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The Legal Lowdown on Owning Manufactured Homes

home pricesThere are over 800,000 mobile homes across Florida, according to estimates from the past two years. This is the largest number of mobile homes in any state across the United States. Other types of manufactured housing such as modular homes add to these numbers. With so many manufactured homes in the state, Florida leads in setting advanced laws and regulations concerning manufactured housing.  

Florida’s unique and innovative practices in this field have been somewhat overshadowed by the developments in Vermont and Oregon in recent years, nonetheless, Florida’s standards are monumental in their successful implementation and effectiveness as exemplified by the fact that manufactured homes and communities have become more safe and healthy environments for residents. In many ways, Florida has surpassed the regulation and lending requirements established under the Uniform Manufactured Housing Act to improve both the opportunities for owning manufactured homes and the conditions of these homes.

Due to the high number of manufactured homes in the Sunshine State, it is especially important to review regulations and procedures enacted in Florida as a model for regulations that work well in states with high volumes of occupied manufactured homes.

 Essentially, there are two notable manufactured home practices in Florida that distinguish it from many other states across the U.S.: (1) the strict installation and installation license requirements, and (2) the Florida Department of Health’s publicly-available inspection database.  

Strict Installation Requirements

The United States Department of Housing and Urban Development (HUD) requires that all states set a minimum installation standard and an operating installation program. While HUD has set a national minimum standard that all states must meet, called the HUD-Administered Manufactured Home State Installation Program, several states have elected to adopt more stringent installation standards than those required by this program. Florida is one of those states.  

To receive an installation license in Florida, the Florida Department of Highway Safety and Motor Vehicles requires that the installer must comply with a multi-step process. First, the installer must complete a pre-license course and pass a license examination. Next, the installer must secure a $5,000 surety bond. The installer must also hold a liability insurance policy for a minimum of $100,000. Finally, all installers are required to provide new manufactured homeowners with a one-year installation warranty.  

It is also mandatory for installers to renew their license annually. Installers who meet all of these requirements can install the manufactured home and complete all the necessary plumbing installation work, but cannot perform any of the electrical setup needed for the home’s installation. These steps require a different license and an electrician must be employed separately to complete this part of the installation process.  

These regulations appear to have met the necessary safety purposes for installing manufactured homes. According to data gathered by the Florida Department of Highway Safety and Motor Vehicles between 2004 and 2005, manufactured homes built and installed according to the established state standards did not experience any significant damages despite the intense weather conditions regularly encountered by the state.   

Securing the Communities

Florida also provides a significant amount of critical information about manufactured home communities to the general public via online databases such as the FloridaHealth website, a source maintained by the Florida Department of Health. It allows users to search for communities by name, county, address, inspection date, and the result of the inspection. The list of search results includes all this information and a link to download the complete inspection report for each community. Compared to most other states, this database provides thorough information about the condition of these communities.  

This information is accessible by regular inspections of all registered manufactured home communities located throughout the state by the Florida Department of Health. All conditions essential to the health and safety of those residents of manufactured home communities are examined and their conditions are reported in the state inspection report that is then filed with the Department of Health.  

Opportunity for Improvement

While Florida has enacted several important practices that have benefitted residents of manufactured homes, best practices enacted in other states that, if followed in Florida, would likely further improve conditions for Florida residents. These changes would advance the rights of residents and increase the information available about manufactured homes and manufactured home communities throughout the state.  

Best Practices in Oregon

In July 2016, Oregon’s Department of Housing and Community Services created the Oregon Manufactured Home Park Directory, an interactive computer-generated imagery (CGI) map with detailed information about each manufactured home community in the state. The information includes the size of the community, its total resident population, and the area surrounding the community. Supplementing this same type of information to the existing database in Florida would improve the amount of data available to Florida residents about the conditions of manufactured homes and communities throughout the state.  

The state of Oregon has also enacted measures and requirements that benefit residents of manufactured home communities throughout the state. According to information provided by the Legal Aid Services of Oregon, owners of manufactured home communities in Oregon must give residents at least 365 days’ notice before they close communities and must also financially assist residents who are forced to abandon or relocate their homes based on the closure of the community.  Based on the size of the resident’s home and the decision to either relocate or abandon his or her home, the owner of the community must pay residents $5,000, $7,000, or $9,000.

Residents who live in manufactured home communities in Oregon also have protection against eviction following their violation of rental agreement terms. In Oregon, if a resident violates the terms of his or her rental agreement, he or she cannot be evicted from the community until the receipt of a written notice with a 30 day period in which to cure the matter at stake. If the resident takes this time period to rectify the issue and again violates the same term, the resident must then receive another written notice providing for 20 days in which the matter may be rectified prior to eviction. These requirements help ensure that residents are notified and allowed sufficient time to resolve any problems before they are evicted for violating rental terms of which they might not even be aware.

Best Practices in Vermont

In Vermont, owners of manufactured home communities are required to give residents a minimum of 18 months’ notice before the closure of a community and 45 days’ notice before any sale or offering for sale of such community.

If an offer is made by either a non-profit organization or a tenant-owned group during this sale pending period, the owner must negotiate with these groups in good faith and cannot make a final decision regarding a sale for an additional 120 days. Currently, based on data gathered by Vermont’s Agency of Commerce and Community Development, the state has 58 tenant-owned or non-profit owned manufactured home communities. These groups often have the best interests of the community and residents in mind because their main objective is not to make a considerable profit from their control and ownership of the manufactured home community, but rather to promote the community and improve living conditions for all of the residents.

Manufactured Housing and Mortgage

In Oregon, a purchaser of a manufactured home can classify it as either real property or personal property (chattel) depending on the state conditions that are met. A manufactured home can be classified as real property if the home and the land on which the structure is placed are both owned by the same person. However, if the land and structure are owned separately, the property will likely be classified as personal property. In Oregon, a manufactured home that is classified as personal property will likely qualify only for a chattel loan and not a traditional mortgage. Often chattel loans offer less favorable terms, including higher interest rates.

In Oregon and Vermont, manufactured homeowners can receive financing with favorable terms more easily. In Oregon, these homes can be classified as real property so long as the homeowner has obtained a long-term lease for at least 20 years or owns the land on which the home will be affixed. After being classified as real property, owners of these manufactured homes can obtain loans with more favorable terms.

Vermont’s regulations make it easier to receive financing with more favorable terms. In Vermont, certain loans and payment programs are readily available to owners of manufactured homes, regardless of the lease length or property ownership. For example, the Champlain Housing Trust offers a deferred payment program for manufactured homes and the Vermont State Employee Credit Union offers a manufactured home mortgage that is available for all homes that were built after 1976 and were located on either owned property or in a manufactured home community. The terms for these mortgages offer low fixed-interest rates.

Getting a Mortgage in Florida

The laws in Florida currently require manufactured homes to be financed as personal property, secured by financing statements, instead of securing such financing pursuant to a mortgage loan.  Residents of Florida can only secure mortgages for homes that are classified as real property and the title to the property has been retired. In Florida, manufactured homes are not classified as real property until after the home has been permanently affixed to a plot of land and the land on which the home is affixed is either (i) owned by the homeowner or (ii) land on which the homeowner has secured a lease of at least 30 years. Moreover, to retire title for a piece of property, its original title and legal description must be filed with the county clerk for the county in which the home is located. A sworn statement by the owner that iterates the ownership or secure lease of the land is also needed to retire title to the land.  

It’s difficult to obtain a 30-year lease on land for a manufactured home because there is no incentive for owners of manufactured home communities to offer long-term leases. Purchasing a new manufactured home and the land on which to place it can also be costly for homeowners making it difficult for individuals to obtain a manufactured home without any mortgage options to offer financial assistance. However, if one can meet the terms necessary to reclassify the manufactured home as real property, then a mortgage can be secured easily and readily.  

If a manufactured home is expressly classified as personal property when it is transferred or sold to another party, that home cannot qualify for reclassification as real property because, unlike Oregon, Florida does not offer a reclassification process for these homes. The property must then only be classified as personal property on all loan, security, and financial documents. This introduces a distinct barrier to obtaining mortgages for manufactured homes.  

Since the federal funding regulations apply to all loans granted on manufactured homes in Florida, these homes must be classified as real property to receive mortgages with favorable loan terms. However, if residents are unable to meet the set requirements to have the homes classified as real property, the homes must still be classified as personal property.  Individuals obtaining financing on manufactured homes that could only be classified (and secured) as personal property are likely to receive less favorable loan terms than if these homes were classified as real estate secured by mortgage loans. This is unfortunate because this property classification prevents marginal borrowers from obtaining loans with the favorable and necessary terms to successfully purchase a property.  

The conditions for buying a manufactured home in Florida could be improved by changing the property classification requirements for these homes.  Residents would greatly benefit from their state adopting the same policies as those of Oregon because manufactured homes could then be reclassified from personal property to real property when sold or transferred between parties.  Since this would greatly improve the loan terms offered to borrowers purchasing manufactured homes in these circumstances, it would further the hope of future homeownership.

The practices in Oregon and Vermont that benefit and protect residents of manufactured home communities could also be implemented in Florida to benefit and protect residents of manufactured home communities across the state. Florida has among the highest number of manufactured homes and manufactured home communities across the U.S., therefore it is especially important for such an enormous group to benefit by implementation of policies which safeguard their interests.    

Furthermore, there are changes that could be implemented to improve manufactured home financing means and help many other Florida residents successfully achieve their goals of home ownership.  

About Author: Alexandria Decatur

Alexandria Decatur is a rising third-year student at Albany Law School and an aspiring in-house corporate attorney. In addition to being Managing Editor for Production, Research, and Writing on Albany Law School’s Journal of Science and Technology and President of the Business Law Society, she also interns at the Community Development Clinic, which assists local startups and non-profits. Alexandria is also on the Pro Bono Society Executive Board and serves as Director of the Worker’s Rights and LawHelp projects.

About Author: Debbie Hoffman

Debbie Hoffman is Founder & CEO of Symmetry Blockchain Advisors working with clients in their endeavors related to education, strategy and development of blockchain solutions. With her experience in financial services, law and technology innovation, Debbie brings a unique perspective to blockchain innovation. Debbie was previously the Chief Legal Officer at Digital Risk and a finance attorney at Thacher Proffitt & Wood in New York. She served as a professor at the Florida A&M University College of Law and the University of Central Florida. In 2018 Debbie was named a NAWRB Roaring Thirty Winner.” In 2017 Debbie was named as a Top General Counsel by First Chair Awards, received an Honorable Mention in MReport’s Women in Housing and was a “Hot 100” in Mortgage Professional America. She was selected as a Woman of Influence by Housingwire Magazine multiple times and has been the receipt of two Stevie® Awards.
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