Mobile and Manufactured Homes
Mobile Home
A mobile home is any unit built prior to June 15, 1976 when HUD regulations 24 C.F.R. Part 3280 construction standards were implemented and any unit in a rental park. A manufactured home was built after June 15, 1976 and installed on a certified 433a foundation on land owned by the unit owner.The key difference between the two is a manufacured home can be financed conventional, VA and FHA for 30 years while a mobile home cannot. There is mobile home financing available for 20 years at a slightly higher rate than loans on a 433a.
People often confuse the term "permanent foundation" as the determining factor for a manufactured home. Many units in parks where the land and unit are owned the unit still cannot qualify as a 433a permanent foundation. The designation of 433a foundation was not a designation till June 15 1976. Therefore any unit built or installed prior to that date does not qualify for 433a "permanent" status.
Manufactured Homes
Occasionally, units built after June 15, 1976 were installed on a permanent foundation but were never certified 433a. Assuming they were built on the properly engineered foundation, they can be certified relatively inexpensively. Units built after June 15, 1976 that were not put on the proper foundation can be retrofitted to a permanent 433a foundation for a few thousand dollars.
Ubfortunately, even units built after June 15, 1976 that have been relocated do not qualify.
A 433a unit, due to more favorable financing, is often $30,000 to $40,000 more valuable in California than units that are not
Housing Community Development
Mobile home units on and owned by the unit owner are generally real property and are taxed as such. Units in rental parks are registerred with Housing and Community Development as a mobile home and title taxes are paid annually to HCD.
Things to Watch For
There are many mobile homes that have been sold by the owner directly to a buyer without assistance from a professional. Often disclosures and transfers are not properly comlpleted. We helped a client sell her property but when closing she found she owed $8,000 to HCD because the transfer was not done properly when she bought the property through a mobile home dealer. Elevate insists that clients use experienced mobile home escrow companies which minimizes transfer errors. Mobile and manufactured homes can be represented by licensed real estate agents or by mobile home salespeople. Real estate professionals are required to do the proper disclosures protecting both buyer and seller, mobile home dealers are not.
Even when rent controlled, as many parks are, the monthly space rent can be changed when there is a change in ownership. Even if the space rent is only $400 per month it could easily increase after the sale by hundreds of dollars. Check with the park office before assessing your budget. In fact park disapproval can ruin your whole day. Though many parks want you to get approval before an offer is made the more pracitcal procedure is to turn in an application immediately after offer acceptance. This may also apply to coop parks. This is not necessary in a community where the land is owned individually.
Types of Communities
The type of community a unit is located in affects monthly outgo and financing. There are three basic types.
RENTAL COMMUNITIES
In a rental community the owner of the mobile home does not own the parcel that the coach is on. They pay a landlord space rent for their little plot of land and the privilege to put their mobile home there. All coaches in a rental park are mobile homes. They cannot qualify for standard real estate financing regardless of the year built or the foundation.
Positives: There is no property tax. Space rent can be more affordable than buying the land in ownership parks. There is no HOA fee, but there are park rules. The cost of the units is less than those in ownership parks.
Negatives: Park space rents go up. Even in communities covered by rent restrictions the cost of space rent can still go up based on the Consumer Price Index. Eviction happens, sometimes for good reasons, sometimes not. In the event a space renter is evicted the value of the coach can be ten cents on the dollar. Too often park management is less than cooperative, some even acting illegally. It can be even worse in parks where the "sales office" also buys and sells mobile homes in the community. Personnel there can, and often do, discourage applicants without good reason, particularly when it benefits them. If the market is controlled by the resident sales office rather than open market, values generally don't keep pace with the market. An HCD fee is paid to HCD annually (like a DMV fee).
INDIVIDUAL OWNERSHIP COMMUNITY
In these communities there is a subdivision map separating out the individual parcels and those parcels are individually owned by the mobile home owner. This includes condominium communities in which each owner owns a percentage of the land in the community.
Positives: ownership of the lots is protected by law. Title insurance assists in guaranteeing title. No space rent. Units can be either mobile or manufactured homes. FHA, VA and conventional loans are available to manufactured (433a) homes (30 year financing at lowest market rates). Land values go up commensurate with land values in the area, increasing the value of units on them. These units, with the land, become real property. Properties can be sold at open market through Multiple Listing Services increasing exposure and value.
Negatives: There will be a Homeowners Association (HOA) which could be a positive as it preserves the condition of the neighborhood but can also be a negative as there will be HOA dues and rules. There will be property tax.
COOPERATIVES, STOCK OWNESRSHIP
Cooperatives, often referred to as COOPs, feature land owned by the community with specific ownership rights designated to individual spaces. Unlike condominiums that give a percentage of land ownership to each subdivided lot owner, COOPs and stock communities distribute a percentage of ownership in the COOP itself.
Positives: Units in COOPs can be slightly less pricy than like units in ownership parks with most of the same benefits. Units may be financeable with FHA, VA and conventional loans.
Negatives: Some lenders have heartburn with stock ownership and COOP communities. Check with your lender. Buyers do not generally understand COOP or stock ownership which makes them hesitant to offer otherwise full market. There is an HOA with HOA dues and rules. Sometimes the HOA fees are high if there is a land loan tied to the COOP. Property tax is often paid through the HOA which also can increase HOA dues. If someone in the HOA doesn't pay their fair share the other HOA members must make up the difference.
