I have a tenant who will buy my property in the spring. I will finance this deal myself over time for 15 yrs. My plan is to collect a non refundable deposit of 25,000.00 then collect (rent payments) for the duration. I will make existing mortgage payments, plus additional principal payments to pay off the note in the 15 yr term. Will I continue to hold insurance on theproperty? Is it necessary to list the tenant as a co-owner somehow? Is it necessary to protect this property with an LLC or is this just a simple contract for the lawyers to write? the property is a mobile home on leased land so new buyer has no way of getting financed otherwise.
It sounds like you own the mobile home but not the land? This would be a consumer finance deal rather than a real estate transaction, correct? You state that you are going to sell the mobile home to your tenant in the spring but then you say you will collect “rent” payments for the duration. Do you plan to lease option the mobile home to the tenant or do you mean that you will be collecting loan payments for the duration? Some clarification might help the topic.
Thanks, I wasn’t sure myself at first but I will be collecting loan payments for the duration. The mobile is on leased land but not in a park. Traditional financing is def out. The only reason I have a mortgage now is that the bank bought my bank and inherited the note. is this a seller finance?
Based on what Iv’e read in the other posts, maybe I need a contract for deed?
Okay, so you own a mobile home that is financed and on leased land. You have a tenant that is interested in buying the mobile home. If memory serves me a loan secured by a mobile home is a consumer loan and secured by a UCC filing with the state?
Have you negotiated the sale price and terms with the tenant? If you intend to sell the mobile home with owner financing have you reviewed your current loan documents to determine if this will trigger an acceleration of your loan and require you to pay it off? Typically transferring title to a new owner will do this. If you sell with owner financing whom will be responsible for the lease payments on the underlying land? Again review your state’s laws regarding mobile home finance and title transfer. It is likely a consumer finance transaction and not a real estate transaction.
I am responsible for the lease payments. I am responsible for the mortgage payments as well since everything will stay in my name. I will carry a fire policy, and a seperate liability policy will be held by the buyer with my named as additional ins. I have negotiated the selling price and the terms of the deal , but not sure how to move forward. The bank will probably not do anything since the note is being paid, and for them forclosure is not helpful. I have an attorney who is advising an llc to do the deal, not sure if necessary. Any input is helpful
Forming an LLC would be useful to protect you from potential liability if you retain title to the mobile home while someone else is living in it whether they are a tenant/renter or a buyer under contract for deed. If you transfer title of the mobile home to the buyer and you simply lease the underlying land I’m not sure an LLC would be all that beneficial. The new buyer owns the mobile home so if they hurt themselves they can’t sue you, and you don’t own the underlying land. Perhaps there may be tax benefits of running the transaction through an LLC structure? Ask your attorney why he supports the formation of the LLC; personal liability protection or tax purposes?
Also, review your state’s rules regarding ownership and transfer of title to mobile homes. Where I live it is a consumer loan / vehicle title transaction and not a real estate transaction utilizing a mortgage.
Finally, if you sell the mobile home to the new buyer who will be responsible for the lease payments on the underlying property?
As I stated prior I will be holding title of the home until the loan is payed off. This is the only way I know of to protect myself for default.
The LLC is a means of protection from liability i.e in case of suit by others while on the property. Including new owner by agreement.
Tax implications are little since the lack of property taxes and low mortgage amt. There is however a current mortgage with a bank for the mobile home even though it is considered a vehicle. The bank will not give the buyer a new loan since they do not lend on this property type (mobile home) and others won’t finance due to no land ownership. I am trying to determine how to set up the financing for the new buyer , so I will hold title, he will pay deposit and make payments for 10 yrs, at a negotiated rate, and then I will title the home to him. He is already living in the home and holds the lease for the land.
Okay, so it seems the LLC is a good idea since you will retain title to the property. As for tax purposes I was thinking of any capital gain that you might generate from selling the mobile home to your tenant.
It sounds like a contract for deed is the preferable setup. You retain title and the buyer makes payments for 10yrs and then you transfer title. You just need to lay out the terms; sale price - down payment = amount financed by you. Given a term of 10yrs you just need to determine the interest rate you wish to charge and a monthly payment can be determined. Seems like your just about there.
This contract for deed, is that the usual means for this type of agreement?To be drafted by the attorneys?