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Mobile Home Issues in Tax Sales

Posted by 15789465 on

A mobile home is considered personal property unless you complete some paperwork to have it officially considered real property. Almost nobody does that paperwork, so the mobile home remains personal property. On the other hand, if you own a mobile home and put it on land that you also own, you pay ad valorem taxes on the land and the mobile home. What happens after a tax sale?  Who gets the mobile home?  The brand new case of Greentree-AL LLC v. Dominion Resources L.L.C. answers that question.  It says that the mobile home is not part of the tax sale. Only the land passes.  Investors BEWARE:  If you buy tax sale property with a mobile home, and rent out the mobile home, you probably won't be entitled to keep the rents if the owner redeems! The issue in Greentree was a lien on the mobile home. Greentree provided the financing to purchase the mobile home.  The owner did not pay her real estate taxes.  St. Clair County sold the property at the annual tax auction in May 2005, and Dominion bought it.  It's not clear from the court opinion, but it seems the owner continued to live in the mobile home, and to make her mortgage payments. Dominion received a tax deed in May of 2008, and then filed an ejectment action and had the former owner thrown off the property. That's probably when she decided to stop making her mortgage payments. Perhaps it happened earlier. Either way, Greentree wanted to repossess the mobile home.  Dominion said it was THEIR mobile home because of the tax sale, but if Greentree wanted to redeem, it could do so for almost $37,000. That figured included $10,000 in preservation improvements (disputed by Greentree) and almost $10,000 in legal fees (also disputed by Greentree as not allowed under the statute.)  Greentree sued Dominion to regain possession of the mobile home. The trial court ruled in favor of Dominion, and said Greentree must redeem before it could get the mobile home.  Greentree appealed to the Alabama Court of Civil Appeals. The higher court ruled in favor of Greentree. It said that mobile homes are personal property, and just because someone has to pay real estate taxes on them, does not convert them into real property.  The court said that a tax sale transfers only the real property, not personal property.  As a result, Greentree was entitled to repossess the mobile home. The court pointed out that it was NOT making a decision about whether Greentree might need to reimburse Dominion for that part of the taxes attributable to the mobile home. It was also NOT making a decision about whether Greentree might owe Dominion some money for taking care of Greentree's collateral in the meantime.  Those decisions would have to be made by the trial court, after the appeal. I've been in communication with the owner of Dominion Resources, who says he is deciding whether to file a petition for certiorari with the Alabama Supreme Court, and let the highest court in this state make a decision. To read the Alabama Court of Civil Appeals decision, click HERE.  

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10 comments

  • I’d give them a copy of the Alabama Supreme Court decision that says it was not sold to you.

    Denise L. Evans on
  • how do i explain to community development that the vacant mobile home with housing violations wasn’t actually sold to me.

    howard ross on
  • Hi Chuck, Great advice to all the foreclosure investors out there! Just because there’s been a foreclosure of a property on which the owner of the land also had a mobile home, does not mean the foreclosure purchaser also gets the mobile home!

    Denise L. Evans on
  • Hi James, Good advice! You cannot take anything for granted in that area.

    Denise L. Evans on
  • Hi Howard, It seems you were wise to be so cautious. (1) A mobile home is the same thing as manufactured housing (2) As the decision explains, the mobile home is assessed as real property for property tax purposes, but it order to lose its identity as personal property and become real property, a particular form must be filled out and filed; and (3) Technically, redemption can occur only after a valid tax sale. Reimbursement would occur after a void tax tax and the purchaser is entitled to be reimbursed for taxes paid, plus under equitable principles perhaps be entitled to actions take to prevent the property from deteriorating in value, such as paying for insurance and possibly fixing a leaking roof.

    Denise L. Evans on

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