The sole issue to be decided in this appeal is the priority of competing liens in and to a manufactured

[mobile] home located on, but not attached to, a parcel of real estate which is the subject of a foreclosure action.

The land and mobile home were both previously owned by Rose Day.

On February 18, 1999, Ms. Day conveyed

[transferred] the real estate to Anthony Reynolds and Kim Reynolds by deed, which was thereafter duly recorded in the Garrard County Clerk’s Office. The deed description does not mention the mobile home;

but it is clear from the record that the Reynolds were purchasing both from Ms. Day. The Reynolds further executed a mortgage to Washington Mutual Bank’s predecessor in interest that was recorded shortly after the deed conveying a security interest in the * * * property. There is no question the Washington Mutual Bank has a valid and fi rst lien on the real property.b There is no specifi c mention of the mobile home on the mortgage. Additionally, the Reynolds did not obtain a title certifi cate to the mobile home in their name. The evidence reveals that at the time of fi ling of the Complaint in this action by Washington Mutual, the mobile home was still titled in Ms. Day’s name. There was no title lien statement issued in favor of Washington Mutual, or its predecessors in interest.
The parties acknowledge that the mobile home was never legally affi xed to the real property so as to remove it from the motor vehicle title records and change its character from personal property to real property.
On or about May 30, 2002, the Reynolds executed a second mortgage encumbering [burdening] the real property in favor of Citizens. Once again there was no description of the mobile home in the mortgage and no title lien statement issued in favor of Citizens. The Reynolds subsequently defaulted on both loans prompting the fi ling of the present litigation.
The Complaint was fi led by Washington Mutual on April 16, 2007, claiming lien priority on both the real estate and the manufactured home. On April 19, 2007, the Plaintiff [Washington Mutual] recorded a lis pendensc notice with the Garrard County Clerk’s Offi ce claiming an interest in both the real estate and the mobile home. The lis pendens and its amendment both identifi ed Citizens National Bank of Jessamine County as an interested party. Further, Citizens was listed as a party defendant and properly served with the Complaint.
On May 16, 2007, after being served with the Complaint, Citizens and the Reynolds executed a Title Lien Statement regarding the mobile home, which was recorded in the Garrard County Clerk’s Offi ce on August 14, 2007.
The master commissioner * * *
determined that [the relevant Kentucky statute concerning the lis pendens] applied equally to real and personal property. Without further citation to authority, the master commissioner found “the fi ling of the Complaint and lis pendens by Washington Mutual created a priority claim in the mobile home.”
* * * The master commissioner concluded Washington Mutual’s claims to the real estate and the manufactured home should be given priority over all other claims.
* * * *
[The trial court confi rmed the master commissioner’s report, and this appeal followed.]
Citizens contends the trial court erred in confi rming the master commissioner’s report as it was based on the erroneous conclusion that the fi ling of a complaint and lis pendens created a priority lien on the manufactured home. Citizens contends the purpose of a lis pendens is to provide notice of a claim and applies only to interests in real estate.
* * * *
We agree with Citizens.
Kentucky’s lis pendens statute clearly applies only to real estate.
* * * As adopted in this Commonwealth, the UCC does not allow for the fi ling of a lis pendens on personal property such as the manufactured home in issue here.
* * * KRS [Kentucky Revised Statutes] 186A.190 provides that the sole means of perfecting a security interest in personal property for which a certificate of title is issued is by placing a notation of the lien on the certificate of title. There is no dispute Citizens has so perfected its lien but Washington Mutual has not.
It is fundamental that unperfected security interests are subordinate to perfected security interests. This is true regardless of Citizens’ knowledge of Washington Mutual’s filing of a notice of lis pendens and any claim set up by such fi ling because, as we stated earlier, the notice of lis pendens applied only to the real estate which was the subject of the underlying foreclosure action, and not the manufactured home situated thereon. Because Washington Mutual has failed to perfect its lien under the mandates of KRS 186A.190, its interest in the Reynolds’ manufactured home must necessarily give way to Citizens’ perfected claim. The master commissioner’s findings were incorrect and the trial court erred in not so finding. [Emphasis added.]

Questions:-

1. According to the court, which of the two security interests in the land on which the manufactured home was situated had priority? Why?

2. Suppose that the manufactured home had been affixed to the land and regarded as real property. In that situation, which of the two security interests would have taken priority? Why?