Assignment of funds method is mostly preferred by the lender whereas Cash on Delivery (COD) is preferred by modular home manufacturers. Let us unearth the facts behind this and understand the nuances involved in prefab housing payment mechanism. Hang around if you are new to real estate business, for this is a different kind of world.
Why is Full-Time Settlement Manufacturer’s Concern?
Manufacturers take a giant leap of faith in the buyer, by taking only a percentage of the amount involved in construction. Much like buyers, they also have to meet expenses like labor charges for vendors, factory staff, and delivery staff. That only adds to a portion of the whole project as the final payment arrives only after full construction.
When is Cash on Delivery Preferred?
Once all the modules of the home are attached, the manufacturers are legally bound with dealers by personal property law. The final settlement is done soon after the work gets finished. Cash on Delivery is best because no one wants to be packing to the court of law and face farcical episodes of legal formalities.
Why Lenders Prefer Assignment of Funds?
Most lenders see the modular home construction as a real estate project although rules term it as personal property work. The assignment of funds method is actually a reconciliation process set in motion to meet the conflicting demands of lenders and their clients. You know how this works, don’t you?
To protect the interests of the real buyer, the lender would pay the lump sum amount to builders only if the modules are fixated in a property by the manufacturer. One of the representatives would inspect the property in contention and give a go-ahead to the project.
How does Lender Pay Settlement on Behalf of Customer?
If a down payment is made directly by the customer, the lender would assign portions of the funds. Manufacturers and dealers are protected when the lender enacts on behalf of the customer. The settlement is usually done by wire transfer or certified check on the completion of modules.