Skip to content

If you are experiencing a hardship, please contact your account representative at (877) 426-8362.

Manufactured Housing News

Can a Mobile or Manufactured Home Be Real Property?

March 30, 2021

Can a Mobile or Manufactured Home Be Real Property?

The short answer is yes. The long answer is: it depends. That's because a manufactured home must comply with certain requirements in order to be considered real property. Since the process of classifying a manufactured home as real property varies by state and local jurisdictions, the local governments have developed specific statutes that set forth the procedures for classifying a manufactured home as real property.

As an example, some states require a document similar to a deed of conveyance (e.g. Certificate of Title), while other states request an affidavit of affixture for a manufactured home to be considered real property. Similarly, in some states a manufactured home can be classified as real property only if it's permanently affixed to land that the homeowner owns free and clear; in other states the home can be affixed to either leased land or on a lot the homebuyer owns outright or is still paying for.

Additionally, it's essential to know that the manufactured homes built before June 15, 1976, aren't typically eligible for conversion because they don't meet the HUD code requirements. However, some of those homes could be retrofit-eligible, which means they may be able to meet the HUD standards once retrofitted.

Reasons to Convert a Manufactured Home to Real Property

In general, manufactured homes are classified as personal property. However, increasing numbers of manufactured homeowners are looking for ways to convert their homes to real property. To fully understand the benefits of classifying a manufactured home as real property, let's first take a look at the differences between these two classification options.

  • Personal property - A manufactured home considered personal property is often installed on a temporary foundation, which means that the home could be moved to another location if the homeowner decides to do so later. This type of classification is identical to that of a vehicle.
  • Real property - A manufactured home classified as real property is permanently attached to land, just like a conventional site-built home.

Why does the classification matter? In a nutshell, converting a manufactured home to real property provides a more favorable status, particularly in terms of financing, taxation, and appreciation rate.

To begin with, a manufactured home classified as personal property can only be financed with a chattel loan. This type of loan could be right for you if you intend to purchase a manufactured home and install it on a leased lot or on your own land. Conversely, a manufactured home classified as real property will provide access to more manufactured home financing options. For instance, you may qualify for a Land/Home loan, which has similar interest rates, terms, and conditions to conventional mortgage products. Using this loan, buyers can purchase a manufactured home and a piece of land together. Another type of loan you may be able to get is the LandPlus loan, which allows you to utilize the amount of equity that you have in your land for the down payment. Additionally, there are different refinancing options that you could use to shorten the repayment term of your current manufactured home loan, lower your monthly payments, consolidate debt, or tap into your home equity.

Coming down to taxes and tax exemptions, most states differentiate between personal and real property in several ways. First, the manufactured homebuyers, who purchase a manufactured home classified as personal property in a state without an exemption for the buyers of these homes or a sales tax reduction, are typically taxed at a higher rate compared to the buyers of real property. On the other hand, a manufactured home converted to real property is usually taxed at a higher rate than a manufactured home that's considered personal property. However, real property provides more tax benefits than personal property for the qualifying homeowners.

Another reason to convert a manufactured home to real property is that real property tends to appreciate in value at a faster rate than personal property. Although all manufactured homes appreciate in value as long as they're well maintained and remodeled to keep up with the ever-changing needs of today's homebuyers, new data suggests that a manufactured home that's permanently attached to a piece of land appreciates in value just like a conventional site-built home.

Converting a Manufactured Home to Real Property

The only way to enjoy all the benefits of owning a home is to convert your manufactured home to real property. In most states, the conversion process is fairly straightforward, involving the following steps:

  • Checking the HUD certification - The HUD certification is a placard typically located at the base of the home. This placard attests the fact that your manufactured home meets the minimum building standards required and, thus, is eligible for conversion.
  • Building a permanent foundation - If your home is attached to a non-permanent foundation, you need to build a permanent foundation and install your home on it, after removing its wheels, axles, and towing hitch.
  • Connecting utilities - After permanently attaching your manufactured home to the foundation, utilities must be connected and approved by the county code department.
  • Filing a certification of location - The certification of location indicates that your manufactured home is tied into a land parcel, which makes it eligible as real property.
  • Gathering all the documents you need - To convert a manufactured home to real property, you should also have your decal number, the last-issued HCD certificate of title, and the last-issued original HCD registration card. If you own both the manufactured home and the land to which it is affixed, the manufactured home title and land ownership deed must be identical in order to convert your home to real property. Once you have all these items, you can complete the application and submit all the documents required.

All things considered, if you already own a manufactured home but want to get the benefits that only a site-built home could provide, you don't have to sell your home and buy a new one. You can simply convert it to real property! However, whether the manufactured home that you own or want to buy is classified as personal or real property, our professionals can help you find the right financing or refinancing options so that you can finally get the home you've always dreamed of!

All posts