HOUSE BILL REPORT

HB 1561

BYRepresentatives Nutley, Leonard and Todd

Adopting the manufactured home conversion act.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (8)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Barnes, Sanders, Todd, J. Williams and Wineberry.

House Staff:Charlie Gavigan (786-7340)

AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 4, 1988

BACKGROUND:

A mobile home or manufactured home is built in a factory and moved, generally in two sections, to a site.  The home is built on a frame that includes a wheel chassis and hitch so that the home can be towed on the public highways.  The construction of these homes is regulated by the federal Department of Housing and Urban Development.  Mobile or manufactured homes are treated in statute as vehicles and are titled.

Real property is generally defined as land and anything affixed or attached to the land, so that the thing attached and the land are considered as one.  Real property ownership is based on a chain of title, with transfer of the property accomplished through the recording of documents with the county.  These records are based on the legal description of the land, which is a description of the boundaries of the land and where the land is located in the county.  These records do not specify what is affixed to the property, such as a house or other improvements.

Personal property is generally defined as things that can be owned that are not real property.  Personal property includes boats, automobiles, stocks, bonds, patents, and appliances. Personal property ownership is usually based on possession of the property or on a title or other document evidencing ownership.

Personal property can be attached or affixed to real property so that it becomes part of and is treated as real property.  This type of property is commonly called a fixture.

Mobile or manufactured homes are personal property when they are built.  They remain personal property unless the home is affixed to real property that is owned by the same person who owns the mobile home.  Mobile or manufactured homes that have become real property may be included in the transfer of the real property simply through the legal description of the land, just like the a home built at the site.  Here the title to the mobile home is not necessary for the transfer, and may even cause confusion because there is generally no "title" to real property.

A creditor with a security interest in a fixture may, if a default occurs, remove the fixture from the real property, although the creditor is liable for damage caused by the removal.  Parties with a security interest in the real property may prohibit the removal of the fixture unless the creditor removing it provides adequate assurance (security) that any damage will be repaired.

SUMMARY:

SUBSTITUTE BILL:  The owner of a mobile or manufactured home that is affixed to land owned by the homeowner is required to eliminate the title to the home and list the mobile or manufactured home as real property in the county records.  A home is affixed to real property when it becomes so related to the land that an interest in it arises under real property law.

Prior to the elimination of the title, the owner must provide the Department of Licensing with documentation concerning the ownership and interest holders. The department must approve the elimination of the title.

Once the title has been eliminated, the mobile or manufactured home is no longer regulated by statutes dealing with vehicles.

A secured party's interest, particularly relating to priority and default, is governed by the laws regarding fixtures.

When a mobile or manufactured home whose title has been eliminated is being removed from the real property, a procedure is established to issue a new title on that mobile or manufactured home.

These requirements and procedures are mandatory on the transfer of any mobile or manufactured home after the effective date of this act.  If the transfer occurred prior to the effective date, an owner may voluntarily eliminate the title to the mobile or manufactured home by electing to follow the specified procedures.

The Department of Licensing is authorized to make any rules necessary to implement and enforce this act.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  References to real property interest holders are eliminated.  The lender's priority in the mobile home is clarified to insure that elimination of the title does not affect the lender's security interest. Technical corrections are made to the process of recording documents in the county records.

Fiscal Note:      Requested January 25, 1988.

Effective Date:The bill takes effect on July 1, 1989.

House Committee ‑ Testified For:    None Presented.

House Committee - Testified Against:      Ron Clarke, Washington Manufactured Housing Association.

House Committee - Testimony For:    None Presented.

House Committee - Testimony Against:      A statutory clarification of when mobile homes are real or personal property and a process to eliminate the title are needed.  However, concerns with this bill focus on the mandatory nature of the process, the lender's ability to control the title, and the lender's priority when the title is eliminated.