AN ACT Relating to manufactured housing; amending RCW 19.52.160, 46.12.290, 82.45.032, and 84.04.090; adding a new chapter to Title 65 RCW; adding a new section to chapter 46.12 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. PURPOSE. The legislature recognizes that a specific, consistent procedure for classifying manufactured homes as either real property or personal property does not currently exist and that the lack of such procedure creates a variety of problems including (1) all manufactured homes are required to be titled as motor vehicles even if treated as real property; (2) confusion exists as to the creation, perfection, and priority of security interests in manufactured homes which often results in loans on manufactured homes being inadequately secured; (3) financing terms on a manufactured home are often less favorable than those on a conventional site-built house due to the requirements of the secondary mortgage market that a manufactured home be classified as real property under state law; and (4) it is difficult or impossible in some cases to obtain title insurance for a manufactured home. The purpose of this chapter is to foster certainty in transactions involving manufactured homes by providing an exclusive procedure for classifying manufactured homes as either real property or personal property and providing for the conversion from one classification to the other.

NEW SECTION. Sec. 2. SECTION HEADINGS. Section headings as used in this chapter do not constitute any part of the law.

NEW SECTION. Sec. 3. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affixed" means that the manufactured home is installed in accordance with the installation requirements of chapter 296-150B WAC, or any successor standards adopted by the department of labor and industries.

(2) "Conversion" means either the procedure set forth in sections 5 and 6 of this act to exempt a manufactured home from titling and registration or the procedures set forth in sections 10 through 13 of this act to title a previously exempt manufactured home.

(3) "Interest holder" means any person who has title to any estate or interest, including a remainder interest, in the manufactured home or the real property to which it is or will be affixed. It does not include the owner of a right of way, easement, or subsurface rights or interests in or to minerals of such real property.

(4) "Manufactured home" means a structure, transportable in one or more sections, which either (a) in the traveling mode, is eight body feet or more in width and thirty-two body feet or more in length, or, when erected on site, is four hundred or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities; or (b) meets all the requirements of this subsection except the size requirements and with respect to which the manufacturer voluntarily files a certification and complies with the standards established under the national manufactured housing construction and safety standards act, Title VI of the housing and community development act of 1974.

(5) "Owner" when referring to the owner of a manufactured home means the registered or record owner of the manufactured home and does not include a lessee or the holder of a security interest.

(6) "Person" means any individual, trustee, corporation, partnership, or other legal entity.

(7) "Physical removal" means the removal of the manufactured home, or any significant portion thereof, from the real property to which it is affixed except for temporary purposes of repair or improvement thereto.

NEW SECTION. Sec. 4. EXEMPTION FOR CONVERTED MANUFACTURED HOMES. Except as otherwise provided in this chapter, a manufactured home which has been converted to real property in compliance with this chapter shall be exempt from the requirements of chapter 46.12 RCW including, without limitation, the requirement to register and title the manufactured home. The exemption shall continue unless and until the manufactured home is converted back to personal property or removed from the real property to which it is affixed in violation of this chapter.

NEW SECTION. Sec. 5. APPLICATION FOR CONVERSION. To initiate the conversion of a manufactured home to real property, the owner of the manufactured home shall submit to the department of licensing an application package consisting of:

(1) An affidavit in the form prescribed by the department of licensing signed by all of the owners of the manufactured home including:

(a) The date;

(b) The names of all of the owners of record of the manufactured home and the real property to which it is to be affixed;

(d) A description of the manufactured home including model year, make, width, length, and vehicle identification number;

(e) The names of all interest holders in the manufactured home and the real property to which it is to be affixed and a certification that such information is true and complete;

(f) A statement that the owner of the manufactured home owns the real property to which it is to be affixed; and

(g) A statement to the effect that the manufactured home will be affixed to the real property and that the owner has fulfilled all applicable requirements of this chapter;

(2) The certificate of title for the manufactured home or the manufacturer's statement of origin, in the case of a manufactured home not previously titled;

(3) A signed statement in the form prescribed by the department of licensing from each interest holder in the manufactured home and the real property indicating the interest holder's consent to the conversion;

(4) A title policy or lot book guarantee which complies with section 14 of this act issued by a title insurance company authorized to do business in the state of Washington covering the real property to which the manufactured home is affixed. The title policy or lot book guarantee shall be used to verify the identity of interest holders. The title policy or lot book guarantee shall be dated no more than seven days before the date the application package is received by the department of licensing; and

(5) A check, money order, or cash to cover recording fees and any application fee established by the department of licensing.

The department of licensing may require further verification of any of the items contained in the affidavit required by this section.

A person owns real property for purposes of this section if the person owns the real property outright, owns a life estate in the real property or is the trustee of a trust which owns the real property; or has exclusive possession to the real property under a lease with a remaining term of thirty-five years or more; or is purchasing the real property by real estate contract.

NEW SECTION. Sec. 6. RECORDING OF CONVERSION TO REAL PROPERTY. Upon receipt of the application package, the department of licensing shall examine the application and, if complete, shall issue a certificate of conversion to real property and submit the certificate of conversion for recording to the recorder of the county in which the manufactured home is to be located together with recording fees. The department of licensing shall promptly thereafter notify the owner of the manufactured home in writing that his or her application for conversion has been approved. After recording, the original certificate of conversion shall be delivered by the county recorder to the owner of the manufactured home with a conformed copy to the department of licensing. The department of licensing shall cancel the certificate of title, if any, and establish a file for each manufactured home converted to real property in which it shall place the manufacturer's statement of origin or canceled certificate of title, the copy of the affidavit, any interest holder consents, the lot book guarantee or the title policy, and the copy of the certificate of conversion.

NEW SECTION. Sec. 7. EFFECT OF CONVERSION TO REAL PROPERTY. As of the date the certificate of conversion to real property is recorded, the manufactured home shall be exempted from the requirements of chapter 46.12 RCW and shall be deemed a real property fixture and improvement to the real property to which it is affixed for all purposes other than taxation. This date shall be the "conversion date." Physical removal of the manufactured home is thereafter prohibited unless the procedures set forth in sections 10 through 12 of this act are completed.

NEW SECTION. Sec. 8. EXCLUSIVE METHOD OF CONVERSION. Notwithstanding any other provision of law, any manufactured home otherwise subject to the requirements of chapter 46.12 RCW and not converted to real property in compliance with this chapter shall not be deemed real property or a fixture or improvement to real property except for the purposes of taxation in appropriate cases.

NEW SECTION. Sec. 9. PRIORITIES‑-CONVEYANCES‑-FORECLOSURE. (1) It shall be the responsibility of the owner and interest holders to take action as necessary to protect their respective interests in connection with conversions to real property or personal property or the movement of a manufactured home converted to real property from one parcel to another pursuant to this chapter. This responsibility shall include taking appropriate steps to continue a lien under applicable Washington law; failure to take such steps shall result in the termination of the lien.

(2) A converted manufactured home may be conveyed by deed, real estate contract, will, or trust instrument when it is conveyed together with the property to which it is affixed. Any instrument of conveyance, including deeds, real estate contracts, deeds of trust, mortgages, wills, or trust instruments, executed subsequent to the effective date of this section shall include a manufactured home which is converted to real property and affixed to the property described in such instrument unless the manufactured home is specifically excluded.

(3) In order to allow an interest holder who has a properly perfected security interest in a manufactured home maintain his or her priority position with respect to the manufactured home, a uniform commercial code fixture filing filed on behalf of such interest holder before the conversion date shall have the same priority as a purchase money security interest in the manufactured home perfected in accordance with RCW 62A.9-313. An interest holder in the real property on or after the conversion date obtains an interest in the manufactured home which is subordinate to an interest in the manufactured home perfected in accordance with this subsection.

(4) Except as provided in this section, the rules regarding fixtures set forth in the Washington uniform commercial code, chapter 62A.9 RCW, including the rules concerning priorities and realizing on security interests in the event of default shall govern interests in a manufactured home converted to real property. In the event of default, an interest holder shall also comply with sections 10 through 12 of this act before removing the manufactured home from the real property.

NEW SECTION. Sec. 10. TITLING A PREVIOUSLY EXEMPT MANUFACTURED HOME. To initiate the conversion to personal property of a manufactured home converted to real property, the owner or interest holder, or his or her successor, shall, before physical removal of the manufactured home, notify the department of licensing of the intended removal and provide the department of licensing with:

(1) An affidavit in the form prescribed by the department of licensing signed by all the owners of the manufactured home including:

(a) The date;

(b) The names of all of the owners of record of the manufactured home and the real property to which it is affixed;

(d) A description of the manufactured home including model year, make, width, length, and vehicle identification number;

(e) The names of all interest holders in the manufactured home and the real property to which it is affixed and a certification that such information is true and complete; and

(f) A statement that the applicant has fulfilled all applicable requirements of this chapter;

(2) Consents to the removal and releases of interest in the forms prescribed by the department of licensing from all interest holders in the manufactured home and the real property to which it is affixed;

(3) An application for a certificate of title pursuant to chapter 46.12 RCW or a special permit pursuant to RCW 46.44.170, or both. Both must be submitted except that an application for a special permit alone is sufficient only if (a) the manufactured home is being moved to a new location but again will be affixed to real property and the applicant has complied with section 11 of this act, or (b) the applicant is applying for a certificate of title as evidenced by the submission of a completed certificate of title application along with the application for a special permit;

(4) A title insurance policy or lot book guarantee which complies with section 14 of this act issued by a title insurance company authorized to do business in the state of Washington covering the manufactured home and the real property to which the manufactured home is affixed dated no more than seven days before presented to the department of licensing;

(5) The results of uniform commercial code lien searches in the names of all interest holders dated no more than seven days before presented to the department of licensing;

(6) A treasurer certificate in accordance with RCW 46.12.105; and

(7) A check, money order, or cash to cover recording fees and any application fee established by the department of licensing.

The department of licensing may require further verification of any of the items contained in the affidavit required by this section.

NEW SECTION. Sec. 11. REQUIREMENTS FOR RELOCATION OF CONVERTED MANUFACTURED HOME. In addition to complying with section 10 of this act, an owner or interest holder, or his or her successor, who is moving the manufactured home to a new location where it will again be affixed to real property and who wishes to continue the exemption from the requirements of chapter 46.12 RCW, shall submit to the department of licensing the application package described in section 5 of this act with respect to the real property to which the manufactured home is to be relocated.

NEW SECTION. Sec. 12. CONVERSION TO PERSONAL PROPERTY OR RELOCATION BY INTEREST HOLDER OR SUCCESSOR. (1) In addition to complying with sections 10 and 11 of this act, if applicable, an interest holder or his or her successor acting pursuant to his or her lien and who is converting to personal property or relocating a manufactured home converted to real property shall provide the department of licensing with evidence satisfactory to the department of compliance with RCW 62A.9-504.

(2) An application for a manufactured home to be removed under a lien by an interest holder shall include the following in substitution for the consents and releases of interests of all interest holders:

(a) A court decree directing the sale; or

(b) An affidavit in a form approved by the department of licensing explaining how the lien was acquired supported by documentation satisfactory to the department of licensing.

NEW SECTION. Sec. 13. RECORDING OF CONVERSION TO PERSONAL PROPERTY OR RELOCATION. Upon presentation by the owner or interest holder, or his or her successor, of the required documentation, the department of licensing shall examine the package for completeness, and if complete, shall issue a certificate of conversion to personal property or an amended certificate of conversion to real property where the manufactured home is being located but not titled. The department of licensing shall forward the certificate or amended certificate and recording fees to the appropriate county recorder for recording. After recording, the county recorder shall forward the original of the certificate or amended certificate to the applicant with a conformed copy to the department of licensing. At the time a certificate of conversion to personal property is recorded, the manufactured home is again personal property and subject to the requirements of chapter 46.12 RCW.

NEW SECTION. Sec. 14. TITLE POLICY OR LOT BOOK GUARANTEE. The title policy or lot book guarantee required by sections 5(4) and 10(3) of this act shall be issued in the name of the owner of the manufactured home but shall be for the benefit of third parties relying on the statements made by the owner of a manufactured home in an application, affidavit, or other document used in connection with a conversion and who, by such reliance, are damaged. The title policy or lot book guarantee shall provide for liability in an amount equal to or greater than the fair market value of the manufactured home. Fair market value shall be established by the applicant to the satisfaction of the department of licensing. The title policy or lot book guarantee shall also provide affirmative insurance against any loss suffered as a result of the identity of any interest holder being otherwise than as indicated therein.

NEW SECTION. Sec. 15. ACKNOWLEDGEMENT REQUIRED. The affidavits required by sections 5(1) and 10(1) of this act and the consents required by sections 5(3) and 10(2) of this act shall be sworn by all required to sign before a notary public or other officer authorized by law to take acknowledgments of deeds.

NEW SECTION. Sec. 16. UNIFORM FORMS. The department of licensing shall prepare forms of affidavits, interest holder's consents, releases of interest, and certificates of conversion to be used pursuant to this chapter.

NEW SECTION. Sec. 17. FEES. The department of licensing may charge reasonable fees to cover the cost of processing conversions.

NEW SECTION. Sec. 18. PENALTIES. Every person who knowingly and wilfully participates in (1) the falsification or omission of information required in an affidavit; or (2) the falsification of a consent required pursuant to this chapter; or (3) the removal of a manufactured home converted to real property without complying with sections 10 through 12 of this act is guilty of a gross misdemeanor and any conversion of the manufactured home to real property or personal property is voidable at the option of any party injured by any such falsification or omission to the extent necessary to remedy the injury.

NEW SECTION. Sec. 19. PROSPECTIVE EFFECT. This chapter applies prospectively only and not retrospectively.

NEW SECTION. Sec. 20. LENDER'S OBLIGATION. Nothing in this chapter may be construed to require a lender to consent to the conversion of a manufactured home. The obligation of the lender to consent is governed solely by the agreement between the lender and the owner of the manufactured home. Absent any contractual obligation, a lender may withhold consent in the lender's sole discretion. In addition, the owner of the manufactured home shall comply with all reasonable requirements imposed by a lender for obtaining consent. A lender may charge a reasonable fee for processing a request for a consent.

NEW SECTION. Sec. 21. NO EFFECT ON TAXATION. Nothing in this chapter may be construed to effect the taxation of manufactured homes.

NEW SECTION. Sec. 22. RULES. The department of licensing may adopt any reasonable rules relating to the enforcement and proper operation of this chapter.

NEW SECTION. Sec. 23. SHORT TITLE. This chapter may be known and cited as the manufactured home conversion act.

NEW SECTION. Sec. 24. A new section is added to chapter 46.12 RCW to read as follows:

This chapter shall not apply to manufactured homes that have been converted to real property in accordance with chapter 65.-- RCW (sections 1 through 23 of this act).

Sec. 25. Section 6, chapter 395, Laws of 1985 and RCW 19.52.160 are each amended to read as follows:

This chapter shall not apply to the financing of mobile homes which meets the definition of real property contained in RCW 84.04.090, and which financing is insured by a federal instrumentality or the financing of manufactured homes that have been converted to real property in accordance with chapter 65.-- RCW (sections 1 through 23 of this 1988 act).

Sec. 26. Section 14, chapter 231, Laws of 1971 ex. sess. as last amended by section 2, chapter 304, Laws of 1981 and RCW 46.12.290 are each amended to read as follows:

The provisions of chapter 46.12 RCW insofar as they are not inconsistent with chapter 65.-- RCW (sections 1 through 23 of this 1988 act) or are not inconsistent with the provisions of this 1971 amendatory act shall apply to mobile homes regulated by this 1971 amendatory act: PROVIDED, That RCW 46.12.080 and 46.12.250 through 46.12.270 shall not apply to mobile homes: PROVIDED FURTHER, That in order to lawfully transfer ownership of a community mobile home, both spouses must sign the title certificate. In addition, the director of licensing shall have the power to adopt such rules and regulations as he deems necessary to implement the provisions of chapter 46.12 RCW as they relate to mobile homes.

Sec. 27. Section 1, chapter 266, Laws of 1979 ex. sess. as last amended by section 1, chapter 211, Laws of 1986 and RCW 82.45.032 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Real estate" or "real property" means real property but includes used mobile homes and used floating homes.

(2) "Used mobile home" means a mobile home or manufactured home converted to real property in accordance with chapter 65.-- RCW (sections 1 through 23 of this 1988 act) which has been previously sold at retail and has been subjected to tax under chapter 82.08 RCW, or which has been previously used and has been subjected to tax under chapter 82.12 RCW, and which has substantially lost its identity as a mobile unit at the time of sale by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe connections with sewer, water, and other utilities.

(3) "Mobile home" means a mobile home as defined by RCW 46.04.302, as now or hereafter amended or a manufactured home as defined in section 3 of this 1988 act.

(4) "Used floating home" means a floating home in respect to which tax has been paid under chapter 82.08 or 82.12 RCW.

(5) "Floating home" means a building on a float used in whole or in part for human habitation as a single-family dwelling, which is not designed for self propulsion by mechanical means or for propulsion by means of wind, and which is on the property tax rolls of the county in which it is located.

Sec. 28. Section 84.04.090, chapter 15, Laws of 1961 as last amended by section 1, chapter 155, Laws of 1987 and RCW 84.04.090 are each amended to read as follows:

The term "real property" for the purposes of taxation shall be held and construed to mean and include the land itself, whether laid out in town lots or otherwise, and all buildings, structures or improvements or other fixtures of whatsoever kind thereon, except improvements upon lands the fee of which is still vested in the United States, or in the state of Washington, and all rights and privileges thereto belonging or in any wise appertaining, except leases of real property and leasehold interests therein for a term less than the life of the holder; and all substances in and under the same; all standing timber growing thereon, except standing timber owned separately from the ownership of the land upon which the same may stand or be growing; and all property which the law defines or the courts may interpret, declare and hold to be real property under the letter, spirit, intent and meaning of the law for the purposes of taxation. The term real property shall also include a manufactured home that has been converted to real property in accordance with chapter 65.-- RCW (sections 1 through 23 of this 1988 act) or a mobile home which has substantially lost its identity as a mobile unit by virtue of its being permanently fixed in location upon land owned or leased by the owner of the mobile home and placed on a permanent foundation (posts or blocks) with fixed pipe connections with sewer, water, or other utilities: PROVIDED, That a mobile home located on land leased by the owner of the mobile home shall be subject to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.

NEW SECTION. Sec. 29. Sections 1 through 23 of this act shall constitute a new chapter in Title 65 RCW.