## Facts

- Pauline Fink (debtor) bought a mobile home from Palmer Mobile Homes, Inc. and, in a retail installment contract, granted the dealer a security interest in the home.
- The dealer assigned the security interest to Endicott Trust Company of New York (Endicott).
- Endicott filed a UCC financing statement describing the collateral as a “24 × 52 1977 Bendix,” but did not file in the office where a real-estate mortgage would be recorded and did not include a description of the related real property.
- At the time the mobile home was delivered, Fink was leasing the lot (Route 415, Town of Campbell) from Wemco Corp. (Wemco).
- Shortly after delivery, Fink contracted to buy the real property from Wemco for $24,000; when the deed was delivered, Fink gave Wemco a purchase-money mortgage for the full price.
- The unit was installed on the land in a manner comparable to a conventional residence: a foundation area was excavated; concrete footers were installed; concrete blocks were cemented to the footers; beams and supports were used to hold the structure.
- The home was delivered in two sections on steel cradles, set onto the foundation supports, and the sections were bolted together.
- Shingles and roofing were installed, and permanent connections were made for a septic system, water lines, and electricity.
- Fink later filed bankruptcy. Endicott asserted a secured claim based on its security interest in the mobile home.
- The trustee (joined by Fink) brought an adversary proceeding to avoid Endicott’s security interest and to preserve the avoided lien for the estate against Wemco pursuant to Bankruptcy Rule 611.

## Issues

1. Whether the mobile home, as installed on the property, was a fixture (part of the realty) under New York law rather than personal property.
2. If it was a fixture, whether Endicott’s financing statement—filed only as a personal-property UCC filing and lacking a real-property description and real-estate record filing—perfected Endicott’s security interest against the bankruptcy trustee and Wemco’s recorded purchase-money mortgage.
3. Whether the trustee could avoid Endicott’s security interest and preserve the avoided lien for the benefit of the estate under Bankruptcy Rule 611.

## Decision

- The court found that the mobile home, given the excavation, foundation work, bolting of sections, roofing, and permanent utility connections, became a fixture attached to the real property.
- Because the collateral was a fixture, Endicott needed a proper fixture filing (filed in the same office as real-estate mortgages and containing a description of the affected real property); Endicott’s personal-property filing did not meet those requirements.
- Endicott therefore did not have a perfected security interest in the fixture as against the trustee and competing interests in the realty, including Wemco’s purchase-money mortgage.
- The trustee was permitted to avoid Endicott’s unperfected lien and preserve it for the benefit of the estate under Bankruptcy Rule 611 as against Wemco.

## Legal Principles

- Whether an item is a fixture depends on objective factors such as the manner of attachment to the land, the item’s function in relation to the real property, and whether the installation shows an intent that it remain in place.
- A security interest in goods that have become fixtures generally must be perfected by a fixture filing: a financing statement recorded in the real-estate recording office and containing a description of the related real property (and other fixture-filing elements required by Article 9).
- A financing statement sufficient for ordinary personal property does not perfect a fixture interest against parties who rely on real property records, including real-estate mortgagees, purchasers, and a bankruptcy trustee exercising strong-arm powers.
- When a trustee avoids an unperfected lien, the lien may be preserved for the estate under Bankruptcy Rule 611 so the estate, rather than junior parties, receives the value of the avoided interest.

## Conclusion

In re Fink held that a mobile home installed on a concrete foundation with roofing, bolted sections, and permanent utility connections became a fixture, so the assignee-creditor’s ordinary UCC filing (without a fixture filing in the real-estate records and without a real-property description) left its security interest unperfected and subject to avoidance and preservation by the trustee for the estate as against the real-estate mortgagee.


In re Fink, 4 B.R. 741 (1980)