The plaintiffs own and operate manufactured housing parks where they lease sites to tenants who own manufactured housing units. The city assessed property taxes to owners of the manufactured housing units and assessed the plaintiffs for the value of the land. Customarily when a site becomes available in a park the plaintiff park owners will place a new unit on the site, unconnected to utilities and offer it for sale. Under RSA 72:7-a “manufactured housing suitable for use for domestic, commercial or industrial purposes is taxable as real estate,” except for manufactured housing held for sale or storage by an agent or dealer. Under RSA 80:2-a manufactured housing that is taxed as real estate may not be moved from the location where it was last taxed unless all outstanding taxes have been paid in full.
The city assessed property taxes to the plaintiffs for manufactured housing units while they were on site, available for sale but not yet connected to utilities. The city also took the position that the plaintiffs may not remove units abandoned by park tenants without paying the property taxes. The plaintiffs petitioned the Superior Court for a declaratory judgment with two claims: (1) manufactured housing units are not taxable as real property under RSA 72:7-a while they are for sale because the plaintiffs are “dealers” and the units are not “suitable for use” when not connected to utilities; and (b) the plaintiff park owners are not subject to RSA 80:2-a when they remove abandoned units after eviction of the tenants from their parks. The trial court found that the city properly taxed the plaintiffs for the installed units prior to sale, and the court declined to rule on the claim related to the abandoned units. The plaintiffs appealed to the Supreme Court.
The Supreme Court reviewed the lengthy history of RSA 72:7-a and held that the plaintiff park owners are not “dealers” within the meaning of the statute because their primary business is owning and managing manufactured housing parks. In support of their argument that the units are not suitable for use if not connected to utilities, the plaintiffs pointed to RSA 477:44, which deems a manufactured housing unit to be real estate for purposes of transfer of title when it is placed on a site and connected to utilities. The Court held that RSA 477:44 does not control the meaning of RSA 72:7-a. A unit is “suitable for use,” the Court reasoned, whether or not the final step has been taken to connect it to utilities. “A manufactured housing unit may be fit for eventual use as a domestic dwelling or for commercial or industrial purposes as soon as it is manufactured with such use in mind, regardless of whether it is connected to utilities.”
Turning to RSA 80:2-a, the Supreme Court rejected the plaintiffs’ argument that the statute applies only to owners of manufactured housing. The statute plainly applies to anyone relocating manufactured housing or other buildings or structures.
Collection of property taxes on abandoned manufactured housing is difficult. A tax deed is often inadvisable. The municipality will become liable for rent. The park owner typically will have obtained a writ of possession to evict the tenant, and the cost of removing the manufactured housing can exceed its market value without a site. The Supreme Court’s interpretation of RSA 80:2-a at first appears to help towns and cities with the tax collection problem. However, in its review of the applicable statutes, the Court pointed to the remedy for the manufactured housing park owners under RSA 205-A:4-a, VII, which allows the park owner to sell the unit to recover unpaid rent, moving and storage costs after eviction. The statute provides in part: “The board of selectmen or assessors … may issue a statement that the manufactured housing may be relocated without the payment of the taxes assessed thereon as provided in RSA 80:2-a in the event the proceeds from the sale are insufficient to pay the full amount of the property tax outstanding.” This language seems to imply a duty on the part of the town or city to compromise in at least some circumstances, but further clarification will have to await additional litigation or legislative action.