Can a Finance Company Repossess My Mobile Home?

Can a Finance Company Repossess My Mobile Home?

Last updated: March 2008

The following question was submitted to John Roska, an attorney/writer whose weekly newspaper column, "Q&A: The Law," runs in the St. Louis Post-Dispatch (Illinois Edition) and the Champaign News Gazette.

Question

I’m behind on my mobile home payments. The finance company has threatened to repossess the mobile home if I don’t catch up. Can they repossess my mobile home if I’m still living in it? Don’t they have to take me to court first?

Answer

A mobile home sale, like a car sale, is a sale of personal property. Cars get repossessed all the time, without any kind of court case. Theoretically, then, mobile homes can be repossessed the same way. But in reality, it’s rare.

That’s because repossession law doesn't allow repos that breach the peace, or trespass. Since it would be pretty hard to haul off someone’s residence without committing a breach of the peace, or a trespass, mobile home sellers usually get a court order before retaking mobile homes.

Repossession law is really a last vestige of the old Wild West, do-it-yourself kind of justice called “self-help.” While it’s been centuries since a landlord could legally go over and kick out a defaulting tenant, without any kind of court case, it’s still legal for a stealthy repo man to drive away a defaulting buyer’s vehicle with no advance warning or court order.

Not every sale of goods creates a right to repo. A valid security interest in the repossessed goods is the key. The law says a security interest exists if “the debtor has signed a security agreement which contains a description of the collateral.” The collateral “secures” the loan by providing something extra a creditor can go after, besides just the debtor’s pocketbook.

So, if a written security agreement creates a security interest in the collateral, the creditor can do a self-help repo when the buyer defaults. But, only if there’s no breach of peace, or trespass.
 
One authority defines a breach of the peace as “a violation of public order, a disturbance of tranquility, by an act or conduct inciting to violence or tending to provoke or excite others to break the peace.” Towing away someone’s residence, especially with them in it, probably qualifies as a “disturbance of tranquility.”

At the same time, a mobile home repo probably requires some kind of entry upon private property that would be considered a trespass.

Therefore, when creditors want mobile homes back, they usually file what’s called a “replevin” case. It seeks a replevin order, which is basically a court order requiring the buyer to surrender the collateral. 

In a replevin case, the buyer gets served with a summons, and can go to court to defend against whatever the creditor is asking for. This orderly process contrasts with the disorder that can occur when repo man and buyer face off.

If the seller gets a replevin order, and gets the mobile home back, they have to sell it, just like after a self-help repo. The proceeds of that sale are applied to what’s owed on the debt. When the sale proceeds don’t pay off the loan, the unpaid amount is called a deficiency, which can become a judgment against the buyer.
 

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