Bulletin: MT000014

Date:
October 28, 2003
To:
All Issuing Offices in Montana
RE:
Insuring Mobile/ Manufactured Homes as Real Property

Dear Associates:

Recent increases in the sale of manufactured homes has resulted in underwriting questions regarding the issuance of insurance in Montana where mobile or manufactured homes are located on the subject property. This Bulletin offers new underwriting guidelines for insuring mobile/manufactured homes as real property in Montana.

MOBILE/ MANUFACTURED HOME AS PERSONAL PROPERTY

Generally, the Montana Code treats a Mobile or manufactured home as personal property until certain statutory requirements are met to make the mobile home unit real property for tax purposes. An agent should assume that the mobile home unit is not affixed to the land and consider it personal property when the agent becomes aware of the existence of a mobile home on the subject property. If the mobile home is personal property, it is not insurable and the following exception should apply in Schedule B of the Policy:

The land described in this (commitment or policy) shall not be deemed to include any home trailer or mobile home located on the premise.

CLOSING INSTRUCTIONS.

Pay close attention to the lender's instructions to understand their intent. The lenders written instructions should clearly set forth who is responsible for obtaining the title for a mobile home. If applicable, obtain amended instructions setting forth what the agent can and cannot do to insure a mobile home as real property.

  1. If the lender intends to make the mobile home real property, follow the steps set forth in the next section as necessary.

  2. If the intent is to retain the title as security/ personal property, you may offer to issue the CLTA 116, which insures that personal property in the form of a Mobile Home is currently located on the land.

    a. If the mobile home is transferred as personal property, then the land should be shown as vacant. In this case, the mobile home is included in the definition of improvements.

    b. Do not insert "single family dwelling" on a 116 endorsement if title is retained as security/personal property.

If the lender has requested title insurance for the full amount of the loan and you determine by inquiry, tax roles, etc., that there is a manufactured home on the property which has not been declared as real property, either write your commitment for land value only; or make inquires as to the lender's intent.

Consider including a statement in your closing instructions that the title agent is unaware of any violations of the detitling statue and makes no assurances that the Assessor will allow detitling or that detitling complies with the State statute.

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.

INSURING A MOBILE HOME AS REAL PROPERTY

If the lender's intent is to make either a new or used manufactured home real property, you must verify that all requirements set forth in the remainder of this Bulletin have been met where:

  • You are asked to issue the Manufactured Housing Unit Endorsement (ALTA Form 7) which provides coverage under the Policy for the manufactured unit located on the land at the date of the Policy.

  • You insert "single family dwelling" on the CLTA 116. If you insert this language, then you have insured the manufactured home as real property.

  • You are asked to issue a Policy without exception to the mobile home and the mobile home is attached to the land.

The Montana Code requires proof of proper compliance with Chapter 1, Title 15, if a manufactured home is to be insured as real property as follows:

  1. Require proof that the Manufactured Home is permanently affixed to the land either by inspection or information from a reliable source such as a surveyor or appraiser. Factors required to be present are:

    Removal of the axles, wheels, and other running gears.

    Setting on a permanent foundation

    Connection to sewer system and public utilities

  2. Obtain a proper Statement of Intent to Declare Manufactured Home Real Property with original certificate of origin (ORIGINAL MSO) or the original title attached is filed with the county Treasurer.

  3. Record of the Statement of Intent and a duplicate receipt of surrender.

NOTE: EACH COUNTY HAS ITS OWN RULES ON WHETHER OR NOT THEY WILL ALLOW A TRANSFER OF AN ORIGINAL MSO TO BE SIMULTANEOUSLY HANDLED AT THE SAME TIME AS THE TITLE IS BEING DE-TITLED. WE SUGGEST THAT EACH COUNTY BE CONTACTED TO VERIFY IF THEY WILL ALLOW THIS TO BE DONE TOGETHER OR NOT.

TITLE & ESCROW GUIDELINES

We offer the following new underwriting guidelines set forth below when you are instructed by a lender to insure the manufactured home as real property under the terms of the Policy.

Additionally, we suggest that you send a letter to the manufactured dealers that you typically do business with in order to inform them of your new closing and insuring guidelines (e.g. the original MSO prior to closing; written payoff letter prior to closing; original MSO sent directly to your office after receipt of payment). This will give them an idea of what to expect and will hopefully prevent any confusions at the time of closing.

PLEASE NOTE THAT 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.

New Mobile Homes. Prior to closing-

  1. Contact the mobile home dealers and request the original MSO (Manufactured Statement of Origin).

  2. Review the ORIGINAL MSO and verify Proof of Ownership and the numbers for the Statement of Intent.

  3. Require and obtain a written payoff letter from the mobile home retailer. (See Exhibit A).

  4. Pay the mobile home retailer directly in the Closing and require that the original MSO be sent directly to escrow.

  5. Follow the proper detitling procedures for mobiles. (See attached Detitling Requirements)

  6. Keep in mind that the manufacturer and the dealer may have money owing. Therefore, you may need to verify that both are paid and all liens are released.

  7. DO NOT CLOSE UNTIL YOU HAVE THE WRITTEN PAYOFF LETTER AND ORIGINAL MSO IN ESCROW!

The original MSO is required to record the Statement of Intent to Declare the Manufacture Home as Real Property. Obtaining the ORIGINAL MSO and completing and recording the Statement of Intent is a closing obligation that the agent assumes when it uses a lender's money. It is not acceptable to disburse the lender's money and then wait for the ORIGINAL MSO. Therefore, DO NOT CLOSE until you have a written payoff letter and the ORIGINAL MSO in escrow! If you are dealing with a manufactured home dealer that completes all of the necessary steps for you and brings the original MSO to the closing, you may pay the dealer directly. You must be in control of the funds in order to provide the lender with the policy they are requesting.

Additionally, you may not issue your title Policy before recording the Statement of Intent, even if you do not issue the Endorsement. You must record the Statement of Intent before you record the Deed of Trust and issue the Policy with the Endorsement.

Used Mobile Home. Prior to closing:

  1. Obtain and examine a copy of the title from the buyer/owner (front and back)

  2. Confirm that the Certificate of Title reflects that the title to the home is vested in the owner of the land.

  3. If the title is lost, require and obtain a copy of the new title before closing.

  4. The mobile home should be currently taxed by the Assessor as real property. The different counties vary widely in their criteria for recharacterization of mobile homes as real property. You should check with the tax office as to their requirements before closing a transaction where an ALTA 7 Endorsement is required.

  5. Satisfactory evidence that there are no taxes due and owing to the State.

  6. Satisfactory evidence that the real estate taxes relating to the mobile home have been assessed and paid for those years that it has been affixed to the land.

  7. Satisfactory UCC search.

  8. Any outstanding certificates of title must be cancelled pursuant to the requirements of Montana law and all liens on title must be satisfied.

  9. Require proof of proper completion of all De-Titling Requirements for Mobile Homes. (See attached Detitling Requirements)

  10. If the detitle requirements have not been complete, then the Agent cannot insure the mobile home as real property until the detitling requirements are met. Do not assume that "detitle" or a quiet title has occurred because the assessor is taxing the mobile/manufactured home as real property.

  11. Keep in mind that the manufacturer and the dealer may have money owing. Therefore, you may need to verify that both are paid and all liens are released.

  12. DO NOT CLOSE UNTIL YOU HAVE THE WRITTEN PAYOFF LETTER AND ORIGINAL MSO IN ESCROW!

  13. Require satisfactory indemnity agreement against construction liens from the general contactor if the manufactured home has recently been moved onto the property. Also, require a copy of the contractor's current financial statements or unconditional lien waivers by subcontractors for all labor provided and materials supplied to the site.

DO NOT CLOSE UNTIL YOU HAVE LOCATED THE TITLE AND OBTAINED THE ORIGINAL.

PLEASE REMEMBER TO EXAMINE ANY RESTRICTIVE COVENANTS FOR PROHIBITIONS AGAINST MOBILE HOMES.

IF YOU HAVE ANY QUESTIONS REGARDING THE ISSUES RAISED BY THIS BULLETIN, PLEASE CONTACT YOUR LOCAL UNDERWRITING PERSONNEL.

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:
12.24 Mobile And Manufactured Homes
Exceptions Manual:
None
Forms:
ALTA Endorsement 7 (Manufactured Housing Unit)
 
CLTA Location of Land, Designation of Improvements Endorsement 116