A cautionary tale
Luz Diaz is a Colombian national who legally immigrated to the United States decades ago. Her daughter is a U.S. citizen. Her husband accompanied her but eventually returned to Colombia. Diaz lived modestly in various rental apartments, including a basement unit in the coal region with moldy walls and limited egress.
She found an older manufactured home in a mobile home park. The cost to live in the park was around $650, with increases in rent promised. But the park was safe and offered great amenities. The manufactured home was livable — and cheap, at $6,000. She barely had the money saved. Diaz took the plunge to homeownership.
Manufactured homes are transferred using a motor vehicle title. For Diaz, repairs were needed and made before her move-in. She transferred the title from the previous owner.
Manufactured homes often sell for cash because they can be priced low and banks refuse to offer mortgages.
A manufactured home is considered affordable housing. Municipalities often shy away from the affordable option provided by manufactured housing because certain locations have sordid reputations. Taxes are paid by the home’s owner, and there is a separate higher tax on land occupied by mobile home parks.
In 2013, the state passed a new law stating that any transfer of a manufactured home must have a tax certification stating that taxes are paid. Single-family residences have a similar requirement when they are transferred to a new owner. The certification requirement reduces the chances that a mobile home is transferred to a new owner with taxes overdue.
In her purchase, Diaz received her tax certification and accepted the title from the previous owner. She moved in. Everything seemed to be in order. She was able to pay her bills on her limited Social Security income. She picked up handy jobs cleaning and gardening.
Included in the state law (HB 1767) that required tax certifications were certain administration processes that allowed park owners to get unpaid taxes forgiven for owners who abandon properties. At first glance, forgiving unpaid taxes is viewed as a cardinal sin. However, in the manufactured home world, taxes can exceed the cost of the home. No one will buy a home with delinquent taxes. Best to get the unit removed or get a new unit in that pays higher taxes.
There are several reasons that tax liability can exceed the value of the property. The biggest one is that mobile homes decrease in value, and the county has neither the intention nor personnel to effectively reassess mobile homes on a recurring basis. Most owners do not know they have an option to request a reassessment.
Before the new law, if an owner walked away from a manufactured home, the property sat vacant. A park did not want to take ownership because it would be required to pay back taxes. To get a unit paying lot rent, the park would just give the unit away even though it had no legal right to do so. To a park manager, lot rent and unit sales are the business. Having a unit sit there doing nothing is a loss. Resolving this problem is the basis of HB 1767.
What happened before the new law is what came back to devastate Diaz two years after she moved in. She followed the rules when she purchased her home, but the owner before the last owner transferred the title without regard to taxes. The previous owner acquired it by filing for and receiving a title. There was no requirement to certify that taxes were paid at that time.
Diaz got a notice that school taxes were not paid in 2011, well before she owned her mobile home. The Northampton Area School District uses a third-party collector, Portnoff Law, to collect school taxes.
Even though Diaz can show there was a broken chain of title because the park owner took no action on the property, she is stuck with a property tax bill she cannot pay. Half of the bill is for legal fees.
The Diaz tax bill, with fees, is around $1,200. It is all based on a distant 2011 tax bill that was not handled properly. The actual tax due may be under $500.
You might ask, why not take the property to tax sale and collect money? If the school district or Portnoff takes the property, it becomes the owner and technically needs to pay lot rent to the mobile home park owner until the home can be sold.
Portnoff and the school board take action in this type of situation to collect taxes equally from everyone who owes. A negotiating point might be to forgive the taxes and move on. Diaz said she was not allowed a negotiated settlement. Penn Legal Services, a legal arm for low-income people, was unable to resolve this dilemma. There was a payment plan worked out with Portnoff Law; however, it still cuts deeply into her expenses.
State Rep. Marcia Hahn, R-138th, issued guidelines to warn purchasers of the pitfalls that can happen when buying a mobile home.
“The state of Pennsylvania treats mobile and manufactured homes in parks like vehicles, in that they must be titled through PennDOT, and a checklist exists for buyers and sellers to follow when entering into such a transaction,” she said.
A fact sheet explaining the purchasing process is available by visiting the Pennsylvania Department of Transportation website, penndot.gov, and searching for “Titling a Mobile Home or Manufactured Home.”
The new rules enacted by the legislature resolved many of the problems, with one glaring omission. It is not mandatory for park owners to follow ownership rules. Even with precautions, it may be difficult to determine if there is compliance.
One option is to make park owners responsible for accurate ownership. There are more than 300 units in the park where Diaz lives and township authorities need assistance keeping track of the ownership of so many units. A large mobile home park is often a community unto itself.
A new case working through the courts involves an investor who took a property on a verbal assignment but is now denied ownership because the park technically did not own the property when the verbal agreement was made. The park can sell the property without reimbursing the tradesmen who worked to improve the property.
Mobile homeowners are protected under their own rights act, but these situations are not readily enforceable.
Property owners are also beginning to question the value of the constant increase in property taxes. It is not believed the municipal services are measuring up to the increasing taxes.
Diaz has a GoFundMe account, gofundme.com/help-Luz-Diaz, to assist with the tax bill.
(Editor’s note: Paul Cmil is the owner of a mobile home park and purchases mobile homes for investment.)