South Carolina Lawyer
SC Lawyer, July 2007, #3.
Retiring the Title to Mobile Homes
South Carolina LawyerJuly 2007Retiring the Title to Mobile HomesBy Brian C. PhillipsSouth Carolina has among the highest percentage of mobile homes in the nation. According to the U.S. Census Bureau, in 2003 nearly 18 percent of total housing units in South Carolina were mobile homes, ranking it number two nationally. See www.census.gov/statab/ranks/rank38.html. Consequently, closing attorneys in South Carolina frequently handle transactions involving mobile homes.
The most common scenario encountered by closing attorneys involves a mortgage lender extending a loan on real estate that has, or will have, a mobile home situated on the property. Typically the lender's closing instructions either expressly require retirement of title to the mobile home or require issuance of an ALTA 7 endorsement to the lender's title insurance policy. The ALTA 7 generally assures the lender that "the term 'land' as defined in the policy includes the manufactured housing unit located on the land at the Date of Policy." ALTA 7 Manufactured Housing Unit Endorsement, 1987. Title insurance companies will typically require retirement of title before they will issue an ALTA 7 endorsement.
To accommodate the requirements of lenders and title insurers, closing attorneys must be familiar with the procedures for retiring the certificate of title (CT) to mobile homes. The purpose of this article is to explain the procedures. A better understanding can help minimize the risk, costs and delays inherent in handling transactions involving mobile homes. This article will only address retirement of title and will not address the procedures detailed in S.C. Code § 56-19-550 for severance of a mobile home for which title has been retired.
Note that the retirement procedures require considerably more work than the typical residential closing, and the clerk of court and Department of Motor Vehicles charge additional fees for retirement of title. Consider adjusting attorney fees accordingly.
Mobile homes are classified as personal property. Brockbank v. Best Capital Corp., 341 S.C. 372, 534 S.E.2d 688; City of North Charleston v. Claxton, 315 S.C. 56, 431 S.E.2d 610 (Ct. App. 1993) (finding that mobile homes were personal property because they had no significant attachments to the property such as permanent foundations or additions). S.C. Code § 56-19-500 et. seq. provides the procedure for affixing a mobile home to real estate and retiring the title so that it is treated "for all purposes except condemnation as real property." S.C. Code § 56-19-510(C). "Title to the manufactured home is thereby vested in the lawful owner of the real property to which it is affixed." Id.
The first step is to determine whether a mobile home is involved in the transaction. A thorough title search, in particular of plats and tax records, may reveal the presence of a mobile home. The sales contract should also be reviewed for language indicating that a mobile home is included in the sales transaction. In addition, sellers, buyers, lenders and brokers should be questioned to determine if the property contains a mobile home or if one is to be conveyed with the property. If a lender is involved, review the lender's closing instructions for instructions regarding mobile homes. However, it is not a good idea to wait on the closing instructions to determine if the collateral includes a mobile home, as it is often too late to adequately prepare for closing and retirement of title. If the lender intends to include a mobile home as collateral, the lender's appraisal will include the value of the home and specific details of the home. Therefore, regularly requiring review of the appraisal prior to closing is a good idea. This is the best source for an attorney to determine if the home is a mobile home.
If the transaction involves a mobile home, the next question is whether the...