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Real Property vs Personal Property and Why it Matters

Heads Up to Manufactured Home Owners - Real Property vs Personal Property And Why It Matters

Real Property is simply land that includes any and all improvements. Improvements could include a home, well, septic system, fencing and any other improvements that may have been done to the property. Personal property is everything else. So why does this matter in real estate?

It actually matters a lot due to the fact that banks will not do real estate loans on personal property. We have had many instances where clients would like to sell their land with a manufactured home on it and end up having difficulty due to the fact that the manufactured home is not attached permanently to the land and still has a DMV title and is therefore taxed separately. Until the title is deactivated and the manufactured home is converted to real property, it is considered personal property and banks don’t do real estate loans on personal property.

So what can you do? The first step is to ensure the house has an approved foundation and tie down system. The next step is to have the house inspected and approved by the local authority. The DMV will then need to de-activate the title and then the owner will make a request to the county to change the valuation status. This explanation is a bit over simplified but it gives you a general idea without boring you with all the details. This process is actually a bit daunting and can be frustrating if you are not familiar with it. However, the benefits are worth it due to the fact that as soon as it is taxed as real property, the home is now eligible for a loan and a whole lot easier to sell.

Another instance where personal property comes into play in real estate transactions is when the seller includes all the furnishing in the sale. If the buyer has a loan and the furnishings are included in the contract, many times the lender will request to have wording added to the contract that states that the furnishings have no monetary value or are being left in the home as convenience to the seller. Banks don’t loan on furnishings.

If you need help or advice in converting your manufactured home to real property, don’t hesitate to give us a call, we are always more than happy to assist in the process or answer any questions you may have.

Rob Swan

Swan Realty


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