Step Away From Your TV - Posted by Tony-VA/NC
Posted by Tony-VA/NC on October 24, 2003 at 17:09:23:
Let me begin by saying that I agree with the other posts that when reasonable, dealer licensing is preferable. But that aside, let’s look at the reality of the small claims court system and the concerns you raised.
You walk into a courtroom that is filled to the gills with landlords and tenants (if the tenants actually show up which I have found to be rare). My Lonnie buyers rarely showed up in court and when they did, all that the judge asked was how much they owed. I responded. The judge then asked the tenant if that was correct. They would say yes. Case closed. Although it never happened, should they say they didn’t owe me the money, the judge would have set another court date and we would have gone to trial. In the meantime, I would have met them in the hallway and negotiated for them to simply walk away and in return I would drop the suit.
The courts are typically over loaded with cases and the judge does not have time to play detective nor should they. They should try the facts and go onto the next case.
Most if not all of the licensing agencies have little understanding of the mobile home licensing laws. The judge is likely to be totally unaware of the rules and could care less. What buyer of a Lonnie deal would think about licensing as a defense? They are looking at you as someone who owner financed them when no one else would.
Let’s not forget that you are not in court as a dealer. You are in court as the lien holder. The dealer issue has no relevance. You, as the lien holder, are repossessing the home, not conducting a dealer transaction. Were this a dispute over the purchase agreement, that may have some relevance. In the repossession process, you are submitting to the court the promissory note and security agreement.
Could all of those worse case scenarios that you mention occur. Yes, I suppose in a perfect world they could. Now how about reality?
As investors we must look at our risk tolerance and level of exposure. If you go out and hammer people, treat them like Chuck does others here, or take unfair advantage of folks, well then you should bet someone will wait for an opportunity to effect revenge.
I think that if you treat people fairly, you will find that you rarely need to go to court. This does not mean you should not file and begin the process to ensure you buyer leaves, but the reality of going to trial has been very, very slim in my experience. Court yes, trial no.