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Committee advances bill clarifying lien treatment when manufactured homes convert to real property
Summary
House Bill 377 would clarify that a lender’s lien remains enforceable when a manufactured home’s certificate of title is surrendered and the unit is recorded as real estate, streamlining conversions and encouraging lending in the manufactured housing market, lawmakers said.
Rep. Rob Leverett presented House Bill 377 to the Banks & Banking Committee, saying the bill clarifies how liens on manufactured housing are treated when a certificate of title is surrendered and the unit is converted to real property.
"This statute...allows you to surrender your certificate of title and record a certificate of permanent location in the real estate records," Leverett said, describing existing law and the bill’s proposed clarification that a lender's lien would be preserved and enforceable even after conversion to real property.
Leverett told the committee lenders had reported uncertainty about whether liens placed on a manufactured home’s certificate of title would be extinguished when the owner surrenders the title and converts the unit to real property. "The primary function of this bill is making it a little simpler to do all that and to make it clear that the lien of the lender doesn't get scrubbed out or extinguished by going through that process. It's still preserved," Leverett said.
Committee members asked practical questions about the process, including whether the owner must also own the land where the unit is placed and how a former lienholder would ensure a satisfaction is recorded after payoff. Leverett said the statute streamlines the process, that a certificate of permanent location generally requires common ownership between the home and the land, and that the lender's lien can be satisfied and recorded in the real estate records the same way as other satisfactions. He also noted an existing statutory penalty if a lender fails to release a lien after payoff.
Members asked about tiny homes and mobile units; Leverett said the statutory treatment depends on whether the unit is mobile or permanently attached and that local zoning can affect classification.
After discussion the committee voted to pass House Bill 377 by voice vote; members saying "aye" were recorded and the chairman announced the bill passed. Supporters said the change should encourage lenders to enter the manufactured housing market by clarifying lien perfection and enforcement when titles are surrendered.
