Attorney at Law

WHEN FOLLOWING THE LAW MAY NOT BE ENOUGH

By: Larry W. Weaver, Esq.

In April, 2006, the U.S. Supreme Court, led by then new Chief Justice John Roberts, decided the case of Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708 (2006), a case little known in most circles, that could have a significant impact on every manufactured home community owner.

The Jones v. Flowers case involved a house purchased by Gary Jones in 1967 in Little Rock, Arkansas. Jones lived in this house with his wife until they separated in 1993 when Jones moved into an apartment and his wife continued to live in the family home. Jones paid his mortgage for 30 years and the mortgage company paid the taxes. After Jones paid off his mortgage in 1997, the property taxes were unpaid and the property was certified as delinquent.

In April, 2000 the Commissioner of State Lands attempted to notify Jones of his tax delinquency, and his right to redeem the property, by mailing a certified letter to Jones at the family home (the address listed for Jones on the tax roll). The packet of information stated that unless Jones redeemed the property, it would be subject to public sale two years later on April 17, 2002. Nobody was home to sign for the letter and nobody appeared at the post office to retrieve the letter within the next 15 days. The post office returned the unopened packet to the Commissioner marked "unclaimed".

Two years later, and just a few weeks before the public sale, the Commissioner published a notice of public sale in a local newspaper. When no bids were submitted, the State was entitled to negotiate a private sale of the property. Several months later, Linda Flowers submitted a purchase offer. The Commissioner mailed another certified letter to Jones at the family home, attempting to notify him that his house would be sold to Flowers if he did not pay his taxes. Like the first letter, the second was also returned to the Commissioner marked unclaimed. Flowers then purchased the home and had an unlawful detainer notice delivered to the property. The notice was served on Jones' daughter who contacted Jones and notified him of the tax sale.

Jones filed a lawsuit in the Arkansas State Court against the Commissioner and Flowers. The Commissioner and Flowers moved for summary judgment on the ground that the two unclaimed letters sent by the Commissioner were a constitutionally adequate attempt at notice. The trial court granted the summary judgment in favor of the Commissioner and Flowers concluding that the Arkansas tax sale statute, which set forth the notice procedure followed by the Commissioner, complied with constitutional due process requirements.

Jones appealed and the Arkansas Supreme Court affirmed the trial court's judgment citing an earlier Supreme Court decision [Dusenberry v. United States, 534 U.S. 161, 170 (2002)] that stated that due process does not require actual notice and that attempting to provide notice by certified mail satisfied due process in the circumstances presented.

The Supreme Court granted certiorari, rejecting the view that the enforcing officer's obligation is always satisfied by sending the notice to the address listed on the tax roll, even where the notice is returned as undeliverable. In reversing the judgment of the Arkansas Supreme Court, the U.S. Supreme Court held that, A when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so. Jones v. Flowers, 126 S.Ct. 1708, 1713.

So what does this have to do with mobilehome park law? As you know, there are a number of circumstances when community owners are required to send copies of notices and other documents to various parties; sixty day notices are sent to legal owners, junior lienholders and registered owners ( Civil Code, § 798.55); warehouseman lien and sale notices are sent to legal owners, lienholders and registered owners ( Civil Code, § 798.56a); and abandonment notices, abandonment petitions and abandonment sale notices are sent to homeowners, registered owners and any known holder of a security interest ( Civil Code, § 798.61). In each case, as in the Jones case, the notices are sent by certified or registered mail, return receipt requested. Moreover, as in the Jones case, it is common that one or more of the notices so sent are returned by the post office as unclaimed, unable to forward, forwarding order expired, or unknown.

As in the Jones case, the outcome of no one coming forward in response to notices that are not received and often returned to the sender is the sale and/or removal of a mobilehome worth thousands of dollars, ie., a loss of property without actual notice as in the Jones case. While the Jones case does not directly apply to mobilehome owners and operators, it is not inconceivable that an owner or lienholder of a mobilehome who did not receive some notice sent certified mail, returned receipt requested and returned unclaimed could sue for damages, based upon a theory similar to that utilized in the Jones case, after the sale of their mobilehome in a warehouseman lien or abandonment sale.

The Commissioner in the Jones case argued that the address that notice was sent to was the address that Jones provided and that Jones had a legal obligation to keep updated. The Commissioner further argued that a property owner who fails to receive a property tax bill and pay taxes is on inquiry notice that his property is subject to a governmental taking. The Commissioner also argued that Jones was obligated to ensure that those in whose hands he left his property would alert him if it was in jeopardy. All of these arguments, which are similar to those that a community owner could and would make (the address on title was out of date; the person in possession did not notify the owner of the receipt of the notice; and the homeowner should have been on notice when he or she knows that payments are not being made), were rejected by the Supreme Court.

The Supreme Court noted that the certified letters return unclaimed meant either that Jones was not home when the postman called and did not retrieve the letter or that he no longer resided there. Thus, while the Supreme Court determined that it was not the Court's responsibility to prescribe the form of service that the State should adopt, the State should have taken additional reasonable steps available to it given these circumstances.

The Supreme Court, in discussing the reasonable steps the State could have taken, indicated that it would have been reasonable for the State to send a copy of the notice by regular mail, so that a signature was not required and to increase the chances that actual notice was received. Another reasonable step, the Court opined, would have been to post a copy of the notice on the front door of the home or to address otherwise undeliverable mail to occupant.

So where does this leave owners and operators of manufactured home communities? The simple answer is that even though various provisions of the Mobilehome Residency Law may only require that notices be sent certified mail, return receipt requested, compliance with the law may not be sufficient when those notices are returned unclaimed or when the community owner and/or management knows that the notices are being sent to an address no longer valid. Indeed, every community owner has experienced the return of certified letters sent in compliance with the Mobilehome Residency Law as unclaimed, unable to forward, forwarding order expired or unknown. Moreover, at the time that these notices were sent, many community owners and/or management were aware that the person listed on the title is deceased, or no longer has an ownership interest in the subject home. Additionally, many legal owners listed on titles to homes in the communities are known to be out of business or to have been acquired by some other entity.

As directed by the Supreme Court, in such circumstances, an owner should take reasonable steps to increase the likelihood that actual notice will be received in cases where notices are required to be sent by registered or certified mail, return receipt requested. For me and my office, this means that when notices are sent certified mail, return receipt requested, those notices are also sent by first class mail. If an address other than that which is listed on title is known, copies are also sent to that address by both first class mail and certified mail, return receipt requested. Additionally, copies of such notices are also posted on the home by a registered process server even when not required by the applicable statute. While these additional steps may cost more money and take more time, they are well worth the effort when at some later date a lawsuit is filed because someone claims that proper notice was not given.

While we cannot know whether a court will ever determine that a community owner should have done more to ensure that notice of a pending sale of a mobilehome was received, or even if the additional steps suggested by the Jones court would be sufficient in the context of the sale of a mobilehome, taking these additional steps, steps that are not required by the Mobilehome Residency Law, but which will increase the likelihood of actual notice being received, will increase the probability that a court would uphold the sale of a mobilehome by a community owner, even if the individual or entity complaining did not actually receive the notice. This seems a small price to pay for some additional peace of mind.

Think of the additional effort as a form of insurance. A little insurance now might save a lot of attorneys' fees and inconvenience later.


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