Contract Sale - What Should I Know?

[DD]

I haven't decided for sure yet, but...

I'm considering taking a new approach to try to sell my MH. I swore I would never consider selling it on a contract, but after two years and no sale, I'm ready to try anything. What I'm talking about is selling it on something similar to a land contract (I can't technically call it a "land contract", since the park owns the land), where the buyer would assume my payments with a nominal down payment. They would pay me, and I would pay my finance company. The initial note would remain in my name, but I would hold the buyer's note, and be on the title as a secured party. The buyer would assume responsibility for the monthly lot rent. I have had several inquiries from potential buyers looking for this type of arrangement, some admittedly coming from a bad credit experience. In the past, I have declined such inquiries, my philosophy being "If the bank doesn't want to deal with you, why do I?". However, maybe someone here has had a more positive experience going this route.

Some obvious concerns I have:

The most obvious - what if the buyer defaults? How difficult would it be to foreclose if I have to? I've heard that this process can take months. Has anyone had experience with this?

What if the buyer trashes or severely neglects the property? What are my rights in regard to repossession? The last thing I want to do is have to go in and do a bunch of restoration work because someone destroyed the house and/or defaulted on the note.

Since I am going to be the one who has to determine the buyer's eligibility to purchase the house and keep up the payments, what criteria should I use? What should I check for? Employment history? Rental history? I obviously should run a credit check, but how do you determine how bad someone's credit has to be before you absolutely have to say no?

Finally, what do I have to have written into the purchase contract to protect myself?

This is all new to me, and I'm kind of shaky about proceeding down this path, so I would like to hear of people's experiences, good or bad. If anyone has any advice to offer, please do!

[rmurray]

Here goes..
"The most obvious - what if the buyer defaults? How difficult would it be to foreclose if I have to? I've heard that this process can take months. Has anyone had experience with this?"
This could very with the state...but defaults that require court action can take months..Worse are bankruptcy proceedings....Many time a lease with an option to purchase is better...Renters are much easier to get out..


"What if the buyer trashes or severely neglects the property? What are my rights in regard to repossession? The last thing I want to do is have to go in and do a bunch of restoration work because someone destroyed the house and/or defaulted on the note."
This is the risk every bank takes...I this instance you are the bank...You probably would be able to get a judgement...but collection is another matter..


"Since I am going to be the one who has to determine the buyer's eligibility to purchase the house and keep up the payments, what criteria should I use? What should I check for? Employment history? Rental history? I obviously should run a credit check, but how do you determine how bad someone's credit has to be before you absolutely have to say no?"

There are a few good folks with rough credit...no fault of thier own..I think I would be looking for stability...Good job record...good job with good company..Look at how proud of their auto they are...See how they dress and how they dress their kids....Even poor folks can have pride..If they do not care about their kids or their other major purchase...Let them move on..

"Finally, what do I have to have written into the purchase contract to protect myself? ""

For this you need legal advice...There are many issues that an attorney familier with your states laws can help with...As a matter of fact...all the questions you have asked have a legal angle and should have expert answers..

Good Luck

[DD]

Thanks for the advice. The rent-to-own option is not available to me, since that would be considered sub-letting, which is prohibited by the park.

[aikanae]

ck with a lawyer in your state before you say the lease to own option is out.

[DD]

The rules of my park's management state that all residences within the park must be owner-occupied. Sub-leasing is prohibited. I figure that since they own the land, they can make the rules.

[Larry Rule]

I have had very good expirence with a company called Pre Paid Legal to help with all the legal issues that come with buying or selling a home

If you are interested please call me at 888-844-5916 and I can give you the details

Larry Rule

[DD]

Sorry, but I'm not interested in getting into a legal hassle with the owners of the park. I don't think their rules are unreasonable, I understand why they're in place.

Besides, my wife subscribes to Pre Paid Legal. It can be a handy service, but we haven't found it to be all that convenient. Thank you anyway.