landowner, only someone with a superior claim could really defeat you, and you cover your bases by not screwing this up.
If you want the homes, act like the owner and get title or flush the owner out with abandonment proceedings (and figure that will cost you something in money, time, and aggro).
If you don’t want the homes, you’ll have to tear them down (get them condemned?) or get someone to haul them out (and bond them for ownership, but that makes it their problem and not yours.).
I would NOT assume that purchasing paper insulates you from any liability with respect to home ownership. The “paper” IOU may be worth less than the paper it is printed on (i.e., a liability not an asset). Treat it with respect and hope it pays off and you can deliver the title because you may be in trouble if you can’t (but liability surely limited to damages of the amount reportedly owed). Right @KurtKelley?
Thanks @Brandon, good points!