Do I evict as well? - Posted by Nate-WI

Posted by Michael(KCMO) on July 16, 2006 at 06:33:00:

“Look, Mr Buyer, you’re 2 months behind in your payments and 2 months behind in lot rent. There’s really no way to get caught up and the park is already starting eviction and I’m going to have to reposess, but I’d rather not have to do that if I don’t have to. For one, it’s a hassle for me and secondly it will put a judgement on your credit making it harder for you to rent an apartment or get another place in the future. So here’s what we can do . . . You still owe $10,534.38. I’ll buy it back for that amount and pay off your loan. That way I won’t have to pursue a judgment against you. In exchange you need to get your stuff cleared out. Is the end of this weekend enough time?”

It doesn’t really matter how you explain it. You can explain it as “You give it back and get out” or anything you want. My original point was that when it comes down to the final paperwork I use a purchase agreement and just buy it back for what they owe. They sign the title and purchase agreement and they’re done.

Do I evict as well? - Posted by Nate-WI

Posted by Nate-WI on July 08, 2006 at 07:23:29:

Hey all,

A note payor of mine is getting evicted by the park. She has passed the eviction notice without making the payments so now the park will have the sherrif’s office issue the eviction. My question is do I still have to proceed with my own eviction to get the home back? I have title as its under my LLC and she is not on the title at all. Do I still have to go to court and thru the eviction process?


Re: Do I evict as well? - Posted by Karl (Oh)

Posted by Karl (Oh) on July 08, 2006 at 20:40:23:


As always, it depends.

Is your payor behind with you? Has she defaulted on her payments? Just wondering if you have grounds for filing on her yet. Are you selling the home, or renting it out? (You stated that she was a note payor, but later said that the title isn?t in her name.) If you?re selling, you do repossession. If renting, or doing a lease/option, its an eviction.

I’ll assume that you have a friendly working relationship with the park, they only want to kick out the tenant and not your home as well, and you just want the home back after the tenant is evicted. If the park is doing an eviction, get the tenant to sign a “general release and surrender”. Essentially, you’re letting them out of their obligation to pay you, in exchange for them releasing any claim to the home. I?ve done these countless times. The park is the heavy, and you come in as the good guy. ?Just leave the home like you found it, and I won?t come after you for what you owe me.? Have the buyer sign this after they’re out of the home, and you can take possession. Sometimes a buyer has been making payments for awhile and they might feel that there?s some equity that?s owed to them. I had success deflecting this by telling the buyer that all money paid to date will just be considered rent, as if they?ve been renting the home the whole time. Its easier for a buyer to walk away from lost rent money than it is from equity.

Here?s the downside to only letting the park file on your buyer. If you piggyback on the park eviction, there?s a chance that she might show up with rent money at the last minute and avoids eviction. Then the park is cured, but you?re still not getting paid, and you haven?t started any legal action yet. There?s nothing worse that when the tenant pays the park, but not you. So you might want to consider starting your own legal action right away, just in case the park eviction doesn’t go through.

Sorry for the conflicting answers, but its just going to depend on how you want to run your business, how good your park is at evicting tenants, and your relationship with the park.

Craig has an interesting point about the status of your home. Are you and the park working on solving this problem together, or are they going to consider you part of the problem? What?s your relationship with the park? The answer to your ?should I also evict? question will depend on how well you and park are working together.

Karl Kleiner

Re: Do I evict as well? - Posted by Craig McCracken (AL)

Posted by Craig McCracken (AL) on July 08, 2006 at 15:25:16:

I would read the MHP’s lease very carefully. The status of your MH may be in question. At the very least I would call the park owner/manager and ask questions.

Re: Do I evict as well? - Posted by Michael(KCMO)

Posted by Michael(KCMO) on July 09, 2006 at 14:37:46:

Very good answer Karl. I do one thing slightly differently, though. Rather than have them walk away and sign a general release I just buy it back from them for the amount owed. For me it keeps the paperwork and title simple since it’s my standard purchase agreement and we do the title work at the DMV just like I was buying the home from Joe Bloe. It also seems to help them get over the emotional trauma of losing “equity”. I just tell 'em, “You still owe $10,534.38 on the home. Tell you what . . . why don’t I just buy it back from you for that amount and then your loan can be closed in good standing . . . blah, blah, blah.”

Either way will work. I just wanted to offer an alternative.


Re: Do I evict as well? - Posted by Nate-WI

Posted by Nate-WI on July 08, 2006 at 21:51:18:

Good points Karl. I have been talking directly with the mitigation dept for this park. She has been very good at contacting me and keeping me posted. They have no intention of moving the home and would like me to find a good paying buyer. I am not part of the problem so were working together on this one. The payor is behind 3 months with me. I have sent her late payment letters and have those on file. It’s a sold property and not rented nor leased. Can you send me a copy of the general release and surrender? I don’t have any such doc on file. It would be appreciated and thanks for the tips.


How on earth does this work? - Posted by Eric

Posted by Eric on July 15, 2006 at 17:38:41:


I don’t understand the “buying it back” thing. Let’s say I paid 5k for the subject MH. I then sold it on an 11k note. The buyer paid down the principal by $465.62, leaving a balance of $10,534.38 (from your example). If I buy it back for the amount owed then I’m now into the deal $10,534.38 deeper. $10,534.38 deeper into a MH that was only worth 5k to me in the first place. So I paid 5k for it once, and then I buy it a second time for $10,534.38. I realize the buyer put up a down payment so the original 5k is not really 5k anymore, but I’m still not quite getting it. Can you help me understand what I am hopefully missing?


Re: Do I evict as well? - Posted by Daphne Lowe

Posted by Daphne Lowe on July 10, 2006 at 16:16:16:

Michael, I think that buying it back that way would be a sales taxable event in most places.


Re: How on earth does this work? - Posted by Michael(KCMO)

Posted by Michael(KCMO) on July 15, 2006 at 21:22:04:

They own the home (you sold it to them). There is a lien on the home b/c you also financed it. Who holds that lien? You do. Who do they owe $10,534.38 to? They owe it to you. So you buy the home from them for the balance owed against it. You pay yourself $10,534.38. How much does that cost you? Nothing, since you’re essentially just forgiving the debt they owe you in exchange for them walking away and giving the home back to you. In my mind this is a simpler/safer transaction than a “General Release” or etc. It’s a simple, straightforward sale where I pay myself and they leave.

You are right in that you will now have $10,534.38 in the home as a tax basis. But it didn’t cost you any real money. There are potential tax consequences so run it by an accountant. And if your state charges sales tax on used homes that could be a pretty big monkey wrench thrown into the deal. In that case it probably wouldn’t be a worthwhile strategy. Thankfully charge tax on used homes here in MO or KS.

Hope that helps. Make a little more sense now?


Re: How on earth does this work? - Posted by Todd(AZ)

Posted by Todd(AZ) on July 15, 2006 at 18:51:28:

Eric, I’m pretty sure what Michael means by “buying it back” is that he is forgiving the note. He’s not pulling any additional money out to buy the home. In the above example, he keeps the downpayment plus the $465.62 and the “owners” just walk away. He then just resells the home, collects an additional downpayment and creates a new note. Nice, huh? Todd(AZ)

Re: How on earth does this work? - Posted by Bobbie

Posted by Bobbie on July 15, 2006 at 18:50:57:

ME TOO, I’m confused on the buying it back topic. Are you talking about forgiving the note OR actually buying the home back for the balance owed?

Would sure appreciate some help on this topic.

Many thanks,
Bobbie :slight_smile:

Re: Do I evict as well? - Posted by Michael(KCMO)

Posted by Michael(KCMO) on July 11, 2006 at 11:46:20:

That’s a good point, Daphne. Since we don’t have sales tax on used mh’s in MO it didn’t even cross my mind.


Oh - Posted by Eric

Posted by Eric on July 15, 2006 at 22:31:24:

Yes, more sense. Thanks. But I am envisioning myself explaining to a defaulted buyer that I will “buy it back” and the confusion to follow; their hopes elevated sky-high only to be brought back down to reality when they realize that I don’t really want to BUY it back, I want them to GIVE it back to me. I mean really, how do you explain the concept in such a way that the defaulting party understands the first time? Cuz it confused the crap outa me.

Thanks Michael!