Tuesday, July 10, 2018

“Manufactured Home” designation is the “Kiss of Death” for a Modular Builder

A true modular housing horror story by Steve Lefler, Vice President of Modular Lifestyles in California.

This story is about the factory built house (FBH) -“Modular” definition of a residential structure type. The government agencies regarding building structures are CA Housing and Community Development (HCD) State Codes and Standards, Local Building department and the Tax Assessor. Their meaning of a word, “Manufactured Home” is different. My belief they all recognize its definition but how it translates to the public has different meanings. Why would government agencies not understand how important the structure type and the use of a word and its true meaning? The Title, Lender and Real Estate agent always use the Tax Assessor definition and not the other government building agencies term. These agencies actually validate the structure type, Tax Assessor does not.

My story begins from my attempt as the Owner/Builder to build a “Net Zero”, “California Advanced Home” approved by Pacific Gas and Electric a utility company home rebate program.

The residential structure type is a very important for issuing a “Permit to Build” by the Building department. It is the type of residential structure you plan to build. The State agency for codes and standards sets the parameters for local building to comply at different standards. Things like CA. Green Code, Solar Mandate, and an Energy Efficient recording of its residential house construction for example. These Green Code mandates do not apply to different structure types. The local Tax Assessor is not part of the building process and does not have any interest in how others use their self-described land code terms. However others use the Tax Assessor words. The Tax Assessor office has their own appraisers to determine value and property tax only. Title representatives, Lenders, Real Estate Agents use the Tax Assessor public record in California for mortgage creation, sell real estate, record title, who owns the property, and fact check on what structure(s) exist is on the property “Personal / Permanent” as a residential structures.

The County Building department issues the “Permit to Build” on the unimproved land after a submission and payment for documents on the application.

The submission for the “Permit to build” has typically only two land use codes: for residential construction Mobile Home/Manufactured home (HUD code Federal) and (SFR) Site built. There is NOT a code for a (FBH) modular built house per a local building submission.

A ‘Modular” factory built home term (FBH) is used by the State of California in their building codes and standards. One must follow a set of criteria for a factory to build on a “modular” submission to the building department. The drawings and Energy Report reports must meet the local building code for its local climate and succeed and pass a “Standard build” by a set % set by the California Energy Commission (CEC) on its Title 24 Energy Report prior to the factory building it. Many builders resort to a Home Energy Rating Service (HERS) rater who is schooled to validate the build to successfully pass this standard CEC Climate Zone % and building department review. The State Housing and Community Development (HCD) has jurisdiction to the Building Department but neither have jurisdiction to the Tax Assessor.

Our “Modular” build submission contained these and other documents and was given to the County Building Department for the review. Our hope is the issuance of the “Permit to build” by the local building planner upon review. These “Modular” (FBH) architectural drawings were first sent to the State Agency HCD, reviewed and stamped approved. The local building and zoning officials just have to review the State approved drawings with no changes. Our “HERS” rater “Title 24 Energy Report” passed the local building review and successfully exceeded a standard build by 25%. In addition, PGE reviewed the same report and house drawings under its “CAHP” program and issued us a rebate check for beating their standard.

The “Permit to Build” came back to me and they noted the (FBH) modular house in their eyes is just a “Mobile Home”. (see arrow below) Why? Factory built is factory built no distinction. A Mobile/Manufactured home has a long term poor image and public perception. In addition, the term “Manufactured home” denotes houses are built in a factory. They conform to a Federal building code, called the HUD code, rather than to building codes at their local destinations. It is widely known a lesser national quality home product.

As a public record with a structure type of a Mobile Home is the “Kiss of Death” on Mortgages and Appraised value

Our reaction was of astonishment after they knowingly reviewed all of our documents. Ignorance is not an accepted excuse. We immediately made an appointment and discussed with the building department review official. We had them changed it to the appropriate term “Single Family Dwelling” after an intense discussion and a re-review of the documents. It is the same term used for Site Built homes.

We finished the modular home in 3 months. The Building Inspector came and looked at the house and the Interior fire sprinklers were reviewed by Cal Fire Agency. We received our “Certificate of Occupancy” immediately.

Our Lender began the loan process for the change from the construction loan to a permanent 30 year fixed rate mortgage in 2014. Then the Red Flags went up from Title and the Lender. The Tax Assessor recorded on our Property Tax Record the term: Manufactured home.

Here is the actual response from the Tax Appraiser:

In response to your request to update our records to show the improvements on the subject parcel is a Modular Home,
Our Land Use Code of Modular Homes in our attribute system is the same as the Land Use Code we use for Mobile Homes and Manufactured Homes.

Your individual record for the improvements on this parcel definitely does show that the improvement on this parcel is a Modular Home.

It was valued as a Modular Home and the Building Record states that it is a Modular Home.

Hope this explanation solves your issue. Please call me if I can help further.

Thank you,Supervising Appraiser NAME WITHHELD

San Luis Obispo County Assessor's Office

The Title Company and Lender reviewed the Tax Assessor public display and claimed the Mortgage was coded incorrect due to the term “Manufactured Home”. We immediately pleaded to the Title/Lender it is an incorrect term usage. We showcased the above building permit “Single Family Dwelling” same as a site built. Each company needed to be made aware of that the Tax Assessor ignorance and the use of a word is poor and not a correct definition of our structure.

I recently formalized my complaint in writing detailing all items of our previous actions and comments to the newly elected County of San Luis Obispo Tax Assessor and shared it with the State HCD Building Codes and Standards Director. The State Director response was they would contact the Tax Assessor to see if they would change it, but they do not have jurisdiction. It was suggested my only recourse may be Civil Court, Wow? I contacted the Tax Assessor a day later by phone and it was changed to a residence (their term for a Single Family Dwelling) matching our “Permit to Build”. I recently received the Letter from the Tax Assessor validating the change in writing.

Most modular builders should be aware of the Title process when you build. Please check months later after the Certificate of Occupancy is issued to review the Tax Assessor’s public record. A structure type word change does have a real consequential meaning to the homeowner/buyer at some future date.

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