Vol. 11, No. 4, Pg. 40. Mortgages on Mobile Homes: How Secure is Your Secured Interest?.

AuthorBy H. Guyton Murrell

South Carolina Lawyer

2000.

Vol. 11, No. 4, Pg. 40.

Mortgages on Mobile Homes: How Secure is Your Secured Interest?

40Mortgages on Mobile Homes: How Secure is Your Secured Interest?By H. Guyton MurrellIn the typical mortgage loan, the lender is providing funds to purchase or refinance improved realty as a place of residence. The risk of nonpayment is tempered by the assurance of the subject property serving as collateral for the debt. This basic premise has spawned the mortgage lending industry as we know it, and it remains the method by which the average person purchases his or her home.

Of course, business is famous for adapting to meet the changing needs of consumers and the mortgage lending industry is no exception. Due to the affordability of pre-built structures such as mobile homes and manufactured houses, the mortgage lending industry has expanded its services into this area, and now more than one-half of the new home sales in South Carolina are factory built and then moved on-site. Despite the increased use of mobile homes and manufactured houses in mortgage loan transactions, the law in South Carolina has not adapted to the changing landscape.

42The present statutory provisions for acquiring and protecting security interests in mobile homes and manufactured houses contain many pitfalls that may impair a mortgage security interest held by the unwary lender.

South Carolina's present version of the Uniform Commercial Code does not adequately address the present reality that most mobile homes and manufactured houses are intended to be permanent improvements to real estate. The structure may meet all of the requirements necessary to be considered a fixture under the common law and therefore be subject to lien perfection as a fixture under a properly recorded mortgage. Yet mobile homes and manufactured houses are expressly defined as personal property under current state law, and the only certain avenue ordained by state statute for perfecting a security interest is to record the subject lien on the certificate of title.

SECURITY INTERESTS UNDER THE UNIFORM COMMERCIAL CODE

Statute 36-9-302(1)(d) states a general requirement that the filing of a financing statement is required to perfect a security interest in motor vehicles and fixtures. This statute alone would not preclude using a mortgage to secure an interest in...

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