Bulletin: GA2008004

Dear Associates:

Recent changes to Georgia's Manufactured Homes Act[1] has raised a number of questions about the requirements for insuring a manufactured home located on the property any time a lender or knowledgeable buyer requests a CLTA 116 or ALTA 7 series endorsements or other affirmative insurance.  We are also aware that some county assessors in the State of Georgia may be currently assessing manufactured homes as real property even though the manufactured home is, as a matter of law, personal property due to the failure of the homeowner to properly convert it to the real property as required by statute.  This Bulletin will clarify underwriting guidelines whenever a manufactured home is located on property.

A Mobile Home as Personal Property

The Georgia Code treats a manufactured home, including pre-fabricated homes, manufactured housing units, and modular homes, as personal property[2] until it meets certain requirements to become real property.   Generally, Issuing Agents should assume that a mobile home is personal property when the agent becomes aware of the existence of a mobile home on property to be insured.  In these instances, the mobile home is not insurable and the following exception should appear in Schedule BII of the commitment:

The land described in this (commitment) (policy) shall not be deemed to include any house trailer, mobile home or mobile dwelling on the subject property.

In certain circumstances, a lender may accept that the property does not include the manufactured home and the agent may proceed to close the transaction by showing the property as vacant land, excepting from the policy any manufactured home in Schedule B and stating the amount of insurance in the policy (and commitment) as the value of the real property only, and not the value of the manufactured home.  A Location of Land, Designation of Improvements Endorsement 116 may also be issued in connection with the lender's policy as long as the endorsement does not include any language referencing a "single family dwelling."  Instead, the manufactured home is included in the definition of "improvements."

Note: If the title to a manufactured home has been lost or never issued, information and forms are available through the Georgia Department of Revenue, Motor Vehicle Division at http://motor.etax.dor.ga.gov/motor/titles/needed/manufactured.asp.

Statutory Requirements to Convert A Mobile Home to Real Property

Since May of 2003, Georgia has enacted new laws to assist in the determination of when a manufactured home becomes real property as follows: 

A manufactured homes, which is sold before July 1, 2006, may become real property if  (1) the home is or is to be permanently affixed to real property and (2) one person or more persons with an ownership interest in the manufactured home also have an ownership interest in the land; and (3) the owner of the home and the holder of all security interest in the home execute and file a Certificate of Permanent Location, in the correct form, in the real estate records in the county where the property is located; and (4)  a certified copy of the CPL is properly filed with the state revenue commissioner and the certificate of title is surrendered. [3]

A manufactured home that has not been issued a certificate of title and which is sold on or after July 1, 2006 becomes, for all legal purposes, a part of the real property on which it is located if (1) the home is or is to be permanently affixed to real property and (2) one person or more persons with an ownership interest in the manufactured home also have an ownership interest in the land; and (3) the owner of the home and the holder of all security interest in the home execute and file a Certificate of Permanent Location in the correct form in the real estate records in the county where the property is located. [4]

Insuring an Existing Manufactured Homes on the Property

In order to provide policy coverage in the form of the ALTA 7 series endorsements or to delete the manufactured home exception, we require strict compliance with Georgia's Manufactured Homes Act and satisfaction of the following requirements:

(1) You must determine that the manufactured home has become permanently affixed to the land to be insured either by inspection or by information from a reliable source, such as the surveyor or appraiser.  Factors may include the removal of the wheels and axles, the trailer set on a permanent foundation and permanent utility connections.   We will also accept an affidavit by the owner of the real property that he or she is the owner of the manufactured home and the home is permanently affixed to the real property in accordance with state law.  We have attached an acceptable affidavit form for your use attached hereto as Exhibit A.  Remember, if there is a question regarding the location of the manufactured home on the insured property, you should always require a survey.

(2) Your examination of title must confirm that at least one person with an ownership interest in the manufactured home also has an ownership interest in the land.

(3) Be sure to verify that the manufactured home is taxed in conjunction with the land as a single parcel of real estate and determine if any personal or real property tax is due on the manufactured home.

(4) Your examination of title should disclose a Certificate of Permanent Location ("CPL") or Form T-234 in the proper form and filed with the superior court in the county where the land is located.   The CPL must be executed by the owner(s) of the home and all holders of security interests.  If the manufactured home was sold on or after July 1, 2007, verify that the CPL includes the title number assigned to the home.   If the manufactured home was sold before July 1, 2007, you must verify that a certified copy of the CPL is properly filed with the state revenue commissioner and the certificate of title has been surrendered.  Where your title examination does not disclose a CPL in the proper form, you will need to follow the statutory procedures to convert the mobile home to real estate prior to insuring the manufactured home as a part of the real estate.

(5) If your title examination discloses a Certificate of Removal or Certificate of Destruction relating to the manufactured home, you may not insure the manufactured home without Stewart Underwriter approval.

Insuring the Purchase Of A New Manufactured Home

The purchase of a manufactured home being financed by a lender intending to encumber the property also requires strict compliance with Georgia's Manufactured Homes Act and satisfaction of the items detailed above.  Additional considerations include the following:

(1) You must obtain and/or prepare a Certificate of Permanent Location ("CPL") in the proper statutory form.   The CPL must be executed by the owner(s) of the home and all holders of security interests.  The Agent must either file the CPL with the superior court in the county where the land is located and/or confirm that all statutory requirements are satisfied to convert the mobile home to real estate prior to the issuance of the title insurance policies.

(2) The agent should also obtain payoffs directly from the manufacturer and dealer for amounts owing on the purchase of the home.  Payoffs to the dealer and manufacturer may be included in the closing documents

(3) The new Security Deed must contain a clause similar to the following language required by Fannie Mae: The description should specifically include the Manufacturer's Identification Number (VIN number, serial number), and make and year of the home, followed by a phrase such as "which, by intention of the parties, shall constitute a part of the realty and shall pass with it."

(4) Remember, a manufactured housing unit is subject to attachment of liens against personal property and fixtures.  For this reason, it is necessary to search the lien and tax records to identify and provide for the satisfaction of any outstanding liens against the personal property.  If the manufactured home is affected by any of the unsatisfied matters listed below, be sure to show these matters as exceptions in the commitment and title policy:

• Any security interest, lien or, encumbrance that affects manufactured home or similar unit and appears in the title registration, bill of sale, or certificate of sale.
  
• Any security interest revealed by the U.C.C. filing search.
  
• Any personal property or motor vehicle taxes assessed against the mobile unit or similar housing units.

(5) You may also want to examine any restrictive covenants filed against the real property for prohibitions against manufactured homes. 

COMPANY POLICY: Issuing Agents may proceed to insure a manufactured home on the land upon satisfactory evidence that all statutory and underwriting requirements are being satisfied and in the proper form.  Please call your local underwriter if these requirements cannot be satisfied.  

Also, be sure to comply with the requirements of Fannie Mae relating to mortgage eligibility and servicing procedures for mortgages secured by manufactured homes.  These requirements may be found at www.efanniemae.com .  Reflected there are the State of Georgia guidelines on titling procedures for new, previously owned or refinance transactions.  This information follows O.C.G.A.§ 8-2-180 prior to the recent amendment and simple and concisely gives procedures to follow.  Copies are attached for your convenience.

If you encounter an issue requiring specific underwriting information concerning a manufactured housing unit, please contact a local underwriter for additional guidance.  
BE SURE TO CONSULT YOUR LOCAL STEWART UNDERWRITER IF YOU HAVE ANY QUESTIONS.

[1] The Uniform Standards Code for Manufactured Homes Act, Part 2 of Chapter 2 of Title 8 of the Georgia Code as amended on July 1, 2006.
[2] The Motor Vehicle Certificate of Title Act, Chapter 3 of Title 40 of the Georgia Code.
[3] See O.C.G.A.§§ 8-2-181 and  O.C.G.A.§§8-2-183(a).
[4] See O.C.G.A.§§ 8-2-183.1.
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