Untitled Texas Attorney General Opinion ( 2005 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
July 28,2005
The Honorable Joel D. Littlefield Opinion No. GA-0343
Hunt County Attorney
Post Office Box 1097 Re: Whether the Department of Housing and
Greenville, Texas 75403-l 097 Community Affairs must revoke the statement of
ownership and location, issued under Occupations
Code section 1201.207, of a manufactured home
when the home has been relocated without the
payment of ad valorem taxes (RQ-03 13-GA)
Dear Mr. Littletield:
You ask whether the Department of Housing and Community Affairs (the “Department”)
must revoke the statement of ownership and location (the “Statement”), issued under Occupations
Code section 1201.207, of a manufactured home when the home has been relocated without the
payment of ad valorem taxes.’ See TEX. Oct. CODE ANN.0 1201.207 (Vernon 2004); TEX. TRANSP.
CODE ANN. 5 623.094 (Vernon 1999).
Your question follows from what you describe as the Hunt County Tax Office’s loss of
“extensive tax revenues as a result of [manufactured] homes being removed from the County with
delinquent taxes remaining unpaid.” Request Letter, supra note 1, at 1. You continue:
It has been alleged that finance companies who loan monies for the
purchase of manufactured homes are circumventing the provisions of
the Texas Property Tax Code requiring taxes to be paid prior to the
acquisition of a permit to move the manufactured home by submitting
false or fraudulent documentation to the . . . Department . . .
indicating that no taxes are due. Based on the false or fraudulent
information, the . . . Department . . . transfers titles to the mobile
homes. Once ownership is transferred on the title, the Tax Office’s
lien effective January 1 is extinguished and the debt becomes
uncollectible.
Id. at l-2.
‘See Letter from Honorable Joel D. Littlefield, Hunt County Attorney, to Honorable Greg Abbott, Texas
Attorney General (Jan. 24, 2005) (on tile with Opinion Committee, also available at http://www.oag.state.tx.us)
[hereinafter Request Letter].
The Honorable Joel D. Littlefield - Page 2 (GA-0343)
.
Your request implicates several statutes: chapter 1201 of the Occupations Code, the Texas
Manufactured Housing Standards Act (the “Act”), see TEX. OCC. CODEANN. $1201 .OOl (Vernon
2004); chapter 623, subchapter E of the Transportation Code, relating to the transport of a
manufactured house over a highway, road, or street, see TEX. TRANSP.CODEANN. 0 623.092(a)
(Vernon 1999); and chapter 32 of the Tax Code, relating to tax liens, see TEX. TAX CODE ANN.
0 32.01(a) (Vernon 2001). We will examine relevant portions of each of these statutes in turn.
I. Relevant Statutes
A. The Act
The Act, which is to “be liberally construed to promote its policies and accomplish
its purposes,” TEX.Oct. CODE ANN. 3 1201.002(c) (Vernon 2004), provides the Department with
jurisdiction over applications for and the issuance of Statements. See id. 3 1201.203(a). A
Statement is a Department-issued document that sets forth “the ownership and location of a
manufactured home that has been sold at a retail sale or installed in this state” and “other information
required by this chapter.” Id. 3 1201.003(23-a). Under section 1201.205 of the Occupations Code,
a Statement must describe the manufactured home’s make, model, and dimensions, and list certain
information, including the purchaser’s and seller’s names and addresses, recorded liens on the home,
the home’s location, and “any other information the director requires.” Id. 5 1201.205; see also 10
TEX. ADMIN.CODE 4 80.204(a) (2004) (Department of Housing & Community Affairs, Titling
Forms) (listing the information a document of title must contain); TEXAS DEP’T OF HOUSING &
COMMUNITYAFFAIRS,APPLICATIONFORSTATEMENTOFOWNERSHIPAND LOCATION,available at
http://www.tdhca.state.tx.us/mh/docs/solapp.pdf (last visited July 21, 2005). The Act currently
requires the Department to print on each Statement a caution that the Statement “may not reflect the
existence of a tax lien notice filed for the manufactured home after the date the [Statement] was
issued” and that “information about a tax lien for which notice has been filed may be obtained from
the department on written request.” TEX. Oct. CODEANN. 5 1201.219(d) (Vernon 2004).
Within 30 days after the date of a manufactured home’s first retail sale, the purchaser must
complete an application for the issuance of a Statement and the retailer must submit it to the
Department. See id. $ 1201.206(a)-(c). If the manufactured home is subsequently sold or
transferred, “the [new] purchaser or transferee shall apply for” a new Statement. Id. $ 1201.206(d).
Indeed, ownership “does not pass or vest at a sale or transfer . . . until a completed application
for the issuance of a statement of ownership and location is tiled with” the Department. Id.
tj 1201.206(e). An owner who relocates the home must apply for a new Statement “not later than
the 30th day after the date the home is relocated.” Id. 5 1201.206(f). A relocating owner also must
submit to the Department evidence that the home was relocated consistently with Texas Department
of Transportation (“TxDOT”) requirements, set forth in chapter 623, subchapter E of the
Transportation Code. See id.; TEX. TRANSP.CODEANN.ch. 623, subch. E (Vernon 1999 & Supp.
2004-05); infia at 3 (discussing TxDOT requirements under Transportation Code chapter 623,
subchapter E).
The Honorable Joel D. Littlefield - Page 3 (GA-0343)
Section 1201.209 lists several reasons for which the Department director may refuse to issue
or may suspend or revoke a Statement, including that the Department director “has reason to believe”
that “a local tax lien was filed before September 1,2001, and recorded . . . , and the lien has not been
extinguished.“* TEX. Oct. CODE ANN. 5 1201.209(6) (Vernon 2004).3 You focus on section
1201.209(l), which lists as a reason that “the application for issuance of the [Statement] contains
afalse orfraudulent statement.” Id. $1201.209( 1) (emphasis added); see also Request Letter, supra
note 1, at 2 (emphasis added). If the director refuses, suspends, or revokes a Statement, the director
must notify the seller and purchaser or transferor and transferee, as well as the holder of a lien or
security interest, and must permit affected parties to appeal the decision. See TEX. OCC. CODEANN.
5 1201.210(a)-(c) (Vernon 2004).
B. Transportation Code Chapter 623, Subchapter E
Under section 623.092(a) of the Transportation Code, a manufactured home that
exceeds legal size limits for a motor vehicle “may not be moved over a highway, road, or street”
without a TxDOT-issued permit. TEX. TRANSP.CODEANN. $623.092(a) (Vernon 1999). Section
623.093(d) requires that an application for a permit to transport a manufactured home in connection
with a transaction other than the original sale, exchange, or lease-purchase to a consumer be
accompanied by a written statement from the chief appraiser that no ad valorem taxes are owed on
the house. Thus, unless the manufactured house is not listed on the most recent appraisal roll of the
appraisal district established for the county in which the manufactured house is located, “the
application for a permit must be accompanied by a written statement from the chief appraiser of the
appraisal district established for the county in which the manufactured house is located that states
that no unpaid ad valorem taxes have been reported on the manufactured house due any taxing unit
for which the appraisal district appraises property.” Id. $623.093(d) (Vernon Supp. 2004-05).
C. Tax Code Chapter 32
In general, under section 32.01 of the Tax Code, a tax lien attaches to real and
personal property on January 1 of each year “to secure the payment of all taxes, penalties, and
interest ultimately imposed for the year on the property.” TEX. TAX CODEANN. !j 32.01(a) (Vernon
2001). Section 32.014 provides specifically for tax liens on manufactured homes:
*House Bill 2438 recently passed the Seventy-ninth Texas Legislature and amends section 1201.209(6). See
Act of May 29,2005,79th Leg., R.S., H.B. 2438, $ 14 (to be codified at TEX. Oct. CODEANN. $ 1201.209(6)); infia
note 8 (summarizing relevant portions of House Bill 2438).
‘Section 1201.209 does not expressly authorize the Department to refuse to issue, suspend, or revoke a
Statement in any circumstance: “The department may not refuse to issue [a Statement] and may not suspend or revoke
[a Statement] unless . . . .” TEX. Oct. CODEANN. 5 1201.209 (Vernon 2004). Section 1201.209 appears implicitly to
authorize the Department to refuse, suspend, or revoke Statements in certain circumstances.
The Honorable Joel D. Littlefield - Page 4 (GA-0343)
(a) If a manufactured home is listed together with the land on
which the manufactured home is located under Section 25.08,4 the tax
lien attaches to the land on which the manufactured home is located.’
(b) If a manufactured home is listed separately from the land
on which the manufactured home is located, the tax lien on the
manufactured home does not attach to the land on which the home is
located.
(c) In this section, “manufactured home” has the meaning
assigned by Section 1201.003, Occupations Code.6
(d) If a manufactured home is listed together with the land on
which the manufactured home is located, a taxing unit with
jurisdiction to impose taxes on the land may place a lien on the
manufactured home to secure payment of those taxes to the same
extent that it can place a lien on the land. If a home is moved from its
location and a new [Statement/ is not issued under Section 1201.207,
Occupations Code, a taxing unit with jurisdiction to impose taxes on
the land on which the manufactured home was located retains the
right to record and enforce liens on that home to secure the payment
of taxes, regardless of where the home is currently located.
(e) This section prevails over Chapter 1201, Occupations
Code, to the extent of any conflict.
4Section 25.08 of the Tax Code directs that a manufactured home “shall be listed” in local property appraisal
records “together with the land on which the home is located if? (1) the Statement for the home reflects the owner’s
election to treat the home as real property; and (2) a certified copy of the Statement “has been filed in the real property
records in the county in which the home is located.” TEX.TAXCODEANN.0 25.08(e) (Vernon Supp. 2004-05). If either
of these two conditions is not satisfied, the home “shall be listed separately from the land on which the home is located.”
Id. 6 25.08(f).
‘An owner of a manufactured home may elect to have the home treated as personal property or real property.
See TEX.OCC.CODEANN.$1201,2055(a) (Vernon 2004). An owner may elect to treat the manufactured home as real
property, however,
only if the home is attached to:
(1) real property that is owned by the owner of the home; or
(2) land leased to the owner of the home under a long-term lease, as
defined by department rule.
Id.
60ccupations Code section 1201.003( 15) defines the term“manufactured home” as “a HUD-code manufactured
home or a mobile home.” Id. 9 1201.003( 15).
The Honorable Joel D. Littlefield - Page 5 (GA-0343)
Id. 9 32.014 (Vernon Supp. 2004-05) (emphasis and footnotes added); see also id. 3 32.015
(providing for cancelling tax liens filed before September 1,2001, on which payment of the taxes,
penalties, and interest has been recorded).
II. Analysis
Your question appears limited to a manufactured home on which a tax lien is unenforceable
under Tax Code section 32.014(d) because the home has been relocated. We therefore consider only
those manufactured homes that are listed on the local tax records “together with the land on which
the. . . home is located.” Id. 5 32.014(a); see Request Letter, supra note 1, at 2 (“Once ownership
is transferred on the title, the Tax Office’s lien . . . is extinguished and the debt becomes
uncollectible.“). We further assume that you do not ask about an unextinguished tax lien filed before
September 1,200l; the Department is expressly authorized to refuse to issue or to suspend or revoke
a Statement if “a local tax lien was filed before September 1,2001, . . . and the lien has not been
extinguished.” See TEX. OCC. CODEANN. 4 1201.209(6) (Vernon 2004).
As we understand the problem underlying your question, once a manufactured home is
relocated and the Department issues a new Statement under Tax Code section 32.014(d), an existing
tax lien may not be enforced. See TEX. TAX CODEANN. 9 32.014(d) (Vernon Supp. 2004-05). The
Hunt County Tax Office thus would like the Department to refuse to issue or to suspend or revoke
Statements on relocated manufactured homes on which ad valorem taxes are owed. See Request
Letter, supra note 1, at 1. In your opinion, an application for a Statement that omits relevant
information about unpaid ad valorem taxes is a false or fraudulent statement for which the
Department may refuse to issue or may suspend or revoke a Statement under section 1201.209( 1).
See id. at l-2. You also suggest that a Statement application that either omits evidence that the
manufactured home was relocated consistently with TxDOT requirements or is based on a TxDOT
relocation permit that was fraudulently obtained is grounds for refusing to issue or for suspending
or revoking a Statement under section 1201.209(l) of the Occupations Code. See id. (attachment
to Request Letter) (reprinting portions of Transportation Code chapter 623).
An applicant’s failure to provide accurate information about an existing tax lien constitutes
sufficient grounds for refusing to issue or for suspending or revoking a Statement. See TEX. OCC.
CODE ANN. 0 1201.205(6) (Vernon 2004). Under Occupations Code section 1201.205(6), a
Statement must describe each lien on a manufactured home. See id. 3 1201.205(6) (stating that a
Statement must provide “in chronological order of recordation, the date of each lien on the home and
the name and address of each lienholder”). The term “lien,” usedin section 1201.205(6), is a broad
term that, as commonly understood, encompasses a tax lien:
The term “lien”, as generally used, is a charge or encumbrance upon
property to secure the payment or performance of a debt, duty, or
other obligation. . . . A “tax lien” is merely a security established by
The Honorable Joel D. Littlefield - Page 6 (GA-0343)
statute of which the taxing authority may avail itself in the event of
a default in payment.
United States v. Phillips, 267 F.2d 374, 377 (5th Cir. 1959); see also TEX. GOV’T CODE ANN.
$3 11.Ol l(a) (Vernon 2005) (directing a court to read statutory words and phrases “in context and”
consistently with “common usage”). In addition, under Occupations Code section 120 1.209(l), an
applicant’s failure to provide information required by the director, such as information that the Act
plainly requires, is grounds for refusing to issue or for suspending or revoking a Statement,
regardless of the false or fraudulent nature of the omission. See TEX. Oct. CODE ANN.
9 1201.209(l) (V emon 2004) (allowing the Department to refuse to issue or to suspend or revoke
a Statement if “the applicant failed to provide information required by the director”). Whether such
a failure is also a “false or fraudulent statement” for which a Statement may be refused, suspended,
or revoked under section 120 1.209( 1) is a question of a person’s knowledge and intent’ and must be
determined on the basis of the facts in a particular case. See Tex. Att’y Gen. Op. No. GA-0156
(2004) at 10 (stating that fact questions cannot be answered in the opinion process).
In the alternative, the Department may refuse to issue or may suspend or revoke a Statement
if the home was not “relocated in accordance with” TxDOT’s requirements. TEX. OCC. CODEANN.
$1201.206(f) (Vernon 2004); see TEX. TRANSP.CODEANN.$623.093(d) (Vernon Supp. 2004-05)
(requiring a permit to transport a manufactured home to include information on taxes due on the
home). Section 1201.206(f) of the Occupations Code directs the Department to require an owner
to submit evidence that the home was relocated consistently with TxDOT’s requirements. TEX.OCC.
CODEANN.$1201.206(f) (Vernon 2004). To obtain a permit to relocate a manufactured home under
section 623.093(d) of the Transportation Code, an applicant must submit “a written statement from
the [appropriate] chief appraiser. . . that states that no unpaid ad valorem taxes have been reported
on the manufactured house due any taxing unit for which the appraisal district appraises property.”
TEX.TRANSP.CODEANN. 9 623.093(d) (Vernon Supp. 2004-05). An applicant who failed to obtain
a permit or who applied for a permit but who failed to inform TxDOT about unpaid taxes has not
relocated the manufactured home consistently with TxDOT’s requirements. Thus, although section
1201.209 of the Occupations Code does not list an applicant’s failure to show that a manufactured
home was relocated in accordance with TxDOT’s requirements or an applicant’s use of false or
fraudulent information to obtain a relocation permit from TxDOT as grounds for which the
Department may refuse to issue or may suspend or revoke a Statement, we construe section
‘See Am. Empire Life Ins. Co. v. Long, 344 S.W.2d 513,5 18 (Tex. Civ. App.-Eastland 1961, writ ref’d n.r.e.)
(quoting 20TEX. JUR.5 16, at 33-34) (recognizing that a fraudulent promise is one made Yvith the intention, design and
purpose of deceiving.“‘); In re Pirko, 540 N.E.2d 329, 332 (Ohio Ct. App. 1988) (stating that in “common everyday
usage, ” the word “false” indicates a statement that sets forth untruths); BLACK’SLAW DICTIONARY618 (7th ed. 1999)
(defining “false”as “untrue” or “deceitful”), id. at 672 (defining “fraudulent act” as “[clonduct involving bad faith”);
see also Manziel v. Williams, 262 S.W.2d 437,438 (Tex. Civ. App.-Texarkana 1953, no writ) (quoting 37 C.J.S.Fraud
9 12) (stating that “‘the state of mind of a person making a representation is an existing fact”‘).
The Honorable Joel D. Littlefield - Page 7 (GA-0343)
1201.206(f) to authorize the Department to ref&e to issue or to suspend or revoke a Statement for
these reasons.*
*The Seventy-ninth Texas Legislature passed House Bill 2438, which amends Occupations Code section
1201.209(6) expressly to permit the Department to refuse to issue or to suspend or revoke a Statement if an
unextinguished tax lien has been tiled and recorded with the Department, regardless of the filing date. See Act of May
29,2005,79thLeg., R.S., H.B. 2438,s 14 (to be codified at TEX.Oct. CODEANN.0 1201.209(6)). The bill also amends
section 120 1.219(b) of the Occupations Code to provide for perfecting a tax lien on a manufactured home. See id. 4 18.
Finally, the bill amends Tax Code section 32.03 by adding new subsections (a-l) and (a-2), which provide for enforcing
a recorded tax lien and to prohibit transferring a manufactured home’s title if perfected tax liens have not been
extinguished:
(a) Extent as orovided bv Subsection (a-l), a [a] tax lien may not be
enforced against personal property transferred to a buyer in ordinary course of
business . . . who does not have actual notice of the existence of the lien [or+he
-1.
(a- 1) A tax lien against a manufactured home may not be enforced unless
it has been recorded with the Texas Denartment of Housing and Communitv Affairs
as nrovided bv Section 120 1.219. Occunations Code:
(1) before October 1.2005; or
(2) not later than six months after the end of the year
for which the tax was owed.
(a-2) A nerson may not transfer title of a manufactured home until all tax
liens nerfected on the home have been extinguished or satisfied and released. This
subsection does not annlv to the sale of a manufactured home in inventorv.
Act of May 29,2005,79th Leg., R.S., H.B. 2438, 0 33 (to be codified at TEX. TAXCODEANN. 0 32.03). House Bill
2438 was signed by the Governor and became effective June 18,2005. See id. $36 (specifying the bill’s effective date).
Consequently, tax liens are now unenforceable unless they have been recorded with the Department. Additionally, title
to a manufactured home will not be transferred until all perfected tax liens are extinguished or satisfied.
The Honorable Joel D. Littlefield - Page 8 (GA-0343)
SUMMARY
A tax lien that has attached to a manufactured home under
section 32.01(a) of the Tax Code must be listed on a statement of
ownership and location (a “Statement”) issued by the Texas
Department of Housing and Community Affairs under Occupations
Code section 1201.205(6). The Department may refuse to issue or
may suspend or revoke a Statement that is based on false or
fraudulent information regarding an existing tax lien. In addition, the
Department may refuse to issue or may suspend or revoke a
Statement for a manufactured home that was relocated without a
relocation permit from the Department of Transportation or with a
relocation permit obtained without truthful information regarding
taxes due on the home.
Very truly yours,
Attorn&&eneral of Texas . : ’
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee