Mobile home buying-Much paper work need? - Posted by David Elliott


#1

Posted by JHyre in Ohio on January 03, 1999 at 12:38:06:

Berwyn:

Whether the term “casual sales” is literally used depends upon how your state’s statute is written. In general, most states’ dealer statutes provide that to be a dealer, you must sell x number of MH’s. The other way of saying the same thing (Ohio does this) is to say if you are “in the business” you are a dealer and HIDE an exception to being “in the business” in the body of the statute. In Ohio, the “casual sales” exception is buried in the portion of the statute that tells you what you CANNOT do- it’s really an odd place to tell you what you CAN do. NOTE: The DMV materials are often one-sided and may not mention any exceptions that work in your favor. That’s way I would read the STATUTE and REGULATIONS. It ain’t fun, but oftentimes the agency empowered with enforcing the law doesn’t know or enforce the law AS IT IS WRITTEN (This is ESPECIALLY TRUE of the IRS, by the way). I ALWAYS go to the source. If ND does not provide specific guidelines as to what constitutes “doing business” in its statutes and regs, you may have to turn to case law to see what the courts say. If there is simply NO guidance, check and see what the first-time penalty for dealing without a licemse is. If it is minor (it probably is), I would document the lack of guidance and move forward (unless you are REALLY REALLY risk averse- then do nothing). If you ask the DMV, they will 99% likely tell you that you cannot do it. THAT advice would probably have no basis in law (if you haven’t already found anything after a dilligent search)and simply reflect the bureaucratic mindset that you cannot do anything without some officials’ permission. If you ask DMV, do so anonomously.

Best wishes,

John Hyre


#2

Mobile home buying-Much paper work need? - Posted by David Elliott

Posted by David Elliott on January 03, 1999 at 04:36:55:

I am thinking about starting to invest in mobile homes. I have very little experience in MH. I was wondering if the paperwork would be the same as a house or are there special forms. Also if any one knows a good way to obtain forms for buying and financing MH it would be greatful.

Thanks
David


#3

Not too bad… - Posted by JHyre in Ohio

Posted by JHyre in Ohio on January 03, 1999 at 10:38:16:

David:

Because MH’s are personal property and not real property (like houses), the required paperwork is much less intimidating. Lonnie’s books contain the Virginia version of what you need. As his disclaimer says, you need to talk with the relevent professionals to see what works in your state and under your personal circumstances.

A few things to think about:

You can teach yourself much of the law IF you have alot of TIME and are good with “BOOK Smarts”. If you lack either of these attributes, seek a GOOD attorney. The laws that pertain to flipping MH’s include:

  1. Contract Law- While I am an attorney, I do not know nearly enough about contract law. It is complicated and often consists of hard-to-find case law or tradition. I will gladly pay a good contracts attorney to review the documents that I use over and over and over. Such advice is cheap given what it will save you over time.

  2. Secured Transactions- the law of securing your financing with the financed property, in this case the MH. This law is usually based on the Uniform Commercial Code (UCC) and is fairly easy to research. Most clerks of court or the like can walk you through the necessary paperwork.

  3. Dealer laws- easily the most annoying legal aspect of flipping MH’s. Most states require that you be licensed if you sell MH’s. Attaining such status can range from easy to very difficult and expensive. If you cannot economically attain dealerhood alone or with other investors, most states have a “casual sales” exception- that is, you may sell x number (5 in Ohio) MH’s without a license. Some states make the exception apply on a per person basis, so get your spouse, significant other or whatever in on it. Also, some states define a “person” to include corporations, so depending on how the state law is written you can create “persons” (without anyone getting pregnant, that is!). I happen to live near 2 other states, so I will use the “casual sales” exception in EACH state, thereby greatly increasing the total number of deals done without triggering the dealer laws.

Some investors never take title and therefore avoid “selling” the MH. That is illegal in some places. The first time one breaches a dealer law, the penalty is usually a warning (minor misdemeanor in Ohio). Subsequent offenses are generally more serious (in Ohio 2nd degree misdemeanor and mandatory $1,000 fine). Many people that do Lonnie deals ignore state dealer laws. As an attorney I CANNOT recommend that. If you decide to do that, use common sense- do not attract attention to yourself!

  1. Tax Laws- Lonnie’s book and Bronchick’s posts correctly explain that you ARE a dealer for federal income tax purposes and the consequences of that status. Bronchick’s articles also give some sound advice re incorporating and using LLC’s in the context of flipping activities.

One last thing: Many of the people out there say JUST DO IT NOW, don’t worry about pesky details. That advice is well intended- it is meant to prevent procrastination and overcome fear. BUT those people will NOT pay your fines or bail if you get nailed for not having done your homework. That is YOUR responsibility. Kiyosaki makes the point that fear is good if motivates you to excel. The balance is between ANALYSIS PARALYSIS- always thinking but never doing- and a RASH DASH- jumping into something with NO caution and getting your head handed to you.

Good Luck,

John Hyre


#4

Re: MUST READ - If you want to do Lonnies! - Posted by Jim Simons

Posted by Jim Simons on January 03, 1999 at 23:59:47:

No Matter what State you live in - if you want to do Lonnies, you should read the above article by JHyre in Ohio.

There are many people on this board advising you to just Jump in and Do it. Read JHyre’s article first. I can tell you in Texas - the laws are really stiff - is it worth the risk? Is it worth getting a Dealers License? Only you know the answer - but you I feel you should know the facts before rushing into anything.


#5

Casual sales? - Posted by Berwyn

Posted by Berwyn on January 03, 1999 at 12:17:04:

Could you elaborate a little on the “casual sales” aspect? I talked breifly with the DMV dealer liason, and downloaded the relevant sections of the ND Century Code. In my state, you need a licence if you "engage in the business of buying and selling mobile homes or hold yourself out to the public as being in the busines . . "

How might the State differentiate between someone who’s “in the business” and some guy who happens to have a couple mobile homes to sell?

Now the licence itself isn’t too bad, $35 / yr and a $10K bond, but you have to maintain a regular office and have an “adequate service department” whatever that is.

Thanx
Berwyn
(Grand Forks, ND)


#6

Re: Not too bad… - Posted by Dirk Roach

Posted by Dirk Roach on January 03, 1999 at 11:54:38:

JHyre,
Great post! Anyone who is thinking about getting into Lonnie deals should not only read it, but head it’s advice.
I live in CA and out here the state will send what they refer to as a dealer packet. It has all of the requirements/forms and such
one needs to become a dealer in CA. The agency is called HCD (Housing and Community Development). In CA they are the
branch of state Government which whom one needs to make themselves familiar with.
In Vaughan’s “Paper into Gold” it says “Always reduce your exposure, both financial and legal.” In it’s top three rules of
success. I think that is great advice.
And It seems in your above post you are stating the same.
Again anyone getting into Financing Used Mobile Homes, should head your post above.

Dirk