Legal Question in Real Estate Law in California

First, just a word of caution. Manufactured Homes are titled very differently than real estate, and I would really encourage you to have a professional review the purchase agreement, the security agreement (or Deed of Trust if the mobilehome is on real estate, and converted to a fixture thereon), loan agreement and promissory note before you do anything. I also strongly encourage you to utilize an escrow. There are a lot of reasons why this little expense now could save you a fortune in the long-run, not the least of which is the fact that by properly vesting the note and security agreement or deed of trust, you can direct where the asset will go upon either you or your sister's death. You also need to be aware of something called the SAFE Act which now places regulations on anyone - even a seller of a property - arranging financing. By carrying back a loan on the property, you are very likely covered by this new regulation which requires you to be registered. With respect to how to vest the asset properly, there are too many variables, and it is too complex to try and explain in this forum, but trust me when I say that I have spent more time "fixing" transactions like this, costing thousands of dollars, when it could have all been avoided by doing it properly in the first place.

So, with that cautionary note, as for how your interest in the note - or for that matter how your sister's interest will pass upon her or your death is a question of estate or probate law. It is really not a real estate question, because the note is not a real property asset, and even if it were, it would be subject to probate laws upon your death. You can re-post this question in the Trust and Estate, Probate sections, and get a better understanding of how property like this passes upon death, but I think you would be better served to have a professional review the transaction and help structure it so it actually does pass as you intend upon your death. Remember that once you die, it is too late to do anything about this.

A final note - I can tell you that based upon the limited facts you presented, I do not believe (without proper vesting of the note) the note will pass as easily to your daughter as you believe. I am also quite certain that your sister's share will not pass to your daughter, absent properly vesting the note. Sorry to give you a "non-answer" answer, but this is much more complex than you might think.

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