Seller pays for lot rent

Have any of you done a deal where you have a scenario of 20 park owned homes and 10 owner owned homes.

On the purchase and sale contract, indicate that the buyer is buying the land only and not the park owned homes.

So as a result, the seller would own the park owned homes and you basically collect lot rent from the seller on the

20 park owned homes that you just conveyed to the seller. So regardless of either they’re vacant or not, you’d be receiving

the lot rent from the seller on all 20 park owned homes. Have you done a such deal and is it legally possible to arrange it

this way?

Legally you can as there are two separate entities involved. One being the land the other the individual homes. As most park owners do not want to own homes this is a option in purchasing a park to refuse to buy the homes owned by the present park owner. The park owner would of course have the option of refusing to sell the park without the buyer also paying for the homes.

The question is in as much as you may not want to own homes do you want a single owner controlling your rental income on 20 or more of your lots.

It may be better to offer next to nothing to purchase all the homes then turn around and sell to individuals at a profit. This is possible as the present park owner may have no interest in maintaining the homes with the headaches of maintenance. He is most likely tired of the entire business and as such you may be able to squeeze him on the sale. Or you walk on the deal.

Of course that is legal. But you just need to be careful to have an ‘air-tight’ agreement with the seller that the homes stay in the park. You are finished if he pulls them out, or sells them to a competing MHP owner nearby who wants to fill his community.

Your agreement should include the following:

  1. The seller has to keep the homes in the park ‘forever.’ You might have him sign a 20+ year lease with you.

  2. If the seller sells any of the mobile homes, they have to go to individual owner/occupants that you approve to live in the park. This will prevent the seller from selling the homes to another MHP owner, and prevent him from selling the homes to undesirables (child molesters, etc.).

  3. You might actually insist on owning the homes, and selling them back to the seller for his lot rent payments. This will insure you have a claim (a title!) on the homes.

All of this said, it would also be fair for the seller to ask you to:

  1. Not unreasonably withhold approval for a resident (e.g. you have to apply the same standards to his residents as you do to everyone else in your community), and

  2. You not raise rent on him too much (maybe cap it at the inflation rate, or not charge more than for everyone else in the community).

Splitting a deal into land and homes can be challenging for obvious reasons. That said, it is certainly desirable to own just the ‘real estate’ and none of the ‘wheel estate.’ Consult a local attorney to determine what can be done to write an air-tight agreement that is fair to both parties to keep the homes on the land.

Best,

-jl-