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The Homestead Exemption and Manufactured or Mobile Homes

by Adam Mack, J.D.

If you are considering bankruptcy and you live in a trailer home, mobile home, modular home, manufactured home, or any other home for that matter which is synonymous to any of the above, then there is a level of complexity to your case that is not shared by people who live in “traditional” stick-built homes.  For clarity in this blog article, I will refer to trailer homes, mobile homes, modular homes, manufactured homes, and the like simply as “Manufactured Homes”.

As I mentioned in a previous blog article, Kansas has one of the most debtor friendly homestead exemptions in the nation, providing an unlimited homestead exemption whether filing for Chapter 7 or Chapter 13 bankruptcy (with a few limitations of course).  That said, there are pitfalls awaiting the unsuspecting bankruptcy filer who owns both a manufactured home and the property it sits on.

The problem is with how the Kansas homestead exemption statute is written.  The statute which provides for the exemption is KSA 60-2301.  In part, the homestead exemption statute states that a bankruptcy debtor may exempt “160 acres of farming land, or of one acre within the limits of an incorporated town or city, or a    manufactured home or mobile home, occupied as a residence by the owner or by the family of  the owner, or by both the owner and family thereof.” KSA 60-2301 (emphasis added).

The problem is that the statue presents an either-or scenario.  A debtor may exempt either the manufactured home or the land that it sits on, but not both.  In many respects this interpretation of this statute may appear to have simply been an oversight by the legislators who drafted the law.  It even seems to unduly punish people who live in manufactured homes.  But regardless of whether or not it is fair or makes sense, this interpretation has been upheld by the Court.
So, how does this law treat owners of manufactured homes different than owners of traditional stick-built homes?  In many respects a manufactured home is regulated by the same laws and regulations that effect motor vehicles, which is why all manufactured homes have a Vehicle Identification Number. As such, a manufactured home is not treated by the law as an improvement on the land.  It is treated as being completely separate from the land and is looked at as little more than a vehicle that was parked on that land, even if it is permanently affixed to a concrete foundation.

On the other hand, a stick-built home is treated as a part of the real estate itself.  In other words, a manufactured home is treated like a separate piece of property, whereas a stick-built home is considered an improvement of the existing land that it was built on.  Thus, a stick-built home is legally part of the real estate and can therefore be exempted with the real estate, and the manufactured home is a separate property from the real estate and so only one or the other can be exempted, but not both.

Again, as I mentioned earlier, this law may feel like it is unfair, but what a person feels about the law does not change how the court has treated this issue in the past.  The bottom line is that if you do own a manufactured home and are considering bankruptcy, then you may face some difficulty in protecting your home in the bankruptcy process.  If this exemption issue does apply to you, you do still have options, but before you move forward you really do need to consult with a bankruptcy lawyer.  If you do not seek out proper legal advice you may lose far more than you bargained for, including your home. Tags: Bankruptcy Information


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!