CFED Assets & Opportunity Scorecard
|Resident Ownership and Titling of Manufactured Homes|
States that Encourage Resident Ownership of Manufactured Home Communities
States that Encourage Titling Manufactured Homes as Real Property
Manufactured housing is a frequently overlooked homeownership opportunity for low- to moderate-income families. These homes—which are built in a factory, transported to a site for installation, and regulated by the HUD code for quality and safety—open the door to homeownership for families who, in many of the nation’s housing markets, cannot afford to buy a site-built home.
Nearly three million manufactured homes are located in approximately 50,000 manufactured home communities across the country. Most of the families living in these communities own their homes but rent the ground beneath them, leaving them vulnerable to excessive rent hikes and even eviction if the land owner sells the land. Policies that promote resident ownership of the land enable residents to preserve and improve the communities where they live. When they are not in danger of eviction or rent increases, their homes become real assets and increase in value.
In addition to being located on leased land, manufactured homes are also often titled as personal property, like a car or television, rather than as real property, like a condo or site-built home. This designation can leave homebuyers with few financing options and limited protection. For example, personal property financing options often include shorter loan terms, higher interest rates, differential rights in case of default and a more limited pool of lenders. While some states permit homeowners to convert their manufactured homes to real property, homeowners in rental communities are often not granted this option, even if the community is resident-owned.
What States Can Do
To promote resident ownership of manufactured home communities, states can require community owners to give residents at least a 45-day, advance notice before a community is sold, including for sales that will not result in a closure of the community, and to offer them an opportunity to submit a bid to purchase. Tax incentives for landowners to sell the community to the residents are also effective.
To ensure that owners of manufactured homes can access the same financing opportunities as owners of any other type of home, states can allow titling of manufactured homes as real property. The Uniform Law Commission, an organization that has drafted many successful model laws to encourage uniformity among states, recently approved the Uniform Manufactured Housing Act, which gives owners of manufactured homes the choice of tiling their homes as real rather than personal property. States that adopt this Act will make it easier for traditional mortgage lenders to give manufactured homeowners access to affordable financing.
Strength of State Policies: Resident Ownership and Titling of Manufactured Homes 1
|Does the state encourage resident ownership of manufactured home communities via an effective pre-sale notice, tax incentive or both? 2||Does the state have a policy that allows owners of manufactured homes, including those in resident-owned communities, to title their homes as real property? 3|
|State||Encourages resident ownership?||How?||Titling as real property?||Strength of policy|
|Arizona||—||Weak - requires 20 year lease and lacks clarity|
|California||—||Weak - requires 35 year lease and permanent foundation|
|Colorado||—||Weak - requires at least 10 year lease and must be permanently affixed|
|Delaware||Effective pre-sale notice||—|
|District of Columbia||—||—|
|Florida||Effective pre-sale notice||Weak - requires 30 year lease|
|Idaho||—||Weak - only eligible if being financed in accordance with a federal housing finance agency's guidelines|
|Iowa||—||Weak - Only eligible if being financed in accordance with a federal housing finance agency's guidelines and on permanent foundation|
|Massachusetts||Effective pre-sale notice||—|
|Missouri||—||Weak - requires 20 year lease|
|Montana||Tax incentive||Weak - not user friendly|
|Nebraska||—||Weak- requires 20 year lease|
|Nevada||—||Weak - home must be financed in accordance with the guidelines of a federal housing program|
|New Hampshire||Effective pre-sale notice||Strong - most all residential manufactured homes become real property automatically|
|New Jersey 4||—||—|
|North Carolina||Tax incentive||Weak - requires 20 year lease|
|North Dakota||—||Weak - requires 20 year lease|
|Oregon 4||Tax incentive||—|
|Rhode Island||Effective pre-sale notice and tax incentive||—|
|South Carolina||—||Weak - requires 35 year lease|
|South Dakota 4||—||—|
|Texas||—||Medium - requires long-term lease|
|Utah||—||Weak - must financed in accordance with a federal housing agency's guidelines|
|Vermont||Effective pre-sale notice and tax incentive||Medium - Allows homes on owned or leased land to be financed as real property, but lacks clarity that home is real property for all purposes|
|Washington||Tax incentive||Weak - requires 35 year lease|
|West Virginia 4||—||—|
|Wisconsin||—||Medium - requires a lease of more than 1 year|
Notes on the Data
1. Data provided through email correspondence with the National Consumer Law Center.
2. A state receives credit if it: 1) provides a tax incentive if a manufactured home community owner sells the community to the residents, (2) requires the community owner to notify the residents at least 45 days before the community is sold (including sales that will not result in closure of the community) or (3) both.
3. A state receives credit if it has a titling statute that allows for homeowners in resident-owned cooperatives, or in any other land-lease manufactured home community, to convert their homes from personal property to real property. A state does not receive credit if it either has no titling statute or has a titling statute that only allows for homeowners who own the land beneath their homes to convert their titles from personal property to real property.
4. Although this state does not allow homeowners in resident-owned cooperatives to convert their homes from personal property to real property, the state does allow homeowners who own the land beneath their homes to convert their titles.
What States Have Done
Ten states have implemented at least minimally effective laws that promote resident ownership. Four require a pre-sale notice of at least 45 days, four provide tax incentives to the landowners to sell the community to the residents, and two states (Vermont and Rhode Island) have both types of laws.
Nineteen states have implemented laws that allow owners of manufactured homes, including those in resident-owned communities, to title their homes as real property. Unfortunately, eighteen of these laws include weaknesses that make it difficult to convert manufactured homes from personal to real property. For example, in order to title manufactured homes as real property, eleven states require the homes to have long-term land leases; four states require the homes to be financed in accordance with a federal housing agency’s guidelines; and three states require the homes be affixed to a permanent foundation. Only New Hampshire’s law allows owners of manufactured homes to title their homes as real property without having to meet these requirements.
Organizations and Experts:
Guides, Briefs and Papers:
CFED thanks Carolyn Carter and John Van Alst from the National Consumer Law Center for their input and expertise on this policy issue.