Summary:
It's not your typical scenario regarding a loan request for a manufactured home on a land parcel. It's a unique bird, or in my case, a beautiful llama...
The borrower's role is not just important; it's crucial. They are the ones who must own the land in fee and the manufactured home, a significant factor in the loan process. Their responsibility in ensuring that the manufactured home is affixed to the ground with proper government certifications, making it a real property asset, is paramount. This is not just a movable structure that can be hauled away with a crew and 18-wheeler, but a valuable asset they are securing. The borrower's role also includes verifying the property's suitability for their intended use, such as gardening and animal keeping, and ensuring the home is installed on a permanent foundation. This empowerment is key to their confidence in the process.
Is the manufactured home affixed to the ground with proper government certifications, making it a real property asset, or can it be hauled away with a crew and an 18-wheeler?
Or do they own the manufactured home on a land parcel owned by a third-party investor requiring monthly rent?
Article:
The mortgage broker, a key player in this process, is not just a facilitator but a source of reassurance. They play a crucial role in assisting the borrower in finding the right lender, negotiating terms, and ensuring all necessary documentation is in order. Their role provides a sense of security and confidence in the loan process, reassuring the borrower that they are not alone in this journey. The broker's expertise and guidance are invaluable in navigating the complexities of the loan process, making the borrower feel supported and guided. The lender's response is crucial.
My client has an accepted offer to purchase a property with a manufactured home on it, containing a fixed foundation on a 1/4th acre parcel. The property will be non-owner occupied and made available for rental. Similar properties are in demand because of the availability of gardening for fresh food, the ability to keep a few animals on the property, and the perception of living off the grid. The potential renter owns a llama named Dolly, a few goats, and chickens. They are excited to find a home for Dolly Llama, their pets, and the kids.
The lender responded:
The first question to be determined is whether the real estate is being purchased in fee ownership or rented from a third party. When a modular home unit is owned by a third party on a leased parcel, the property is considered personal property.
The property is on a paved street with available water and electricity connections. The sewage connection is by septic tank.
Is the land parcel in a community association of similar properties subject to rules, such as covenants, conditions, and restrictions? Does the community have written bylaws?
The borrower should contact the building and planning department to verify that gardening and some animals are allowed on the property.
What is the description of the manufactured home, including size, age, and amenities, and is the home installed on a permanent foundation? Was the installation engineered and permitted by the local municipal building department?
The manufactured home will remain a personal property asset in California until the owner applies for and receives a certification referred to as a 433a permanent foundation certification. This certification ensures the home is installed on a foundation that complies with the California Code of Regulations, Title 25, Chapter 2, Section 18551. Obtaining this certification involves specific municipal approvals, which the borrower needs to be aware of. The process includes detailed steps for receiving the certification. The completed certification is then recorded in county records and will be in a future title search.
Upon completing a loan transaction or conveying the property title, a title company will issue a title endorsement (ALTA 7). This endorsement is not just crucial; it's informative. It ensures the reassignment of ownership of the manufactured home from personal to real property, a critical step in the financing process. It keeps you informed about the status change of the house, making you aware of every step in the process. This endorsement ensures the loan is secure and the property is transferred correctly, making you feel informed and in control.
The successful completion of the loan transaction and the reassignment of ownership of the manufactured home from personal to real property through the ALTA 7 endorsement are testaments to the thorough and secure process. This process, meticulously designed to ensure your confidence and peace of mind, ensures that Dolly has a new home and that the loan arrangement is successful. It's a journey that may seem complex, but the thoroughness of the process is there to guide you every step of the way, ensuring your confidence and peace of mind.