Foundations and the Mobilehome Park Conversion Process

Many mobilehome parks and manufactured home communities began as land lease developments where space rent was dictated by location, size, date of purchase and cost of living increases. It has become increasingly popular for residents to desire a greater control over their living situation and costs associated with their residences, thus converting the park to resident ownership has become a rising trend.

Success of the conversion process is largely attributed to knowledgeable legal advisors that understand the complexities of the conversion process and can liaison with residents, homeowner's association board of directors, building officials and lenders. As the trends in lending continue to change, the underwriters have become more proactive in their demands on the manufactured home's foundation for two reasons: to protect their investment by having the home safely supported and to have their security interest protected by having the home and land affixed.

In order to understand the lender's desire for security interest, one needs to understand that manufactured homes are a unique form of housing because they can either be registered as personal property (chattel) i.e. a car or recreational vehicle or real property like a site-built home (realty). The titling category is often determined strictly by the foundation beneath it. In some parts of the country, in order to be classified as real property, the foundation must be considered "permanent". For homeowners in existing structures, the thought of retrofitting their foundation to something permanent sounds daunting and expensive. Fortunately, wise engineers and fabrication companies have designed proprietary systems meet both safety and lending requisites without resetting the home. There are a variety of systems that are available to the homeowner and borrower. Although there is still a financial commitment associated and a permit burden, the cost is relatively moderate considering the value received. Having the home attached through the process of a foundation retrofit conjoins the land and home, making the two entities a unified piece of real property, ergo protecting the security interest of the lender.

Therefore in the conversion process some lenders often require a recorded document (i.e. 433A document in California) which has been signed by the local permitting jurisdiction (building department) showing that the home is on a foundation. In order for the building department to make such a sign-off, they must be presented with a set of plans generally with a Standard Plan Approval number which has been certified by a structural engineer. Once installed, they inspect the system, sign the 433A and then record the 433A. Some lenders still accept the 433C document which simply converts the land to real property and the home is a fixture improvement. However, this has become increasingly less common as lending requirements tighten. Also this area has been a source of confusion and error for some escrow and title companies. It is common to see that the land and home show different owners because escrow or title did not understand the unique titling issues associated with manufactured homes. Again, using specialists that deal with the peculiarities of manufactured homes is important so that clerical errors don't turn into big lawsuits later on.

OnTheLevel is uniquely qualified to work as a team member to assist in the conversion process, having the ability to champion the homeowner's cost concerns yet understand the local jurisdictional building requirements as well as the lender requirements. While there are many retrofitters that are able to "install only", the paper work and associated follow-through in the 433A or engineer's certification process can often cause loans to be delayed or fall through altogether. OnTheLevel is a turn-key company that navigates the paperwork from start to finish, working with all players in the park conversion process.