We acquired a note at the time of purchase of one of our parks, on a 2001 Schult 26 x 56 MH. I have copies of the original promissory note and agreement to buy on terms. The purchase price was $30000.00 with a $100.00 deposit and $4900.00 due at closing. After further examination of the note the “Agreement to Buy On Terms” states that the note shall be payable at $200.00 per month at 8% annually commencing on December 30, 2004. Buyer has the right to prepay with no penalty. The “Promissory Note” however, states that the payment shall be $250 per month. Also, the big problem is that no where in any of the agreements does it state the term of the loan, or years amortized!
Does the payment amount imply the amortization rate and term?
I know I will have to end up paying my attorney to figure this out…but what are my rights as the owner of the note to set a term if one is not listed?
Additionally, the Promissory Note states that the buyer is to maintain the collateral with normal wear and tear excepted. The buyer certainly has not kept up the home…the outside has visible damage and the inside is another story.
Thanks for any help!!!
Cari–
You will want the original note and not simply a copy. You also want to see that the note states that it may be assigned (usually reads something to the effect of … payable to Mr. Smith LLC or assigns… or as directed).
This note sounds like it is a homespun note that did not provide the truth in lending info that would have answered your questions.
The best suggestion I can give is for you, as the park owner and note holder, to meet with the payor face to face and explain that you are the new owner and that there are some concerns with the buyer/tenant’s compliance with the note.
Be nice here, listen and most likely you will here and excuse as to why they are not able to pay or keep the home up. Then continue to be nice and ask, “If we could change the amount you pay to make things more affordable for you, would that help?”
Of course it will. You then bring in your new note that has been properly drafted to be enforceable in your county (I suggest you take a look at a car loan note that your local bank uses since their attorneys wrote it and have enforced it in local courts).
Have them sign the new note and tear up the old.
What you want is a good, enforceable note, lot rent and the gravy of receiving the note payment (in that order). Be flexible on the note. Remember you just want to get control back. This will allow you to negotiate from a position of strength when future issues pop up (such as the condition of the home, late or no payment received etc.).
In short, regain control of this deal while playing the role of the good guy/gal. This will allow you to successfully control and win if things go bad in the future. Right now you are on shaky ground. Remedy that now.
Tony