The Process of Conversion
- Checking the HUD Certification
A HUD certification is a placard that shows your manufactured home has met the minimum building standards set by the Department of Housing and Urban Development and is eligible for conversion. It is usually placed at the base of the home. Unlike the conventional building codes, the HUD code requires modular homes to be built on a permanent foundation as site-built homes.
- Building a Permanent Foundation
Once your modular home is eligible for conversion, the next step will be to construct a permanent foundation on your piece of land. This means that any wheels, axles, and towing hitch that were supporting the structure have to be removed before your modular home can be attached to a concrete foundation.
- Connecting Utilities
Now that your home is firmly attached to a stable, permanent foundation, all utilities must be connected and approved by your county code department. This phase involves connecting your electricity, plumbing, landlines, and sewerage to the grid in your area. It will require a team of professionals who deal with the specific utility lines to ensure it complies with the HUD codes.
- Filing a Certification Of Location
This is a document that indicates that your modular home (personal property) has been tied into a land parcel, making it eligible as a real estate property. It is prepared by a land surveyor and consists of a map or plan that indicates the current situation and state of immovable things attached to the land concerning zoning regulations and municipality.
- Gathering all the Required Documents
It is important to have a decal number when converting a manufactured home into real property. This should be accompanied by the last-issued original HCD registration card and certificate of title. In a situation where you own both the land and the manufactured home, the land ownership deed and the manufactured home title must be identical to finalize the conversion to real property. You can then complete the application once you have all these items in place and submit all the required documents.
Why Does The Classification Of Real Property Matter?
Converting a modular home into a real property provides several benefits of a stick-built home when it comes to financing, taxation, and rate of appreciation. For instance, a modular home classified as personal property only makes you eligible for a chattel mortgage. This is a type of financing for manufactured homes that are not permanently attached to the land. However, modular homes that are classified as real property gives access to more financing options because they have been attached to a permanent foundation like conventional homes.
When it comes to tax and tax exemptions, there are several ways in which different states categorize personal and real estate property. A homeowner in a manufactured home that is classified, as personal property is likely to be taxed higher compared to a homeowner of real property. This is because they are taxed the same way you would for a recreational vehicle since their purchase is classified under personal property. This means that homeowners in the real property receive more tax benefits because their home is built on the land.
The last reason why the classification matters is that houses classified as real property appreciate quicker than manufactured homes classified as personal property. Although your manufactured home can still appreciate if it is properly maintained, it appreciates even more if it is built on a similar foundation to a conventional site-built home.
Converting a modular home into a conventional home gives you the best of both worlds. Not only will you enjoy the benefits of owning a modular home but also one that meets the HUD certifications to be classified as real estate property. It might require some little investment and follow-ups upfront but converting is a worthwhile process that pays off in the end.