Making it Real: The Title Trip for a Manufactured Home Bryan D. Rosenberg, SVP First American Title Insurance Company

Transcription

1 2011 Seminar Series Making it Real: The Title Trip for a Manufactured Home Bryan D. Rosenberg, SVP First American Title Insurance Company BryanRosenberg@firstam.com

2 Making it Real: The Title Trip for a Manufactured Home Bryan D. Rosenberg, SVP First American Title Insurance Company BryanRosenberg@firstam.com I. What is a Manufactured Home? A. In North Carolina the statutory definition of Manufacture Home is at NCGS (6). There are five elements to meet the definition. They are: 1) structure 2) transportable in one of more sections 3) which in traveling mode is at least eight feet in width or at least 40 feet in length or when erected is 320 square feet 4) built on a permanent chassis and 5) designed to be used as a dwelling when connected to utilities. To be a manufactured Home all five elements of the statute must be met. If all five are not present, then it is not a manufacture home, however it may still be a mobile home which is defined in NCGS as a structure designed, constructed and intended for use as a dwelling, office, place of business or other habitation and capable of being transported from place to place on wheels attached to a frame. So a manufactured home is always a mobile home but a mobile home is not always a manufactured home. The definition of mobile home excludes trailers and vehicles that require annual registration which would include travel homes or other types of vehicles which are self propelled. B. Manufactured homes are motor vehicles in North Carolina. NCGS (23) defines a motor vehicle as a vehicle which is self propelled and a vehicle designed to run on a highway which is pulled by a self propelled vehicle. So if it is intended to be operated on a highway, it generally will be defined as a motor vehicle and required to have a certificate of title (CT). C. Initially, all manufactured homes are personal property. Black s Law Dictionary defines personal property as a thing which is subject to ownership other than real property. Personal property has two classifications: incorporeal which are intangible things like cash, stocks, bonds, copyrights and patents and corporeal which are things which are movable and tangible. A manufactured home is the only motor vehicle that can become real property. II. Certificates of Title (CT) with the North Carolina Division of Motor Vehicles A. CT is a state issued document that provides evidence of ownership in a motor vehicle as personal property. A CT is only required under Chapter 20 when the manufactured home (MH) is treated as personal property. If the MH is permanently attached and treated as real property, no CT is necessary. Manufactured Housing Page 1

3 B. How to get a CT 1. Application for a CT under NCGS Certificate of Origin issued from the manufacturer and assigned by the dealer to transferee under NCGS Replacement of lost CT under NCGS Altering or forging CT is a felony under NCGS C. Only way to perfect a lien on MH as personal property is notation on CT. NCGS III. Treating the MH as real property rather than personal property. A. The old law prior to January 2002: Intent is guiding force. All factors looked at to determine if the intent to permanently affix the MH to the real property existed. Were the tongue, axle and wheels removed? Did the chassis sit on a permanent foundation? Was it taxed as real property? Had a CT ever been issued and if so had it been surrendered? These were all factors looked at to determine if the MH was still personal property or had been changed to real property. Once a MH was considered real property, then a security interest would be in the form of a deed of trust and not a notation on the CT. 1. New MH: When a dealer would sell a new MH, they would assign the manufacturer s Certificate of Origin to the buyer. The new owner would either take the Certificate of Origin and apply for a CT or never apply for a CT if the intent was to permanently affix the MH from the beginning. One way of dealing with this had the transactional lawyer take possession of the Certificate of Origin and mark if void and keep it in their file or destroy it and give the owner and their lender an affidavit to that affect. Under the old system, if a CT was never applied for, it could not be sold as personal property and a lender secured by a deed of trust would be protected. 2. Existing MH: The best practice was to surrender the CT to the DMV. To make the intent very clear, many lawyers would write on the CT that the MH had been placed on a permanent foundation and was now real property. Many times however, the best practice was not used and although many factors indicated intent that the MH be real property, there would still be a live CT. So The State of North Carolina would have evidence that the MH was personal property but everyone would know that the MH was real property and it in fact was real property. The effect of this was uncertainty. It was also a breading ground for fraud. On more than one occasion, after the ownership was transferred by deed, someone might then sell the MH with the CT. 3. There was no statutory basis for converting the MH from personal to real property. The procedure was informal and many time whether a MH was personal or real property was not clear. B. The new law to convert a MH from personal to real property became effective on January 1, 2002 and was designed to bring a more formalized procedure for converting a MH from Manufactured Housing Page 2

4 personal property to real property and to eliminate uncertainty as to the nature of ownership and security interests in a MH. There are now two ways to convert a MH from person property to real property in North Carolina. NCGS and NCGS are the only two ways to convert the MH to real property. 1. NCGS surrender of title to manufactured home: This is a mandatory statute that imposes a fine if it is not followed. If a CT has been issued and the MH qualifies as real property then the owner must submit an affidavit (MVR-46G) and surrender the CT to DMV. There are two requirements for this statute to apply. There has to be a CT in existence and the MH must quality for real property. a. CT must have been issued and not previously surrendered. If the CT was surrendered prior to the law becoming effective, this section does not apply. If a CT was never issued by DMV then this section does not apply. If, however, there is a non-surrendered CT on file with the DMV, then this section does apply. b. MH must qualify as real property under NCGS (13). Real property here specifically includes a MH defined in (6). So a MH qualifies as real property if it meets the requirements of , (13) and (6) combined which are: 1) must be residential structure; 2) designed to be used as a dwelling when connected to utilities; 3) transportable in one of more sections; 4) at lest 8 feet in width or 40 in length when being transported or 320 square feet when set up; 5) built on permanent chassis; 6) removal of tongue, axles and wheels; 7) placed on a permanent foundation and 8) located on land owned by the owner of the MH or on land they have a leasehold estate of at least 20 years. This section does not apply to mobile homes that are not residential in nature. Nor does this section apply if the MH retains any of its personal property characteristics. Even when all of these requirements are present, the MH remains a motor vehicle and personal property until the MVR-46G is recorded in the Register of Deeds office. c. To follow , one must submit the MVR-46G and the CT to the DMV for cancelation. Then as long as there are no secured creditors noted on the CT, the DMV must return the MVR-46G with their certification that the CT has been canceled to the owner. If there is a security interest noted on the CT, the creditor must consent to the cancelation and then the completed MVR-46G must be returned to either the owner or the first secured creditor. Then the owner or the first lien holder must file the MVR-46G with the register of deeds in the county where the MH has been permanently affixed. Failure of the owner or secured creditor to file with the register of deeds can result in a civil penalty of $ Once the MVR-46G is filed with the register of deeds, the MH is no longer personal property but becomes an improvement to the real property described in the affidavit. No security interest can be perfected in the MH except in the Manufactured Housing Page 3

5 manner provided for a lien on real property and only if the security interest also applies to the underlying land. NCGS NCGS declaration of intent to affix manufactured home; transfer of real property with manufactured home attached: The declaration of intent (DI) is the second way to convert a MH from personal to real property. This is the easier, less expensive and more efficient way. If you can do the conversion this way then do so because you don t have to involve DMV. Whereas the CT surrender statute is mandatory with a civil fine, the DI is elective in nature because of the word may. The requirements necessary to use this statute are that the MH has been or will be placed on the land and the MH has either never been titled or the CT has already been surrendered under the pre 2002 law. Also, the only person authorized to file a DI is the owner of the land or the owner of the MH who has entered into a land lease for at least 20 years. a. The first qualification is that the MH has been or will be placed on the land. The MH has to be already in place on the land or will be placed on the land. This is ideal for the purchase of a new MH that will be placed on the land as well as when one buys a used MH to move onto their land. Because the MH does not have to be located on the land yet, this provides a lot of flexibility to the land owner. b. The second qualification to file a DI is that the MH must have never been title or the CT has been surrendered and cancelled by DMV prior to January 1, Again, under this requirement, the use of a DI is perfect for a new MH that has not been titled and is not yet even on the property. If DMV has a CT on record, regardless of the fact the MH is on a permanent foundation and would have been considered real property under the law prior to January 1, 2002, then you can not use a DI to convert the MH into real property. The MH is personal property in that situation and you must surrender the CT under the mandatory As you recall, under the pre 2002 law, a MH could be real property even though a CT was on file with the DMV. That is no longer the case. c. Once the owner files a DI with the register of deeds, the MH placed or to be placed on the property becomes an improvement to real property and any lien placed on the MH must be done so in the same manner provided for a lien on real property. So technically, a land owner can buy a MH and file a DI and then a deed of trust and the deed of trust would be a secured lien on the land and MH even though the MH was not yet on the land and hooked up to utilities. Now we just have to make sure that the driver has good directions and does not make a wrong turn. Manufactured Housing Page 4

6 IV. Problems with the new law and how to deal with older MH. A. Mobile homes as defined in may not meet all the requirements of being a MH in (6) and so a MVR-46G and DI do not apply. It appears that one may be able to follow the MH rules to convert the mobile home from personal to real property but one is not required to do so. Offices, school buildings, golf pro shops or other commercial uses of structures on permanent chassis can be converted to an improvement to real property under common law. So we have an inconsistent system with dealing with these common structures. That may be by design but it doesn t change the fact that this may create confusion and uncertainty which was a reason to change the law. B. Older MH that were considered real property under the old law when they were affixed to the land but have a CT on file with DMV after January 1, 2002 can create problems for the closing attorney. Because there is still a CT on file with the DMV, the MH is considered personal property and as such is incapable of being conveyed by a deed or given as security with a deed of trust. This is true even though it could have prior to The 2002 change in the law shifted the focus from intent to following a specific and set procedure. The consequence of this was to change the nature of the MH for transaction accruing after January 1, As time passes and these MH become older and outlive their usefulness, this problem will diminish. So how do we tackle transactions where we are dealing with these older MH that were once real property but are now personal property and the owner on the CT is unavailable? 1. Do the leg work and get the owner listed to find the CT and have them surrender it with the MVR-46G. If they have lost the CT, then have them apply with DMV for a duplicate CT under NCGS Upon receipt of the duplicate CT, them they can surrender it with the MVR-46G. If there is a security interest on the CT that has been paid but the lender still has possession of the CT, governs the CT retrieval. 2. If this is not possible, then NCGS provides details for the new owner not listed as the owner on the CT to apply for a new CT. The new owner can obtain a new CT by filing a bond in an amount equal to one and one-half times the value of the MH as determined by DMV. This bond must be accompanied by cash or in the nature of a real estate bond as described in (a). The bond and cash will be returned in three years. The bond requirement is in subsection b. V. Application for Title After Cancelation If a CT has been cancelled pursuant to , then (d) allows the owner to apply for a new CT in the event the owner wants to separate the MH from the real property and convert it back to personal property and sell it separate from the land. If the property has been transferred by a deed as should be the case upon surrender, the owner should be prepared to produce documentation proving their ownership in the land with improvements. To apply, the owner must submit an affidavit that contains the same information as the affidavit required to cancel the CT which is in (b), verification that the MH has been removed from the land and written consent of any affected owners of recorded deed of trust, the title application required under (MVR-1) and the fee. Manufactured Housing Page 5

7 VI. We have briefly taken the title for a MH from personal property to real property and back to personal property. Some issues are difficult for buyers to address. Maybe some type of statutory amendment could give buyers of MH with a CT in the name of a long lost owner a little relief. Overall however, the statutory change in 2002 brought about the desired result of certainty and the prevention of fraud. ATTACHMENTS: (6) definitions (13)-definitions mobile home defined application for registration and certificate of title MVR manufacturer s certificate of transfer of new motor vehicle replacement of lost or damaged certificates, cards and plates altering or forging certificate of title, registration card or application, a felony; Reproducing or possessing blank certificate of title perfection by indication of security interest in certificate of title surrender of title to manufactured home MVR-46G affidavit for permanent attachment of titled manufactured home to real Property declaration of intent to affix manufactured home; transfer of real property with Manufactured home attached Declaration of Intent title lost or unlawfully detained; bond as condition to issuance of new certificate transfer by owner release of security interest Manufactured Housing Page 6

8 Definitions. The following definitions apply in this Part: (1) Bank. A federally insured financial institution including institutions defined under G.S. 53-1(1), savings and loan associations, credit unions, savings banks and other financial institutions chartered under this or any other state law or chartered under federal law. (1a) Board. The North Carolina Manufactured Housing Board. (2) Buyer. A person for whom a dealer performs, or is engaged to perform, any services or provides any products including the purchase and setup of a manufactured home for use as a residence or other related use. (3) Code. Engineering standards adopted by the Commissioner. (4) Commissioner. The Commissioner of Insurance of the State of North Carolina. (5) Department. The Department of Insurance of the State of North Carolina. (5a) Deposit. Any and all funds received by a dealer from a buyer or someone on behalf of a buyer for the performance of services or the provision of goods. (5b) Escrow or trust account. An account with a bank that is designated as an escrow account or as a trust account and that is maintained by a dealer for the deposit of buyers' funds. (5c) Escrow or trust account funds. Funds belonging to a person other than the dealer that are received by or placed under the control of the dealer in connection with the performance of services or the provision of products by a dealer for a buyer. (5d) Funds. Any form of money, including cash, payment instruments such as checks, money orders, or sales drafts, and receipts from electronic fund transfers. The term does not include letters of credit or promissory notes. (5e) (5f) License. A license issued under this Part. Licensee. A person who has been issued a license under this Part by the North Carolina Manufactured Housing Board. (6) Manufactured home. A structure, transportable in one or more sections, which, in the traveling mode, is eight feet or more in width or is 40 feet or more in length, or when erected on site, is 320 or more square feet, and which is 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, and includes the plumbing, heating, air conditioning and electrical systems contained therein. (7) Manufactured home dealer or dealer. Any person engaged in the business of buying or selling manufactured homes or offering or displaying manufactured homes for sale in North Carolina. Any person who buys or sells three or more manufactured homes in any 12-month period, or who offers or displays for sale three or more manufactured homes in any 12-month period shall be presumed to be a manufactured home dealer. The terms "selling" and "sale" include lease-purchase transactions. The term "manufactured home dealer" does not include banks and finance companies that acquire manufactured homes as an incident to their regular business. G.S Page 1

9 (8) Manufactured home manufacturer or manufacturer. Any person, resident or nonresident, who manufactures or assembles manufactured homes for sale to dealers in North Carolina. (9) Manufactured home salesperson or salesperson. Any person employed by a manufactured home dealer to sell manufactured homes to buyers. Manufactured home salesperson or salesperson also includes sales managers, lot managers, general managers, or others who manage or supervise salespersons. (10) Person. Any individual, natural persons, firm, partnership, association, corporation, legal representative or other recognized legal entity. (11) Responsible party. A manufacturer, dealer, supplier, or set-up contractor. (12) Setup. The operations performed at the occupancy site which render a manufactured home fit for habitation. (13) Set-up contractor. A person who engages in the business of performing setups for compensation in North Carolina. (14) Substantial defect. Any substantial deficiency in or damage to materials or workmanship occurring in a manufactured home which has been reasonably maintained and cared for in normal use. The term also means any structural element, utility system or component part of the manufactured home which fails to comply with the Code. (15) Supplier. The original producer of completed components, including refrigerators, stoves, hot water heaters, dishwashers, cabinets, air conditioners, heating units, and similar components, and materials such as floor coverings, paneling, siding, trusses, and similar materials, which are furnished to a manufacturer or dealer for installation in the manufactured home prior to sale to a buyer. (1981, c. 952, s. 2; 1987, c. 429, ss. 4, 5, 19; , s. 1; , s. 2.1.; , ss. 1, 2.) G.S Page 2

10 (Effective for taxes imposed for taxable years beginning before July 1, 2008) Definitions. When used in this Subchapter (unless the context requires a different meaning): (1) "Abstract" means the document on which the property of a taxpayer is listed for ad valorem taxation and on which the appraised and assessed values of the property are recorded. (2) "Appraisal" means both the true value of property and the process by which true value is ascertained. (3) "Assessment" means both the tax value of property and the process by which the assessment is determined. (4) Repealed by Session Laws 1973, c. 695, s. 15, effective January 1, (4a) "Code" [is] defined in G.S (5) "Collector" or "tax collector" means any person charged with the duty of collecting taxes for a county or municipality. (5a) "Contractor" means a taxpayer who is regularly engaged in building, installing, repairing, or improving real property. (6) "Corporation" includes nonprofit corporation and every type of organization having capital stock represented by shares. (6a) "Discovered property" includes all of the following: a. Property that was not listed during a listing period. b. Property that was listed but the listing included a substantial understatement. c. Property that has been granted an exemption or exclusion and does not qualify for the exemption or exclusion. (6b) "To discover property" means to determine any of the following: a. Property has not been listed during a listing period. b. A taxpayer made a substantial understatement of listed property. c. Property was granted an exemption or exclusion and the property does not qualify for an exemption or exclusion. (7) "Document" includes book, paper, record, statement, account, map, plat, film, picture, tape, object, instrument, and any other thing conveying information. (7a) "Failure to list property" includes all of the following: a. Failure to list property during a listing period. b. A substantial understatement of listed property. c. Failure to notify the assessor that property granted an exemption or exclusion under an application for exemption or exclusion does not qualify for the exemption or exclusion. (8) "Intangible personal property" means patents, copyrights, secret processes, formulae, good will, trademarks, trade brands, franchises, stocks, bonds, cash, bank deposits, notes, evidences of debt, leasehold interests in exempted real property, bills and accounts receivable, and other like property. (8a) "Inventories" means (i) goods held for sale in the regular course of business by manufacturers, retail and wholesale merchants, and contractors, and (ii) goods held by contractors to be furnished in the course of building, installing, repairing, or improving real property. As to manufacturers, the term includes raw materials, goods in process, and finished goods, as well as other materials or supplies that are consumed in manufacturing or processing, or that accompany and become a part of the sale of the property G.S Page 1

11 being sold. The term also includes a modular home as defined in G.S (21b) that is used exclusively as a display model and held for eventual sale at the retail merchant's place of business. The term also includes crops, livestock, poultry, feed used in the production of livestock and poultry, and other agricultural or horticultural products held for sale, whether in process or ready for sale. The term does not include fuel used in manufacturing or processing, nor does it include materials or supplies not used directly in manufacturing or processing. As to retail and wholesale merchants and contractors, the term includes, in addition to articles held for sale, packaging materials that accompany and become a part of the sale of the property being sold. (9) "List" or "listing," when used as a noun, means abstract. (10) Repealed by Session Laws 1987, c. 43, s. 1. (10a) "Local tax official" includes a county assessor, an assistant county assessor, a member of a county board of commissioners, a member of a county board of equalization and review, a county tax collector, and the municipal equivalents of these officials. (10b) "Manufacturer" means a taxpayer who is regularly engaged in the mechanical or chemical conversion or transformation of materials or substances into new products for sale or in the growth, breeding, raising, or other production of new products for sale. The term does not include delicatessens, cafes, cafeterias, restaurants, and other similar retailers that are principally engaged in the retail sale of foods prepared by them for consumption on or off their premises. (11) "Municipal corporation" and "municipality" mean city, town, incorporated village, sanitary district, rural fire protection district, rural recreation district, mosquito control district, hospital district, metropolitan sewerage district, watershed improvement district, or other district or unit of local government by or for which ad valorem taxes are levied. The terms also include a consolidated city-county as defined by G.S. 160B-2(1). (12) "Person" and "he" include any individual, trustee, executor, administrator, other fiduciary, corporation, limited liability company, unincorporated association, partnership, sole proprietorship, company, firm, or other legal entity. (13) "Real property," "real estate," and "land" mean not only the land itself, but also buildings, structures, improvements, and permanent fixtures on the land, and all rights and privileges belonging or in any way appertaining to the property. These terms also mean a manufactured home as defined in G.S (6) if it is a residential structure; has the moving hitch, wheels, and axles removed; and is placed upon a permanent foundation either on land owned by the owner of the manufactured home or on land in which the owner of the manufactured home has a leasehold interest pursuant to a lease with a primary term of at least 20 years for the real property on which the manufactured home is affixed and where the lease expressly provides for disposition of the manufactured home upon termination of the lease. A manufactured home as defined in G.S (6) that does not meet all of these conditions is considered tangible personal property. G.S Page 2

12 (13a) "Retail Merchant" means a taxpayer who is regularly engaged in the sale of tangible personal property, acquired by a means other than manufacture, processing, or producing by the merchant, to users or consumers. (13b) "Substantial understatement" means the omission of a material portion of the value, quantity, or other measurement of taxable property. The determination of materiality in each case shall be made by the assessor, subject to the taxpayer's right to review of the determination by the county board of equalization and review or board of commissioners and appeal to the Property Tax Commission. (14) "Tangible personal property" means all personal property that is not intangible and that is not permanently affixed to real property. (15) "Tax" and "taxes" include the principal amount of any tax, costs, penalties, and interest imposed upon property tax or dog license tax. (16) "Taxing unit" means a county or municipality authorized to levy ad valorem property taxes. (17) "Taxpayer" means any person whose property is subject to ad valorem property taxation by any county or municipality and any person who, under the terms of this Subchapter, has a duty to list property for taxation. For purposes of collecting delinquent ad valorem taxes assessed on real property under G.S through G.S , "taxpayer" means the owner of record on the date the taxes become delinquent and any subsequent owner of record of the real property if conveyed after that date. (18) "Valuation" means appraisal and assessment. (19) "Wholesale Merchant" means a taxpayer who is regularly engaged in the sale of tangible personal property, acquired by a means other than manufacture, processing, or producing by the merchant, to other retail or wholesale merchants for resale or to manufacturers for use as ingredient or component parts of articles being manufactured for sale. (1939, c. 310, s. 2; 1971, c. 806, s. 1; 1973, c. 695, ss. 14, 15; 1985, c. 656, s. 20; 1985 (Reg. Sess., 1986), c. 947, ss. 3, 4; 1987, c. 43, s. 1; c. 440, s. 2; c. 805, s. 3; c. 813, ss. 1-4; 1991, c. 34, s. 3; 1991 (Reg. Sess., 1992), c. 975, s. 1; c. 1004, s. 1; 1993, c. 354, s. 23; c. 459, s. 1; 1995, c. 461, s. 15; , s. 29A.18(c); , s. 1; , s. 4; , s. 4; , ss. 1, 8.) (Effective for taxes imposed for taxable years beginning on or after July 1, 2008) Definitions. The following definitions apply in this Subchapter: (1) Abstract. The document on which the property of a taxpayer is listed for ad valorem taxation and on which the appraised and assessed values of the property are recorded. (2) Appraisal. The true value of property or the process by which true value is ascertained. (3) Assessment. The tax value of property or the process by which the assessment is determined. (3a) (Effective for taxes imposed for taxable years beginning on or after July 1, See note for repeal.) "Builder" means a taxpayer licensed as a general contractor under G.S and engaged in the business of buying real property, making improvements to it, and then reselling it. (4) Repealed by Session Laws 1973, c. 695, s. 15, effective January 1, G.S Page 3

13 (4a) Code. Defined in G.S (5) Collector or tax collector. A person charged with the duty of collecting taxes for a county or municipality. (5a) Construction contractor. A taxpayer who is regularly engaged in building, installing, repairing, or improving real property. (6) Corporation. An organization having capital stock represented by shares or an incorporated, nonprofit organization. (6a) Discovered property. Any of the following: a. Property that was not listed during a listing period. b. Property that was listed but the listing included a substantial understatement. c. Property that has been granted an exemption or exclusion and does not qualify for the exemption or exclusion. (6b) Discover property. Determine any of the following: a. Property has not been listed during a listing period. b. A taxpayer made a substantial understatement of listed property. c. Property was granted an exemption or exclusion and the property does not qualify for an exemption or exclusion. (7) Document. A book, paper, record, statement, account, map, plat, film, (7a) picture, tape, object, instrument, or any other thing conveying information. Failure to list property. Any of the following: a. Failure to list property during a listing period. b. A substantial understatement of listed property. c. Failure to notify the assessor that property granted an exemption or exclusion under an application for exemption or exclusion does not qualify for the exemption or exclusion. (8) Intangible personal property. Patents, copyrights, secret processes, formulae, good will, trademarks, trade brands, franchises, stocks, bonds, cash, bank deposits, notes, evidences of debt, leasehold interests in exempted real property, bills and accounts receivable, or other like property. (8a) Inventories. Any of the following: a. Goods held for sale in the regular course of business by manufacturers, retail and wholesale merchants, and construction contractors. As to retail and wholesale merchants and construction contractors, the term includes packaging materials that accompany and become a part of the goods sold. b. Goods held by construction contractors to be furnished in the course of building, installing, repairing, or improving real property. c. As to manufacturers, raw materials, goods in process, finished goods, or other materials or supplies that are consumed in manufacturing or processing or that accompany and become a part of the sale of the property being sold. The term does not include fuel used in manufacturing or processing and materials or supplies not used directly in manufacturing or processing. d. A modular home as defined in G.S (21b) that is used exclusively as a display model and held for eventual sale at the retail merchant's place of business. G.S Page 4

14 e. Crops, livestock, poultry, feed used in the production of livestock and poultry, or other agricultural or horticultural products held for sale, whether in process or ready for sale. (9) List or listing. An abstract, when the term is used as a noun. (10) Repealed by Session Laws 1987, c. 43, s. 1. (10a) Local tax official. A county assessor, an assistant county assessor, a member of a county board of commissioners, a member of a county board of equalization and review, a county tax collector, or the municipal equivalent of one of these officials. (10b) Manufacturer. A taxpayer who is regularly engaged in the mechanical or chemical conversion or transformation of materials or substances into new products for sale or in the growth, breeding, raising, or other production of new products for sale. The term does not include delicatessens, cafes, cafeterias, restaurants, and other similar retailers that are principally engaged in the retail sale of foods prepared by them for consumption on or off their premises. (11) Municipal corporation or municipality. A city, town, incorporated village, sanitary district, rural fire protection district, rural recreation district, mosquito control district, hospital district, metropolitan sewerage district, watershed improvement district, a consolidated city-county as defined by G.S. 160B-2, or another district or unit of local government by or for which ad valorem taxes are levied. (12) Person. An individual, a trustee, an executor, an administrator, another fiduciary, a corporation, a limited liability company, an unincorporated association, a partnership, a sole proprietorship, a company, a firm, or another legal entity. (13) Real property, real estate, or land. Any of the following: a. The land itself. b. Buildings, structures, improvements, or permanent fixtures on land. c. All rights and privileges belonging or in any way appertaining to the property. d. A manufactured home as defined in G.S (6), unless it is considered tangible personal property for failure to meet all of the following requirements: 1. It is a residential structure. 2. It has the moving hitch, wheels, and axles removed. 3. It is placed upon a permanent foundation either on land owned by the owner of the manufactured home or on land in which the owner of the manufactured home has a leasehold interest pursuant to a lease with a primary term of at least 20 years and the lease expressly provides for disposition of the manufactured home upon termination of the lease. (13a) Retail merchant. A taxpayer who is regularly engaged in the sale of tangible personal property, acquired by a means other than manufacture, processing, or producing by the merchant, to users or consumers. (13b) Substantial understatement. The omission of a material portion of the value, quantity, or other measurement of taxable property. The determination of materiality in each case shall be made by the assessor, subject to the taxpayer's right to review of the determination by the county board of G.S Page 5

15 equalization and review or board of commissioners and appeal to the Property Tax Commission. (14) Tangible personal property. All personal property that is not intangible and that is not permanently affixed to real property. (15) Tax or taxes. The principal amount of any property tax or dog license tax and costs, penalties, and interest. (16) Taxing unit. A county or municipality authorized to levy ad valorem property taxes. (17) Taxpayer. A person whose property is subject to ad valorem property taxation by any county or municipality and any person who, under the terms of this Subchapter, has a duty to list property for taxation. (18) Valuation. Appraisal and assessment. (19) Wholesale merchant. A taxpayer who is regularly engaged in the sale of tangible personal property, acquired by a means other than manufacture, processing, or producing by the merchant, to other retail or wholesale merchants for resale or to manufacturers for use as ingredient or component parts of articles being manufactured for sale. (1939, c. 310, s. 2; 1971, c. 806, s. 1; 1973, c. 695, ss. 14, 15; 1985, c. 656, s. 20; 1985 (Reg. Sess., 1986), c. 947, ss. 3, 4; 1987, c. 43, s. 1; c. 440, s. 2; c. 805, s. 3; c. 813, ss. 1-4; 1991, c. 34, s. 3; 1991 (Reg. Sess., 1992), c. 975, s. 1; c. 1004, s. 1; 1993, c. 354, s. 23; c. 459, s. 1; 1995, c. 461, s. 15; , s. 29A.18(c); , s. 1; , s. 4; , s. 4; , ss. 1, 8; , s. 1.1; , s. 1; , s. 20.) G.S Page 6

16 Mobile home defined. For the purpose of G.S through , "mobile home" means a structure that (i) is designed, constructed, and intended for use as a dwelling house, office, place of business, or similar place of habitation and (ii) is capable of being transported from place to place on wheels attached to its frame. It also means a manufactured home as described in G.S (13). This definition does not include trailers and vehicles required to be registered annually pursuant to Part 3, Article 3 of Chapter 20 of the General Statutes. (1975, c. 881, s. 1; 1987, c. 805, s. 4.) G.S Page 1

17 Application for registration and certificate of title. (a) An owner of a vehicle subject to registration must apply to the Division for a certificate of title, a registration plate, and a registration card for the vehicle. To apply, an owner must complete an application provided by the Division. The application must request all of the following information and may request other information the Division considers necessary: (1) The owner's name. (1a) If the owner is an individual, the following information: a. The owner's mailing address and residence address. b. One of the following at the option of the applicant: 1. The owner's North Carolina drivers license number or North Carolina special identification card number. 2. The owner's home state drivers license number or home state special identification card number and valid active duty military identification card number or military dependent identification card number if the owner is a person or the spouse or dependent child of a person on active duty in the Armed Forces of the United States who is stationed in this State or deployed outside this State from a home base in this State. The owner's inability to provide a photocopy or reproduction of a military or military dependent identification card pursuant to any prohibition of the United States government or any agency thereof against the making of such photocopy or reproduction shall not operate to prevent the owner from making an application for registration and certificate of title pursuant to this subdivision. 3. The owner's home state drivers license number or home state special identification card number and proof of enrollment in a school in this State if the owner is a permanent resident of another state but is currently enrolled in a school in this State. 4. The owner's home state drivers license number or home state special identification card number if the owner provides a signed affidavit certifying that the owner intends to principally garage the vehicle in this State and provides the address where the vehicle is or will be principally garaged. For purposes of this section, "principally garage" means the vehicle is garaged for six or more months of the year on property in this State which is owned, leased, or otherwise lawfully occupied by the owner of the vehicle. 5. The owner's home state drivers license number or home state special identification card number, provided that the application is made pursuant to a court authorized sale or a sale authorized by G.S. 44A-4 for the purpose of issuing a title to be registered in another state or country. 6. The co-owner's home state drivers license number or home state special identification card number if at least one co-owner provides a North Carolina drivers license number or North Carolina special identification number. G.S Page 1

18 (1b) 7. The owner's home state drivers license number or special identification card number if the application is for a motor home or house car, as defined in G.S (27)d2., or for a house trailer, as defined in G.S (14). If the owner is a firm, partnership, a corporation, or another entity, the address of the entity. (2) A description of the vehicle, including the following: a. The make, model, type of body, and vehicle identification number of the vehicle. b. Whether the vehicle is new or used and, if a new vehicle, the date the manufacturer or dealer sold the vehicle to the owner and the date the manufacturer or dealer delivered the vehicle to the owner. (3) A statement of the owner's title and of all liens upon the vehicle, including the names and addresses of all lienholders in the order of their priority, and the date and nature of each lien. (4) A statement that the owner is an eligible risk for insurance coverage as defined in G.S (4a). (5) For registration and certificate of title for a nonfleet private passenger motor vehicle, a statement that providing incorrect or false and misleading information as to the owner's status as an eligible risk can result in criminal prosecution and the denial of insurance coverage for any loss of the owner under any insurance policies for which application is made if the owner provides false and misleading information as to eligible risk status. (6) For registration and certificate of title for a nonfleet private passenger motor vehicle, a statement that the owner will inform the insurer before the next policy renewal if the owner ceases to be an eligible risk. (a1) An owner who would otherwise be capable of attaining a drivers license or special identification card from this State or any other state, except for a medical or physical condition that can be documented to, and verified by, the Division, shall be issued a registration plate and certificate of title if the owner provides a signed affidavit certifying that the owner intends to principally garage the vehicle in this State and provides the address where the vehicle is or will be principally garaged. (b) When such application refers to a new vehicle purchased from a manufacturer or dealer, such application shall be accompanied with a manufacturer's certificate of origin that is properly assigned to the applicant. If the new vehicle is acquired from a dealer or person located in another jurisdiction other than a manufacturer, the application shall be accompanied with such evidence of ownership as is required by the laws of that jurisdiction duly assigned by the disposer to the purchaser, or, if no such evidence of ownership be required by the laws of such other jurisdiction, a notarized bill of sale from the disposer. (1937, c. 407, s. 17; 1961, c. 835, ss. 2, 3; 1975, c. 716, s. 5; 1991, c. 183, s. 2; 1993 (Reg. Sess., 1994), c. 750, s. 5; , s. 4; , ss. 1, 2; , s. 6; , ss. 4-7; , s. 4.1; , s. 4.) G.S Page 2

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20 Manufacturer's certificate of transfer of new motor vehicle. (a) Any manufacturer transferring a new motor vehicle to another shall, at the time of the transfer, supply the transferee with a manufacturer's certificate of origin assigned to the transferee. (b) Any dealer transferring a new vehicle to another dealer shall, at the time of transfer, give such transferee the proper manufacturer's certificate assigned to the transferee. (c) Upon sale of a new vehicle by a dealer to a consumer-purchaser, the dealer shall execute in the presence of a person authorized to administer oaths an assignment of the manufacturer's certificate of origin for the vehicle, including in such assignment the name and address of the transferee and no title to a new motor vehicle acquired by a dealer under the provisions of subsections (a) and (b) of this section shall pass or vest until such assignment is executed and the motor vehicle delivered to the transferee. Any dealer transferring title to, or an interest in, a new vehicle shall deliver the manufacturer's certificate of origin duly assigned in accordance with the foregoing provision to the transferee at the time of delivering the vehicle, except that where a security interest is obtained in the motor vehicle from the transferee in payment of the purchase price or otherwise, the transferor shall deliver the manufacturer's certificate of origin to the lienholder and the lienholder shall forthwith forward the manufacturer's certificate of origin together with the transferee's application for certificate of title and necessary fees to the Division. Any person who delivers or accepts a manufacturer's certificate of origin assigned in blank shall be guilty of a Class 2 misdemeanor, unless done in accordance with subsection (d) of this section. (d) When a manufacturer's statement of origin or an existing certificate of title on a motor vehicle is unavailable, a motor vehicle dealer licensed under Article 12 of this Chapter may also transfer title to another by certifying in writing in a sworn statement to the Division that all prior perfected liens on the vehicle have been paid and that the motor vehicle dealer, despite having used reasonable diligence, is unable to obtain the vehicle's statement of origin or certificate of title. The Division is authorized to develop a form for this purpose. The filing of a false sworn certification with the Division pursuant to this subsection shall constitute a Class H felony. The dealer shall hold harmless the consumer-purchaser from any damages arising from the use of the procedure authorized by this subsection. (1961, c. 835, s. 4; 1967, c. 863; 1975, c. 716, s. 5; 1993, c. 539, s. 331; 1994, Ex. Sess., c. 24, s. 14(c); , s. 1.) G.S Page 1

21 Replacement of lost or damaged certificates, cards and plates. (a) In the event any registration card or registration plate is lost, mutilated, or becomes illegible, the owner or legal representative of the owner of the vehicle for which the same was issued, as shown by the records of the Division, shall immediately make application for and may obtain a duplicate or a substitute or a new registration under a new registration number, as determined to be most advisable by the Division, upon the applicant's furnishing under oath information satisfactory to the Division and payment of required fee. (b) If a certificate of title is lost, stolen, mutilated, destroyed or becomes illegible, the first lienholder or, if none, the owner or legal representative of the owner named in the certificate, as shown by the records of the Division, shall promptly make application for and may obtain a duplicate upon furnishing information satisfactory to the Division. It shall be mailed to the first lienholder named in it or, if none, to the owner. The Division shall not issue a new certificate of title upon application made on a duplicate until 15 days after receipt of the application. A person recovering an original certificate of title for which a duplicate has been issued shall promptly surrender the original certificate to the Division. (1937, c. 407, s. 32; 1961, c. 360, s. 7; c. 835, s. 7; 1975, c. 716, s. 5.) G.S Page 1

22 Altering or forging certificate of title, registration card or application, a felony; reproducing or possessing blank certificate of title. (a) Any person who, with fraudulent intent, shall alter any certificate of title, registration card issued by the Division, or any application for a certificate of title or registration card, or forge or counterfeit any certificate of title or registration card purported to have been issued by the Division under the provisions of this Article, or who, with fraudulent intent, shall alter, falsify or forge any assignment thereof, or who shall hold or use any such certificate, registration card, or application, or assignment, knowing the same to have been altered, forged or falsified, shall be guilty of a felony and upon conviction thereof shall be punished in the discretion of the court. (b) It shall be unlawful for any person with fraudulent intent to reproduce or possess a blank North Carolina certificate of title or facsimile thereof. Any person, firm or corporation violating the provisions of this section shall be guilty of a Class I felony. (1937, c. 407, s. 35; 1959, c. 1264, s. 2; 1971, c. 99; 1975, c. 716, s. 5; 1979, c. 499; 1993, c. 539, s. 1251; 1994, Ex. Sess., c. 24, s. 14(c).) G.S Page 1

23 Perfection by indication of security interest on certificate of title. (a) Except as provided in G.S , a security interest in a vehicle of a type for which a certificate of title is required shall be perfected only as hereinafter provided. (1) If the vehicle is not registered in this State, the application for notation of a security interest shall be the application for certificate of title provided for in G.S (2) If the vehicle is registered in this State, the application for notation of a security interest shall be in the form prescribed by the Division, signed by the debtor, and contain the date of application of each security interest, and name and address of the secured party from whom information concerning the security interest may be obtained. The application must be accompanied by the existing certificate of title unless in the possession of a prior secured party. If there is an existing certificate of title issued by this or any other jurisdiction in the possession of a prior secured party, the application for notation of the security interest shall in addition contain the name and address of such prior secured party. An application for notation of a security interest may be signed by the secured party instead of the debtor when the application is accompanied by documentary evidence of the applicant's security interest in that motor vehicle signed by the debtor and by affidavit of the applicant stating the reason the debtor did not sign the application. In the event the certificate cannot be obtained for recordation of the security interest, when title remains in the name of the debtor, the Division shall cancel the certificate and issue a new certificate of title listing all the respective security interests. (3) If the application for notation of security interest is made in order to continue the perfection of a security interest perfected in another jurisdiction, it may be signed by the secured party instead of the debtor. Such application shall be accompanied by documentary evidence of a perfected security interest. No such application shall be valid unless an application for a certificate of title has been made in North Carolina. The security interest perfected herein shall be subject to the provisions set forth in G.S (b) When a manufacturer's statement of origin or an existing certificate of title on a motor vehicle is unavailable, a first lienholder who holds a valid license as a motor vehicle dealer issued by the Commissioner under Article 12 of this Chapter or his designee may file a notarized copy of an instrument creating and evidencing a security interest in the motor vehicle with the Division of Motor Vehicles. A filing pursuant to this subsection shall constitute constructive notice to all persons of the security interest in the motor vehicle described in the filing. The constructive notice shall be effective from the date of the filing if the filing is made within 20 days after the date of the security agreement. The constructive notice shall date from the date of the filing with the Division if it is made more than 20 days after the date of the security agreement. The notation of a security interest created under this subsection shall automatically expire 60 days after the date of the creation of the security interest, or upon perfection of the security interest as provided in subsection (a) of this section, whichever occurs first. A security interest notation made under this subsection and then later perfected under subsection (a) of this section shall be presumed to have been perfected on the date of the earlier filing. The Division may charge a fee not to exceed ten dollars ($10.00) for each notation of security interest filed pursuant to this subsection. The fee shall be credited to the Highway Fund. A false filing with the G.S Page 1