Mortgage Company That Failed To Release UCC Lien On Mobile Home Found Liable For Lot Rent To Park
The Michigan Court of Appeals in Green Tree Servicing v Sheldon Futernick (2006) determined that a party that repossessed a mobile home would be liable for lot rent to a park after the date of repossession under an implied-in-fact contract theory. But what happens to lot rent liability if a mortgage company does not actually repossess the mobile home, but fails to properly discharge its lien after the owner defaults and abandons the mobile home? This issue came up in Sheldon Futernick v Vanderbilt Mortgage and Finance, Michigan Court of Appeals Docket No. 302987 (July 24, 2012). In Sheldon Futernick, the Court held that the mortgage company’s failure to properly discharge its lien by sending a termination statement to the UCC Secretary of State and the park resulted in “constructive” possession of the mobile home. The court noted that possession may be physical or constructive. The Court found that since the mortgage company effectively controlled the home by “controlling title” that it owed lot rent.
Lenders should certainly carefully screen borrowers for creditworthiness. Something to consider: Does this open the door for landlords to claim rent from lenders whose borrowers’ equipment is left on site after a default in a lease?
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