HOUSE BILL REPORT

HB 1630

BYRepresentatives Nutley, Winsley, Leonard, Todd and Brough

Clarifying the property status of manufactured homes.

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; Winsley, Ranking Republican Member; Anderson, Ballard, Inslee, Padden and Todd.

House Staff:Charlie Gavigan (786-7340)

AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 10, 1989

BACKGROUND:

A manufactured home (mobile home) is built in a factory and moved, generally in two sections, to a site.  The manufactured 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.  Manufactured homes generally are treated in statute as vehicles, and are titled.

Personal property is something that can be owned that is 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.

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 ownership, 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 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.

Manufactured homes are personal property when they are built, and when placed in a mobile home park or on a rented individual lot.  Some argue that when a manufactured home becomes affixed to land that is owned by the same person who owns the manufactured home, the manufactured home becomes real property much like a fixture.  Others argue that the titling statute requires that a manufactured home be treated as personal property even where it is affixed to land owned by the home-owner.  The financial industry generally treats manufactured homes that are affixed to land owned by the home-owner as real property, although the title must be addressed which can cause confusion.

The distinction between personal property and real property can be very significant, especially regarding the protections provided to the property owner (i.e. foreclosure), the terms and availability of financing, and the perfecting of security interests.

SUMMARY:

SUBSTITUTE BILL:  When a manufactured home is sold or transferred after the effective date of this act, it becomes real property when the new owner eliminates the title by following a statutory process.  If a manufactured home is sold or transferred after the effective date of this act and the new owner does not eliminate the title by following the statutory process, the manufactured home is classified as personal property.  An owner of a manufactured home at the time the act takes effect may voluntarily eliminate the title by following the statutory process.

Current law applies to manufactured homes that have not changed ownership and have not had the title eliminated after the effective date of this act.

A statutory process to eliminate the title and have the manufactured home classified as real property is established for homeowners who own the land the manufactured home is affixed to.  The process requires the owners of the manufactured home who wish to eliminate the title to the manufactured home to apply to the Department of Licensing (DOL).  The application contains:  (1) information on the owner and the secured parties, (2) consent of the legal owner of the manufactured home, and (3) certification by the local government that the home is permanently affixed to the land.

After verifying that all requirements have been met, DOL approves the application and has it recorded in the county where the land is located.  After the documents are recorded by the county auditor, the manufactured home is treated the same as a site-built home (real property), and removal of the home is not allowed unless the owners follow a statutory process to retitle the manufactured home.

The statutory process to retitle and move a manufactured home when the title has been eliminated requires:  (1) that the owner apply to DOL for a title, (2) that all lienholders in the land consent to retitling and moving the home, and (3) that a title company list the owners and lienholders in the land.  After verifying that all the requirements have been met, DOL is to reissue a title and record the application in the county real property records for the land from which the home is being removed.  A process is also provided for moving the home from one location to another but not retitling the home.  The act applies prospectively only and has no effect on taxation.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Clarification is made that the fees to be sent to the state treasurer are for services provided by the Department of Licensing or its agents, and are not recording fees.  "Security interest" is defined, and technical corrections are made.

Fiscal Note:      Requested February 1, 1989.

House Committee ‑ Testified For:    Ron Clarke, Washington Manufactured Housing Association; Heather Hamilton; Department of Licensing; and Gayle McElroy, Washington Bankers Association

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The bill is the result of a task force that met to address problems that arise because manufactured homes that appear to be real property have titles. Confusion arises in areas such as transferring, financing, and perfecting security interests in manufactured homes that are affixed to land owned by the homeowner.  Conflicts in real property law, the Uniform Commercial Code, and the titling statutes regarding manufactured homes hurt consumers and lenders.  This legislation provides for the elimination of the title, and provides a clear definition of when a manufactured home is real property or personal property.

House Committee - Testimony Against:      None Presented.