Factory built homes, explained

Manufactured and Modular Homes in Coffee County

Buyers looking at land and rural homes around Manchester often ask me about manufactured and modular homes. Both are built in a factory, but the rules that apply to them are very different, and those rules decide how you can finance the home, how it is titled and what you should check before you buy. This guide explains the difference, the Tennessee installation and title rules, the main loan programs and what to look for on a showing.

This is general information, not legal or lending advice. Loan rules change, so ask your lender to confirm how a program treats a specific home, and talk with a Tennessee attorney or your closing attorney about title questions.

Manufactured, modular and mobile homes: what the words mean

• Manufactured home. A home built in a factory to the federal Manufactured Home Construction and Safety Standards, often called the HUD Code, found at 24 CFR Part 3280. The federal definition describes a structure that is transportable in one or more sections, built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities. In traveling mode it is 8 body feet or more wide or 40 body feet or more long, or it is 320 square feet or more when set up on site. HUD says the standards cover body and frame requirements, thermal protection, plumbing, electrical, fire safety and other parts of the home.
• Mobile home. HUD rules apply to manufactured homes that entered the first stage of production on or after June 15, 1976, the effective date of the federal standards (24 CFR 3282.1). Tennessee law (TCA 68 126 202) defines a mobile home as a structure manufactured before June 15, 1976 that was not built to those federal standards. HUD also notes that a manufactured home was formerly known as a mobile home, so you will hear the words used loosely. The build date is what matters.
• Modular home. The Tennessee Modular Building Act (TCA 68 126 303) defines a modular building unit as a structural unit, including its electrical, plumbing, heating and other service systems, that is manufactured off site and transported to the point of use for installation as a finished building. Under TCA 68 126 304, a modular unit may not be sold or installed in Tennessee unless it bears an insignia of approval from the state commissioner of commerce and insurance or an approved inspection agency, and units are inspected at the place of manufacture. HUD's FHA reference guide notes that modular construction is also factory built but is treated the same as stick built housing.

How to tell which one you are looking at

• HUD certification label. Federal rules (24 CFR 3280.11) require a permanent label on the outside of each transportable section of a manufactured home. It is a metal plate about 2 inches by 4 inches, and HUD describes it as a red certification label, often called a HUD tag. FHA Handbook 4000.1 says it is located at one end of each section, about one foot up from the floor and one foot in from the road side, or as close to that spot as practical.
• Data plate. Each manufactured home must also have a data plate inside (24 CFR 3280.5). HUD says it is a paper label about the size of a standard sheet of paper, usually found on or near the main electrical panel, in a kitchen cabinet or in a bedroom closet. It lists the manufacturing plant, the serial number and model, the date of manufacture, the certification label numbers and maps of the wind, roof load and thermal zones the home was built for.
• Missing label. HUD does not reissue certification labels, but it can issue a Letter of Label Verification through the Institute for Building Technology and Safety (IBTS) when it can locate the historical records.
• Modular insignia. A modular home built for Tennessee should carry the state insignia of approval described in TCA 68 126 304.

Ask the seller or listing agent early whether the label and data plate are still on the home. Lenders and appraisers look for them, and a missing label can slow down or stop a loan.

Zoning and placement in Coffee County

• State law on factory built homes. TCA 13 24 201 says local zoning power may not be used to exclude a residential dwelling from land designated for residential use solely because it was partly or completely built in a manufacturing facility, and TCA 13 24 202 says such a dwelling must have the same general appearance required for site built homes. The statute also says this protection does not apply to factory manufactured mobile homes built as a single self contained unit on a single chassis, so local rules for those homes still apply.
• Modular homes. TCA 68 126 304 says a modular unit with the state insignia is deemed to meet local construction standards, while local zoning, setbacks, subdivision rules and appearance review are reserved to local government and must be applied the same way to conventional and modular buildings.
• Outside city limits. Coffee County Codes Compliance, 1329 McArthur Street, Suite 2, Manchester, (931) 723 4841, handles zoning, building permits and inspections in the county. The county zoning fee schedule (Resolution 2011 11) lists separate permits for single wide mobile home placement, double wide mobile home placement and modular home placement.
• Inside city limits. If the land is in Manchester or Tullahoma, ask the city planning and codes office before you buy.

Ask about zoning for the exact parcel before you sign a contract on land, and again before you order a home.

How installation works in Tennessee

• Who regulates it. The Manufactured Housing and Modular Buildings Section of the Tennessee Department of Commerce and Insurance, part of the Division of Fire Prevention, licenses manufactured home manufacturers, retailers and installers, performs installation inspections under state law and serves as HUD's State Administrative Agency in Tennessee. The section's phone is (615) 741 7192.
• Licensed installer required. TCA 68 126 403 makes it unlawful to occupy a manufactured home in Tennessee unless it was installed by a person licensed by the state. Under TCA 68 126 404, an installer must complete a 15 hour course, pass an approved exam, carry a surety bond and renew the license every year with continuing education.
• Installation standards. New homes must be installed according to the manufacturer's approved instructions or, if none are available, to instructions that meet the federal installation standards in 24 CFR 3285. Used homes installed after July 1, 2003 follow the manufacturer's manual from the time the home was built, instructions sealed by a Tennessee registered engineer or the alternative standard named in the statute. In every case the installation must comply with FEMA rules for flood zones.
• Permit and decal. Under TCA 68 126 406, the installer must buy an installation permit from a county clerk and pay the state inspection fee before installing the home. The permit decal goes inside the electrical panel box cover, and the electrical inspector may not authorize power to the home if no decal is on it. State inspectors check installations, including homes from every installer each year.

HUD's homeowner resources list what to plan for: local zoning, septic, electrical and building permits; site preparation and access for delivery; stable soil and a foundation and anchoring system approved for the soil; a perimeter enclosure where recommended or required; and utility hookups. HUD also warns that a manufactured home should never be placed in a more restrictive wind, thermal or roof load zone than the one shown on its data plate.

If the home will not be on public sewer, the septic permit comes first. My septic systems guide explains TDEC permits and records.

Foundation and title: personal property or real estate

In Tennessee, a manufactured home is often titled like a vehicle, with a certificate of title from the county clerk. The University of Tennessee County Technical Assistance Service (CTAS) explains that a home can instead be recorded as part of the real estate when the same owners own both the home and the land and the home is affixed to that land.

That conversion uses an affidavit of affixation under TCA 55 3 128. The affidavit is recorded with the county register of deeds, and a copy is filed with the assessor of property. Among other things, it states:

• The names of all owners of the home and the land, and the home's year, manufacturer, model, serial number, length and width
• The address and legal description of the land
• That the home is to be taxed as an improvement to the real property
• Any lienholders on the home
• That all required permits were obtained, the foundation system complies with applicable codes and the manufacturer's specifications, and the wheels and axles have been removed
• That the home is permanently connected to a septic or sewer system and to utilities

After recording, the owner surrenders the certificate of title, or the manufacturer's certificate of origin for a new home, to the state for cancellation. The Tennessee Department of Revenue publishes the affidavit form. The statute says recording the affidavit is prima facie evidence that the home has become an improvement to the real property.

CTAS adds that the affidavit is only used when the home and land have the same owner. If someone else owns the land, a certificate of title is required even if the home is attached to the land.

When you buy, ask whether an affidavit of affixation was recorded or whether the home still has a separate title. Your title company or closing attorney can confirm how the home is held and make sure the right documents transfer at closing.

Financing paths

HUD says manufactured homes are eligible for government backed loans from FHA, VA and USDA Rural Development, and that some lenders offer long term real estate mortgages that may require the home to be on an approved foundation. Modular homes are generally financed like site built homes. Here is what each federal program says about manufactured homes.

FHA loans

Under 24 CFR 203.43f and FHA Handbook 4000.1, a manufactured home financed with an FHA Title II loan must:

• Be designed as a one family dwelling with at least 400 square feet of floor area
• Have been built on or after June 15, 1976 to the federal standards, shown by the HUD certification label or a label verification letter; homes built before that date are not eligible
• Be classified as real estate together with the site, though it need not be taxed as real estate
• Be built on and remain on a permanent chassis, with the towing hitch and running gear removed
• Sit on a permanent foundation built to HUD's Permanent Foundations Guide for Manufactured Housing; the lender gets a certification from an engineer or architect licensed in the state
• Have been moved directly from the factory or dealer to the site
• Have the finished grade beneath the home at or above the 100 year flood elevation

The handbook also says the space beneath the home must be properly enclosed with a continuous perimeter wall. If the home has additions or alterations that the foundation certification did not cover, the lender needs a state inspection or a structural engineer certification. My FHA loans guide covers down payment, mortgage insurance and the appraisal.

USDA loans

For the USDA guaranteed loan, 7 CFR 3555.208 allows financing of a new manufactured home with its transportation, permanent foundation, installation and site, when one real estate mortgage covers both the home and the land. Among the rules:

• The new home must have at least 400 square feet, be installed on a permanent foundation to HUD standards with a certification of proper foundation, and have all wheels, axles, towing hitches and running gear removed
• A loan cannot be used to buy a site without also financing a new home
• An existing manufactured home qualifies only in limited cases, such as when it meets the HUD label and data plate requirement, sits on a proper permanent foundation, has not been installed on another homesite, has not been altered except for approved porches or decks, and was built on or after a date USDA sets
• A home that has been moved from another site is not eligible
• The home must be taxed as real estate, the loan must be secured by a lien on the home and land together, and any certificate of title must be surrendered where state law allows

USDA's direct loan program (7 CFR 3550.73) has similar rules, requires one dealer contractor contract that covers both the home and the site work and limits the term to 30 years. Ask your lender about the current USDA requirements for the specific home, and see my USDA loans guide for address eligibility.

VA loans

Federal law (38 USC 3710) allows VA to guarantee loans to buy a manufactured home that will be permanently affixed to a lot the veteran owns, or to buy a manufactured home and a lot together. The home must be considered real property under Tennessee law once it is affixed. Lenders set their own additional requirements, so ask early. My VA loans guide explains the Certificate of Eligibility and funding fee.

If the home is titled as personal property instead of real estate, ask lenders which loan types they offer for it before you make an offer.

Inspections for factory built homes

An appraisal is not an inspection, so hire your own licensed home inspector. My home inspection guide explains what a Tennessee inspection covers. For a manufactured home, also ask about:

• Foundation, piers and anchoring. Lenders look at the foundation closely, and FHA requires a foundation certification. Ask whether one exists from a past loan.
• Perimeter enclosure and crawl space. HUD says many manufacturers require a perimeter enclosure or a ground vapor retarder, and that a properly installed enclosure with ventilation improves energy performance and protects the home. Check that water drains away from the foundation.
• Additions, decks and porches. HUD says an addition or structural change may require local permits and could take the home out of compliance with the HUD Code. Ask whether permits were pulled.
• Labels and data plate. Photograph the HUD label on each section and the data plate, and confirm the build date and zone maps.
• Septic, well and flood zone. Rural homes often have private systems. See my septic, well water and flood zones guides.

If a new home has problems the retailer or manufacturer will not fix, HUD says to contact the State Administrative Agency, which in Tennessee is the Manufactured Housing Section of the Department of Commerce and Insurance. HUD adds that for a used home, the federal program covers only problems that are serious defects or imminent safety hazards.

Buying tips

• Confirm whether the home is manufactured, modular or a pre 1976 mobile home before you plan your financing.
• Ask for photos of the HUD label and data plate, or the modular insignia, with your first questions.
• Ask how the home is titled, and whether an affidavit of affixation was recorded.
• Talk to a lender about the specific home before you write an offer, and leave time in your contract for the foundation certification and appraisal.
• Check zoning, septic and utilities for the exact parcel, especially if you plan to place a new home on land.
• Use your inspection period for a full inspection, and keep copies of every warranty, permit and installation document.

Placing a new home on land

If you want to buy land and set a new manufactured or modular home on it, start with the land. My land buying guide covers septic site evaluations, zoning, surveys and access, and my new home building guide covers permits and construction loans. Ask the retailer or builder who handles the foundation, installation permit, utility connections and any affidavit of affixation, and get it in writing.

Keep reading:

• USDA home loans in Coffee County
• FHA loans in Tennessee
• Using a VA home loan in Manchester
• Buying land in Coffee County
• Septic systems when buying a home in Tennessee
• Home inspections in Tennessee
• All Manchester guides

Looking at a manufactured or modular home?

I help buyers across Manchester and Coffee County sort out labels, title, financing and inspections before deadlines pass. Call or text me at (615) 497 1658, or request my buyer guide below and tell me what you are looking for.

Common questions

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.