BILL NUMBER: S7120
SPONSOR: RYAN S
 
TITLE OF BILL:
An act to amend the vehicle and traffic law and the real property law,
in relation to manufactured home certificates of title, and the convey-
ance and encumbrance of manufactured homes as real property
 
PURPOSE OR GENERAL IDEA OF BILL:
Establishes a process for surrendering the certificate of title to a
manufactured home and converting it to real property.
 
SUMMARY OF PROVISIONS:
Section 1: This act shall be known as and may be cited as the "New York
Land-Home Property Act."
Section 2: amends section 2107 of the Vehicle and Traffic Law by adding
11 new subdivisions (d), (e), (f), (g), (h), (i), (j), (k), (1), (m),
and (n) to direct the Commissioner of Motor Vehicles to file and main-
tain documents related to the application for the surrender of a
Manufacturer's certificate of origin, applications for the surrender of
certificates of title, applications for confirmation of conversion, and
affidavits of affixation.
Sections 3, 5, 6 and 7: amend various sections of the Vehicle and Traf-
fic Law to make necessary conforming changes to add appropriate process-
ing and record keeping requirements and to reflect the Real Property Law
procedures for conveying and encumbering a manufactured home as real
property.
Section 4: adds thew new sections to the Vehicle and Traffic Law:
Section 2117-a establishes procedures for surrendering the manufactur-
er's certificate of origin to a manufactured home. Section 2117-b estab-
lishes procedures for surrendering the title to a manufactured home.
Section 2117-c establishes procedures for converting a manufactured home
to real property when either the manufactured home is not covered by a
certificate of title or manufacturer's certificate of origin or the
manufacturer's certificate of origin or the certificate of title can be
found.
Section 8: adds a new Article 9-E to the Real Property Law which estab-
lishes procedures for the conveyance and encumbrance of manufactured
homes as real property. This section also includes the form for the
affidavit of affixation, protections for covered parties, and preserva-
tion of warranties covering homes after the conversion to real property.
Section 9: effective date.
 
JUSTIFICATION:
Currently, manufactured homes - even if attached to real property - are
not treated as a regular house that can easily be mortgaged and sold.
For a mortgage secured by a manufactured home and land ("Land-Home Mort-
gage") to be eligible for sale to Freddie Mac, the land and the manufac-
tured home must be real property under state law. Freddie Mac's eligi-
bility requirements, for example, state specifically that "The
Manufactured Home must be legally classified as real property; it must
be a 1-unit dwelling that is permanently affixed to a permanent founda-
tion in a way that makes it part of the real property." Freddie Mac
Single Family Seller/Servicer Guide § 5703.2(a), 5703.7(a). Other inves-
tors, such as Fannie Mae and HUD, have similar eligibility requirements.
Fannie Mae Single Family Selling Guide § B5-2-05; 24 C.F.R. § 203.43f.
New York law currently provides that 1995 model year and newer manufac-
tured homes are not classified as real property, even when affixed.
Investors also require the home be covered by a policy of title insur-
ance with an ALTA 7.1 manufactured housing rider. See, e.g. Freddie Mac
Single Family Seller/Servicer Guide § 5703.7(f); Fannie Mae Single Fami-
ly Selling Guide § B5-2-05. Under current law, these policies are not
readily available in New York.
Current New York law does not provide a procedure for a surrender of the
certificate of title. This amendment makes the necessary changes to
allow lenders to comply with the investor requirements that the manufac-
tured home be real property under state law, making it possible for
investors to purchase New York Land-Home Mortgages without exception.
While many manufactured homes are financed as personal property, the
ability to finance land and home with a mortgage is an attractive option
for many homeowners seeking more favorable financing terms. Without the
support and involvement of entities such as Freddie Mac and Fannie Mae
in this market, the availability of Land-Home Mortgages is limited.
Currently, 43 states utilize a certificate of title process to establish
ownership of, and to perfect a security interest in, a manufactured
home. All states but New York also provide a formal statutory procedure
for electing to convey and encumber a home as real property. Satisfying
this conversion procedure legally converts the home to real property for
all purposes.
This bill would establish a process in New York State, similar to the
process that exists in the overwhelming majority of states, providing
for the ability to surrender a certificate of title to and convert a
manufactured home to real property. This process will meet the guide-
lines and requirements of secondary market mortgage investors and there-
fore help ensure that affordable mortgage financing remains a viable
option.
The bill, throughout, recognizes that for most purposes, existing law
adequately governs the conveyance and encumbrance of manufactured homes.
Accordingly, the bill generally does not change the current provisions
of the Uniform Commercial Code and the New York Vehicle and Traffic Law
that govern conveyance and encumbrance of homes that are consumer goods
or fixtures. Similarly, the bill does not purport to overrule case law
construing those provisions. In deference to this law, existing business
practices, and practical considerations, the bill permits, but does not
require, use of the conversion procedure for homes covered by a certif-
icate of title.
The heart of the bill is a new Article of the Real Property Law setting
forth the procedures for converting a manufactured home to real proper-
ty. The central document in the conversion process is the "Affidavit of
Affixation," The manner of completing, recording and filing the Affida-
vit of Affixation, 'and, consequently, the time when conversion occurs,
depends on whether the manufactured home is covered by a certificate of
title, and whether the home is subject to any security interests at the
time of the real estate closing. There are different conversion proce-
dures based on whether or not the manufactured home is covered by a
certificate of title.
To convert a home to real property, the home must be affixed to a perma-
nent foundation; an Affidavit of Affixation must be recorded in the land
records; an application, including the recorded original of the Affida-
vit of Affixation, must be filed with the commissioner of motor vehi-
cles; and, depending upon whether the home is covered by a manufactur-
er's certificate of origin or a certificate of title if one exists, the
commissioner of motor vehicles must cancel the manufacturer's certif-
icate of origin, cancel the certificate of title or confirm in its
records that conversion has occurred. Upon completion of all these
requirements a home is deemed to be real property and thereafter is
conveyed and financed as real property.
The bill also provides for the conversion of homes not covered by
certificates of title (or for which the certificates of title cannot be
found) but permanently affixed to real property. The bill includes
provisions to facilitate the conversion process and protect existing
secured parties. First, a home cannot be converted until all security
interests in it are released. Second, to facilitate the exchange of a
release of funds to satisfy the lien, the holder of a manufacturer's
statement of origin or a certificate of title may deliver it to any
person (such as a closing agent) in trust for the person delivering it.
Finally, the bill provides that conversion to real property does not
impair statutory and contractual warranties covering the homes. This
bill would enable more people to own an affordable home. These new home-
owners will be able to mortgage and sell the manufactured home as any
other house attached to real estate. These new homeowners will be able
to acquire equity. The home can eventually be sold or passed on to the
homeowner's family.
 
PRIOR LEGISLATIVE HISTORY:
2022: 57042/A8152 Passed Senate. 2
023-24: S101A/A1703A - Passed Senate
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
State and local governments will likely benefit since the manufactured
home converted to real estate will likely be worth more than before so
property taxes collected will increase.
 
EFFECTIVE DATE: 6sk 1 This act shall take effect one year after it
shall have become a law. Effective immediately, the addition, amendment
and/or repeal of any rule or regulation necessary for the implementation
of this act on its effective date are authorized to be made and
completed on or before such effective date.

Statutes affected:
S7120: 2107 vehicle and traffic law, 2108 vehicle and traffic law, 2123 vehicle and traffic law, 2124 vehicle and traffic law