Bulletin: OH000009

Dear Associates:

There has been an increase in underwriting questions regarding the issuance of title insurance where a manufactured home or mobile home is located on the subject real property. In order to address those problems, you should follow the procedures outlined in this Bulletin in addition to all regular standards applicable to the closing of a real estate transaction.

Pursuant to §4505.01(A)(2) O.R.C. a manufactured home and a mobile home are included within the definition of motor vehicle.

Every motor vehicle located in the State of Ohio must have a certificate of title in a form prescribed by the registrar of motor vehicles. (§4505.01(B) O.R.C.)

The owner of a manufactured home or mobile home that is located in the state shall pay either a real property tax pursuant to Title 57 O.R.C. or a manufactured home tax pursuant to §4503.06(c) O.R.C. Any manufactured home or mobile home that is not taxed as real property is subject to an annual manufactured home tax, payable by the owner, for locating the home in this state. (§4503.06(c) O.R.C.)

If the manufactured home or mobile home is subject to the annual manufactured home tax then the manufactured home or mobile home is considered personal property not real property. Therefore, neither a deed of conveyance nor a mortgage describing the subject real property would convey nor encumber the manufactured home or mobile home located thereon. In order to convert the manufactured home or mobile home from personal property to real property it is necessary for the owner of the manufactured home or mobile home to follow specific statutory procedures.

When you become aware of the existence of a manufactured home or mobile home on the real property to be insured, you should assume that the manufactured home or mobile home is not affixed to the land and is classified as personal property and is subject to the manufactured home tax. Therefore, the manufactured home or mobile home is not insurable. In addition, the following exception should appear in Schedule B of any commitment or title policy:

The land described in schedule A hereof shall not be deemed to include any manufactured home or mobile home located upon the real property.

When you become aware of the existence of a manufactured home or mobile home on the real property to be insured, and you are requested to insure that the manufactured home or mobile home has been converted to real property, through the issuance of The Manufactured Housing Unit Endorsement (ALTA Series 7), in conjunction with the issuance of a title insurance policy, it will be necessary for you to determine the current status of the manufactured home or mobile home, and whether the manufactured home or mobile home is permitted on the premises.

In order for a manufactured home or mobile home to be taxed as real property the owner of the manufactured home or mobile home must do the following:

1. Affix the manufactured home or mobile home to a permanent foundation.

2. Locate the manufactured home or mobile home on land owned by the owner of the home.

3. Surrender the certificate of title to the county auditor in the county where the home is located.

4. Pay all outstanding manufactured home taxes. (§4503.06(B)(1) and (2))

To verify that a manufactured home or mobile home has been converted to real property and is taxed as real property, you should take the following steps:

1. Review the Covenants and Restrictions encumbering the title for prohibitions against manufactured homes or mobile homes.

2. Review the County Auditor's records to determine if the manufactured home or mobile home is being taxed as real property.

a) Determine if there is a building value for taxing purposes.

b) Determine that the building value is an amount commensurate with the value of the manufactured home or mobile home.

c) If the manufactured home or mobile home is being taxed as real property, request proof that the certificate of title has been surrendered.

If the manufactured home or mobile home is being taxed as real property and you have verified that the certificate of title has been surrendered to the county auditor you may proceed with your transaction in the same manner as any other similar transaction.

If you have determined that the manufactured home or mobile home is not taxed as real property nor has it been converted to real property, it will become necessary for you to secure the certificate of title for the manufactured home or mobile home so that it may be surrendered to the county auditor.

1. Obtain the current owner's authorization to do a search of the motor vehicle title records to determine if the manufactured home or mobile home has a certificate of title, and who is the owner.

2. If there is a certificate of title outstanding, request that the seller/buyer/borrower bring the title to the closing if they have it in their possession.

3. If you are requesting a pay-off for the current mortgage, ask if the lender is holding a certificate of title for the manufactured home or mobile home.

4. If the current mortgage lender is holding the certificate of title for the manufactured home or mobile home, secure written authorization from the homeowner to have the certificate of title sent to you.

5. Have the current homeowner and the purchaser, if any, execute a Motor Vehicle Power of Attorney to you so that you may affect the transfer of title of the manufactured home or mobile home, if necessary. (a copy of the state form is attached)

6. If the current homeowner is also the borrower, obtain written authorization to allow you to surrender the certificate of title to the county auditor to convert the manufactured home or mobile home to real property.

Note that the procedures and forms in each county may be different. Obtain the necessary forms and procedures from the county auditor wherein the manufactured home or mobile home is located.

Note: A manufactured home or mobile home sold on or after January 1, 2000 shall not be considered a motor vehicle for purposes of Title 57 O.R.C. No sales tax will be due on the sale of a manufactured home or mobile home which has not been converted to real property.

Should you have any questions, please contact your local underwriting counsel.

For further information, please see §12.24 of the Underwriting Manual.