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.
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.
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.
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:
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!