Underwriting Manual: TX 12.24 Mobile And Manufactured Homes

The term "land" is defined in the Conditions and Stipulations section of the Texas Owner and Mortgagee title insurance policies as follows:

(d) "land": the land described or referred to in Schedule A, and improvements affixed thereto that by law constitute real property. The term "land "does not include any property beyond the lines of the area described or referred to in Schedule A, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy.

The Residential Owner policy defines "land" as:

e. Land. The land or condominium unit described in Schedule A and any improvements on the land that are real property.

In certain cases, the determination as to whether a house or dwelling unit located on the land constitutes real property may not be an easy task.

While those houses or dwelling units that are totally built on the land present no problem in qualifying as real property, those completely built outside the land do present some serious difficulties in order to have them divested of their condition of personal property and have them qualified as part of the land.

In general terms, out-site housing can be grouped as follows:

• Modular Homes - prefabricate structures that arrive on-site in units preassembled at the factory.
  
• Mobile-Component Houses - prefabricated structures consisting of two or more three dimensional components that are joined together at the site.
  
• Manufactured Housing Units (MHU) - dwelling structures in which structured chassis support the floors, walls, and roofs, and in which the chassis rest on wheels, axles, and brakes for the purposes of transportation to any site or location.
  
• Recreational Vehicles are similar to MHU's except they are less than 320 sq. ft. in area.
  

• That the ownership of both the manufactured housing unit (statement of ownership and location (SOL)) and the ownership of the land (deed) are in the same party.
  
• That there is a manifest intention to dedicate the mobile home or similar housing unit for the exclusive purpose of a permanently located dwelling area, as shown by the application for SOL marked as electing the unit as real property.
  
• After January 1, 2002, manufactured housing units permanently affixed to real estate owned by the buyer, or being performed under a contract for deed or contract for sale.
  
• That the mobile home or similar housing unit is being taxed in conjunction with the land as a single parcel of real property.
  
• That the permanent affixation of the mobile home or similar housing unit to land has been fully effected. This affixation entails, among others, the following steps:
  
  
  • Removal of the axles and wheels.
    
  • Setting on a permanent foundation.
    
  • Connection to at least one public utility, such as water, electricity, storm sewer, natural gas, propane, or butane.
    
  • Compliance with any other statutory requirements.
    
• That any lien, security interest, or encumbrance affecting the MHU and shown in the title registration, or bill of sale, or certificate of sale, has been properly canceled.
  
  
  • The MHU disclosure statement must have been provided by the dealer or lender prior to loan application. Failure of the buyer to receive this notice does not void the deed or any encumbrance.
    
  • That any mortgage being insured contain the following clause:
    
    The real property described in this mortgage includes as an improvement to the land set forth herein a (manufactured housing unit) description of any other similar housing unit) permanently affixed to such land.
    
• After your examination and above compliance you may issue the Manufactured Housing Endorsement T-31 and a T-31.1.
• In 2007, legislation was passed dealing with the issuance of statements of ownership and location for manufactured homes to certain lien holder's without the consent of the owner's of those homes. This bill was made necessary by the failure of some owners, retail sellers, lenders and title companies of to getting the required Statement of Ownership in a timely manner. If the lender foreclosures, the TDHCA is unable to issue an SOL to the lender, who then cannot provide an SOL to their buyer. This bill allows the lender or the loan servicer to file an affidavit and the foreclosed loan instrument with the TDHCA and obtain an SOL.

  Effective date January 1, 2008.

  Changes/actions required: This provision does not dispense with the duty to promptly handle all SOL requests in a timely fashion. On the other hand, when a property has been foreclosed and the lender or servicer provides you with an SOL on the manufactured home involved in your transaction, you may consider the home to be real property and handle it in accordance with normal practices.

See also Texas Bulletin TX2013006 – LEGISLATIVE UPDATES 2013 Part I relating to extinguishment of tax liens on manufactured homes. 

Exception: The land described in this (commitment) (policy) does not include any manufactured housing unit on the subject property.

Upon request of a lender, the underwriting requirements of this section and the payment of the premium as set out in R-11(e) of the Texas Title Insurance Basic Manual, you may issue either or both the T-31 and T-31.1 Endorsements.  A T-31.1 can be issued to both owner and lender.

Bulletin TX000066 contains a full explanation of MHU laws and standards over the years.