Manufactured Housing Bill Passes
Chris Burti, Vice President and Legal Counsel

House Bill 253 has been ratified and is sitting on the Governor’s desk awaiting his signature at the time of the preparation of this article. It is believed that bill will simplify the conveyance and securitization of property transactions involving manufactured housing. For the first time, we will have a statutory procedure to convert personal property into real property with consistency and relative certainty. This should result in savings to the consumer. It should be noted that the provisions of this bill are not mandatory. Traditional certificate of title financing is left in place and untouched by this new procedure. If traditional certificate of title securitization is used, the new provisions can be easily implemented at a later time.

The first section of this legislation provides that single section manufactured housing will be treated uniformly in the tax office under NCGS Sec. 105-273(13). This will be effective for taxes imposed for tax years beginning after July 1, 2002.

Section 2 of the bill amends Article 3 of Chapter 20 of the General Statutes by adding a new section 20-109.2. This section deals with the DMV and provides a procedure for surrendering the certificate of title issued for a manufactured home that qualifies as real property as defined in G.S. 105-273(13). The owner will submit an affidavit to DMV, stating that the manufactured home meets the definition and will be permanently affixed to real estate. The affidavit must be in a form approved by the DMV and the North Carolina Land Title Association is working with industry counsel to get an approved form out as soon as practicable. The affidavit must include all of the information listed. The full text of the bill follows, but the requirements are basic information that you would expect to include.

Upon compliance by the owner with the procedure for surrender of title, the DMV will cancel the certificate of title. If a security interest has been recorded on the certificate of title, the DMV will require written consent from all secured parties. After cancellation, the DMV will return the original affidavit for recordation with the office of the register of deeds of the county where the real property is located. The section also makes provision for reapplication of title when the unit is to be severed from the realty.

Section 3 of the bill adds Sec. 47-20.6 to Article 2 of Chapter 47 of the General Statutes. This section deals with the Register of Deeds and provides the procedure for recording the affidavit.

Upon recordation, the affidavit is to be indexed on the grantor index in the name of the owner of the manufactured home and on the grantee index in the name of any secured party or lienholder.

When the affidavit is recorded, the manufactured home becomes an improvement to real property. Following recordation of the affidavit, all existing liens on the real property include the manufactured home. Therefore, the process can occur after closing. The deed of trust is recorded, the title is canceled and once the affidavit is recorded, the lien attaches to the unit. The bill provides that the recording acts control interests in the unit after the affidavit is recorded. This applies to the provisions of G.S. 25-9-334 relating to the priority of a security interest in fixtures, applying to manufactured homes.

The new NCGS Sec. 47-20.7 makes provision for the thousands of manufactured housing units currently in place with canceled certificates of title or never having had a certificate of title issued. The property owner may record a declaration of intent to affix the manufactured home to the real property in the office of the register of deeds of the county where the real property is located. The declaration of intent, deed, deed of trust, or other instrument must contain a description of the manufactured home, manufacturer, model, serial number, and a statement of the owner's intention that the manufactured home be treated as real property. After the filing of the instrument, the manufactured home on the property becomes an improvement to real property.

Sections 2 and 3 of the act become effective January 1, 2002, and apply to manufactured home title cancellations and to declarations of intent, deeds, deeds of trust, and other instruments recorded after that date. We assume that technical corrections may be needed to insure a streamlined process, but only time will tell what they may be. The text of the act follows.

AN ACT TO PROVIDE THAT MANUFACTURED HOMES NEED NOT HAVE MULTIPLE SECTIONS TO QUALIFY AS REAL PROPERTY FOR PROPERTY TAX PURPOSES, TO REQUIRE AN OWNER TO SURRENDER CERTIFICATE OF TITLE WHEN THE MANUFACTURED HOME BECOMES REAL PROPERTY, AND TO REQUIRE AN OWNER TO FILE EVIDENCE OF THE SURRENDER OF TITLE WITH THE REGISTER OF DEEDS.

 

SECTION 1. G.S. 105-273(13) reads as rewritten:

"§ 105-273. Definitions.

When used in this Subchapter (unless the context requires a different meaning):

(13) 'Real property,' 'real estate,' and 'land' mean not only the land itself, but also buildings, structures, improvements, and permanent fixtures on the land, and all rights and privileges belonging or in any way appertaining to the property. These terms also mean a manufactured home as defined in G.S. 143-143.9(6) if it is a residential structure; has the moving hitch, wheels, and axles removed; and is placed upon a permanent foundation on land owned by the owner of the manufactured home. A manufactured home as defined in G.S. 143-143.9(6) that does not meet all of these conditions is considered tangible personal property."

SECTION 2. Article 3 of Chapter 20 of the General Statutes is amended by adding the following new section to read:

"§ 20-109.2. Surrender of title to manufactured home.

(a) Surrender of Title. - If a title has been issued for a manufactured home and the manufactured home qualifies as real property as defined in G.S. 105-273(13), the owner shall submit an affidavit to the Division that the manufactured home meets this definition and surrender the certificate of title to the Division.

(b) Affidavit. - The affidavit must be in a form approved by the Commissioner and shall include or provide for all of the following information:

(1) The manufacturer and, if applicable, the model name of the manufactured home.

(2) The vehicle identification number and serial number of the manufactured home.

(3) The legal description of the real property on which the manufactured home is placed stating that the owner of the manufactured home also owns the real property.

(4) A description of any security interests in the manufactured home.

(5) A section for the Division's notation or statement that the title has been surrendered and canceled by the Division.

(c) Cancellation. - Upon compliance by the owner with the procedure for surrender of title, the Division shall rescind and cancel the certificate of title. If a security interest has been recorded on the certificate of title, the Division may not cancel the title without written consent from all secured parties. After canceling the title, the Division shall return the original of the affidavit to the owner, or to the secured party having the first recorded security interest, with the Division's notation or statement that the title has been surrendered and has been canceled by the Division. The owner or secured party shall file the affidavit returned by the Division with the office of the register of deeds of the county where the real property is located.

(d) Application for Title After Cancellation. – If the owner of a manufactured home whose certificate of title has been canceled under this section subsequently seeks to separate the manufactured home from the real property, the owner may apply for a new certificate of title. The owner must submit to the Division an affidavit containing the same information set out in subsection (b) of this section, verification that the manufactured home has been removed from the real property, and written consent of any affected owners of recorded mortgages, deeds of trust, or security interests in the real property where the manufactured home was placed. The Commissioner may require evidence sufficient to demonstrate that all affected owners of security interests have been notified and consent. Upon receipt of this information, together with a title application and required fee, the Division is authorized to issue a new title for the manufactured home.

(e) Sanctions. - Any person who violates this section is subject to a civil penalty of up to one hundred dollars ($100.00), to be imposed in the discretion of the Commissioner."

SECTION 3. Article 2 of Chapter 47 of the

General Statutes is amended by adding the following new sections to read:

"§ 47-20.6. Affidavit for permanent attachment of titled manufactured home to real property.

(a) If the owner of real property has surrendered the title to a manufactured home that is placed on the real property and the title has been canceled by the Division of Motor Vehicles under G.S. 20-109.2, the owner, or the secured party having the first security interest in the manufactured home at time of surrender, shall record the affidavit described in G.S. 20-109.2 with the office of the register of deeds of the county where the real property is located. Upon recordation, the affidavit shall be indexed on the grantor index in the name of the owner of the manufactured home and on the grantee index in the name of the secured party or lienholder, if any.

(b) After the affidavit is recorded, the manufactured home becomes an improvement to real property. Any lien on the manufactured home shall be perfected and given priority in the manner provided for a lien on real property.

(c) Following recordation of the affidavit, all existing liens on the real property are considered to include the manufactured home. Thereafter, no conveyance of any interest, lien, or encumbrance shall attach to the manufactured home, unless the interest, lien, or encumbrance is applicable to the real property on which the home is located and is recorded in the office of the register of deeds of the county where the real property is located in accordance with the applicable sections of this Chapter.

(d) The provisions of this section control over the provisions of G.S. 25-9-334 relating to the priority of a security interest in fixtures, as applied to manufactured homes.

"§ 47-20.7. Declaration of intent to affix manufactured home; transfer of real property with manufactured home attached.

(a) A person who owns real property on which a manufactured home has been, or will be placed, as defined in G.S. 105-273(13), and either where the manufactured home has never been titled by the Division of Motor Vehicles or where the title to the manufactured home has been surrendered and canceled by the Division, may record in the office of the register of deeds of the county where the real property is located a declaration of intent to affix the manufactured home to the property and may convey or encumber the real property, including the manufactured home, by a deed, deed of trust, or other instrument recorded in the office of the register of deeds.

(b) The declaration of intent, deed, deed of trust, or other instrument shall contain a description of the manufactured home, including the name of the manufacturer, the model name, if applicable, the serial number, and a statement of the owner's intention that the manufactured home be treated as real property.

(c) On or after the filing of the instrument with the office of the register of deeds pursuant to subsection (a) of this section, the manufactured home placed, or to be placed, on the property becomes an improvement to real property. Any lien on the manufactured home shall be perfected and have priority in the manner provided for a lien on real property.

(d) The provisions of this section control over the provisions of G.S. 25-9-334 relating to the priority of a security interest in fixtures, as applied to manufactured homes.

SECTION 4. Section 1 of this act is effective for taxes imposed for taxable years beginning on or after July 1, 2002. Sections 2 and 3 of this act become effective January 1, 2002, and apply to manufactured home title cancellations and to declarations of intent, deeds, deeds of trust, and other instruments recorded after that date. The remainder of this act is effective when it becomes law.

In the General Assembly read three times and ratified this the 3rd day of December, 2001.

No Title Search Required for New Insurance Products
NCLTA

Various insurance products have recently appeared in the mortgage lending market which give the lenders lien protection, without requiring a title search. These products go by several different names including: Mortgage Impairment Insurance, Mortgage Lending Activities Protection Policy, Processors Liability Policy, Radian Lien Protection, Lien Priority Guarantee and Lender Master Protection Program. Some of the companies that offer these products include Radian Guaranty, Zurich North American (through ZC Specialty and Fidelity & Deposit), Travelers, Great American, Cigna, AVEMCO, AIG, Chubb, Bankers Trust, and. By using only an owner’s affidavit and a credit report, not an attorney’s opinion based on a search of the public records, these products insure the priority of a lender’s lien.

We at the North Carolina Land Title Association (along with the American Land Title Association) believe that these products pose a serious threat to consumers’ property interests and to the integrity of the real property public records systems. Our systems of independent title searches and closings have developed over the centuries to protect the public records’ reflection of title and, thereby, the ownership interests of purchasers. We believe that lien priority insurance providers should be subject to the same licensing requirements as title insurers and adhere to our title insurance rules and regulations, especially those requiring a search of the public records and opinion on title by a licensed North Carolina attorney. Lien priority insurance is insurance of an interest in a real estate title, i.e. title insurance. But the companies that offer these other products file them with the Department of Insurance as "minor" additions to Property and Casualty products or as Surplus Line products, thereby evading filing requirements and the structural safeguards which have protected the integrity of real estate titles in North Carolina. We believe that these companies should not be able to evade Department of Insurance title insurance regulations by filing their title products as P&C insurance and Surplus Lines.

The consumer is also at danger with this system. With loans being filed without searches, chains of title will increasing become corrupted with errors. These difficult chains will eventually lead to higher search costs to the purchasers. Also, since these products insure only the lenders and there is no provision for a simultaneous owner’s policy, the consumers will have fewer opportunities to insure themselves. And consumers could be subjecting themselves to liability for legal conclusions made in their borrower’s affidavit. For example, do all consumers understand that an equity line of credit is a lien on their home?

Help us educate the lenders, borrowers, associations, regulators and legislators in our state about the high risk to consumers and to the integrity of our public records of real estate titles. Also, please help us identify these companies and encourage them to act responsibly and with a view toward the long-term viability of the record title systems in this country.

IRS Requiring Form 8821 for Federal Tax Lien Payoff Information
Bonnie D. Windom, Eastern Operations Director

The Internal Revenue Service has changed the procedure for disclosure of outstanding federal tax lien amounts. The procedure has been standardized nationally to better ensure taxpayer privacy.

Before releasing tax information, they must receive Form 8821, which is the Tax Information Authorization form, signed by the taxpayer, which form allows IRS to disclose the amount of all Federal taxes due. Hopefully, this will reduce the need for several contacts with the IRS office and also reduce the processing time of your request to them.

A copy of the new Form 8821 can be obtained by calling the IRS toll-free forms line at 1-800-829-3676, or you may download the form from the IRS Digital Daily @ www.irs.gov.

Instructions are on the back of the form.

Faxed copies of the form are acceptable.

The taxpayer(s) must sign the form, and it must be received by IRS within 60 days of the dated signature. Reg. 301.6103(b)(2)

Once IRS receives Form 8821, they can generally update payoff information without a new form 8821.

Request for lien payoff, along with Form 8821, can be faxed to North/South Carolina Lien Unit at (336) 378-2316.

Any questions regarding this new procedure can be directed to Charles Little, Technical Support Group Manager at (336) 378-2170 or Nancy Scott in the Tax Lien Unit at (336) 378-2085.

CLARIFICATION OF RECORDING FEES

Don’t forget to include the $2.00 probate charge in addition to the per-page recording fee when calculating your recording costs.