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Covenants Prohibiting ‘Prefabricated’ Housing Can Unintentionally Exclude Systems-Built Homes

As more builders and consumers are looking to factory-crafted homes and components for better efficiency and performance, the NAHB Building Systems Councils is working to clear up public confusion about the term “prefabricated.” When used too broadly or erroneously, the term can result in the exclusion of systems-built homes from residential communities.

Generically, “prefabricated” can be used to define any type of housing or component that is, in any way, constructed in a factory before it is shipped to the home site. This applies to roof trusses and floor panels, as well as to certain types of housing, including modular, panelized, log and concrete homes.

Confusion arises, however, when the term is also applied to manufactured housing, including trailer or “mobile” homes. “Prefabricated” is too general a term to accurately describe the advantages of code-compliant, factory-crafted housing.

While the construction of “systems-built” homes does begin in a factory, there is more involved in their production than prefabrication. While they are built with prefabricated components, they are also assembled in a precise system to meet local and state building codes. Structurally, they are at least as strong as homes built entirely on site and they show comparable appreciation in value.

Building Systems Councils Advocacy Chairman John Colucci of Westchester Modular Homes says that confusing “prefabricated” and “systems-built” can often lead to unintended consequences. “Many times, in an effort to exclude manufactured homes — or mobile homes — from subdivisions, land developers and real estate lawyers will rely on boilerplate text that bans all ‘prefabricated’ homes. While these restrictive covenants will exclude mobile homes from a community, they also unintentionally bar modular, panelized, concrete and log homes.”

Systems-built construction applies to roughly 30% of all new housing being produced, and as it continues to gain in popularity across the country, using “prefabricated” and “systems-built” interchangeably can create problems for developers, builders and home buyers.

“Once covenants that prohibit a certain type of housing are drafted and accepted, they are very difficult to overturn,” noted Colucci.

The NAHB Building Systems Councils represents the builders, suppliers and producers of modular, panelized, log and concrete homes.

For more information about systems-built housing and how to draft covenants that include these types of homes, contact NAHB’s Building Systems Councils at 800-368-5242 x8576.

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