Park owners… do you ever finance the sale of used homes to buyers?
I’m having a hard time figuring out how to structure the sale of a used home to a buyer. I attempted to have the buyer finance through Triad but we got hung up on appraisal because of too few comps. Given the buyer doesn’t have 100% of purchase price in cash and as we can’t find another bank to lend, it is feeling like the only way to get this done is to have the park finance it.
I’m getting an unclear picture from my attorney on if/how to do this. On one hand it seems like park owners do this quite frequently. And on the other hand there are federal watch outs like Dodd Frank and a boatload of Minnesota regulation to try and make heads and tails of.
Simple terms would be 10% down, either no interest or reasonable rate charged if allowed, 5 or 7 year amort, no balloon payment.
Any thoughts here from fellow park owners? What sort of contract do you write up in such a case? Any big watch outs or things to be sure to include/exclude? TIA!
Park owners do sometimes finance used home sales, but it’s important to navigate the legalities carefully. A well-structured contract is key, including clear terms on down payments, interest rates (if applicable), and loan duration. Make sure you’re compliant with Dodd-Frank and state regulations, and consult with your attorney on specific terms to avoid potential issues. To minimize risk, you might want to include clauses about default and late fees, and clarify ownership transfer processes. It’s a good idea to also require the buyer to maintain insurance and make the park’s lien the first priority.
2 Likes
Was your response just a copy/paste from ChatGPT or do you have experience seller financing home sales?
Honestly the best advice anyone here could give you would be to consult a competent real estate attorney. Yes, this is a common event and if your attorney is not clear on the details, get a new one.
2 Likes
Get an experienced MHC ATTY.
Selling just a few homes a year on “rent to own” may require you to register as a loan originator, which can be complex and time consuming. It also may require you follow std foreclosure processes v tenant eviction processes which may be vastly different in your state?
Have you considered
- Helping them get traditional financing by being a surety or guarantor?
- Requiring them to escrow insurance and taxes, wherever they finance?
- Keeping insurance on the home and billing it back so you can be sure the homes is always covered?
1 Like