I recently received this email from someone who saw a post from last year: Seller Financing and Mobile Homes in Parks, and wanted to know if her mobile on 2 acres of land might be eligible for the land trust transfer technique:
Hi!
I have two acres with a mobile home on it in Perris, California, not on a permanent foundation (hence not eligible for bank financing), which I’ve owned free and clear as my primary residence for around thirty years (hence don’t need to worry about capital gains.)
I have found a way to buy a new home without needing immediate cash from the sale of this one. Am asking $142,500, willing to carry back. However, a current potential buyer who has only $15,000 to put down, willing to make payments @ 6% amortized over 30 years (no balloon), presents the issue (for me) of worrying about foreclosure costs should he default.
In my financial position, selling him the house for $15,000 down would be the same as giving it to him. Should he default, I could do nothing about it (I’ve not seen foreclosure costs for less than $30,000.)
Your website had a similar case (albeit for much more expensive property) wherein the seller owed nothing, the buyer put little down, selling As Is but using a “two party trust” which would allow the seller (if necessary) to evict rather than foreclose.
Questions:
1. Is this an option for me? I wouldn’t necessarily need a buyout of any or all of the loan; just the security of not having to go through the much more expensive process of foreclosing should they default.
Yes, the title holding (land) trust transfer system would work for you.
2. I haven’t been able to find anything online that discusses California law re: eviction in this type of transaction. If someone fights eviction, that can still run upward of $20,000. How would the two-party trust fit within California law, and protect me from high eviction costs?
If the resident beneficiary defaults and fights eviction, then they will forfeit their beneficial interest in the trust. Most people wouldn’t want to jeopardize their initial investment, especially if it’s in excess of 10% of the purchase price.
3. Your consultation fees would be….?
Read here about the costs associated with the trust, and the documents I’ll need to get you going.
4. It’s my understanding you wouldn’t be interested in purchasing all nor a portion of the note until the buyer (if the deal goes through) has demonstrated reliable payment behavior. Correct? As I said, it’s not a necessity, but I’m willing to look at the option.
If you choose not to use the land trust, and just want to set up a traditional installment sale (a note secured by a deed of trust), you will need to let the note season for at least 12 months before trying to sell it.
To sell for minimum discount at that time, you will want help putting your deal together. It’ll make all the difference in the price you’ll get for your note if you ever want to sell.