Customer wants to sell his home to buy a Motorhome
Dear Jan,
I hope you can help with this problem. I have a customer that wants to buy a motorhome; the problem is he has to sell his house. I should add that he has an LLC (Limited Liability Corp.) The LLC is registered in Montana that has no sales tax. He will need the proceeds from the house for a down payment and finance the remainder of the balance. However, the problem is the bank will not loan the money for the remainder since the customer does not have a permanent address and will be in the name of the (LLC) now that the house is sold. Do you have any solutions for this problem? This could also be a problem with insurance!
- Thanks, Ken
Dear Ken,
Thank you for your question. I would contact a mortgage broker and see if they are still doing “bridge loans” and try to wrap up the deal that way. A bridge loan is a loan that uses the equity in real estate as collateral. The loan has no payments until the end of the term. Typically, 90 days, perhaps six months, no longer than one year. Yes, interest is ticking away, and the customer will end up paying it. As for the dealership, this will be a cash deal, and you can get funded usually within 14 days.
Should that option not be available then contact Citizens Bank, you can e-mail Karen Sideris at Karen.S.Sideris@Citizensbank.com.
They are the only lender I know of that will finance a Montana LLC.
When people form these LLCs to avoid paying sales tax, that opens Pandora’s box. A good business practice to use is that the customers must have a driver’s license showing an address (physical address) proving that their residence is in a state that does not pay sales tax. Otherwise, the rules of the sales tax road are the customer pays sales tax and license fees where they reside. I would recommend you check with your dealership’s legal council for verification, as I am not an attorney and the advice I provide is given as best business practices and not legal advice.
- Thanks, Jan
RV Trade Digest May 2009