Manufactured Housing Practice Test

What must a dealer do if they assume an existing lien on a trade-in unit?

1. A) Cover the lien amount before taking possession

2. B) Deliver consenting documents into escrow from the legal owner and junior lien-holder

3. C) Release the existing lien before the sale

4. D) Notify the buyer of the lien status

The correct answer is: B) Deliver consenting documents into escrow from the legal owner and junior lien-holder

When a dealer assumes an existing lien on a trade-in unit, delivering consenting documents into escrow from the legal owner and junior lien-holder is crucial. This process ensures that all parties involved acknowledge the existing lien and agree to the terms under which the new arrangement will take place. By securing the necessary consent, the dealer protects themselves and the buyer from potential disputes regarding ownership and repayment obligations. This step is essential in the legal transfer of the vehicle, as it clarifies that the existing lien will still be honored and maintains transparency regarding the trade-in unit's financial obligations. This also helps facilitate a smoother transaction, ensuring that the buyer is fully aware of any encumbrances on the title before finalizing the purchase. Other methods, such as covering the lien amount before taking possession or notifying the buyer of the lien status alone, do not provide the same level of assurance or documentation required for a proper transfer of ownership and responsibility. Thus, delivering these documents into escrow is the most reliable approach in this situation.