IBA Compliance Connection

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Our title company has advised us that title to a mobile home securing a mortgage needs to be surrendered only if the loan will be sold on the secondary market, and that any loans we keep in-house are exempt from this requirement. Is that correct?

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No, if your security interest in a mobile (or manufactured) home will be perfected by a mortgage on the home, the owner must surrender the certificate of title (or Manufacturer’s Statement of Origin, if applicable) to the Illinois Secretary of State and comply with the other steps necessary for the home to be deemed real property under the Illinois Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act. This is true whether the loan is kept in-house or sold on the secondary market.

If the owner of the manufactured home does not surrender the certificate of title — or fails to follow the other required steps, such as affixing the home to a permanent foundation and recording or delivering an affidavit of affixation — the home will not be deemed to be real property, and your mortgage will not attach to the home. As a result, your security interest in the home will not be perfected.

For resources related to our guidance, please see:

  • Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, 765 ILCS 170/5-5 (“For the purposes of this Act, ‘manufactured home’ means a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code. . . . For the purposes of this Act, a manufactured home is ‘affixed to a permanent foundation’ if the wheels, axles, and towing hitch are removed, and it is anchored to real property by attachment to a permanent foundation and connected to residential utilities (such as water, gas, electricity, or sewer or septic service). The certification of a certified residential real estate appraiser, a certified general real estate appraiser, a licensed manufactured home installer, or a licensed professional engineer that the home is affixed to a permanent foundation shall establish conclusively that the home is affixed to a permanent foundation.”)
  • Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, 765 ILCS 170/5-2(b) (“The purpose of this Act is to establish a clear statutory procedure for converting to real property manufactured homes located outside of mobile home parks that are affixed to real property and for the severance of manufactured homes from real property.”)
  • Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, 765 ILCS 170/5-30 (“A manufactured home shall be deemed to be real property when all of the following events have occurred: (1) the manufactured home is affixed to a permanent foundation as provided in Section 5-5 of this Act; (2) an affidavit of affixation conforming to the requirements of Section 5-15 of this Act has been recorded; (3) a certified copy of the recorded affidavit of affixation has been delivered for filing to the Secretary of State as provided in Section 5-25 of this Act; and (4) the requirements of Section 3-116.1 or 3-116.2 of the Illinois Vehicle Code, as applicable, have been satisfied. A conclusive presumption shall arise that the averments of the recorded affidavit of affixation establish that, for all purposes, the manufactured home is real property.”)
  • Illinois Vehicle Code, 625 ILCS 5/3-116.2(a) (“The owner (all, if more than one) of a manufactured home that is covered by a certificate of title, including, if applicable, a certificate of title issued in accordance with subsection (b) of Section 3-109, and that is permanently affixed to real property as defined in the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, or which the owner intends to permanently affix to real property as defined in the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, may surrender the certificate of title to the manufactured home to the Secretary of State by filing with the Secretary of State an application for surrender of title containing or accompanied by: . . .”)
  • Illinois Vehicle Code, 625 ILCS 5/3-116.1(a) (“The owner (all, if more than one) of a manufactured home that is covered by a Manufacturer's Statement of Origin and that is affixed to a permanent foundation as defined in the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, or which the owner intends to affix to a permanent foundation as defined in the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, may surrender the Manufacturer's Statement of Origin to the manufactured home to the Secretary of State by filing with the Secretary of State an application for surrender of Manufacturer's Statement of Origin containing or accompanied by: . . .”)
  • Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act, 765 ILCS 170/5-35 (“Upon the satisfaction of the requirements of Section 5-30 of this Act and the requirements of Section 3-116.1 or 3-116.2 of the Illinois Vehicle Code, as applicable, such manufactured home shall be deemed to be real property; any mortgage, deed of trust, lien, or security interest that can attach to land, buildings erected thereon, or fixtures affixed thereto shall attach as of the date of its recording in the same manner as if the manufactured home were built from ordinary building materials on site