MOBILE HOMES AND TITLE INSURANCE

1
MOBILE HOMES AND TITLE INSURANCE

• South Dakota Land Title Association
• Fall Educational Seminar
• October 3, 2000
• Chad L. Hansen
• Dakota Homestead Title Insurance Company

2
The Issues

• Mobile homes become affixed to the real estate
  but are relatively easily moved
• How do we enforce their status as fixtures?
• What is the risk for a title insurer when they
  insure a mobile home?

3
Definitions

• Mobile Home (SDCL 32-7A-1)
• A movable or portable unit, designed and
  constructed to be towed on its own chassis, and
  designed to be connected to utilities for
  year-round occupancy.
• Includes units that folded or collapsed when
  towed and then expanded and units composed of two
  or more separately towable parts designed to
  joined into one unit capable of being separated
  again.

4
Definitions

• Manufactured Home (SDCL 32-7A-1)
• A structure, transportable in one or more
  sections, which is at least 8 feet wide and 40
  feet in length in traveling mode, or is more than
  320 sq. ft. when erected, built on a permanent
  chassis, designed for a dwelling, with or without
  a permanent foundation and contains plumbing,
  heating, A/C, and electrical systems.

5
Definitions

• Fixture (SDCL 43-33-1)
• A thing is affixed to land when it is attached by
  roots or imbedded in it or permanently resting
  upon it or permanently attach to something else
  permanent by means of cement, plaster, nails,
  bolts, or screws.

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Fixture

• Tests for a Fixture
• Annexation to the realty, either actual or
  contructive
• Its adaptability to the use and purpose for which
  the realty is used
• Intention of the party making the annexation

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Fixture

• Intention is the controlling criterion
• Intention is deduced from the relation of the
  parties and the circumstances of the case

8
Fixtures

• Permanently attach
• The permanence required is not equated with
  perpetuity. It is sufficient that if the item is
  intended to remain where affixed until worn out,
  until the purpose to which the realty is devoted
  is accomplished or until the item is superseded
  by another item more suitable for the purpose.
• Tax Appeal of Logan and Associates, 331 NW2d 281,
  283 (citations omitted)

9
Personal Property Attributes

• Considered personal property until affixed to the
  land
• Titled like a motor vehicle
• Still relatively easy to move after it is placed
  on a lot

10
Real Property Attributes

• Affixed to the land
• Usually placed on a cement pad or foundation
• Attached to permanent and year-round utitilities
• Attachments are made to the mobile home (e.g.,
  deck or porch)

11
Security Methods

• Real Estate Mortgage
• Chattel Mortgage
• Financing Statement
• Placing Lien on Title

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Endorsement

• Mobile Home Endorsement (ALTA 7)
• Insures that the term land includes the
  manufactured housing unit located on it
• Implying that the manufactured housing unit is a
  fixture

13
Endorsement

• Requirements to issue endorsement
• Need to make a determination that it is a fixture
• Remove wheels and tongue
• Attach to permanent foundation
• Surrender title

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Potential Risks

• Owner reattaches wheels and tongue and moves the
  mobile home to another county or state
• Owner may be able to obtain another title and
  resell or obtain additional financing

15
Underwriting Considerations

• Most mobile homes stay put
• Most people are honest
• Cost of endorsement

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Other Answers

• Iowa must place in a designated park to
  maintain status as mobile home outside park it
  is considered real estate
• Variation of old SD Method surrender title to
  Dept. of Revenue who advised County to tax as
  real estate