MHCO Community Updates

Rent to Own and SAFE Act Implications

Do you want access to MHCO content?

For complete access to forms, conference presentations, community updates and MHCO columns, log in to your account or register now.

Question: We just acquired a manufactured home in our community. I would rather sell it to a new tenant, but would consider renting it out or doing a rent-to-own. If I pursue rent-to-own option, will I be subject to the new SAFE Act?

Answer: Remember that the SAFE Act only applies if the seller/landlord is providing financing, and in doing so, is going to make a credit decision regarding the buyer's financial capacity.

In short, so long as you don't extend credit (which includes carrying back a security agreement or other form of installment payment contract) you're not subject to the Act. If you do a credit check for your prospective tenant, this would not be covered by SAFE. Make sure that your lease/option or rent-to-own paperwork is reviewed by legal counsel - and under no circumstances do you want to offer an extension of credit in the transactional documents. Under SAFE, if you extend credit for the purchase of the home you would have to be a Mortgage Loan Originator as described in the Act. I did an extensive summary (FAQs) on the SAFE Act, and you can link directly to it on the MHCO website.

However, on another note, you might want to consider what you are getting into as a landlord of mobile homes. First, you will be responsible for providing certain statutory essential services" which are far more extensive than if you were merely a landlord of the space. Additionally