Question for MH investors in California - Posted by Brian Menold

import · May 10, 2000, 1:05pm

Posted by Dirk Roach on May 12, 2000 at 11:37:04:

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import · May 10, 2000, 1:05pm

Posted by Brian Menold on May 10, 2000 at 13:05:55:

I have recently received my dealer license in California and there are some things that are required by law that not many people discuss on this board. According to the tests and classes I have taken, in CA they require that all sales of mobilehomes or leases with the option to buy by dealers need to open an escrow account. This concerns me because the escrow companies I have talked to have fees that add up between $600 and $1,000 dollars for mobile home transactions. This is pretty steep when your selling a home with a value of $6,000 (over 10% for escrow fees).

Does anyone else who does these deals in California do something different, use an escrow company who charges less, or know of any other ways around opening an escrow account? Or is this something that HCD overlooks when processing transactions. I am a definite newbie and am trying to figure out if I am going to have to raise the down payment for my deals or find another way around the escrow account problem.

Thanks in advance

Brian Menold

import · May 10, 2000, 9:24pm

Colorado answer to California Question. - Posted by RobertR CO

Posted by RobertR CO on May 10, 2000 at 21:24:22:

Brian,

Even though I am out of my league in California and do not know the law I will discuss the escrow account requirement in Colorado. Who knows, our requirements may be similar.

We are required to escrow deposits not hire an escrow company. Just about any bank can set up an escrow checking (or money market) account for this purpose. With this bank escrow account we can show an auditor that the down payment money was not commingled with any other money and the down payment was available to be refunded right up until closing.

Then after closing we can transfer the down payment money to our regular checking account and spend it.

Cordially,

Robert

PS-The subject of this post made me think of that old saying: Don’t Californicate Colorado. Of course now it is too late.

import · May 11, 2000, 10:44am

Re: Colorado answer to California Question. - Posted by Brian Menold

Posted by Brian Menold on May 11, 2000 at 10:44:19:

Thanks for the reply Robert. I may be able to use this technique in California also but the law requires an escrow agent. I don’t know why but it does. I am going to post the law here just so others can read it and then let me know if there is a legal way around the escrow requirements. If all I have to do is escrow a deposit then what Robert was talking about will work great. Well here is the law. Please let me know what you think.

(a) (1) For every transaction by or through a dealer to sellor lease with the option to buy a new or used manufactured home or mobilehome subject to registration under this part, the dealer shallexecute in writing and obtain the buyer’s signature on a purchase order, conditional sale contract, or other document evidencing the purchase contemporaneous with, or prior to, the receipt of any cash or cash equivalent from the buyer, shall establish an escrow account with an escrow agent, and shall cause to be deposited into that escrow account any cash or cash equivalent received at any time prior to the close of escrow as a deposit, downpayment, or whole or partial payment for the manufactured home or mobilehome or accessory thereto. Checks, money orders, or similar payments toward the purchase shall be made payable only to the escrow agent.

import · May 11, 2000, 6:15pm

Looks as though you need an escrow agent. - Posted by RobertR CO

Posted by RobertR CO on May 11, 2000 at 18:15:58:

Brian,

If price is your concern then start shopping for the cheapest reliable agent.

Does Dirk, the California Mobile King, have an opinion?

Cordially,

Robert

import · May 11, 2000, 5:27pm

Re: California Law - Posted by Lisa in Oz

Posted by Lisa in Oz on May 11, 2000 at 17:27:23:

I am by no means a lawyer. However, after reading the law, I have two questions.

Firstly, you are not leasing the home with an option to buy, right? You are selling and they are buying–no lease was created and they do not have the option to buy or not to buy at a later date.

Secondly, if a bank offers escrow accounts, doesn’t that make it an escrow agent? Couldn’t a check be made to an escrow account at a bank in the name of a trust or company rather than to you personally?

Just my thoughts–ask Bronchick.

Lisa Charles