Your Guide to Chattel Loans for Mobile | Modular | Mini Homes in Canada
In the Canadian real estate landscape, understanding the difference between chattels and fixtures is essential for buyers, sellers, and realtors alike.
These classifications not only affect property descriptions and legal obligations but also have significant financial implications when it comes to loans, taxes, and commissions. Among the most important (and often misunderstood) components of this landscape is the chattel loan, especially as it applies to modular homes, mobile homes, and mini homes.
This guide aims to be the definitive source for understanding chattel loans in Canada—what they are, how they work, and how they compare across the spectrum of chattels, from major property purchases to minor home features.
What Is a Chattel?
In Canadian property law, a chattel refers to personal property that is movable and not affixed to the land or structure. This can range from the small (appliances, furniture, light fixtures, curtains) to the large (mobile homes, modular homes, RVs, even certain sheds). By contrast, fixtures are items permanently attached to the property and are generally considered part of the real estate.
Understanding this distinction is crucial. While fixtures transfer with the property as part of a standard sale, chattels must be itemized in the Agreement of Purchase and Sale if they are to be included. If they are not listed, they are not legally included in the sale.
What Is a Chattel Loan?
A chattel loan (or chattel mortgage) is a type of personal property financing, secured against movable assets rather than real estate. In the context of mobile, modular, or mini homes—especially those not permanently affixed to land—a chattel loan is often the only viable financing method.
Chattel loans differ significantly from traditional mortgages:
Higher interest rates due to greater risk and shorter amortization periods.
Less stringent approval requirements, which can benefit those with lower credit.
Faster processing, making them appealing for certain buyers.
Applicable only when the property is not affixed to land (i.e., not considered real property).
Mobile, Modular, and Mini Homes: When Are They Chattels?
Mobile homes on leased land or in mobile home parks are typically classified as chattels.
Modular homes that are not affixed to a permanent foundation also qualify as chattels.
Mini homes (small, prefabricated homes) follow similar rules—if they’re not attached, they’re not fixtures.
Once a structure is permanently affixed to land (connected to utilities, mounted on a foundation), it can usually qualify for a traditional mortgage and is treated as real estate, not a chattel.
What Can (and Can’t) Be Financed With a Chattel Loan?
Chattel loans are not limited to large structures. In theory, anything considered a chattel can be financed—but there are practical and economic limits. Let’s break it down:
Common items financed via chattel loans:
Mobile homes
Modular homes
RVs and large vehicles
Boats
Farm equipment
Less common (but technically possible):
Sheds
Detached garages
Highly unusual (impractical or uneconomical):
Curtains
Appliances
Furniture
While you could technically take out a personal loan or line of credit (secured or unsecured) to finance smaller chattels like curtains or home decor, formal chattel loans are rarely, if ever, used for small household items. The administrative costs and interest rates make such arrangements unreasonable for all but the most expensive items.
Including Chattels in a Real Estate Deal
Including chattels in a purchase agreement can complicate the transaction:
Value Assignment: If chattels are assigned a separate value from the home (e.g., $80,000 in furniture, $620,000 for the house), it can trigger legal and tax scrutiny.
Tax Implications: Misrepresenting value allocation to avoid land transfer taxes or reduce property price for tax purposes can constitute tax fraud.
Legal Risk: Realtors are advised against facilitating or encouraging any misrepresentation related to chattel value, as it can be construed as mortgage or tax fraud.
Chattels should always be listed transparently in the Schedule B or chattel section of the Agreement of Purchase and Sale.
Realtor Commission on Chattel Value
A key consideration for real estate professionals: commissions are typically only paid on the real property sale price. This means that if $80,000 worth of chattels are broken out separately, they do not count toward the commissionable amount.
This is especially relevant in markets like cottage country or vacation areas where homes are often sold furnished. Realtors may find themselves negotiating a significant sale where a sizable portion of the value is excluded from their commission.
Chattel Loan Rates & Accessibility in Canada
Chattel loans are often easier to qualify for, especially for those with modest credit or those purchasing lower-priced homes. However, they come with trade-offs:
Interest Rates: Typically 1-3% higher than traditional mortgages.
Loan Terms: Shorter amortizations (10-20 years rather than 25+).
Down Payments: May require larger down payments, especially for older mobile homes.
Insurance & Inspection: Lenders may require specialized insurance and thorough inspection.
Not all banks offer chattel loans. Specialized lenders, mobile home dealers, and credit unions are more likely to provide this financing. For example, Scotiabank offers specific chattel mortgage forms for mobile/modular/mini homes.
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Final Thoughts: Navigating Chattel Classification and Loans
Understanding how chattels interact with real estate transactions is critical. For buyers, it can affect what they’re actually getting. For sellers, it may impact the legal structure of their deal. For realtors, the inclusion of large chattels like mobile homes can alter commission expectations, loan eligibility, and disclosure requirements.
Key takeaways:
Mobile, modular, and mini homes are considered chattels only when not permanently affixed to land.
Chattel loans provide an accessible way to finance movable dwellings, but with higher interest rates.
Smaller chattels (appliances, curtains) are typically not financed via chattel loans.
Transparency in agreements is crucial to avoid tax and legal issues.
As Canada continues to evolve its housing solutions, especially in affordable and modular living, understanding chattel financing is no longer optional—it's essential.
