Does anyone on this forum ever use a strategy of placing a lien on a resident’s mobile home to help enforce the policy of not allowing homes to be sold and moved outside the park? Or perhaps as a strategy to deal with the occasional abandoned home?
When I sell a home to a resident, I put in their lot lease agreement that they cannot move the home out of the park, and cannot sell to someone else who would move the home. If someone actually decides to break that provision of the contract, I have little recourse. If, however, I am able to place a lien on the home (e.g., in lieu of a larger deposit), then they would need my permission to transfer title of the home to another person.
I’ve not done this yet, but I’m considering it and wondering if others have made this a practice.
A benefit of doing this is that it happens to help me when I end up with the occasional abandoned home. In NC the process of taking title to an abandoned home is lengthy and somewhat arduous, at least I found it to be. If I had a lien on a resident’s title, if they abandoned the home it would be much easier to take title back.
What are the pros and cons of such a practice?
Sounds predatory and not ethical. I have seen those clauses before and our attorney said it’s not legal under the circumstances that a home is sold and the park owner wants to prevent the home from being moved. This is an entirely different case.
This issue has come up first in Michigan and later in Illinois. As a result a new national association of home owners has sprung up with a vengeance.
Through their efforts, the Illinois House saw an odious bill introduced addressing this issue and a whole lot more. As the Legislative Chair (and at the time Chairman of the Illinois Manufactured Housing Association, I and a number of others spent hours and hours defeating the legislation.
There are both legal and ethical ways to encourage homes to stay in the community and to discourage poachers without trying to take advantage of residents. The industry does not need the backlash or black eye caused by trying to take advantage of homeowner residents.
Ok, please explain to me how I am taking advantage of homeowner residents if I sell I home to someone at a fair price, but only under the condition that it not be moved from it’s present location? @Rockfundgroup, how is this predatory and not ethical? I am not required to sell, and the buyer is not required to buy. If they buy, they have the freedom to sell the home later on to someone else, as long as it stays in the park. I will also allow them to rent the home to someone so it can generate income for them if they move out. But if they choose to purchase a home from me, they have to agree to my condition. I’m not in the business of selling mobile homes. I’m in the business of renting the land underneath the homes. If someone wants to purchase a mobile home with the option of moving it, they have many other sellers they can choose to deal with.
I don’t know about other states, but here in North Carolina I have a friend who owns several parks and he places this requirement on all homes he sells (I’m not aware that he places a lien on the title however). A couple years ago someone who purchased a home from him wanted to move it, and challenged him in court. My friend won. The court upheld the contract where the buyer had agreed not to move the home as a condition of selling it, setting a precedent for future potential court cases.
Use a long term lot lease to keep them in the Park. You were talking about liens which are a different animal.
If your tenants are month to month on their lot lease then they have rights to move their home if they give you notice in accordance with that lease.
You should to:
Jeffrey P. Barringer
194 Washington Ave, Ste 600 | Albany, NY 12210
@suburban - As the saying goes - “do you want to be right, or do you want to be effective?” Do you want to argue with other park owners about what is or is not predatory - or do you want to concern yourself with the larger picture of optics in the eye of homeowners, the public and media at large, and regulatory bodies?
Personally - I want to be effective…
Furthermore just because your friend won, and the homeowner did not have the resources to appeal the lower court verdict does not mean whatsoever that your friend is legally in the right. Lower court decisions get turned over all the time.
Part of what it means to actually own property is to have the freedom to choose what to do with it. I’m not sure that it is even an intelligible definition of “selling” you something if I claim to retain rights and conditions on what you can do with that property after the sale has transacted.
From my experience, if you tell people they can’t, they will try to.
So, if you don’t make it a big deal, they won’t make it a big deal. Not sure what your state laws provide for or don’t, but here in WA, people don’t take them out of the parks unless they are very mad at the park or unless they have a very new home. Talk to you your legal team regarding this situation. We do liens for failure to pay and then acquire the homes that way and then turn them over for profit. There again, I don’t know what your state provides for. But here, we don’t put that provision in because its pointless. However, you can deter anyone from removing a home with a few details such as if they are from the mid 70s you don’t want to move them due to repair requirements and issues with travel and the fact that the are meant to be moved once, and you move them over and over and they won’t remarry back together the same and will have new structural problems… there are always ways to talk a person out of moving a home out.
You’re saying you want to sell a home but have owner sign a long term lease, and then place a lien on their home to ensure they can’t violate the lease provision?
Lien while they’re paying off the home, yes. Lien just because they’re on a lease? No.
Oh, what you want is a lien until enough “time” has passed for them to be able to do what they want? Smells like a mortgage.
@Brandon, our leases for lot-rent only are month to month, so maybe creating a long term lease (5 years?) would reduce the chances of them moving the home (but if they break the lease it’s almost impossible for me to recover anything monetarily for lost revenue–North Carolina is not very friendly to mobile home park owners’ rights). No, I’m not trying to create a hidden mortgage, I’m trying to minimize the loss to my company by having someone sell a home to someone who then moves it out of the park. Just last week I had a person call to say they wanted to purchase a home from us. We almost sold it to him until he happened to mention that he was going to be moving it to another park (that park offered to pay the moving and setup costs). So I simply thanked him for his call after explaining that we don’t sell homes so they can be moved. Judging from some of the comments above, it would seem that some of those who have replied think I should have just sold it and let him move it.
You’re right, I think, that you can’t place a lien on a home just because they are on a lease. But I could if I gave them the option of either paying a larger deposit or letting me place a lien in lieu of a deposit.
Generally in places were there is stiff competition like south Tx. where park owner will move for free a MH from a competitor to their own park for free it is very legal to have a first right of refusal (in guidelines) and if the home has a later reduced price the park owner again has a shot at owning it. As long as a tenant has a loan against their homes to the park entity it will not be moved until the note is paid or given written permission from such. We do not employ the right of first refusal since like most parks, MH’s once set, stay. We do enforce the policy for homes not up to our standards to move since 90% of our homes are 2000 or newer and therefore protect the overall value of tenant homes and also change the dynamics of new tenants plus being a asset to the surrounding community!
1-Reality is that most tenants don’t move homes. They are more likely to sell them. 2- why would they move them is the rent too high or the park no good?
Like everything involving the law, there are ways of creating a defensible practice and there are things that would be difficult to defend. This industry has long relied on the fact that most residents are either too poor, or too ignorant, or both to exert their rights. All of that is changing and the pendulum is now swinging too far the other direction in response to some of the things our industry has done in the past. As a result, we often end up with laws that do not consider what you or I might feel is moral, just, or fair.
I, and most of our clients, do actively use a right of first refusal when selling a home for placement in our communities. It becomes defensible, by having the community pay out part of the purchase price in return for that right. Both this agreement and the right are carefully spelled out in a state specific agreement that was carefully crafted by competent legal counsel and NOT by Google, Google & Google.
The captive/related finance companies also make their offers to lend contingent on the home staying in the community until the loan is paid off. This only becomes defensible through carefully crafted verbiage in the purchase money agreement that shows a benefit to the borrower.
Basically, as any competent attorney knows, you cannot compel someone to give up a right without acceptable compensation. The method, and or value, of that compensation is something which must be carefully thought out if the agreement is to survive though a court battle.
Courts, legislators and others view us with suspicion already. If we are not careful, we will get more laws and more court decisions that make it harder for us to survive.
What If you aren’t charging the $5000/$10000 to move the home as long as it isn’t moved within 5 years. How unfair to the owner if thats not at least paided back. Am I missing something?
Josh - As long as it is properly structured and in writing that they are gaining a financial benefit in return for not moving the home, or selling it to someone other than you, for a specified period of time, you should be pretty safe based on my experience. You could be even safer if you included an amortized penalty clause that included a legal rate of interest in your state for a buyout.
Neither I as the poster, nor Rishel Consulting Group are attorneys or a law firm. What is being offered is not legal advice but rather advise base on experience. We have no financial agreement between our company and yourself, this issue is outside our area of consulting so we would suggest retaining a competent attorney to assist you with this issue.