In the Matter of Bennett

In October 1997, Shane Lee and Robin Marie Bennett (debtors) purchased a manufactured home to install on their ranch in Nebraska. The Bennetts borrowed money from Gothenburg State Bank (the bank) (creditor) to cover the down payment and cost of installation. The Bennetts financed the balance by signing an installment sales contract with the predecessor in interest of GreenPoint Credit (GreenPoint) (creditor). The Bennetts had previously received loans from the bank and its predecessor, and they had offered liens on their land and other assets. The bank had perfected its interests in land by recording two deeds of trust, one in March 1997 covering fixtures attached to land and containing a clause covering future advances. In October 1997, GreenPoint’s predecessor perfected its interest by notating its lien on the home’s certificate of title. In Nebraska, manufactured homes are defined as mobile homes, with perfection following the rules for motor-vehicle registration. When the Bennetts filed for bankruptcy in April 2001, both the bank and Greenpoint claimed to have priority. At purchase, the Bennetts told the seller they intended to attach the home to real estate. The home was sold in two halves that had to be combined on-site. The home did not have a steel frame, which would have permitted the attachment of wheels for towing. The Bennetts took other steps such as (1) installing a concrete foundation and basement, (2) attaching the home to underground utility lines for electricity, water, and telephone, and (3) constructing a deck. The bankruptcy court considered the issue of priority at an adversary proceeding.