Re: A Rose Is A Rose?..! - Posted by David P. Butler
Posted by David P. Butler on March 09, 2008 at 14:48:45:
Hello Glen,
Good afternoon my friend. Hope you and your well-named son;-) are doing well, and kicking up some good dirt (or perhaps “tin cans” would be better used here!) out in Buckeye country;-)
As to your question here… technically the answer is “yes”, the terms can be used interchangebly (though I am not familiar with the phrase “personal property note” other than hearing spoken now and again, and assuming what is meant when it is used). And yep… you were told incorrectly! The term “chattel mortgage” is perhaps the most common term used when describing a mobile or manufactured home mortgage, specifically when the home is not financed with the land.
But a mobile home note itself is not considered a chattel mortgage. Rather, it is the security instrument for a note secured by a manufactured (aka “mobile”) home which is not permanently, and formally converted to real estate - that is broadly referred to as a “chattel mortgage” - and is still formally identified as such in some states, where it customarily used as a type of loan contract.
Personally, we refer to it as a mobile home note, or MH note (as opposed to a mobile home permanently affixed to land, which we refer to as a “real estate note”).
One formal definition of “Chattel mortgage” would be “A mortgage on personal property, as distinguished from one on real property. Any item of movable or immovable property except the freehold, or the things which are parcel of it. It is a more extensive term than ‘goods or effects’. Note: certain real estate interests can are chattels, such as are movable, as are such rights in land as are less than a freehold, as leases, mortgages, growing crops or timber, etc.”
Keep in mind that the nomenclature in the private note industry is similarly interchanged, albeit not technically correct necessarily (private cash flow industry; private note industry; discounted note industry; discounted mortgages; discounted trust deeds, and land contracts - and their many forms - are generally used interchangeably by most people). So don’t be uncomfortable with usage per se - so much as becoming more familiar with the various phrases, and quantify it by context of usage, or requesting more clarification where you have the opportunity to engage the user of a particular phrase directly.
A good starting point for determining the appropriate nomenclature in whatever state you are purchasing a MH note in, would be the state agency regulating mobile home (manufactured home) titles in that specific state - and/or that state’s UCC code sections as they apply to the securing of MH financing. In California for example, over the past 15 years or so, it has been more common to use what is known as a “Security Agreement” which is three or four pages of legal size document, with the promissory note actually incorporated into the security instrument as part of that document. This is described in the California UCC as it pertains to MH paper, and also the Health & Safety Code (which oddly enough is the regulating code section for MH titles, financing, etc. in California).
I have seen the same in the many Texas HCA contracts securing the many notes I have purchased out there over the years.
Hope this helps, and give my best regards to the family accountant! And…
Have Fun For A Living
David P. Butler
www.hotspurinvestentgroup.com