If you own a manufactured home, it may be considered a type of personal property or a type of real property. A manufactured home that qualifies as personal property can be subject to repossession if you fail to make loan payments on it. By contrast, a manufactured home that qualifies as real property can be subject to foreclosure if you fail to keep up with your payments. A manufactured home that still qualifies as personal property also may be subject to foreclosure based on the homeowner’s default on a mortgage attached to the land where it sits.
People often are confused by the differences among mobile homes, manufactured homes, and modular homes. A “manufactured home” is a home that is constructed on a permanent chassis with axles and wheels beneath it. A “mobile home” is a manufactured home that was built before the construction and safety standards that the U.S. Department of Housing and Urban Development imposed in the 1970s. A “modular home” is a home that travels in sections to the building site and must be assembled on location. However, it does not rest on a permanent chassis and follows the building codes that apply to site-built homes rather than the construction standards for mobile homes.
When a Manufactured Home Becomes Real Property
Initially, a manufactured home is classified as a type of personal property, but you may be able to convert it to real property under state law. The main step to take is to permanently affix it to the land. Depending on the state where you live, you may or may not be required to own rather than lease the land where the home sits. The process of permanently affixing a manufactured home to the land involves removing the axles and wheels, installing tie-downs, giving the certificate of title to the revenue commission, and following any statutory requirements in your state. The owner also must show their intent to permanently attach the home to the land.
Foreclosure and Repossession of Manufactured Homes
A home that is classified as real property can be subject to foreclosure under state laws. This may mean that the lender goes to court and gets a judgment of foreclosure, or the lender may be able to pursue a non-judicial foreclosure without going to court. If a home is classified as personal property, the creditor may go to court in a process known as replevin and get an order for repossession, or the creditor might use self-help repossession without the involvement of the courts. You can think of replevin as parallel to judicial foreclosure and self-help repossession as parallel to non-judicial foreclosure.
Self-help repossession of a manufactured home may prove challenging for a creditor because it requires them to avoid a breach of the peace. Taking a home away from its residents is likely to result in a heated confrontation that may amount to a breach of the peace. The creditor also cannot take personal property inside the home that is not attached to its loan. To avoid these issues, some states do not allow self-help repossession for manufactured homes.
If your state does not use a certificate of title, the lender can use a UCC filing to establish their security interest in the manufactured home. This makes the home a fixture. The creditor can use foreclosure, repossession, or replevin if the homeowner defaults, assuming that the state permits all of these options.
Foreclosure on a Land Mortgage
Sometimes the owner of a manufactured home owns the land on which the home sits but has not converted the home into real property. The question of whether they could lose the home if they default on the land mortgage would depend on whether the home is considered a fixture. Determining whether a home is a fixture is a very fact-specific inquiry, but one important factor to consider is whether the home still rests on axles and wheels. If it is attached to the ground instead, it is more likely to be considered a fixture.
A manufactured home that is a fixture may fall within the mortgage attached to the land if it covers improvements to the land. This means that you cannot remove the home from the land if you default on the land mortgage. On the other hand, if the manufactured home is not a fixture, you can simply take the home with you if you default on the land mortgage.