CFED Assets & Opportunity Scorecard
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 treated differently than site-built homes in two key ways. First, manufactured homes are 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 often includes 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.
The second way manufactured homes are treated differently than site-built homes is through state zoning laws. About half the states have laws that specifically address zoning restrictions on manufactured homes, but there is great variation in these laws. Some of these laws merely provide that a municipality cannot adopt a zoning ordinance that completely excludes manufactured homes from the jurisdiction. These laws merely require municipalities to allow manufactured homes somewhere within their boundaries – a protection that allows them to be excluded from single-family home districts or even confined to manufactured housing communities (land-lease communities, also known as “mobile home parks”). Other statutes require local jurisdictions to allow manufactured homes in at least some single family residential districts.
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 manufactured homes are treated the same as site-built homes, states can (1) ensure owners of manufactured homes have access to the same financing opportunities as owners of other types of homes, and (2) ensure manufactured homes are allowed in single-family zoning districts. To increase access to financing opportunities, states can allow titling of manufactured homes in land lease communities 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, Titling and Zoning of Manufactured Homes 1
|Does state encourage resident ownership of manufactured home communities via an effective pre-sale notice, tax incentive or both? 2||Does state's titling or zoning laws treat manufactured homes the same as site-built homes? 3|
|State||Encourages resident ownership?||How?||Allows titling as real property or includes MH in single-family district zoning?||Allows MH in land lease communities to be titled as real property?||Includes MH in zoning laws for single-family districts?|
|Alaska||—||Yes (weak) - requires a 20 year lease and permanent foundation||No|
|Arizona||—||Yes (weak) - requires year lease and lacks clarity||No|
|California 5||—||Yes (weak) - requires 35 year lease and permanent foundation||Yes|
|Colorado||—||Yes (weak) - requires at least 10 year lease and must be permanently affixed||No|
|Connecticut 4 5||—||No||No|
|Delaware||Effective pre-sale notice||No||No|
|District of Columbia||—||No||No|
|Florida||Effective pre-sale notice||Yes (weak) - requires 30 year lease||No|
|Idaho 5||—||Yes (weak) - only eligible if being financed in accordance with a federal housing finance agency's guidelines||Yes|
|Iowa||—||Yes(weak) - only eligible if being financed in accordance with a federal housing finance agency's guidelines and on permanent foundation||No|
|Massachusetts||Effective pre-sale notice||No||No|
|Minnesota 4 5||—||No||No|
|Missouri||—||Yes (weak)- requires 25 year lease||No|
|Montana||Tax incentive||Yes (weak)- not user friendly||No|
|Nebraska||—||Yes (weak) - requires 20 year lease||No|
|Nevada 5||—||Yes (weak) - home must be financed in accordance with the guidelines of a federal housing program||Yes|
|New Hampshire||Effective pre-sale notice||Yes (strong) - most all residential manufactured homes become real property automatically||No|
|New Jersey 4 5||—||No||No|
|New York 5||—||No||No|
|North Carolina||Tax incentive||Yes, (weak) requires 20 year lease||No|
|North Dakota||—||Yes (weak) - requires 20 year lease||No|
|Oregon 4 6||Tax incentive||No||No|
|Pennsylvania 4 5||—||No||No|
|Rhode Island||Effective pre-sale notice and tax incentive||No||No|
|South Carolina||—||Yes (weak) - requires 35 year lease||No|
|South Dakota 4||—||No||No|
|Texas||—||Yes (medium) - requires long-term lease||No|
|Utah||—||Yes (weak) - must finance in accordance with a federal housing agency's guidelines||No|
|Vermont||Effective pre-sale notice and tax incentive||Yes (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||No|
|Washington||Tax incentive||Yes (weak)- requires 35 year lease||Yes|
|West Virginia 4||—||No||No|
|Wisconsin||—||Yes (medium) - requires a lease of more than 1 year||No|
Notes on the Data
1. Data provided through email correspondence in July 2015 with John W. Van Alst and Carolyn L. Carter from 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 adopted at least one of the following two policies: (1) The state 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). (2) The state requires zoning laws to include manufactured homes in single-family districts.
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.
5. California, Connecticut, Idaho, Maine, Minnesota, Nevada, New Jersey, New York, and Pennsylvania have laws that are intended to encourage resident ownership, but they do not receive credit, usually because they provide less than 45 days
6. Oregon has an advance notice law in addition to its tax incentive. The advance notice law has recently been amended to make it more effective, but it still provides less than 45 days advance notice.
How States Are Assessed
States receive credit for encouraging resident ownership of manufactured home communities if they offer effective pre-sale notices prior to the sale of a community with the opportunity for a purchase bid, or if they offer tax incentives to entice landowners to sell the community to residents. States receive credit for treating manufactured homes the same as site-built homes if they have adopted at least one of the following two policies: (1) they enable owners of manufactured homes in land lease communities to title their homes as real property or (2) they include manufactured homes in single-family zoning districts.
What States Have Done
Ten states have implemented at least minimally effective laws that promote resident ownership. Four states only require a pre-sale notice of at least 45 days, four only 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.
Twenty-two states treat manufactured homes the same as site-built homes, either by allowing titling as real property or including manufactured home in single-family district zoning. Twenty states have implemented laws that allow owners of manufactured homes, including those in resident-owned communities, to title their homes in land lease communities as real property. Unfortunately, nineteen of these laws include weaknesses that make it difficult to convert manufactured homes from personal to real property. For example, to title manufactured homes in land lease communities 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.
Only six states require manufactured homes be allowed in single-family zoning districts.
Organizations and Experts:
Guides, Briefs and Papers:
CFED thanks Carolyn Carter and John Van Alst of the National Consumer Law Center for their input and expertise on this policy issue.