AN ACT Relating to eliminating the title to manufactured housing when it becomes real property; amending RCW 46.12.290; adding a new section to chapter 46.08 RCW; adding a new chapter to Title 65 RCW; and prescribing penalties.

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

NEW SECTION. Sec. 1. PURPOSE. The legislature recognizes that specific, consistent procedures for classifying manufactured homes as either real property or personal property do not currently exist and that the lack of such procedures results in a variety of problems including (1) requiring all mobile homes to be titled as motor vehicles even if treated as real property; (2) creating confusion as to the creation, perfection, and priority of security interests in mobile homes; (3) making it more difficult to obtain long-term mortgage loans due to the requirements of such programs; (4) making it difficult or impossible in some cases to obtain title insurance; and (5) inadequate security for lenders for manufactured homes. Therefore, the purpose of this chapter is to foster certainty in transactions involving manufactured homes by providing an exclusive method for titling manufactured homes only when they are personal property.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affixed" means that the manufactured home becomes so related to particular real property that an interest in it arises under real property law.

(2) "Conversion" means either the procedure set forth in sections 3 and 4 of this act to exempt a manufactured home from titling and registration or the procedure set forth in section 7 of this act to title a previously exempt manufactured home.

(3) "Department" means the department of licensing.

(4) "Interest holder" means a person who has title to any estate or interest, including a remainder interest, or a secured party, 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 the owner of subsurface rights or interests in or to minerals.

(5) "Manufactured home" means a mobile home as defined in RCW 46.04.302.

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

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

(8) "Physical removal" means the removal of the manufactured home, or any significant portion thereof, from the real property to which it is affixed.

NEW SECTION. Sec. 3. APPLICATION FOR CONVERSION. The owner of the manufactured home shall submit to the department the following, which shall, along with any requirements made by the department, constitute the application for conversion:

(1) An affidavit signed by all of the owners of the manufactured home containing:

(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 from each interest holder in the manufactured home indicating the interest holder's consent to the conversion. The interest holder shall not unreasonably deny consent to convert; and

(4) A uniform commercial code search on the manufactured home. The uniform commercial code search shall be used to verify the identity of all interest holders. The uniform commercial code search shall be dated no more than seven days before the date the application is received by the department.

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 that owns the real property; 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, mortgage, or deed of trust.

NEW SECTION. Sec. 4. APPROVAL OF THE CONVERSION. (1) The department shall approve the application for conversion when all requirements listed in section 3 of this act have been met. Upon approval, the department shall send the affidavit to the auditor in the county or counties in which the real property on which the mobile home is to be placed is located.

(2) The county auditor shall record the affidavit in the county real property records, and notify the assessor of the recording. The assessor shall then treat the manufactured home as real property.

(3) The department shall cancel the certificate of title, if any, and maintain a record of each manufactured home title or manufacturer's statement of origin canceled due to conversion.

NEW SECTION. Sec. 5. EFFECT OF CONVERSION. Effective on the date the affidavit is recorded, the manufactured home is exempt from the requirements of Title 46 RCW and is deemed a real property fixture and improvement to the real property to which it is affixed. Physical removal of the manufactured home is thereafter prohibited unless the procedure set forth in section 7 of this act is completed.

NEW SECTION. Sec. 6. PRIORITIES‑-CONVEYANCES‑-FORECLOSURE. (1) It is the responsibility of the owner and interest holders to take action as necessary to protect their respective interests in conjunction with conversions to real property or personal property pursuant to this chapter.

(2) Instruments of conveyance, including deeds, real estate contracts, deeds of trust, and mortgages, shall include a converted manufactured home that is affixed to the property described in the instrument unless the manufactured home owned by the same person who owns the real property is specifically excluded.

(3) A converted manufactured home shall be conveyed by deed or real estate contract and shall be sold together with the property to which it is affixed.

(4) As to the manufactured home, the rules regarding fixtures set forth in the Washington uniform commercial code, under Article 9 of Title 62A RCW, including rules concerning priorities and realizing on security interests in the event of default, shall govern interests in a manufactured home converted to real property: PROVIDED, That in the event of default, an interest holder shall apply for a title before removing the manufactured home from the real property. The department shall make specific rules and procedures for the interest holder to obtain title in the event of a default.

NEW SECTION. Sec. 7. TITLING A PREVIOUSLY EXEMPT MANUFACTURED HOME. Before physical removal of a manufactured home converted to real property:

(1) The owner shall:

(a) Obtain consent to the removal from all interest holders in the manufactured home;

(b) Apply to the department for a certificate of title and a special permit. A special permit alone is sufficient where (i) the manufactured home is being moved to a new location but again will be affixed to real property, or (ii) the owner is applying for a certificate of title as evidenced by a completed title application;

(c) Notify the department of the intended removal and provide the department with (i) the required consents, (ii) the results of a lien search under Title 62A RCW showing any interest holders dated no later than seven days before presented, and (iii) the certificate of title and special permit. Where the owner is applying for a certificate of title, the completed title application shall also be submitted.

(2) The department shall, upon presentation by the owner of the documents required by subsection (1)(a) through (c) of this section, and upon verification by the department that all the requirements are met, process any title applications, notify the county auditor who shall remove the manufactured home from the real property records, and notify the county treasurer of the removal. At the time the auditor removes the manufactured home from the real property records, the manufactured home is again personal property and subject to the requirements of Title 46 RCW.

NEW SECTION. Sec. 8. UNIFORM FORMS. The department may prepare forms of affidavits and interest holders' consents to be used pursuant to this chapter.

NEW SECTION. Sec. 9. FEES. The department and the county auditors may charge reasonable fees to cover the cost of processing conversions.

NEW SECTION. Sec. 10. PENALTY. Every person who falsifies or omits information required in an affidavit or falsifies a consent required pursuant to this chapter is guilty of a gross misdemeanor punishable in accordance with RCW 9A.20.021, and the 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. 11. APPLICATION OF CHAPTER‑-CONVERSION TO REAL PROPERTY. Any sale of a manufactured home after the effective date of this section shall comply with this chapter, although noncompliance with this chapter shall not affect the classification of the mobile home as personal property or real property, or change the status of an owner or interest holder. Any person who owns, before the effective date of this section, a manufactured home, may eliminate the title to the manufactured home in accordance with this chapter. The status of manufactured homes or liens filed before the effective date of this section is not affected by this chapter.

NEW SECTION. Sec. 12. RULES. The department may make any reasonable rules relating to the enforcement and proper operation of this chapter.

NEW SECTION. Sec. 13. PROSPECTIVE EFFECT. This chapter applies prospectively only and not retrospectively.

NEW SECTION. Sec. 14. CAPTIONS NOT LAW. Section headings as used in this chapter do not constitute any part of the law.

NEW SECTION. Sec. 15. SHORT TITLE. This chapter may be known and cited as the manufactured home conversion act.

NEW SECTION. Sec. 16. A new section is added to chapter 46.08 RCW to read as follows:

A manufactured home whose title has been eliminated in accordance with chapter 65.--!sc ,1RCW (sections 1 through 15 of this act), unless and until the mobile home is converted back to personal property and a title issued, or removed from the real property to which it is affixed, is exempt from the requirements of this title.

Sec. 17. 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.--!sc ,1RCW (sections 1 through 15 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.

NEW SECTION. Sec. 18. Sections 1 through 15 of this act shall constitute a new chapter in Title 65 RCW.

NEW SECTION. Sec. 19. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.