If you own a manufactured home, and are making mortgage payments on the land it’s situated on, what happens to your home if you default on the land payments? For the most part, the answer depends on state law, whether your manufactured home is real or personal property, and whether it’s a fixture on the land.
(For more on what happens to manufactured homes when you default on payments, see our Foreclosure and Repossession of Manufactured Homes topic area.)
Understanding Manufactured Homes
Manufactured homes, formerly referred to as mobile homes, are homes that are constructed on a permanent chassis, with a tongue, axles, and wheels for transport to a residential site in one or more sections.
Personal vs. Real Property
Whether your manufactured home is classified as personal or real property makes a difference if you default on your land payments.
Manufactured Homes Start as Personal Property
Initially, a manufactured home is considered personal property, like an automobile. However, a homeowner can take steps to change the classification from personal property to real property.
Generally, to be classified as real property, a manufactured home must be permanently affixed to the land on which it sits and the homeowner must meet any other state procedural requirements, such as:
- removing the tongue, axles, and wheels
- installing tie-downs
- intending for the manufactured home to be permanently attached to the land
- surrendering the certificate of title to the appropriate revenue commission, and
- taking whatever other steps the state requires for the manufactured home to be assessed as real estate.
Converting Your Manufactured Home to Real Property
In some cases, you can convert your manufactured home from personal property to real property.
When you own the land. You can convert your manufactured home to real property if you own the land that it rests on. However, if you do not complete all of the necessary steps to convert the manufactured home to real property, it remains classified as personal property.
When you lease the land. In some states, you can convert manufactured homes to real property even if you lease the land it’s situated on. (Typically, the lease must be for a minimum specified period of time.) However, in some states, if you lease the land, you can’t convert your manufactured home to real property.
Defaulting on the Land Mortgage: Home Is Real Property
If your manufactured home is classified as real property and you default on the mortgage payment, the property will typically be foreclosed pursuant to state law (just like a non-manufactured home or piece of property would be foreclosed on). Since the manufactured home is considered part of the real property, it will be foreclosed as part of the land. To learn more about the foreclosure procedures in your state, see Nolo's Foreclosure topic area.
Defaulting on the Land Mortgage: Home Is Personal Property
If you own the land your home rests on, but you don’t complete all the steps to convert it to real property, things can get complicated if you then default on your payments.
If Your Manufactured Home Is a Fixture
If the manufactured home sits on land you own, the home may be considered a fixture if it has been permanently affixed to the land. In this type of situation, any mortgage on the land may potentially cover the manufactured home too, if the mortgage includes improvements. If this is the case, then you cannot remove the manufactured home from the property (and you will lose it along with the land), if you stop making payments on the land.
Example. Let’s say you acquired the land first by taking out a mortgage to purchase it. You later buy the manufactured home outright and permanently attach it to the land. Your mortgage states that the land, as well as all improvements now or later erected on the property, as well as any fixtures, act as security for the debt. As a result, the mortgage on the land covers the manufactured home as well. You therefore cannot simply move the manufactured home to another location if the lender forecloses because you stopped making payments on the mortgaged land.
Generally, whether or not the manufactured home is a fixture is a question of fact. For instance, if the tongue, axles, and wheels have been removed and the home is permanently affixed to the ground, it will probably be considered a fixture.
If Your Manufactured Home Is Not a Fixture
If your home is classified as personal property, and it is not a fixture, then if you default on payments for a land mortgage, the land will be foreclosed and you can move your manufactured home to a new location.
For More Information
To find general information about manufactured housing, go to www.hud.gov and enter "manufactured home" in the home page search box to find a list of relevant links.