Distressed Debt
By John Kaufmann
I did not notice your teeth until you shouted at me. They were sharp, regular and jagged, like teeth on the blade of a crosscut saw. You shouted at me the first time we spoke, and frequently thereafter.
Your name on the rent roll was Louis, but everyone called you “Junior”. You lived in a mobile home park that I had recently purchased in 2018, in northern New York. Your wife was a few years younger than you, quiet and soft-spoken. When I would stand in your doorway to speak with you, she would stand next to you listening. I do not think I ever heard her voice. I would sense, rather than see, two toddlers just outside my field of vision, straining to hear what their parents and The Man were saying to each other.
You had bought your home from the previous owner of the park. Instead of cash payment, he had “taken back paper”, or issued you a note for the purchase price. When I bought the park, that note was transferred to me. When I told you that note payments theretofore made to the previous owner would henceforth be made to me, you flashed your eyes, bared your teeth and shouted, “You can’t do that! That’s illegal!” Untrue, I thought. I had a document executing the transfer of the instrument from the seller to me. The amount of the payment would not change from what you had been paying previously. And why would you care who cashed your check so long as the debt burden remained the same? But you were shouting too loudly for me to talk. I managed to say, “But—”, and you continued, “I’m gonna call my lawyer! That aint legal!” I said,
“Tell me your lawyer’s name.”
“I aint tellin you!”
“Why the hell not?”
“I aint helpin you!”
Before I owned mobile home parks, I was a big-firm tax lawyer. My specialty was the taxation of financial instruments. I wrote articles about the taxation of distressed debt in the wake of the 2008 financial crisis. Deeply distressed bonds and loans are square pegs for tax law purposes because they have economic features more like equity than debt, but the tax law treats them as debt. Distressed debt is purchased on the secondary market. A secondary market consists of transfers of debt instruments between people who are not original lenders. So, of course it was legal for me to purchase your note. If that weren’t the case, I could not have been able to write those articles. But I was having trouble explaining that to you. You were a boiling Niagara of rage. I was down-stream from that rage, and you didn’t want to listen.
As I walked from your home back to the park office, I reflected that my fancy legal background was useless now. That would have been funny, if it had happened to someone else.
The on-site manager of that park was a guy named Mike. During the following weeks, he would call daily to say, “Junior is in the office, shouting,” or “Junior won’t park his car on his driveway,” or “Junior is driving donuts in his truck on the septic field.” Sometimes, he would hand the phone to you, and you would shout at me directly. While I held the phone away from my ear, I would think, I sit here while Mike takes the blows. The neighbors began to complain. I felt sorry for Mike. I felt sorry for the neighbors.
We offered you a buy-out. You agreed but didn’t sign the documents. You stopped making note payments. You ruined the lawn in the common area near the entry to the park by driving over it in your truck. You said that you could not park your car in your driveway because there was an “electrical grid” there. You called Mike late night and early morning, shouting.
I told Mike, “Turn your phone off when you go to bed. Get some sleep.”
“I can’t do that. What if there is an emergency?”
“Block his number. That’s what I have done.”
“But what if there is an emergency?”
I did not have a good answer for that.
He continued, “Maybe I just need therapy.”
“Get some. I will pay for it.”
“That’s what talking to you is, therapy.”
“I am always here to talk.”
Talk is cheap, I thought. Septic and lawn repair cost money.
I hired a lawyer in town named Jim Palmer. I called your note. That is, I wrote you a letter stating that, in light of recent events of default, the full outstanding principal amount on your note of eleven thousand dollars and change was immediately due per Article seven section three thereof, and I was thereby making a demand for immediate payment. That set you off. You called me and yelled, “I don’t have eleven thousand dollars!”
I said, “I am sorry to hear that.”
“How can I pay eleven thousand dollars?”
“I am sorry, but it is due now, in full.”
An eviction is almost an amputation. Home is the place where, when you have to go there, they have to take you in. That is what an eviction takes away. But the right to evict is a property owner’s only remedy when things go sideways. That is unjust. It is like using nuclear weapons to enforce parking regulations. Nevertheless, that is the remedy available under the law and sometimes an impossible resident has to go. Running a mobile home park is an exercise in utilitarian calculus. Some people are bad neighbors. If you don’t enforce the rules, other people will suffer. In order for people like me to provide the most good for the most people, people who make life difficult for other residents have to go.
I balanced the utils. You had to go.
The morning you received the letter calling your note, Mike called me from the office. I could hear you through the handpiece. You were holding the letter that I had sent and a printed-out pamphlet from the Attorney General’s office. You said that you were holding your rights in your hand, that you would sue the park, that what we were doing was illegal, and that you spoke with your lawyer about this for two hours that morning, and that he had been doing this for thirty fucking years.
You can’t hold rights in your hand, I thought. Rights are inalienable and self-evident, but they are not tangible. You are holding a written representation of your rights, not the rights themselves. I knew the pamphlet you were talking about. It is called Manufactured Home Tenants’ Rights, and it is available on the AG’s website. I had studied the pamphlet and checked all the boxes, crossed all the ‘t’s and dotted all the ‘i’s that it required of park owners. I was within my rights under applicable law. It would have been unfair to your neighbors for me not to exercise them. I hated that, but it was what it was. I asked again, “Who is your lawyer?”
You said, “Jim Palmer!”
Mike and I laughed. I said, “Jim is my lawyer. I will call him after we get off.”
And then, you deflated. I asked what you had discussed with Jim. “He’s your friend,” you said. “Why don’t you ask him?” You agreed to sign the home over to the park. I forgave the debt. You didn’t yell at me or Mike again. Within a month, you, your wife, your son and your daughter were gone. A new family moved into your home.
Later, I called the previous owner about a separate matter. We chatted for a bit. Then, we discussed you. I said, “Hey—Junior’s gone.”
“You should have seen the whack jobs we got rid of before you bought the park.”
“I feel sorry for the guy.”
“I don’t! He deserved it!”
“Nobody deserves to be born crazy.”
“He is a prick.”
“I feel sorry for his wife. She seems pretty normal—and nice.”
“We always tried to deal with her, instead of Junior.”
“And I feel sorry for the kids.”
“Yes, I feel sorry for the kids.”
After you moved out, I googled you. I saw that you totaled your truck in a DUI in 2016. You were married then and had at least one kid; I wondered what coming home to your wife and child with egg, and possibly blood, on your face would have been like after that. I tried to imagine what dealing with me, when I laid down the law, was like, but my powers of empathy were too limited for me to do that. I googled you again more recently. I saw that you and your wife had another child in May of 2022, a girl, at the local hospital. So, you have stayed married and stayed in town. If that is any indication, things might have gotten better. I do not know where you currently live. With luck, you have managed to buy your own land. I hope that that is the case. That is the only way you can be free of people like me.
John Kaufmann (he/him) is an attorney and mobile home park owner who lives in southern New York State. His writing has been published in Off Assignment, Ep;phany, The High Plains Register, The Journal of the Taxation of Financial Products, The Journal of Taxation of Investments, and Tax Notes. He is a descendant of one of the Spiegelberg Brothers, who owned a dry goods store in Santa Fe after the Civil War. The Spiegelberg store was sold in the late nineteenth century and the proceeds from the sale were squandered within a generation. Kaufmann blogs at https://dirtlease.com.