1.2.9 Manufactured Home Foreclosures
State law governs whether a manufactured home must be foreclosed upon as real property or repossessed as personalty. If the property is treated as real estate under state law, then foreclosure procedures are the same as those covered in Chapter 8, infra. As with other real estate, a loan workout agreement or modification may be available prior to foreclosure on a manufactured home.
If the property is treated as personalty, then the repossession protections of Article 9 of the Uniform Commercial Code, discussed in NCLC’s Repossessions § 5.2.2,9 apply. Assuming that the manufactured home is considered personal property, some states prohibit self-help repossession of manufactured homes. Even if self-help repossession is allowed, creditors may find it so difficult that they will resort to a judicial remedy such as replevin. Federal law and some state laws afford a special right to cure a default before repossession or to reinstate a contract after repossession of a manufactured home. The advocate should ask:
- ● Does the buyer have a right to cure or reinstate under state or federal law, and has the creditor complied fully with this right? See National Consumer Law Center, Repossessions §§ 4.5.2, 9.2 (9th ed. 2017), updated at www.nclc.org/library.
- ● Did the creditor breach the peace while utilizing self-help repossession? See National Consumer Law Center, Repossessions § 6.4 (9th ed. 2017), updated at www.nclc.org/library.
- ● If the creditor is using replevin to recover the manufactured home, is it complying with all the procedural and substantive requirements for replevin? See National Consumer Law Center, Repossessions Ch. 5 (9th ed. 2017), updated at www.nclc.org/library.
- ● If the creditor has sold the home, was the sale to an insider? Was the sale commercially reasonable? Was notice of the sale proper? See National Consumer Law Center, Repossessions §§ 10.6–10.9, 11.3.5 (9th ed. 2017), updated at www.nclc.org/library. Commercially unreasonable sales to insiders are particularly common with manufactured homes.
Regardless of whether the home is treated as realty or personalty, the advocate should ask:
- ● Is the home located on a rented manufactured home park lot? If so, to prevent eviction or seizure of the manufactured home, ground rent must be paid. See § 13.14, infra.
- ● Does the owner of the manufactured home also own the land on which the manufactured home is situated? That land may be subject to a mortgage and that mortgage must also be paid, especially if the manufactured home is affixed to the property. See §§ 13.2, 13.15, infra.
- ● Did the creditor send the debtor a notice of right to cure at least thirty days before accelerating the debt or commencing foreclosure? If the creditor is claiming the right to extend credit under federal law without regard to state usury ceilings, federal regulations require it to offer this right to cure. See § 13.5.2, infra.
- ● Would filing bankruptcy help the debtor? Bankruptcy can be particularly useful as a means of saving a manufactured home. See National Consumer Law Center, Repossessions §§ 8.5.4, 8.6.3, 8.7 (9th ed. 2017), updated at www.nclc.org/library; § 13.12, infra.