I have a couple of homes in my park that are rough and need work in order to be livable. We have renovated over 40 homes over the last 18 months and would rather just give them away for free in exchange for lot rent rather than manage another costly renovation. We have people interested in doing a deal like this but the home needs to be brought up to habitable standards before they can move in. I was wondering if anyone had a form or agreement they have used in the past for a transaction similar to this or if there are any other issues to be aware of when giving away a home for free. I have clean title to these homes. Thanks everyone.
I have a simple formula of transferring ownership of the home without signing a lot rental agreement. They are required to renovate to my standards, especially the outside, and once they meet that standard and have a building inspection allowing habitation we sign a lease.
They are home owners but not tenants and not allowed to occupy the home until completed.
There are many ways to approach this and we have tried. In general I do not like handyman agreements unless you know the person knows how to do the work. So vet them first. We had one guy who thought it was fine to put multi-colored vinyl siding on the home. And he probably thought it was in good taste.
Regardless, here is a recent example (neither good or bad, just one sample). We prefer to make a contractor’s agreement first. Only upon ‘approved’ fixes we will offer a lease and title for essentially $1.
Most importantly, be specific on what needs to be done and the due dates.
Whatever you do, do not let them move in without completion and approval.
PS: We have them sign other contractor indemnity forms, yada yada.
Hope this helps a little
Renovation Agreement - 3349AN (1).pdf (105.1 KB)
It is very important that you set all standards and requirements in advance.
We sign an agreement in advance including specifications on all material (siding color etc.) and monitor to insure all permits are in place and all building codes followed.
Thank you everyone for your input. We will most definitely require inspection on completion of work before move in.
In the past when I have tried to do this, we would hold off on signing any agreements or lease until the work was done and give them 1-3 months depending on the condition of the home for renovations to be completed. The problem arose when after 3 months the future resident had not done the work and the deal turned out to be a waste of time with an opportunity cost of 1-3 months of lot rent.
This time I am making them pay lot rent while working on it to avoid wasting time so I need to have an agreement with them upfront in addition to the lease. Thank you Howard for sharing your agreement!
The Texas MH Association offers a form for “Business Use Only sales”, see a copy on our website at http://mobileagency.com/docs/agreement_and_billofsale_purchase.pdf Use this form, or something like it, for sales involving non-habitable homes.
Texas, and most other states have few home warranty requirements for sellers, but they almost all universally say that if a home is sold for residential use, then it must be “habitable.” This basically means the basic functions must work, good electrical, basic plumbing, heating, solid flooring… and the home must be reasonably fit for the purpose for which it was sold. The Uniform Commercial Code (UCC) basically says the same thing about all 'products" sold and MH’s are considered “products” when sold without the land in most cases.
If you sale a home you know isn’t habitable, and the buyer plans to live in it, it’s easier than you’d think to violate this rule. An electrical short that starts a fire and kills the occupants a few months after the sale can result in a liability loss that is “whatever / everything you have.”