# Texas Manufactured Housing Title Issues

## Table of Contents
1. [Overview](#overview)
2. [Personal Property vs. Real Property](#personal-property-vs-real-property)
3. [Statement of Location (SOL)](#statement-of-location-sol)
4. [Election to Treat as Real Property](#election-to-treat-as-real-property)
5. [TDHCA Requirements](#tdhca-requirements)
6. [Title Insurance Considerations](#title-insurance-considerations)
7. [Lender Requirements](#lender-requirements)
8. [Common Title Defects](#common-title-defects)
9. [Due Diligence Checklist](#due-diligence-checklist)

## Overview

Manufactured housing in Texas presents unique title challenges because it can be classified as either personal property (chattel) or real property depending on specific statutory steps. Failure to properly convert manufactured housing to real property creates significant title defects.

**Governing law**: Texas Occupations Code Chapter 1201 (Manufactured Housing Standards Act); Texas Property Code § 2.001

**Key agency**: Texas Department of Housing and Community Affairs (TDHCA) — Manufactured Housing Division

**Critical distinction**: A manufactured home is personal property by default. It becomes real property ONLY through proper statutory election and recording.

## Personal Property vs. Real Property

### Default Classification: Personal Property

Manufactured homes are titled by TDHCA similar to motor vehicles:
- **Document of title**: Issued by TDHCA (like a vehicle title)
- **HUD label**: Federal certification label required on each section
- **Serial number/HUD number**: Unique identification
- **Liens**: Perfected by notation on document of title (like UCC/vehicle liens)

### When Classified as Real Property

A manufactured home becomes real property when ALL of the following are satisfied:
1. **Attached to land**: Permanently affixed to real property
2. **Owner of home = owner of land** (or has leasehold interest)
3. **Document of title surrendered**: TDHCA cancels the personal property title
4. **Statement of Location (SOL) filed**: Recorded in county real property records AND filed with TDHCA
5. **Election recorded**: Affidavit or statement electing to treat as real property

### The "Gap" Problem

If manufactured home is on real property but NOT properly converted:
- Home remains personal property despite physical attachment
- Real property deed does NOT convey the home
- Deed of trust on real property does NOT create lien on home
- Title insurance does NOT cover the home
- **This is a common and serious title defect**

## Statement of Location (SOL)

### Purpose and Requirements

The SOL is the key document linking a manufactured home to real property. Required whenever a manufactured home is:
- Installed on a site
- Relocated to a new site
- Converted from personal to real property
- Title status changes

### SOL Filing Process

1. **Preparation**: Completed by licensed installer, retailer, or owner
2. **TDHCA filing**: Filed with TDHCA Manufactured Housing Division
3. **County recording**: Recorded in county real property records where home located
4. **Document of title surrender**: Original title returned to TDHCA for cancellation

### Required SOL Information

- Owner name(s) and address
- Manufacturer, model, serial number(s), HUD label number(s)
- Year of manufacture
- Legal description of real property where installed
- Whether home is to be treated as real property
- Lienholder information (if any)
- Installer information and license number
- Site preparation certification

### SOL Types

| SOL Type | Purpose |
|----------|---------|
| **Installation SOL** | New installation on site |
| **Relocation SOL** | Moving to new site |
| **Conversion SOL** | Electing real property treatment |
| **Salvage/Destruction SOL** | Removing from tax rolls |

## Election to Treat as Real Property

### Requirements for Valid Election (Tex. Occ. Code § 1201.2055)

ALL of the following must be satisfied:

1. **Ownership/interest in land**:
   - Owner of home must own the land in fee simple, OR
   - Hold a leasehold interest of sufficient term

2. **Physical attachment**:
   - Home must be permanently attached to land
   - Foundation meets HUD/local requirements
   - Wheels, axles, and tongue removed (or rendered immobile)

3. **Document of title cancellation**:
   - Original document of title surrendered to TDHCA
   - TDHCA issues cancellation
   - If lienholder on title: lienholder must consent

4. **SOL filed and recorded**:
   - SOL indicating election filed with TDHCA
   - SOL recorded in county real property records
   - Must include election language

5. **Tax roll conversion**:
   - County appraisal district notified
   - Home assessed as real property improvement
   - Personal property tax account closed

### Reversing the Election

To convert back to personal property:
1. New SOL filed indicating reversal
2. TDHCA issues new document of title
3. Recorded in county real property records
4. All lienholders must consent
5. Tax rolls updated

## TDHCA Requirements

### Licensing

- **Manufacturers**: Must be licensed by TDHCA
- **Retailers/dealers**: Must be licensed
- **Installers**: Must be licensed; responsible for SOL filing
- **Brokers**: Must be licensed for used home sales

### Consumer Protection

- **Warranty**: Manufacturer warranty required (1 year minimum)
- **Disclosure**: Required disclosures for used home sales
- **Installation standards**: Must meet TDHCA installation standards
- **Dispute resolution**: TDHCA handles consumer complaints

### Record Keeping

TDHCA maintains records of:
- All documents of title (current and historical)
- All SOLs filed
- Installation records
- Ownership history
- Lien records

**How to search**: Contact TDHCA Manufactured Housing Division or search online portal by serial number, HUD label number, or owner name

## Title Insurance Considerations

### Insuring Manufactured Housing as Real Property

**Requirements before title company will insure**:

1. **Verify real property election**:
   - Obtain copy of recorded SOL from county records
   - Confirm TDHCA shows canceled document of title
   - Verify election language on SOL

2. **Verify no personal property liens**:
   - Search TDHCA records for liens on document of title
   - If prior liens existed: verify proper release
   - Search UCC records for financing statements

3. **Physical verification**:
   - Confirm home is permanently attached
   - Verify wheels/axles removed or rendered immobile
   - Confirm foundation compliance

4. **Tax status verification**:
   - Confirm home assessed as real property by CAD
   - No outstanding personal property taxes on home

### Schedule B Exceptions for Manufactured Housing

**Common exception**:
> "Any claim that the manufactured home located on the land is personal property rather than an improvement to the real property."

**To delete this exception**, title company will require:
- Recorded SOL with real property election
- TDHCA confirmation of title cancellation
- Evidence of permanent attachment
- Tax roll verification

### Endorsements

No specific Texas endorsement for manufactured housing, but:
- Standard T-1 or T-1R covers improvements including converted manufactured homes
- Lender may require additional documentation
- Some underwriters have specific manufactured housing guidelines

## Lender Requirements

### Conventional Loans (Fannie Mae/Freddie Mac)

**Eligibility requirements**:
- Must be classified as real property
- Must meet HUD Manufactured Home Construction and Safety Standards
- Must be permanently affixed per applicable standards
- Document of title must be surrendered/canceled
- Must be assessed as real property for tax purposes
- Minimum 400 sq ft of living area (Fannie) / varies (Freddie)

**Documentation required**:
- Recorded SOL with real property election
- TDHCA cancellation of document of title
- Engineer's certification of permanent foundation (may be required)
- HUD Data Plate and HUD Certification Labels verification
- Tax assessment showing real property classification

### FHA Loans

**Additional requirements**:
- Must meet FHA Foundation Certification requirements
- Permanent foundation per HUD Handbook 4000.1
- Engineer's certification of foundation
- No encroachment issues with manufactured home placement

### VA Loans

**Additional requirements**:
- Permanent foundation certification
- Must meet VA Minimum Property Requirements
- Evidence of real property conversion

## Common Title Defects

### 1. Missing or Incomplete SOL

**Problem**: Home installed without filing SOL, or SOL filed but not recorded in county records

**Cure**:
- File corrective SOL with TDHCA
- Record in county real property records
- May require title curative affidavit

### 2. Document of Title Not Surrendered

**Problem**: Home treated as real property but TDHCA still shows active document of title

**Cure**:
- Locate and surrender document of title to TDHCA
- If lost: application for duplicate title, then surrender
- If lienholder on title: obtain release first, then surrender

### 3. Personal Property Liens Remain

**Problem**: UCC financing statement or chattel lien recorded against home; lien on document of title not released

**Cure**:
- Pay off personal property lien
- Obtain release/termination (UCC-3 or lien release)
- File with TDHCA and county records

### 4. Home on Leased Land

**Problem**: Manufactured home on rented lot (e.g., manufactured home community); cannot elect real property treatment without sufficient leasehold interest

**Implications**:
- Home remains personal property
- Cannot obtain standard real property title insurance
- Chattel mortgage/UCC financing only
- Title analysis of leasehold interest required

### 5. Double Taxation

**Problem**: Home assessed as both personal property AND real property improvement

**Cure**:
- File correction with county appraisal district
- Provide SOL and TDHCA cancellation as evidence
- May need to contest appraisal

### 6. Multi-Section Home Mismatch

**Problem**: Multi-wide home with serial numbers that don't match SOL or title records

**Cure**:
- Verify all sections by physical inspection of HUD labels
- File corrective SOL if section information incorrect
- Obtain manufacturer verification if needed

## Due Diligence Checklist

### For Every Manufactured Home Transaction

- [ ] **Identify the home**: Manufacturer, year, serial number(s), HUD label number(s)
- [ ] **Search TDHCA records**: Document of title status, SOL history, lien records
- [ ] **Search county records**: Recorded SOL, real property election
- [ ] **Verify conversion status**: Is home properly classified as real property?
- [ ] **Check for personal property liens**: UCC search, TDHCA lien records
- [ ] **Verify tax status**: Real property improvement on tax roll?
- [ ] **Physical inspection**: Permanently affixed? Wheels/axles removed?
- [ ] **Foundation**: Meets HUD/lender requirements?

### Additional for Purchase Transactions

- [ ] **Chain of ownership**: Match TDHCA records to deed chain
- [ ] **Prior SOLs**: Review all historical SOLs for gaps
- [ ] **Warranty status**: Any remaining manufacturer warranty?
- [ ] **Permits**: Installation permit from local jurisdiction?
- [ ] **Flood zone**: FEMA flood zone determination for home location

### Additional for Refinance Transactions

- [ ] **Existing lien structure**: Real property DOT vs. personal property lien
- [ ] **Lender requirements**: Foundation certification? Engineer's report?
- [ ] **Seasoning**: Has home been real property long enough for lender?

## Red Flags

1. **No recorded SOL**: Home may not be properly converted to real property
2. **Active TDHCA document of title**: Conversion may be incomplete
3. **UCC filings against home**: Personal property liens must be cleared
4. **Home on leased land**: Cannot be insured as real property improvement
5. **Mismatched serial numbers**: Potential identity issues
6. **Pre-1976 home**: Does not meet HUD standards; may not be eligible for financing
7. **Home moved from another location**: Verify proper relocation SOL
8. **Missing HUD labels/data plate**: May indicate non-compliant home
9. **Foundation issues**: May not meet lender or HUD requirements
10. **Tax classification discrepancy**: Personal vs. real property assessment mismatch