Altered manufactured home becoming real property 

2-385 1993 Opinions OAG 93-078 OPINION NO. 93-078 Syllabus: When a manufactured home has been altered in such a way that it no longer meets the definition in R.C. 4501.01(0) of manufactured home and, instead, has become real property as defined by R.C. 5701.02, the altered manufactured home is no longer a motor vehicle under R.C. 4505.01(A); therefore, the provisions of R.C. 4505.11(A) and R.C. 4505.18 require the owner of such an altered manufactured home to surrender the certificate of title. To: John W. Baker, Knox County Prosecuting Attorney, Mt. Vernon, Ohio By: Lee Fisher, Attorney General, December 30,1993 You have requested an opinion regarding whether the owner of a manufactured home must surrender his or her manufactured home title in order to have real property status for tax purposes. December 1993 Attorney General Manufactured Homes - Taxation R.C. 4501.01(0) defines a manufactured home as follows: any nonself-propelled vehicle transportable in one or more sections, [with specified dimensions], and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air conditioning, and electrical systems contained therein. R.C. 4503.06(A) provides that "[alll manufactured homes ... are subject to an annual tax, payable by the owner, for the privilege of using or occupying a manufactured home in this state." R.C. 4503.06(J) further provides that "[t]he taxes levied and revenues collected under this section shall be in lieu of any general property tar and any tax levied with respect to the privilege of using or occupying a manufactured home in Ohio except as provided in sections 4503.04 [a use tax] and 5741.02 [a use tax levied on personal property] of the Revised Code." (Emphasis added.) R.C. 4503.06(F) exempts certain manufactured homes from the tax levied by R.C. 4503.06. None of the exemptions, however, involve manufactured homes taxable as real property.' Thus, pursuant to the scheme set out in R.C. 4503.06, an item of property that meets the definition of manufactured home contained in R.C. 4501.01(0) will never be treated as real property for tax purposes. In order to achieve real property status, a manufactured home first must be altered in such a way that it loses its character as a manufactured home and no longer meets the statutory definition set out in R.C. 4501.01(0). 1977 Op. Att'y Gen. No. 77-099; 1969 Op. Atty Gen. No. 69-128.' If, after such alteration, it meets the definition of real property in R.C. 5701.02, the home may be taxed as real prGperty.3 The question of whether ' R.C. 4503.06(F)(1) provides an exemption for manufactured homes that are taxable as personal property used in bu'siness pursuant to R.C. 5709.01, except those rented and used as residences. Manufactured homes on which the manufactured home tax has already been paid for the year are exempt under R.C. 4503.06(F)(3). R.C. 4503.06(F)(2) deals with travel trailers, not with manufactured homes. Although not a model of clarity, this provision appears not to be an exemption at all, but rather a requirement that, in situations other than those listed, travel trailers should be treated as manufactured homes for purposes of the tax. R.C. 4503.06(F)(3) exempts manufactured homes that bear license plates issued by other states, unless such homes remain in Ohio longer than thirty days. 2 The statutory definition of manufactured home has been amended since these opinions were written. Thus, the current test of whether a particular home meets the definition must take into account the changes in the statute and should not be taken directly from prior opinions of the Attorney General. 3 The determination of whether a property tax applies to a particular item of tangible property requires an analysis of whether that property is classified as real or personal property pursuant to the definitions in R.C. 5701.02 -.03. Personal property can be transformed into real property when affixed to the land in such a way as to become accessory to and parcel of the land. See Zangerle v. Republic Steel Corp., 144 Ohio St. 529, 60 N.E.2d 170 (1945) (syllabus, paragraph four) (setting out the test for conversion to real property); Teaff v. Hewitt, 1 Ohio St. 511 (1852). Once a manufactured home ceases to be a manufactured home and is no longer subject to R.C. 4503.06, it becomes subject to this traditional analysis. Thus, it may be taxable either as personal property or as real property, depending on its characteristics after alteration. OAG 93-078 2-386 2-387 1993 Opinions OAG 93-078 a particular property should be taxed as real property or a manufactured home is a factual determination that is made, in the first instance, by the county auditor. 1952 Op. Att'y Gen. No. 1470, p. 391; accord Op. No. 77-099; Op. No. 69-128. Manufactured Homes - Certificates of Title Pursuant to R.C. 4505.01(A)(2), a manufaciured home as defined in R.C. 4501.01(0) is considered a motor vehicle for purposes of R.C. Chapter 4505, governing certificates of title for motor vehicles. Accordingly, a manufactured home cannot be purchased or transferred without a certificate of title, manufacturer's or importer's certificate, or a salvage certificate. See R.C. 4505.03-.05; R.C. 4505.18-.19. A security interest in a manufactured home, unless it is being held in inventory, can be perfected only by notation on the certificate of title, not by filing a security interest pursuant to R.C. Chapter 1309 of the Ohio Uniform Commercial Code. R.C. 4505.13. Further, the title to a manufactured home cannot be transferred unless all taxes due under R.C. 4503.06 have been paid. R.C. 4503.061(C); see also 1991 Op. Att'y Gen. No. 91-059 at 2-288 to 2-289. The surrender of certificates of title for motor vehicles, including manufactured homes, is governed by R.C. 4505.11. R.C. 4505.11(A) provides that an owner of a motor vehicle shall surrender the certificate of title to the clerk of the court of common pleas when a motor vehicle is "dismantled, destroyed or changed in such a manner that it loses its character as a motor vehicle, or changed in such a way that it is not the motor vehicle described in the certificate of title...." With the consent of any lien holders, the clerk must the% cancel the title.' Relationship of Certificate of Title to Property Status of Manufactured Home As discussed previously, in order to attain real property status, a manufactured home must be altered in such a way that it loses its character as a manufactured home as defined in R.C. 4501.01(0). Such an alteration would also remove it from the definition of motor vehicle in R.C. 4505.01(A)(2). Pursuant to R.C. 4505.11 and 4505.18, therefore, the owner must surrender the certificate of title of a manufactured home any time that a county auditor determines that the home has been altered sufficiently to classify it as real property. The surrender of the title is the result of the transformation of the manufactured home to real property status and not, as suggested by your question, the cause of the transformation. Nonetheless, the surrender of title is mandatory under Ohio law. This conclusion is reinforced by the fact that transfers, tax liens, and security interests for real property and fixtures on real property must be recorded by entirely different instruments than apply to motor vehicles. See generally R.C. 1309.32 (fixture filings); R.C. Chapter 5301 (real property conveyances and encumbrances); R.C. Chapter 5721 (delinquent property taxes). The protection of transferees and both private and public creditors, therefore, requires that if a manufactured home has become real property, the certificate of title documenting it as a motor vehicle must be surrendered. 4 Failure to surrender the title is an offense punishable by two hundred dollars and/or ninety days imprisonment. R.C. 4505.18(D); R.C. 4505.99(C). Use of a title that should have been surrendered to "[k]nowingly obtain goods, services, credit or money" is an offense punishable by five thousand dollars and/or imprisonment in the county jail or penitentiary. R.C. 4505.19(D); R.C. 4505.99(D). December 1993 Attorney General Conclusion It is therefore my opinion and you are hereby advised that, when a manufactured home has been altered in such a way that it no longer meets the definition in R.C. 4501.01(0) of manufactured home and, instead, has become real property as defined by R.C. 5701.02, the altered manufactured home is no longer a motor vehicle under R.C. 4505.01(A); therefore, the provisions of R.C. 4505.11(A) and R.C. 4505.18 require the owner of such an altered manufactured home to surrender the certificate of title. OAG 93-079 2-388