Bank Notes
Two Paths to Finding a West Virginia Mobile Home to Be Real Property
November 23, 2020
By: Mark A. Mangano
The method for perfecting a lien on a mobile home depends upon whether it is considered personal or real property. The West Virginia Supreme Court has recently confirmed that there are two paths to finding that a mobile home may be considered real property for lien perfection purposes. In Sheehan v. Mortgage Electronic Registration Systems, Inc.1 the court held that the process described in West Virginia Code §17A-3-12b is not the exclusive means of proving that a mobile home has been converted from personal to real property.
Factory-built homes, which include mobile homes, house trailers, and manufactured homes, (Mobile Home) are issued certificates of title.2 A Mobile Home is considered personal property and liens are recorded on its certificate of title.3 The question is when and how can a Mobile Home be converted from personal property to real property so that a deed of trust lien may attach to the Mobile Home. The West Virginia Code provides a statutory method of conversion.4
West Virginia Code §17A-3-12b provides:
“a) The commissioner may cancel a certificate of title for a mobile or manufactured home affixed to the real property of the owner of the mobile or manufactured home. The person requesting the cancellation shall submit to the commissioner an application for cancellation together with the certificate of title. The application shall be on a form prescribed by the commissioner. The commissioner shall return one copy of the cancellation certificate to the owner and shall send a copy of the cancellation certificate to the clerk of the county commission to be recorded and indexed in the same manner as a deed, with the owner’s name being indexed in the grantor index. … Upon its recording in the county clerk’s office, the mobile or manufactured home shall be treated for all purposes as an appurtenance to the real estate to which it is affixed and be transferred only as real estate and the ownership interest in the mobile or manufactured home, together with all liens and encumbrances on the home, shall be transferred to and shall encumber the real property to which the mobile or manufactured home has become affixed.”
Following the requirements of §17A-3-12b provides for a clear transition of a Mobile Home from personal property to real property. Once a Mobile Home becomes real property, a lien may be perfected by a deed of trust for the real estate to which it is attached.
There has been an argument that §17A-3-12b provides the exclusive means of converting Mobile Homes from personal to real property and that failure to surrender the certificate of title as provided in the code prevents a deed of trust lien from attaching to the Mobile Home even though the Mobile Home is affixed to the owner’s real estate.
The Supreme Court in Sheehan disagreed. It found that §17A-3-12b is not the exclusive method of conversion for purposes of perfecting a lien. The court held that under common law a Mobile Home may become a fixture and part of the real property if three conditions are met:
- It must be attached to the real estate,
- It must be reasonably necessary and adapted to the purposes for which the real estate is being used, and
- It must be the intention of the party placing such property upon the real estate to make it a part thereof.
The Sheehan opinion is a positive development for lenders that have not confirmed the surrender of title to a Mobile Home. However, it should not be viewed as a replacement for following the procedures of West Virginia Code §17A-3-12b. The statutory process provides clear documentation of a Mobile Home’s conversion to real property. Reliance on the factual determinations required under the common law method could lead to costly confusion and uncertainty regarding lien priorities.
As a practical matter, lenders should continue to perfect Mobile Home liens in the manner provided by West Virginia Code Chapter 17. The common law should be viewed only as a backup when the statutory process has not been followed.
1 Sheehan v Mortgage Electronic Registration Systems, No. 19-1082, (W. Va. Supreme Court, November 17, 2020).
2 WV Code §17A-3-2
3 WV Code §17A-3-12
4 WV Code §17A-3-12b