Mobile Homes on Rented Land: Why Steckel II Needs Updating
Like light, which is both a wave and a particle at once, a mobile home affixed to the ground can be either real or personal property, depending on legal context. For lien perfection purposes, a mobile home is personal property. For statute of frauds purposes, the better view is that a mobile home is real property. For federal income tax depreciation purposes, mobile homes fixed to the ground are real property.
For New York State municipal finance purposes, mobile homes are real property. The current law dates to the late 1950s. Before then, mobile homes were personal property for municipal finance purposes. As the population of manufactured housing communities swelled in the years following World War II, local governments tried to tax mobile homes as real property in order to raise revenue to fund the municipal services they consumed. Park owners protested these actions in a series of cases that I will discuss below. At first, the park owners won. In response to these cases, the Legislature changed the law to provide that manufactured homes are real property. After that happened, park owners protested the constitutionality of the law. They won in some lower courts and lost in the Court of Appeals in a case called New York Mobile Homes Ass’n v. Steckel (hereinafter referred to as Steckel II). Steckel II is still good law.
There are two problems with Steckel II. First, for reasons which I will discuss below, it is outdated. Second, its reasoning is flawed. The Steckel II court held on the constitutionality of two features of the current statute, i.e., that (1) mobile homes are real property for applicable purposes and (2) that the value of a mobile home sited on land is included in the assessment of the land on which it is located. The first of these two rules is uncontroversial and, if anything, more true today than it was in 1961, as manufactured homes have become less mobile than they were when Steckel II was decided. The problem is that, by including the value of mobile homes in the assessment of the land on which they sit, landowners are subject to tax on the assessed value of an asset that they do not own. They have none of the benefits of ownership with respect to the home. They can’t sell it. They can’t rehypothecate it, paint it or let their in-laws live there – but if they fail to pay property tax on it, they can lose the land that it sits on in an in-rem proceeding.
That’s both unfair and crazy. It probably deprives the landowners of due process of law, because it imposes taxes on the value of something that they do not own. How did it get to be like this?
Background: Postwar New York
“Travel trailers” were first built soon after the invention of the automobile. Early trailers were used by vacationers and parked on vacant land. A few entrepreneurs began to open “travel courts” where vacationers could park their trailers overnight. Some of these establishments offered travelers access to certain utilities and amenities, like bathrooms, showers and shuffleboard decks. Travel trailers were used to house workers for certain Works Project Administration projects during the 1930s, for defense worker housing during World War II, and as housing for students and returning GIs during the late 1940s. During this time, the design of trailers used as permanent or semi-permanent housing began to diverge from that of pure travel trailers. By the early 1960s, the two had had fully bifurcated. The break was formalized in 1963, with the establishment of two independent industry groups for RVs and for what we now call manufactured homes, i.e., the Recreational Vehicle Association and the Mobile Home Manufacturers Association, respectively. Standardized rules for the manufacture of mobile homes designed to be used as permanent residences were passed when the Federal Manufactured Housing Construction and Safety Standards Act of 1974 was passed.
Mobile home parks are the descendants of the travel courts that cropped up during the 1920s. Since the 1950s, they have been a source of affordable housing for a large segment of the population. In most parks, tenants own their homes but do not own the land. Instead, an owner of a home will enter into a “lot lease” with the owner of the park, pursuant to which the homeowner pays the park owner for use of the land and for the right to hook the home up to utilities owned by the park. Homes manufactured after 1995 have titles that are issued by the Department of Motor Vehicles. When the DMV issues a title for a home, the homeowner’s name is on the title, but the name of the landowner on which the home sits does not.
The population of upstate mobile home parks boomed after World War II. Since mobile homes were treated as personal property for municipal finance purposes, and since municipal revenue was raised through taxes on real property, this placed a strain on local governments. Here’s what the Steckel II court said on the subject:
This litigation stems from a statute, underlying which is an attempt to secure reimbursement from trailer dwellers for some share of the expense of providing them with police and fire protection, educational facilities and the various other services rendered by a municipality to persons residing within its confines. By making his [sic] more or less permanent home in a trailer, an individual could derive the benefit of all the services provided by the local government, while leaving the burden of paying for them upon his neighbors who lived in more conventional dwellings. Although the inequities of this situation were readily apparent, as all the cases on the subject agree, there was seemingly no solution of the problem since the New York State tax against personal property had been repealed, and trailers, of course, were traditionally considered to be personalty.
In the early 1950s, certain towns attempted to solve this problem by declaring mobile homes to be real property. Under contemporary law, “real property” consisted of land and “all buildings and other articles and structures, substructures and superstructures, erected upon, under or above or affixed to the same.” Park owners sued, saying that mobile homes did not fall within this definition. Courts held for the plaintiffs. From the courts’ descriptions, it appears that, at the time the cases were decided, mobile homes were more similar to current-day RVs than to 21st century manufactured homes. As the court in Farrington said, “It appears that the trailers upon which the taxes in dispute were levied were for the most part on wheels, movable, and without any permanent foundation. Trailer tenants moved such trailers in and out of the trailer camp at frequent intervals and the number of such trailers parked in the trailer camp varied from time to time.” The Stewart court held likewise, although it admitted that a mobile home placed on a permanent foundation might fall within the contemporary definition of real property:
The validity of the assessment complained of by the petitioner stands or falls on the determination whether or not the “trailers” are real or personal property.
“House coaches” and “trailers” are primarily designed, manufactured, bought and sold as mobile units. Trailer parks or areas have sprung up all over the country to provide accommodation to this form of transportation. No one can seriously contend that as soon as these vehicles are halted for a given period of time they change character and become real property. It is true that a trailer can be divested of its wheels and motor power, and mounted upon a foundation of a permanent construction and thereby cease to be a mobile unit. In such case it can very properly fall within the definition of real property.
This is quite different from the situation today, where mobile homes installed in parks are tied down to custom-designed foundations and hooked up to electricity, water and septic, and the transaction costs involved in moving a manufactured home make it economically unfeasible in most cases for the owner thereof to move the property off the land where it sits.
To fill the breach caused by these cases, the Legislature changed the statute to its current form. Under the new law, real property includes mobile homes sited on land for 60 days or more, and the assessed value of mobile homes is included in the value of the land. Park owners sued again on constitutional grounds. Two lower courts held for the park owners, but in Steckel II, the Court of Appeals held the statute to be constitutional.
Before a discussion of the cases, a few distinctions are in order. First, both the lower courts and the Court of Appeals mushed two issues together. The first issue is whether a mobile home is real or personal property; the second issue is whether landowners should be taxed on the value of a mobile home that sits on their land. The first of these two issues was straightforward in 1961 and is trivial now; because of the way manufactured homes are anchored to the ground and because of the cost required to move them, they are now, under any reasonable definition, real estate.
The second issue is also trivial, but not in the way envisioned by the courts. The Steckel II court and the statute assume that, because mobile homes are real estate affixed to park land, of course the park owner should be responsible for property taxes thereon. That is simply not true. Every spring, I receive a list of every home located in each of my parks, listing the lot number, year, manufacturer and owner of each home, from the assessors of the towns where my parks are located. In certain cases, such as homes belonging to senior citizens and certain disabled people, the assessor creates a so-called “slash account,” i.e., a property tax account whose number consists of the deed and lot number for my land, followed by a slash and a unique numeric identifier. These slash accounts are treated as accounts separate from the land account for record-keeping and STAR program purposes; however, I, as landowner, am stuck with the bill. So, of course, the assessors could treat each home as a separate parcel and bill the owner for the tax due on that parcel. They have all the information they need to do that. They already do it, for the slash accounts. They bill me, instead of the owners of the homes, because it is administratively easier for them to send me one big bill than to send out multiple small bills. However, administrative ease should not sustain a due process claim, because the U.S. Supreme Court has held unequivocally that matters of administrative convenience may not be used by a tax administrator to deprive citizens of due process rights.
Second, two separate constitutional arguments can be made against the current treatment of mobile homes. The first is an equal protection argument, and the second is a due process argument. The equal protection argument is : since a mobile home can be moved from park A to park B, and since the assessment date is a snapshot, it is unfair to tax park owner A’s land where another homeowner’s property on the assessment date if the homeowner moves the home to park B the day after the assessment date, because park owner B will enjoy the benefit of the home’s for the majority of the tax year, while park owner A is stuck with the tax bill. The due process argument, by contrast, is : in order to ensure that citizens enjoy due process of law, the burden of a tax should be rationally linked to the basis for the tax. An income tax should be borne by the recipient of income; a sales tax should be borne by a participant in a sales transaction; and a property tax should be borne by a property owner. Imposing a property tax on a party other than the party who enjoys the benefits of ownership of the tax basis burdens the taxed party unduly.
Although the due process argument is mentioned, the courts give the equal protection argument the most space. This is problematic, because the equal protection argument is the weaker of the two, and also because the equal protection argument as couched by the courts is weaker today than it was in 1961. As discussed above, mobile homes are less mobile today than they were 60 years ago. In my own parks, a resident might move a home into or out of the park once or twice a year. It happens, but it is a rare occurrence. So the equal protection argument, as made in the original cases, would not be a winner today. However, I believe that another equal protection argument could be made that was not mentioned in any of the litigation. In making the equal protection argument, the courts only examined the relationship between park owner A and park owner B in the example above. They did not examine the relationship between a park owner and the owner of a home sited on the park owner’s land. It would appear to me that the park owner and the owner of the home are similarly situated parties for municipal finance purposes, because both are owners of real estate; however, they are treated differently by the state and municipality because park owners are taxed on the value of their real estate, but homeowners are not. Disparate treatment of similarly situated parties is at the heart of an equal protection argument.
The constitutional issues were first examined in Barnes v. Gorham and New York State Trailer Coach Ass’n v. Steckel (“Steckel I”). Both cases held for the plaintiffs, on the ground that the mobile homes of 1955 were too mobile to be treated as real property. Here’s the Barnes court, discussing the equal protection issue:
If the owner of a trailer which had been parked for 58 days in one trailer park moved the trailer to another trailer park in the same tax district on May 30, it would be subject to taxation as a part of the real estate of the second trailer park owner although it had only been there two days whereas the owner of the first trailer park upon whose land it had been kept for at least 58 days would pay no portion of the tax. As the court pointed out there would be innumerable additional situations as incongruous as this and depending upon the nature of the circumstances someone would be deprived of the equal protection of the law or would be deprived of property without due process of law whether he [sic] be the owner of the trailer, the owner of the trailer park or the owner of some other trailer park in the same tax district. If instead of being moved within the same tax district, it was moved into an adjoining one, it of course would not be there 60 days and would come within the statutory exception.
As discussed above, this argument might have made sense in 1955, when mobile homes were mobile. It makes less sense today, when they are more or less permanently fixed to the ground.
The court in Steckel I mentioned the due process argument but skirted the important issue:
In Hoeper v. Tax Commission . . . the court states: “We have no doubt that, because of the fundamental conceptions which underlie our system, any attempt by a state to measure the tax on one person’s property or income by reference to the property or income of another is contrary to due process of law as guaranteed by the Fourteenth Amendment. That which is not in fact the taxpayer’s income cannot be made such by calling it income.” . . . So here the fundamental difficulty would appear to be that calling a “60-day trailer” real property does not make it real property.
In so doing, the Steckel I court approaches the goal, shoots . . . and misses. In Hoeper v. Tax Commission, the U.S. Supreme Court addressed a Wisconsin state income tax statute that, effectively, required all married couples to file jointly. The taxpayer was a man who married a widow who owned significant income-producing assets. The taxpayer filed a return that did not include income from his wife’s investments. The state ruled that he was responsible therefore, and the taxpayer sued. The Supreme Court held that, although a husband was deemed to own his wife’s property at common law, times had changed. Because a husband did not own his wife’s property and did not have the right to receive income therefrom under contemporary law, it would deprive him of due process to tax him on that income. Here’s the money quote:
We have no doubt that, because of the fundamental conceptions which underlie our system, any attempt by a state to measure the tax on one person’s property or income by reference to the property or income of another is contrary to due process of law as guaranteed by the Fourteenth Amendment. That which is not in fact the taxpayer’s income cannot be made such by calling it income.
The juice here is not, as the Steckel I court states, that it is wrong for a state to declare a type of property or income something that is inconsistent with economic substance. Instead, it is that it is wrong for a state to impute the basis for a tax to a party who does not, if one looks at the economic substance of the applicable transaction, have any rights with respect to the applicable item, be that income, property or something else. In fact, it is so wrong that it constitutes the deprivation of that party’s access to due process of the law.
The Court of Appeals examined the issue in Steckel II. The Steckel II court held that the value of homes should be included in park owners’ land assessments for two reasons, i.e., because that is how it had been done in the case of stick-built structures erected on land owned by a party other than the owner of the structure, and because park owners could pass on the burden of tax to mobile homeowners through lot rents:
The statute, as we have seen above, seeks to include the value of the trailer in the assessment of the land and improvements thereon. In this respect the situation presented is no different from that involved in any case where a lessee erects a building or other improvement on the realty of his landlord. “Where the fee is privately owned, the real property tax attaches to the combined interests of all the parties interested in the land and the improvements thereon (In re Fort Hamilton Manor v. Boyland, 4 N.Y.2d 192, 198). Although the fee owner will, in such a situation, of course, be required to pay a higher tax than if the land were vacant, he will also protect himself by some stipulation in the lease against the increased taxation, and will in effect put the payment of it upon the lessee.” (People ex rel. Van Nest v. Commissioners of Taxes, 80 N. Y. 573, 577). So too in the instant situation, the trailer park owner has the means at his disposal, by way of rent, to allocate the increased tax upon the owner of the trailer – the individual who rightfully should pay for it.
This is deeply problematic for two reasons. First, “we do it that way because that’s how we have always done it” is not an argument. Mobile homes are pieces of property separate from the land they sit on. Ownership of a mobile home is independent of ownership of the land on which it sits. The owner of the land that a home sits on has no rights of ownership with respect to the home. The owner can’t sell the home, borrow against it, move it, live in it or repair it. If the home was manufactured prior to 1995, the owner has a bill of sale that grants the owner legal title thereto. If it was manufactured after 1994, the owner has a document of title issued by the Department of Motor Vehicles with the owner’s name, rather than that of the landowner, written on it. It offends common sense to say that ownership of one should be imputed to the owner of the other. If the same can be said about stick-built homes sited on rented land, then stick-built homes should be treated as parcels separate from the land on which they sit and separately assessed. The dead hand of history is not legal support; it is just dead. The Steckel II court’s failure to buttress its conclusion in this regard with analysis suggests to me that it did not have an analysis to offer.
Second, the Steckel II court’s argument that park owners can pass the cost of real estate taxes imposed on homes on to homeowners through increased lot rents is no longer true. In 2019, the Housing Stability and Tenant Protection Act imposed rent control on mobile home park owners in New York State. Under current law, mobile home park owners may increase lot rents annually by 3% as of right, and by 6% if justified by capital expenses or increased operating costs. Since the annual inflation rate has exceeded 7% for the past two years, and since money is fungible, this effectively means that increases in property tax burdens attributable to mobile home valuations can never be passed on to the owners of the applicable homes. (In 1990, the Appellate Division held that park owners cannot pass the cost of property tax on homes on to homeowners in the form of a charge separate from lot rent. So the cost of property tax on homes may be transferred to the homeowner neither in the form of lot rent, nor as something other than rent.)
Steckel II’s discussion of Hoeper is desultory and, again, outdated:
Plaintiffs’ reliance upon Hoeper v. Tax Comm. (284 U. S. 206, 215) is misplaced. In the first place, it is readily distinguishable on its facts, involving as it does the validity of an income tax statute which sought to tax a husband upon the combined total of his and his wife’s income, and thus place him in a higher tax bracket. In that connection, the court noted that it was improper to “measure the tax on one person’s property or income by reference to the property or income of another” . . . . Furthermore, in such a case the husband – unlike the trailer park owner – would have no means of recouping the additional tax resulting from the value of another’s property.
I do not think that Hoeper can be distinguished. The fact that Hoeper involved an income tax and Steckel II involved a property tax should not be relevant to the analysis. Each involved a tax imposed on a party who did not have the benefits of ownership of the basis for the tax. That the basis was income in Hoeper and property ownership in Steckel II should be no more relevant that the fact that, say, the plaintiff in one was a man and the plaintiff in the other was a woman. And, as discussed above, park owners can no longer pass on the cost of property tax assessments on homes to their residents.
Steckel II’s dismissal of the equal protection arguments set forth in Barnes v. Gorham and Steckel I, discussed supra, is, frankly, confusing. Steckel II states that the argument that the rule that park owner A should bear the tax on a home sited on that owner’s land on the assessment date treats similarly situated parties differently. The home could be moved to park owner B’s park the day after the assessment date should not be addressed because the problem posed is hypothetical. It would appear to me that every equal protection argument is hypothetical. A law that prohibits, say, red-haired people from eating at lunch counters is subject to an equal protection argument because it could cause red-haired people and similarly situated blue-haired people from being treated similarly. But that is not acknowledged by the Steckel II court.
Steckel II was decided wrongly. Changes in the facts and the law have made it even more wrong than it was in 1961.The way it was decided unduly burdens park owners in a way that deprives them of due process and equal protection of the law. More importantly, it burdens the manufactured housing industry in a way that makes it difficult for park owners to do their job, i.e., to provide clean, safe and affordable housing to people who need it. It is time for a change. An industry group (say, the successor to the New York State Trailer Coach Association or the New York State Mobile Homes Association) should challenge the current statute on due process and equal protection grounds. The law would favor success on the merits. The plaintiffs would have nothing to lose but their unjust assessments.
John Kaufmann is the managing member of Romulus Management, LLC, an entity that owns and manages a portfolio of manufactured housing communities in New York State.
 Unlike a mortgage, which is recorded at the local deed registry, a lien on a mobile home is perfected through the filing of a CC or, for homes manufactured after 1994, by recording the lien on the title issued by the DMV.
 See, e.g. Burrus v. Reyes, No. 08-14-00265-CV (Texas, 2017). I once got my head handed to me by a results-oriented judge when I asked him to help me enforce my rights under an oral handyman-special contract.
 Section 168(e)(2) of the Internal Revenue Code of 1986, as amended to date. See also Rupert v. Commissioner, T.C. Memo. 2001-179; Smith, Foy D. et Ux. V. Comm, cited in Tax Notes, Jul. 27, 2010.
 N.Y. Real Property Tax Law, Article 1, § 102(12)(g) (RPTL). “‘Real property,’ ‘property’ or ‘land’ mean and include . . . Forms of housing adaptable to motivation by a power connected thereto, commonly called ‘trailers’ or ‘mobile homes,’ which are or can be used for residential, business, commercial or office purposes, except those (1) located within the boundaries of an assessing unit for less than sixty days, (2) unoccupied and for sale or (3) ‘recreational vehicles’ that are four hundred square feet or less in size, self-propelled or towable by an automobile or light duty truck and used as temporary living quarters for recreational, camping, travel or seasonal use. The value of any trailer or mobile home shall be included in the assessment of the land on which it is located. . . .”
 9 N.Y.2d 533 (1961).
 See, e.g., Morley v. Town of Oswegatchie, 152 A.D.2d 862 (3d Dep’t 1989); Frontier Park v. Assessor, Town of Babylon, 184 Misc. 2d 354 (Sup. Ct., Nassau Co. 2000).
 Although modern-day manufactured homes grew out of the “house trailers” that were first manufactured during the 1920s, a modern mobile home is not very mobile. It is manufactured in a factory and then hauled using special equipment to the site, where it is placed on a foundation that is specially designed for it. It is blocked, leveled, tied down using massive anchors, and hooked up to the land’s water, sewer and electrical service. Although it can be moved to another site, that process is expensive and must be done by a licensed transporter using specialized equipment. The cost of moving a manufactured home is too high for most owners thereof to bear. Because of this, most mobile homes, once sited, stay put.
 RPTL, Article 11, Title 3.
 42 U.S.C. §§ 5401–5426. Since the passage of the HUD Code, it is proper to refer to what were previously referred to as “trailers” as “mobile homes” or, more correctly, “manufactured homes.” A “trailer” is an RV that can be towed behind a passenger vehicle or a light truck.
 According to the Manufactured Housing Institute, in 2020, 22 million Americans lived in mobile homes. https://www.manufacturedhousing.org/wp-content/uploads/2020/07/2020-MHI-Quick-Facts-updated-05-2020.pdf.
 Id. The Steckel II court and contemporaneous courts and legislators often refer to mobile homes as “trailers.” The term is offensive today, but those were different times.
 Stewart v. Carrington, 203 Misc. 543, 544 (Sup. Ct., Broome Co. 1953).
 Id. See also Erwin v. Farrington, 285 A.D. 1212 (4th Dep’t 1955).
 RPTL, Article 1, § 102(12)(g).
 Barnes v. Gorham, 12 Misc. 2d 285 (Sup. Ct., Onondaga Co. 1957); New York State Trailer Coach Ass’n v. Steckel, 208 Misc. 308 (Sup. Ct., Monroe Co. 1955), rev’d on procedural grounds, 3 A.D.2d 643 (4th Dep’t 1956) (“Steckel I”).
 Hoeper v. Tax Commission, 284 U.S. 206, 217 (1931) (“‘That is to say, “A” may be required to submit to an exactment forbidden by the Constitution if this seems necessary in order to enable the State readily to collect lawful charges against “B”. Rights guaranteed by the Federal Constitution are not to be so lightly treated; they are superior to this supposed necessity. The State is forbidden to deny due process of law or the equal protection of the laws for any purpose whatsoever.’ The claimed necessity cannot justify the otherwise unconstitutional exaction.”).
 See, e.g., Jersey Shore State Bank v. United States, 479 U.S. 442 (1987).
 12 Misc. 2d 285.
 208 Misc. 308. It is unclear whether Steckel I was the precursor to the Court of Appeals case (Steckel II). The name of the plaintiff in Steckel I is different from that of the plaintiff in Steckel II. It is possible that the industry association representing owners of what were then called trailer courts changed its name between 1955 and 1961, as the nature of the industry changed.
 Barnes, 12 Misc. 2d at 294–95.
 Steckel I, 208 Misc. at 313.
 284 U.S. 206 (1931).
 Id. at 215.
 9 N.Y.2d 533 (1961).
 Id. at 539.
 S.645, June 12, 2019. Relevant provisions are codified in RPL Article 7, § 233-B.
 People ex rel. Higgins v. Leier, 164 A.D.2d 492 (3d Dep’t 1990), interpreting RPL Article 7, § 233(g). See also Law of Excluded Middle.
 9 N.Y.2d at 540.