A lender must have a basic understanding of Kentucky law to properly protect its interest in a mobile home or manufactured home.
First, the lender must confirm that the mobile home is considered personal property and properly titled in the name of its debtor. Mobile homes are titled in the same manner as motor vehicles and indexed in the Automobile Vehicle Information System (in the county in which the mobile home is located). A lender may confirm a mobile home’s current owner and history by submitting a request to obtain the motor vehicle record to the Kentucky Transportation Cabinet. A mobile home is considered personal property until it is converted to an improvement to real property when the owner has surrendered the certificate of title (Title) to the county clerk, along with an affidavit of conversion. Thereafter, the mobile home is considered real property and an improvement to the land, and the mobile home no longer has a Title.
Second, the lender must ensure that the mobile home is properly transferred to its debtor. To transfer a mobile home still considered personal property, complete the transaction and assignment portion on the back of the Title and present it to the county clerk. Depending upon the date on which the initial Title was issued, seller may also need to submit an application for title and/or an affidavit for previously owned mobile home to the county clerk. A mobile home converted to real property is properly transferred in a deed recorded with the county clerk.
Third, to further protect its interest in the mobile home, the lender should confirm payment of all ad valorem taxes. Current year and delinquent taxes are collected by the county sheriff and the county clerk, respectively.
Fourth, a lender must properly secure its lien on the mobile home. For mobile homes still considered personal property, the lien is secured once the county clerk of the debtor’s residence (which may be a different county from the location of the mobile home) notes that the lender has filed a title lien statement on the Title. The lien on a converted mobile home is secured with a mortgage recorded with the county clerk.
Understanding the peculiar issues that come with mobile homes can assist a lender in protecting its interest.