Park Owner Financing Your Mobile Home, Know the Facts By Gary Perry

A recent trend in manufactured (mobile home) communities is the park owner providing financing to prospective buyers of the mobile homes for sale in the park(s). This trend is growing especially in parks where the buyer purchases the home, and then pays lot rent to the park owner for the lot the home is situated on.
There may be several reasons for this occurring. Lack of standard financing available, buyers unable to secure financing, ease of purchase (just sign the contract and move in) etc.

On paper this may look extremely attractive to a potential buyer, especially if they can't secure financing on their own. However, there are some potential dangers that the potential buyer should be aware of especially in New Mexico.
A troubling trend across New Mexico is private equity purchasing manufactured home communities, implementing significant rent increases and reducing and/or eliminating services.

If the park owner holds the mortgage to your home, and you're also paying lot rent, you are in an extremely vulnerable position. What happens if the park owner increases your lot rent to a point that it is unaffordable and you fall behind in paying it?

In New Mexico, if you live in a manufactured home community and you fall behind on your lot rent the owner can complete and file a form 4-921, indicating the amount of rent due, 3- days to pay it and post it on your home or send certified mail. If you don't pay the rent due, the owner can file for a court hearing and request a Writ of Restitution/Execution for the property. If the court grants the Writ request, the Sheriff will post the notice to "vacate your house" on your door so the park owner can take possession.

The park owner can sell the house, and give you the money, (less the rent due and any associated expenses he incurs with the sale of the house.)

In the meantime you've lost your mortgage payments toward the house, lot rent you've paid, and now you have to find another place to live. And since he holds the note on your house he doesn't have to deal with any outside financial institutions as would be the case if your mortgage was with a bank or mortgage company. Of course you have the opportunity to respond to a court hearing and challenge the action.

One should understand that the above scenario regarding failure to pay rent can occur whether the park owner is financing your house or not.

However, the park owner financing your house and charging you a lot rent with periodic increases (as is the case in most New Mexico parks) is a potential conflict of interest.

You're paying him for the house while he can increase your lot rent. Thus the opportunity is present to create the above described scenario directly due to rent increases for his increased profits. You're an obligated captive to both the mortgage payment and lot rent payment to him.

Moreover, what if the park owner fails to maintain the park, violates applicable laws, or eliminates services that were incentives for you to purchase a home in the park? Are you going to file a complaint against him... the man who holds your mortgage and can raise your lot rent?

In New Mexico the park owner can raise lot rent with only a 60-day notice. There is NO limit on how many increases or how much of an increase.

Due diligence is essential before you purchase a home in a New Mexico manufactured (mobile home) community whether you're obtaining owner financing or not.

There is no oversight by local or state authority or enforcement regarding park owners' violations of the Mobile Home Park Act. An Act that is supposed to govern how mobile home parks are to be operated by owners and management.
Check court records for lawsuits against the park owner or management that could indicate problems associated with a particular park or park owner.

Check with the state Attorney General's office for complaints filed against the owner/management of the park you're considering. Driving through a park, take note of how many homes are for sale. That could be a red flag warning itself of issues associated with the park.

The right park and right park ownership/management can make for a great manufactured home community living experience especially for senior citizens.

And, in some cases park owner financing may be a viable path for some buyers allowing them the benefit of obtaining a home.

Just make sure you understand all the potential issues before "signing the dotted line."

-Gary Perry

Note: Gary Perry is a local advocate for senior citizens rights and fair housing. His series of articles on Mobile Home Park rights can be found via the links below...

New Mexico Mobile Home Act Special Educational Series Introduction

New Mexico Mobile Home Act Special Educational Series: Tenancy Termination

New Mexico Mobile Home Act Special Educational Series: Part 3

Mobile Home Park Act Educational Series Part 4 by Gary Perry

New Mexico Mobile Home Park Act Summary and Needed Changes Part 5