- October 20, 2006
- All Issuing Offices in Alabama
- Insuring Manufactured Homes as Real Property
ALTA Endorsement 7 (Manufactured Housing Unit); ALTA Endorsement 7.1 (Manufactured Housing Unit-Conversion; Loan); and ALTA Endorsement 7.2 (Manufactured Housing Unit-Conversion; Owner's), each provide, among other things, that the definition of "land" in the policy "includes the manufactured housing unit located on the land".
Stewart Title Guaranty Company guidelines for issuance of these endorsements provides, in addition to other requirements, that you must verify that the manufactured housing unit is not personal property under state law and that any certificates or titles have been surrendered and canceled in accordance with state law. The underwriting guidelines for these endorsements are published in the Stewart Virtual Underwriter at: http://www.vuwriter.com.
The purpose of this bulletin is to provide general information regarding Alabama law and procedures as they relate to the issuance of commitments and policies in transactions involving manufactured homes. The information provided is general and is not intended as a comprehensive treatment of the subject. If you encounter an issue requiring specific underwriting information concerning a manufactured housing unit, please contact a Stewart Alabama underwriter for additional guidance.
Manufactured housing units, 1990 year models and after, are treated as titled personal property under Alabama law, unless the statutory and regulatory requirements have been met for classification as real property. The manufactured housing unit is subject to attachment of liens against personal property and fixtures, and the lien of the mortgage attaching to the real property does not encumber the manufactured housing unit until it is classified as real property. See,e.g., In re Johnson, 269 B.R. 246 (M.D. Ala 2001). 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 as a requirement to insure the manufactured housing unit under the ALTA Endorsement 7, ALTA Endorsement 7.1 or ALTA Endorsement 7.2.
If an ALTA 7, 7.1 or 7.2 is requested by the proposed insured, the closing agent must take the proper steps to cancel the Certificate of Title or in the case of new mobile home/land purchase deal, the Manufacturer's Statement(s) of Origin. Once the Certificate of Title/Manufacturer's Statement of Origin has been procured by the Closing Agent, the Certificate of Title/Manufacturer's Statement of Origin must be canceled by the Alabama Department of Revenue. All necessary forms and documents requiring the borrower's signature for classification of the manufactured home as real property, should be signed at closing before disbursement of escrow funds. Locating the borrower and obtaining his or her cooperation after funds have been disbursed, will require extensive time and effort and risk intervening liens. The certificate of title or manufacturer's certificate of origin should preferably be escrowed before disbursement of escrow funds. The steps for completing the cancellation of the Certificate of Title/Manufacturer's Statement of Origin are as follows:
- The closing agent must deliver to the Alabama Department of Revenue the following documents:
(a) The Certificate of Title/Manufacturer's Statement of Origin for the mobile home (it is important to note that when dealing with a "double-wide" mobile home, there will be two Certificates of Title or Manufacturer's Statement of Origin);
(b) A certified copy of the deed or other instrument of conveyance to the land that the mobile home is affixed;
(c) In order for the manufactured home to be classified as real property, affixation to the land described in the commitment/policy is required. Ala. Code §32-8-30 (c). Typically, an affixation affidavit of the owners/borrowers is used to establish the intent to permanently affix the manufactured home to the real property, including a statement of the intent that the manufactured home be assessed as real property for tax purposes. (See references section at the end of this bulletin); and
(d) Lien release from any lienholder as recorded on the face of the certificate of title (mostly refinance situations, but occasionally a mobile home dealer may have blanket lien which covers all inventory/floorplans).
- In addition to the documents listed above, the closing agent must also submit Alabama Department of Revenue Form Number MVT 5-33 entitled "REQUEST TO CANCEL CERTIFICATE OF TITLE TO MOBILE HOME DUE TO CONVERSION TO REALTY" or Alabama Department of Revenue Form Number MVT 5-36 entitled "REQUEST TO CANCEL A CERTIFICATE OF ORIGIN FOR A NEW MANUFACTURED HOME CLASSIFIED AS REAL PROPERTY". The closing agent must take care in completing this form as the Department of Revenue will reject the application if anything is improperly filled out on the application.
- The cancellation procedure can be accomplished at the county courthouse where vehicles are normally titled.
- Upon retiring the Certificate of Title or Manufacturer's Statement of Origin, the "Request to Cancel" form or the "Cancellation of Title", once obtained from the Department of Revenue should be recorded in the Probate Records as evidence that the certificate had been surrendered and cancelled. The form should be indexed in the name of the current owner of the land.
Occasionally, the manufactured home is located on the wrong lot or encroaches onto an adjoining lot. If there is a question regarding the location of the manufactured home on the insured property, an "as affixed" survey should be required.
In a refinance/resale situation where a mobile home has been affixed to the land for some time, the Certificate of Title must be located or a new Certificate of Title must be obtained. The Alabama Department of Revenue has Form Number MV-DPPA1 entitled "Request for Motor Vehicle Records" which may be submitted and upon return will provide the name of the last owner the Alabama Department of Revenue issued title to as well as any liens existing at the time. If the Certificate of Title has been lost or never applied for then a replacement title must be applied for and retired. Alabama Department of Revenue Form Number MVT-12-1 entitled "Application For Replacement Title" must be completed in order to obtain a replacement title. In addition, 1.5% of the “Blue Book” value must be paid to obtain a surety bond to replace a lost title.
In addition to the lost/never applied for Certificate of Title, another situation which may occur during refinance/resale mobile home transactions is that the existing lienholder may have the Certificate of Title in its possession. In this situation, the closing agent must demand in the payoff letter that the lender mail the Certificate of Title to the closing agent pursuant to a power of attorney executed by the seller/owner. Alabama Department of Revenue Form No. MVT 5-13 is the proper power of attorney form. Please note that for a "double-wide" mobile home, the agent will need to have the borrower execute two power of attorney forms, one for each Certificate of Title. If not mailed directly to the closing agent, the lienholder will mail the Certificate of Title to the seller/owner creating a substantial risk of loss. Upon receipt of the Certificate of Title from the prior lienholder, the closing agent should properly title the Certificate of Title in the name of the new purchaser, if a sale, and retire it if necessary.
The Alabama Department of Revenue forms referenced within this bulletin can be found within the Alabama Forms Section of the Virtual Underwriter. Please note that the forms referenced within this Bulletin or provided within the Forms Section of Virtual Underwriter are provided by the Alabama Department of Revenue and are subject to modification or amendment periodically. The forms attached are current as of September 25, 2006. Stewart Title Guaranty Company assumes no responsibility regarding the future modification or amendment of the forms by the Alabama Department of Revenue. It shall the agent's responsibility to confirm that the forms being used in any mobile home transaction are current and have not been modified or amended by the Alabama Department of Revenue. Forms and information regarding the classification of manufactured homes as real property are available at the Alabama Department of Revenue Motor Vehicle Division website: http://www.ador.state.al.us/motorvehicle/TitleForms.html.
In the event the manufactured housing unit is not to be classified as real property and insured under a manufactured housing unit endorsement, then the following exception should be taken in Schedule B of the commitment and policy:
The land described in this commitment/policy shall not be deemed to include any manufactured housing unit located on the premises.
In conjunction with the use of the foregoing exception, the amount of insurance in the commitment and policy should include the value of the real property only, and not the value of the manufactured housing unit. Keep in mind, the mortgage will not create a lien on the manufactured home if it is not classified as real property; therefore, perfection of the security interest by showing the lien on the title is required. Ala. Code § 32-8-61. If the certificate of title or certificate of origin for the manufactured home is not to be surrendered, then a manufactured housing unit endorsement cannot be issued.
Please contact a Stewart Alabama underwriter if you have any questions concerning this or any other topic for which you need assistance.
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.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- Exceptions Manual: