Vermont Mortgage Bankers Association
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SUPREME COURT OF THE STATE OF VERMONT
JAMES and JUDITH CREED, KAREN HARRISON, ARLIE WELCH, RAY and LAURA WILBURN, JEAN O’ROURKE, JOHN and LODY LAFASO, ANTHONY and LISE CHIOFFI, and DIANE BYRNE, Appellees
v.
FRANCIS and DEBRA CLOGSTON, Appellants
Supreme Court Docket No. 2002-426
Appealed from the Rutland Superior Court Docket No. 203-4-02 Rdcv
BRIEF OF AMICI CURIAE VERMONT BANKERS ASSOCIATION and VERMONT MORTGAGE BANKERS ASSOCIATION The primary issue in this case is whether the manufactured home owned by the Appellants is a “mobile home” as that term is used in the restrictive covenant prohibiting the placement of such a home on Appellants’ land. The broader issue, which concerns the Amici Curiae, stems from the trial court’s broad construction of the term “mobile home” and the unintended consequences that could result from such a construction. As indicated above, Amici Curiae are concerned that such a construction of the term “mobile home” blurs the current distinction between what is truly a mobile home and what is manufactured or modular housing secured to a foundation. Such a distinction has important ramifications for the favorable financing of manufactured and modular housing, as truly “mobile” homes are not considered real estate, whereas manufactured or modular housing secured to a foundation is considered to be real estate. Generally, and in addition to a number of additional requirements, any single-family manufactured or modular home larger than a single-wide manufactured home that is permanently affixed to a suitable foundation system on land owned by the mortgagee is considered to be real estate. See attached Guidelines of Fannie Mae and Freddie Mac. As real estate, such a manufactured or modular home would be eligible for the same types of financing as any stick-built or site-built home. Conversely, a truly mobile home such as a camper, trailer, single-wide or double-wide mobile home not permanently secured to a foundation would not be considered real estate for lending purposes. Typically, a single-wide or double-wide mobile home in this category is a structure that has not had the wheels, axles, towing hitches or running gear removed, and it is more likely to be located on a rented lot. Because lenders do not consider these structures to be real estate, they are not eligible for the same types of financing as real estate. Currently, there is a small group of lenders providing financing for those mobile homes not qualifying as real estate. The interest rates for such structures are much higher than rates for real estate, with current interest rates for these structures ranging from 10 to 14 %. Additionally, the interest rates are not fixed for the term of the loan. These are the lending realities governing the financing of manufactured and modular housing, but they were obscured by the overly broad decision of the lower court in the case at hand. Although the Appellant’s home – a double-wide manufactured home permanently affixed to a suitable foundation on land owned by the Appellants – would qualify generally as real estate for lending purposes, the trial court simply labeled the home a mobile home. In the trial court’s words, “a mobile home is a mobile home.” This simplistic determination was based almost exclusively upon the moveability of the home to the site and largely disregarded its permanency once it was secured to its foundation. As the Appellants pointed out in detail in their brief, once secured to its foundation, their home was no more mobile or transportable than a traditional site-built home. Appellants’ Brief at 12-14. In other words, not all mobile homes are created equally, despite the trial court’s holding to the contrary. A single-wide mobile home remaining on its wheels in a rented lot and without any attachment to a suitable foundation may be little more than a luxurious camper trailer with financing terms not significantly more attractive than those available for an automobile. On the other hand, a double-wide manufactured home permanently secured to a suitable foundation on land owned by the same party is considered real estate for which the same types of financing are available as that for any traditional site-built home. While not controlling, the law governing fixtures is helpful in this case. In the case of Shelburne Corp. v. Town of Shelburne, 124 Vt. 481 (1965), this Court was asked to determine whether certain ski lift installations and associated structures were real property or personal property. The Court considered the following factors to make that determination: (1) the annexation, actual or constructive, of the article to the real estate; (2) its adaptation to the use the use of the realty to which it is annexed; and (3) whether or not the annexation has been made with the intention to make it a permanent accession to the freehold.
Shelburne Corp., 124 Vt. at 484. Applying these factors, the Court found that the ski lifts and associated structures were real estate, as they were adapted to the land upon which they were sited, set upon heavy concrete foundations and intended to remain affixed to the land. Like the ski lifts in Shelburne Corp., the manufactured home in this case was annexed to the Appellants’ land and adapted to the use of that land. See Appellants’ Brief at 12-14. Also like the ski lifts, Appellants’ home could not be removed without causing “considerable damage.” Id. In short, just as the ski lifts in Shelburne Corp. constituted real estate, so does the Appellants’ home in this case. It is not, as the trial court suggested, merely a mobile home. The ramifications of the trial court’s decision extend beyond the Appellants’ home and the four corners of the restrictive covenant directly at issue in this case. Without a reversal of that decision, Amici Curiae fear the potential unintended consequences of an opinion that lumps all manufactured housing into a single class and does not recognize the important distinction between what is and what is not real estate. The case of Bianchi v. Lorenz, 166 Vt. 155 (1997), is a relatively recent example of the type of unintended havoc that can result from real estate cases. In that matter, this Court found that a sale of property that was in violation of the zoning laws breached the covenant against encumbrances in a warranty deed. The case sent shockwaves through the real estate and real estate lending industries, and those unintended consequences required significant remedial action by the Vermont General Assembly. While Amici Curiae do not suggest that this case holds the same potential for dire consequences as those flowing from Bianchi, the decision of the trial court blurring the distinction between those structures which are truly mobile homes and those structures which are real estate could drastically limit the financing options available for manufactured and modular housing. Without favorable financing, those manufactured or modular homes permanently secured to a foundation would be much less affordable. It is well established that the policy of the State of Vermont is to encourage the construction and preservation of affordable housing. See, e.g., 2 V.S.A. § 703 (function of Joint Housing Committee); 3 V.S.A. § 2293 (creation of Development Cabinet); 10 V.S.A. § 302 (policy, findings and purpose of Vermont Housing Trust Fund); 10 V.S.A. § 621 (general powers and duties of Vermont Housing Finance Agency); 24 V.S.A. § 4302 (purpose of municipal and regional planning commissions). See also 24 V.S.A. § 4406(4)(A) (prohibition against zoning regulation that excludes mobile homes). Amici Curiae suggest that given the dramatic shortage of affordable housing currently available in Vermont, anything that could exacerbate this housing crisis should be avoided if at all possible.
VI. CONCLUSIONThe decision of the trial court unnecessarily and erroneously construes the term “mobile home” to include virtually any form of mobile, manufactured or modular housing without regard to its characteristics once it is sited. The decision fails to distinguish between what can be accurately described as a “mobile” home and what is considered real estate. This is important distinction, because without it, the financing options available for manufactured and modular housing could be severely limited, thereby threatening a key source of affordable housing. For these reasons, Amici Curiae respectfully request that this Court reverse the decision of the trial court.
DATED at Montpelier, Vermont, this ___ day of December, 2002.
WILSON & WHITE, P.C.
By Andrew W. MacLean
Christopher K. Rice
Philip H. White
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