Bulletin: UT000021

Date:
March 13, 2006
To:
All Stewart Issuing Agents in Utah
RE:
Insuring Manufactured Homes in Utah

Dear Associates:

Several county assessors and treasurers in the State of Utah are 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 affix the home to the real property.  Unfortunately, this often leads to confusion given that there is insufficient information regarding the existence of a manufactured home on the property and the potential need to affix the home.   This Bulletin will clarify underwriting guidelines whenever a manufactured home that has not yet been affixed is located on property. 

In accordance with Utah Code Ann. § 70D-1-20, a manufactured home[1] is personal property until all requirements to affix the home have been satisfied.  Accordingly, if an agent has knowledge that a manufactured home exists on the property without any record of the manufactured home being affixed, that manufactured home is personal property and is consequently not insured under a standard policy.  In those instances where a manufactured home is personal property rather than realty, the commitment and policy should provide an exception specifically excluding any manufactured home or mobile home that is located on the property.    For example, an appropriate exception in Schedule B should read:

The property described in Schedule A shall not be deemed to include any manufactured home, mobile home or home-trailer located thereon.

An agent cannot issue an endorsement to the policy insuring the manufactured home when the affidavit of affixture is not of record.  Any time a lender or knowledgeable buyer requests an ALTA 7, CLTA 116.5 or 116.6, the agent should be on notice that a manufactured home exists on the property.  If no affidavit of affixture is of record, the agent must then amend the commitment to include the completion and recording of an affidavit of affixture as a requirement on the commitment. 

In certain circumstances, a lender may accept that the property does not include the manufactured home.  In those rare instances, the agent may proceed to close the transaction by showing the property as vacant land excepting from the commitment and policy any manufactured home in Schedule B.  A CLTA 116 may 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."

REQUIREMENTS TO AFFIX A MANUFACTURED HOME

When an affidavit of affixture is required to affix the manufactured home as real property, there are two critical items that must be verified prior to completing the affidavit.  First, the agent needs to inspect the property to confirm whether the manufactured home has been permanently secured to the land by being anchored to and supported by a permanent foundation.   Next, the agent must ensure that the owner of the manufactured home is one and the same person as the owner of the real property to which the manufactured home is to be affixed.  This verification requires not only a review of the chain of title but also requires that the agent have the Manufacturer's Statement of Origin ("MSO") or title to the manufactured home.  The agent has to obtain the original MSO from the dealer or manufacturer as this document is required in order to complete the affidavit of affixture. 

If the manufactured home has been located on the property for a period of years, it is likely that the owner of the home has misplaced the MSO.  In most cases, a new MSO may be obtained directly from the manufacturer.  In order to obtain a new MSO, the name of the manufacturer and the vehicle identification number of the manufactured home needs to be located.   This information is often found near the circuit breaker or under the cabinets in the kitchen.  Once the vehicle identification number is located, verify with the Utah Division of Motor Vehicles ("DMV") that the MSO has not been previously surrendered.  The agent should further verify that the MSO has not been registered with the DMV by some person other than the homeowner.   Once this has been verified with the DMV, contact the manufacturer and request an application for a duplicate MSO.  The homeowner will complete the application for duplicate MSO which is delivered to the manufacturer.  The agent may proceed with completing the affidavit of affixture once the duplicate MSO is received from the manufacturer.

AFFIDAVIT OF AFFIXTURE

The affidavit of affixture is a particular document that may be obtained by anyone willing to wait in line at the DMV.  In the affidavit, provide the vehicle identification number that is found on the MSO.  Also, the legal description of the property must be provided on the affidavit.  After completing the pertinent information on the affidavit, the affidavit must then be delivered to the county assessor.  The county assessor will determine if any personal property tax is due on the manufactured home.  If all property taxes have been paid or if no tax is due, the assessor will fill out the appropriate section of the affidavit and sign it.

Following the assessor's completion of the tax assessment information section, the affidavit together with the MSO needs to be delivered to the DMV for review and completion of the receipt of surrender which is a part of the affidavit.  The MSO is surrendered to the DMV and any amounts owing for sales tax are collected.  The DMV will then complete and sign the receipt of surrender.  If someone other than the agent is assisting in the completion of the affidavit, the agent should verify with the DMV that the MSO has been properly surrendered.

Once the entire affidavit is complete, it is then delivered to the county recorder for recording.  Certain county recorders have recorded the MSO along with the affidavit and may ask for the MSO to be provided together with the affidavit.  Utah law, however, does not require the delivery of the MSO or any title issued by the DMV to the recorder's officer for recording.  Moreover, the delivery of the MSO to the recorder's office is impractical given that the MSO has been surrendered to the DMV.  Upon recording the affidavit of affixture, the manufactured home is considered real property and the agent may proceed with the transaction and issue an ALTA 7, CLTA 116.5 or CLTA 116.6 with the policy.

PURCHASE OF A MANUFACTURED HOME

The purchase of a manufactured home being financed by a lender intending to encumber the property as well as the manufactured home requires the completion and recording of the affidavit of affixture as detailed above.  The only difference is that the agent should obtain payoffs 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.


[1] A manufactured home is defined as a transportable home built after June 15, 1976 that when erected on the property is greater than 400 square feet, built on a permanent chassis, designed to be used as a dwelling and includes plumbing, heating, cooling and electrical systems.   Utah Law also makes reference to mobile homes which are transportable homes built prior to June 15, 1976.  For purposes of this Bulletin, the distinction between a manufactured home and a mobile home is irrelevant.   The underwriting requirements delineated in this Bulletin apply equally towards manufactured homes and mobile homes.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None