Contracts for The Sale Of Mobile Homes: Important Elements and Considerations

Contracts for The Sale Of Mobile Homes: An Overview

Contracts for Selling Mobile Homes
Unlike traditional real estate, contracts for mobile homes are a little unique. They can include special clauses and language that differentiate them from other types of contracts. When selling a traditional home, many people are familiar with the handshakes and agreements that are vital to any home sale. Special contracts for selling mobile homes require a slightly different approach. It’s also important to understand the process involved with selling a mobile home so that all legal requirements are met. Mobile homes have different rules and regulations about transfer of ownership. They are often considered personal property rather than real property. It’s important to learn about the requirements for selling mobile homes depending on your unique situation. Mobile homes can be affixed to land or the land can be excluded from the sale. Either way, a sales contract is needed for the transaction. Without a contract, it’s difficult for buyers to get financing for a mobile home. A contract also helps sellers avoid tax liabilities while ensuring that everything goes according to plan. If you’re thinking about selling a mobile home, learn more about the specific contract requirements that apply to your situation. Although a contract for a mobile home is similar to a contract for a traditional home in many ways , there are some unique factors to consider as you prepare for the sale of your property. Contracts for selling a mobile home can be different depending on whether the home is attached to land or not. When the home is considered personal property, a title is issued for the home. When a mobile home is affixed to land, the home is considered real property and a deed is issued. Whether a mobile home is affixed to real property or not will determine when a title is issued during the sale process. Additionally, when selling a mobile home attached to real property, some legal requirements are different from a traditional home. For example, extinguished mortgages on the land are required to be recorded before a title to a mobile home can be transferred. A broker can assist with preparing the documents that are needed for the sale of a mobile home. Mobile homes can be a valuable investment, and learning the details about selling a mobile home can help you avoid unnecessary complications during a sale. When selling a mobile home, it’s important to determine whether to can be sold separately from the land. When a mobile home is attached to real property, selling the two can be a great way to get your investment back while making a profit. Whether you’ve sold numerous mobile homes in the past or this is your first sale, a contract should be used to separate the purchase of the mobile home from the purchase of the real property. Local laws may vary regarding the selling of mobile homes, but understanding the basics of mobile home sale contracts can help you set up your agreement.

The Vital Components To A Sale Contract

Contracts for the sale of mobile homes need to be in writing. At a minimum, the contract should include: Most of the time, at least in Louisiana, this information is included in the mobile home sales contract. The information can be found in Section 5 of the Louisiana Association of Realtors form residential purchase agreement. Section 5 name the parties, describes the property (i.e., 2009 Horton, VIN #123456) and provides information regarding the sale price. There are other terms that are not part of the form, but can be added to customize the agreement for a particular sale. A separate escrow deposit is usually required with the purchase agreement. It will also usually indicate that the deposit is nonrefundable. This is an important point.

Legal Requirements and Related Information

When it comes to legally selling a mobile home, it’s vital for sellers to understand the legal requirements and regulations that govern the process. Although many mobile homes are purchased directly from the owner, most of these sales are facilitated through a broker. Many states require individuals selling a mobile home to hold an appropriate license. Sellers shouldn’t fall victim to the misconception of this requirement being unnecessary for private sales. It’s currently in place to protect both parties from fraud. Failure to comply with this state mandate can lead to serious legal ramifications.
In addition to licensing, there are many state-specific laws that govern the sale of mobile homes. For example, many states require sellers to provide a disclosure with detailed information about the condition of the property. In such cases, if the buyer discovers a material defect of which the seller was aware at the time of agreement, the seller can be held liable. If the sale is not regulated by the state, such as a private sale, then these rules may not be in effect. However, once again, consequences for fraud are serious. Though some may view it as pointless, failing to follow all laws and regulations can be very costly later on. It pays, literally, to be honest and lawful.
Every area has specific zoning regulations that govern various types of properties. If the property is located within a mobile home park, then there will likely be additional restrictions. Local authorities often have input too in the buying and selling of real estate, regardless of whether it’s a traditional property or mobile home. For instance, all transactions will need to get filed for tax purposes. In general, counties handle tax issues while cities deal with zoning matters. It’s also common for a court to get involved in some litigation disputes.

Getting The Mobile Home Ready To Go

As with any sale of a residential property, preparing the mobile home for sale is key. Generally speaking, the homeowner should prepare the property for sale as they would a traditional home to maximize the return on their investment. The home should have been properly maintained from the time they purchased it (including, for example, regularly checking the roof and flashing for leaks and making repairs as necessary, checking the caulking around vents, doors and windows for leaks and making repairs as necessary, and performing regular five-point inspections of the water, electrical, heating and cooling systems). In particular, the seller should confirm that (1) all electrical components are operating properly, (2) the plumbing does not have any leaks, (3) there is no evidence of rot to the floor joists, (4) the water heater is functioning properly and (5) steps and handrails (where necessary) are secure and in good condition. The seller should also inspect all installed appliances and replace any that are not working, including disposing of any appliance that poses a potential safety risk, such as an appliance with exposed electrical wires or broken glass. If the home has been vacant for an extended period, the seller should take additional steps to ensure that the home is clean, free of any rodent or insect pests, and vented and heated to avoid frozen pipes. In addition, the seller should keep careful records of and provide to any prospective purchaser documentation concerning the current condition of the home and previously performed maintenance and repair work. If the purchaser is obtaining financing to purchase the home, the lender will also require a title examination of the home and will likely require information concerning the home’s condition from the seller. If the property suffers from a material defect, this fact may need to be disclosed to the purchaser and the lender. Finally, if the home is being sold to a third party lender, FHA regulations may require the seller to provide the lender with certificates from a registered professional confirming the new home meets certain standards. Finally, the seller may wish to have the home inspected by a qualified professional. Having the home professionally inspected before listing it for sale can go a long way towards avoiding disputes with the purchaser, particularly concerning the condition of the home and steps to remediate any issues. Having the home professionally inspected prior to sale also provides the seller with leverage to negotiate any repairs with the prospective buyer.

Negotiating The Contract’s Terms

As with any type of real estate transaction, negotiating the terms of the contract may be necessary to reach a deal that is acceptable to both parties. The extent to which negotiations are necessary will depend on the precise terms of the original offer and how much the other party is willing to move off of their position. The extent to which the terms can be negotiated will depend on the circumstances surrounding the sale. For example, if a deal is being made between two private parties, it is likely that both parties will have some flexibility to negotiate on price and conditions. On the other hand, if you’re making an offer through a dealer, your offer will also likely be contingent on the dealer being able to turn around and sell you the home. Either way, the process is the same: Provide an initial offer to the seller with the terms that will be acceptable to you , and be prepared to provide a counteroffer if they do not accept your offer right away. Make sure you understand the concept of contingencies. The term "contingency" means something that must happen before a deal can be made. For example, in the case of a mobile home, a common reason for contingency would be that the deal is subject to an inspection and the necessary repairs being completed before finalizing the sale. This informs the seller that they will have time to make necessary repairs that will avoid complaints from the buyer. If you are the seller, there may be additional contingencies that are beneficial to you, such as a contingency on the buyer securing financing for the home. In this scenario, the seller does not want the sale to go through if they do not believe the other party will be able to pay for the home.

Getting Ready To Close

The closing of the sale will typically begin with a final review of the contract. If everything is satisfactory, the closing agent will provide the seller and buyer with a follow-up closing statement, a document summarizing the details of the transaction. The closing agent may accompany this summary with a request for any last-minute items needed to complete the closing. Such items may include the recording fee, a power of attorney or a title search. After any necessary items have been collected, the buyer will pay the purchase price and the seller will sign a warranty deed or other transfer documents and deliver them upon receipt of the funds. Once the documents are recorded, the closing is final.
When a closing and closing statement are prepared, it will frequently be a condition of the sale of real property that the seller furnish at the closing an abstract of title covering the property for the period of the buyer’s ownership (the period preceding the sale). This is called the period of time that is being "abstracted". For example, if a closing and closing statement occur on September 30, 1985, the period of time that is being abstracted will start from the later of (1) the end of the calendar year in which the latest title transaction occurred or (2) January 1st 10 years before the date of the closing and closing statement. Additionally, any mortgages, deeds to secure debt, or other liens that would be of record at the filing of the closing documents, must be paid off. The closing agent will register the documents, deliver the documents, and issue any title insurance, if needed.
As with any contract, you should fully discuss with your attorney the contents of the mobile home purchase and sale contract and the cost and benefits of closing costs including a title insurance and related items.

Common Pitfalls To Avoid

Common mistakes to avoid are simple: do not assume anything; make sure the contract specifics are clear and so that the expectations of both the buyer and seller are set out in detail. For example, while a buyer might insist on a certain amount of cleanup of the mobile home to pass its final inspection, do not assume that your level of "clean up" will meet with the approval of the buyer – get it in writing.
Other common mistakes include failing to disclose all material facts affecting the mobile home that would affect either the buyer or the sale price. Not producing, altering or destroying documents in response to a request from the buyer or the buyer’s inspectors and contractors, such as an engineer, could be a major source of liability based on misrepresentation or fraud.
Of course, the most important issues are making sure that you have the authority to sell the mobile home and to avoid liability for taxes and other liens on the real property.

FAQs

The most frequently asked questions related to contracts for the sale of mobile or manufactured homes are:
How long of a contract is appropriate?
Below are some guidelines for determining an appropriate contract length. Of course, each situation will dictate a specific time frame.
A. Lot rental or monthly park community fees:

1. Less than 1 year – lifetime
2. 1 year – 5 years – lifetime

B. Lot or home sales:

• Cash or conventional loan – 30-60 days
• FHA – 30-60 days
• V.A. – 30-60 days
• Chatt loan – 12-15 months
• SFL loan – 12-15 months
• Seller financing – 5 years

C. Prior owner

• 30 days
• 60 days
• 60 days

There are two exceptions to the above guidelines. First, the sale of a new mobile home that could have a waiting period for installation and setup of as long as 30 days plus the time it takes to obtain final permitting and inspection. Second, if improvements have already been made to the home, such as the replacement of flooring or paneled walls , the time for the remedy can be extended up to 60 days.
What types of contracts are available?
There are two types of contracts available for the sale of a mobile home – one that is acceptable to seller-financed transactions and the other for cash, trades and conventional loans.
Who chooses the closing agent?
Usually the buyer chooses the closing agent. The seller typically has a list of preferred or recommended agents. If the buyer selects an agent who the seller believes to be less than qualified, the seller has the right to refuse.
What happens if the buyer is unable to make the payment for the lot rent or monthly park community fees?
The buyer is required to pay all lot rent and monthly park community fees. The seller should verify this by making periodic payments to park management until the contract is completed.
What can be included in the mobile or manufactured home sale contract?
Almost anything as long as all parties agree. Items such as inclusion of appliances, flooring, special orders, decks, porches, stairs, or any other type of concession can be included in the contract.