I just closed on my first park on Friday. It’s a “turnaround” park that I believe has great potential. I have a new lease and rules/regulations ready to mail on Monday, but I’m stumped by an issue regarding homes that are owned by a third party and rented to the residents.
We’re requiring a lease and rules/regulations signed by each resident over the age of 18. But what if some of the homes are owned by a third party and the occupant is only renting the home? Is my lease with the owner in that case? Do I have both owner and residents sign the lease? Or do I simply have the resident sign the Rules/Regulations? And what if the resident pays the person who owns the home, but that person does not pay the lot rent. Do I still evict the resident?
I feel as though I have so much to learn - and no time to learn it!
In some Lonnie deals (third party owning a home in your park) the owner of the home pays the rent, no matter who is living in the home, In other situations, the Lonnie dealer has sold and is carrying the paper on the home, and the tenant pays the lot rent to the park direct. The key item is to keep the actual owner of the home in the loop, so they can remove the tenant who is not paying the rent. Whoever lives in the park must sign the rules, But if the home owner is paying the rent, they need to sign the lease and not the person living in the home. So the answer is that it is 100% based on the relationship you have with the home owner. An additional word of caution: be sure to understand the rules and regulations in your state regarding keeping the home owner “in the loop”. Make sure you don’t break any privacy of information laws. Talk to your state MHA about this.
I have a couple of home owners in my park that rent there homes to a third party. My tenant is the home owner. He/she being the owner of the home on my land is responsible for the lot lease payment. The occupant of the home is the home owners tenant. I must approve the home owners tenant because the home is on my land and his/her tenant is using my land.
My policy is very clear with home owners. The home owner is responsible for lot rental, water fees and taxes paid directly to me. The home owners tenant pays the home rental fees to the homeowner. In a case where there are issues with the home owners tenant I will speak directly to the occupant of the home but deal directly with the home owner if issues are not corrected, In the case of a eviction it is the home owner that is in violation and ultimately served with the eviction notice. State/provincial regulations will dictate the process.
To be clear it is the home owner that is my tenant not the occupant in the case of a third party rental. Legally only the owner of the home can rent the land and legally it is a mistake to accept lot rent from a third party. You will find out why if you end up in court.
We require 3rd party agreements if there are rented homes, and we send our ‘late’ notices to both the person residing in the home, and the home owner. These can be tricky deals for park owners- the lonnie dealers can be your best friends- or your worst nightmare.
I really lean on a win win with the lonnie dealers. Establishing those relationships and maintaining them is another thread- and probably a very long worded one…
Thanks for your replies. The ownership of the homes is largely in question. A prior owner (2 owners ago) sold the park in two “parts” - homes and land. He held the note on the homes and a bank held the note on the land. The bank foreclosed and I bought the land/infrastructure.
I called the last owner and was told that he gave all of the titles back to the guy he bought it from (2 owners ago) when he couldn’t make the payments. I called him (Mr. 2 owners ago) and he said that he sold the homes for $1000 each, but most of the buyers never sent the titles in, so they’re in the name of an LLC “in care of” the last owner. Further complicating matters, he said that the first owner of the park has liens on many of the homes. I’ve been unable to locate the first owner.
These homes are most all mid-80s, neglected, and not worth much. I can’t see the original owner (who holds the liens) wanting them. I want to help the residents resolve the title issues so they can obtain insurance and bring the taxes current. In most cases, taxes have not been paid for several years, but the County tax office has no intent to take action (I checked).
My intentions were/are to tell the tenants they must transfer title to their name if they own the home. But do I need to verify that the occupant is the rightful owner by asking to see the title and comparing it against their ID? If I take their word for it and accept lot rent, is that entering into a lease illegally if I later discover they did not own the home (since only the home owner can sign a lease)?
If they don’t have the titles, I would attempt to contact the owner by going through the abandoned vehicle approach (in GA, mobile homes are considered vehicles). But I will need access to the home to obtain the VIN number. I’m hopeful that the residents will comply since the alternative is eviction - and since I have no interest in owning the homes, but would be trying to get it straighted out so the homes are legally titled to them. But what about lot rent until the issue is resolved? Can I place a lien against the home if the owner is unknown and then require that lien be satisfied once the issue is resolved? I’m guessing that the current occupants will eventually acquire title in most cases, but I’m not sure how to handle the situation while everything is in limbo.
I just wired the funds for the park today and the deed should be recorded this week. I’m going back to the area to meet with an attorney to seek legal advice on resolution. I’m just trying to figure out what I’m dealing with so I know what questions to ask.
Your local County government can tell you the process for taking title to abandoned property. Generally this involved posting a notice on the door of the trailer, sending the notice via certified mail to the last owner/address of record, and posting an ad in a local newspaper for 30 days. While you could do this yourself, it is probably not a good use of your time. Ask your local government and look on your local CraigsList for someone advertising that they process titles. It will be well worth the $100 - $200 per title to have someone else own this headache.
But no matter how you do it, do move forward with getting the titles properly processed. If you need to evict, so be it. Once you take title to any ‘leftover’ mobile homes and post eviction notices on those doors, people will get serious, or get out. For the homes you take back, fix and flip them (read ‘Deals on Wheels’ by Lonnie Scruggs).
Cindy - Do not be surprised if no one - even the local county officials, local attorneyes and local judges do not know the abandoned home procedure very well. If they do you are lucky. It can vary a great deal from county to county. In 3 different states we had to read the state law very carefully and then find the one or two people in the state DMV office familiar with the process and start there. It also may help to join the state Manuf. Housing Assoc and get advice from them.
You may have to do a title search with the state DMV (some states have it on line but you may have to fill out a form). That will be your official starting point, because even some of the hard copy titles might be old or duplicates, or they might have signatures on them of people intending to sign the titles over to someone else but the new owner never registered the title (this happens a lot). Title clerks do not generally allow crossing out or any extra writing on the titles.
Most title searches require the VIN number and this will be another challenge. If you are lucky you might still find the original placard in the master bedroom closet or near the electrical panel (or sometimes on the backside of a kitchen cabinet in the newer homes). If not then you will have to look on the frame. For homes 1976 and newer HUD requires the manufacturer to stamp the VIN # on the front steel crossmember of the frame in letters at least 3/8 " high. (Not on the hitch). This would require removing the front skirting and searching very carefully. If you have old titles in hand none of this VIN searching will be necessary as it should be on the title.
Good Luck. If you expect a few bumps and all goes smooth then you might be pleasantly surprised.