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Mobile homes often trade in a ‘gray market.’ Owners now have a chance to avoid back taxes.

Michelle Hutson took advantage of a tax relief program to save mother's mobile home

Daughter takes advantage of mobile home credit, an amnesty on back taxes and fees of her deceased mother's mobile home.
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Daughter takes advantage of mobile home credit, an amnesty on back taxes and fees of her deceased mother's mobile home.

Nearly 21,000 families in the four-county Sacramento region, and about a half-million across California, live in homes that are theoretically mobile.

For many, buying a home that’s up on blocks is one of the last opportunities for single-family homeownership in a state with some of the highest housing costs in the nation.

“If you can buy outright, it’s an affordable option,” said Michelle Hutson, who owns her double-wide mobile home in south Sacramento but rents the land beneath it for less than an apartment might cost.

With such homeowners in mind, housing advocates and state officials are pushing a new program that waives back taxes and fees to ensure that mobile home owners really do own their homes and are able to maintain the value of what’s often their largest asset.

The problem is that many residents who think they own their mobile homes may not hold proper title, or they may be so burdened with tax liens that they lose what equity they thought they had, said Ben Metcalf, director of the state Department of Housing and Community Development. In many cases, owners may be unaware of their precarious situations.

That’s because many mobile residences are bought and sold in what Metcalf called a “gray market,” much of it in the state’s 4,335 mobile home parks.

Sacramento County has 9,424 mobile homes. Placer County has 4,451. El Dorado and Yolo counties have 3,874 and 3,248, respectively.

Structures often change hands informally, with buyers and sellers trading money for a bill of sale. They don’t go through the more complicated process of transferring title, as one would do when buying a traditional single-family house. The title-search process would uncover taxes and registration fees that former owners hadn’t paid.

Many owners never knew their properties were required to be titled and registered; others wanted a title but couldn’t pay the back taxes and fees, state officials said.

Without title and registration, owners can face liens and they may be unable to sell their home, get insurance and building permits, or take advantage of government assistance programs.

“This program gives people who acquired a home but didn’t get the proper documentation a one-time opportunity to correct their situation and not have to pay many back taxes, fees and penalties often incurred by prior owners,” Metcalf said in a written statement. “With the proper title and registration, homeowners can have the security and peace of mind that comes from having a stable and secure home.”

Assembly Bill 587, which created the program, was passed by the state Legislature last year and signed into law by Gov. Jerry Brown. It took effect in January and runs through the end of 2019. Up to 160,000 homeowners may qualify, officials estimate.

Hutson, 53, was one of those who took advantage of the amnesty program. She lives in a manufactured home in the Southwind Mobile Estates in south Sacramento. She also inherited a mobile home from her mother in the Bay Point area of Contra Costa County. She plans to let her son live in the mobile home or maybe split her time between Sacramento and the Bay Area.

The inherited property gave her trouble, however, because of taxes that hadn’t been paid.

“When I contacted the HCD and inquired how I could get the mobile home into my name, they gave me all the info and applications I needed to fill out,” Hutson said. “But when they told me the taxes had not been paid for the last five years, my heart kind of sank. Then they told me I didn’t need to worry because, as of January, they had a program to waive those fees, and I qualified for it.”

The unpaid taxes were about $700.

“I would’ve come up with the money, but it would’ve been kind of rough at the time. I would have had to borrow it,” she said. “I had to pay a small fee to get a duplicate title in my mother’s name because I didn’t have the actual title in my hand, and then there was an application to transfer it into my name. It was a very easy process.”

Hutson said that mobile home ownership offered a safe refuge for her and her mother when they faced difficult times.

“My mother became disabled on her job in her 50s,” she said. “She (bought a mobile home) as a survival move.”

Hutson said she and her husband lost their prior home to foreclosure and moved into a mobile home because they could buy it outright and pay roughly $690 a month to rent the space beneath it – much cheaper than a comparable apartment, she said.

The median income of mobile-home-owning families is just under $60,000 per year, state figures show.

“Affordability has been a major challenge for Californians up and down the state,” Metcalf said. “The state of California has the highest poverty rate in the nation once you factor in the cost of housing. One part that offers natural affordability is the mobile-home and manufactured-home market.”

The California Rural Legal Assistance Foundation promoted the bill that created the HCD’s Fee and Tax Waiver Program. Brian Augusta, a legislative advocate for the foundation, said mobile homes “continue to be a good option for a range of homeowners – families trying to get a little bit of a foothold in homeownership, a retirement community for downsizing seniors.

One big downside is that most mobile homes are mobile in name only. It costs thousands of dollars to move a unit, putting many homeowners at risk from rising rents, he said. Once the wheels are off and the home is up on blocks, it’s likely to stay put.

Even mobile homes are getting more expensive, along with the rest of the state’s housing stock.

Still, “if people are savvy and have a little bit of education (about buying and owning), there’s no reason for people to shy away from mobile homes,” Augusta said. “People just need to know it’s not as simple as buying a home.”

Part of the complexity comes from the fact that mobile homes, which rose in popularity after World War II, fall legally somewhere between a house and a car.

Mobile homes were once required to be registered with the Department of Motor Vehicles, like trailers. Now they have to be registered with the Department of Housing and Community Development, which collects annual registration fees if the mobile homes are more than about 35 years old. Owners of newer homes pay county property taxes, just like owners of houses built on foundations.

“It could be that one in three mobile homes are in this limbo,” Metcalf said. “The Legislature passed this law for relief. If you come in out of the dark and can prove title with a historic bill of sale, we’ll relieve you of back taxes and back liens. That’s a win-win across the board.”

For more information, go to RegisterYourMobilehomeCA.org or call 1(800) 952-8356. Assistance is available in all languages, HCD says.

Hudson Sangree: 916-321-1191, @hudson_sangree

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