Oftentimes while mobile home investing, you will be faced with challenges concerning a mobile home’s title(s) and correctly transferring them into your possession. Common title problems arise due to a title being lost, the actual owner on title not being present, the title being missing or the current seller not yet putting the title into their name from when they bought the home, along with multiple other situations due to common mistakes.
In the bullets below, I will outline the most common title issues and some wise ways to proceed forward.
4 Common Mobile Home Title Issues & How Best to Correct Them
1. No Title, Correct Owner.
If the current seller is the legal owner of record, then there is a simple and easy process to obtain a duplicate title. Call your local mobile home titling agency to inquire about specific steps moving forward. Typically the owner of record needs only to provide proof that he or she is the owner and pay a small fee.
2. No Title, Incorrect Owner.
Sometimes when a new buyer closes on a mobile home, they do not immediately run down to transfer the title into their ownership. This happens for many reasons; however, legally the buyer is not the true owner until the title is registered into his/her name, or an entity he or she controls. In these cases it is not good if the title(s) are then lost or go missing.
a. Is the owner available?
If yes: If the owner is available, you must contact them immediately. Many times they will agree to obtain a duplicate copy of the mobile home title(s) if you pay for this small cost. The legal owners (prior sellers) will do this in order to transfer the home out of their name so they are not liable for taxes or accidents on a property that they didn’t think they still owned.
If no: If the owner is not available, then they must be tracked down in order to proceed ahead. A private eye or skip tracer may be helpful in tracking down the current owner.
Pro Tip: You will see occasions when buyers and sellers have “transferred ownership” via a separate piece of paper known as a Bill of Sale. A Bill of Sale acts as a meeting of the minds and as a receipt typically given when selling personal property. While this process may be sufficient for the buyer, seller and even park manager, it is not sufficient enough to transfer legal ownership from one person to another. The original owner is still the legal owner and can come back any time to take possession of his or her home.
b. The owner passed away.
Do you have the owner’s power of attorney for handling this property or a death certificate and immediate family? If yes, then you will likely be able to obtain a duplicate title by filing the correct forms with your state. If you do not, then you may want to ask your state the best course of action moving forward to obtain legal ownership of this mobile home. Obtaining clear title may or may not be possible.
Pro Tip: Always verify with your state that yearly taxes have been paid and are current. If a seller has not transferred a title into his or her name, then he or she may not be up to date paying taxes.
3. Correct Title, Incorrect Owner.
This scenario is the most common hurdle you will see as a used mobile home investor. In situations like this, your seller will be in physical possession of the current original mobile home title; however, it may or may not be signed and dated by the buyer(s) and seller(s).
If the true owner on title has already signed on the seller’s line, then simply have your seller sign as buyer and quickly transfer the title into the current seller’s name. Once the seller is the actual owner, they can now transfer their clear title to you without worry. Call your state to verify that this double transfer can be completed in one day.
If the true owner has not signed on the seller’s line, then this must be completed before the title can be legally transferred into the purchaser’s name. Track down the legal owner to have his or her signature placed on the seller’s line.
Pro Tip: Avoid forging documents. If you can’t find the legal owner listed on the title, it may be tempting for you or your seller to forge the legal owner’s signature on the title. Some people can rationalize that this is a victimless crime. With that being said, it is still a crime and illegal.
If your seller has a title that is signed by the owner but the buyer’s signature lines are blank, it can be tempting to skip over your current seller and transfer the title from the legal owner straight to you. While this can technically be done, most states consider it illegal, as you are skipping the chain-of-title and not placing the home into your current seller’s name first. You may not get caught; however, do this at your own risk.
Pro Tip: Be aware that most states charge a late fee for delaying the transfer of a mobile home title from a buyer to a seller if not completed within X number of days. This late fee will be paid when the title is eventually transferred into the new buyer’s name.
4. Correct Title, but there are liens still showing.
If there are active liens still on the title, then the owner will not likely be in physical possession of the home’s title(s). It is most common for the lien holders to physically hold the title(s) until they are paid off in full. At this point, a new title is issued showing zero active liens, or the lien holder simply signs a “Release of Lien” located on the title or provided on a separate form given to the owner. Both of these methods show the home is free and clear from debt.
If you run into a situation where a mobile home seller is in possession of their title with active liens, it is important to understand if this is an error or if there is still money owed on the mobile home. Being present with the seller as they call up the bank or loan servicer to confirm a principal balance pay off will answer this question. Once you know the amount of the lien you can decide to move forward accordingly.
Pro Tip: Always call your state to verify the mobile home’s VIN or serial numbers and confirm if there any active liens showing on the title. Some states will have this information at their fingertips, and other states will not be as technologically advanced.
When you are able to go the extra mile to solve a seller’s problem and close another mobile home investment property, you will find yourself competing with less and less investors and buyers. For most questions in real estate, the answer is typically, “it depends.” If you are a determined investor and are working with motivated sellers, you can typically come to legal win-win solutions that accomplish the goals of all parties. Continue helping others and going the extra mile to solve problems when possible.