Believing that two bankruptcy judges and a district judge were wrong, the majority on the Arizona Supreme Court answered a certified question by holding that a self-propelled motor home (a/k/a an RV) is not a “mobile home” and therefore does not qualify for an Arizona homestead exemption.
The dissenter believes that an exempt “mobile home,” an undefined term in the statute, “can reasonably be interpreted as either a trailer home that is not self-propelled or a motor home that is self-propelled when either is used as a permanent residence.”
The majority opinion by Arizona Supreme Court Justice James P. Beene refers to vehicles that are commonly known as recreational vehicles, or RVs. Given how many retirees in Arizona live in RVs, this writer hopes that the Arizona legislature will amend the state’s exemption statute to protect people who live in RVs as their permanent residences.
The RV Residence
A couple in chapter 7 owned an RV manufactured in 2017. This writer found similar models resold for prices between $114,000 and $149,000. They lived permanently in the RV and claimed a homestead exemption. Following objection by the chapter 7 trustee, Bankruptcy Judge Paul Sala of Phoenix certified the question to the Arizona Supreme Court.
In his February 23 opinion, Justice Beene said that “no Arizona precedent exists determining whether a motor home qualifies as a mobile home under Arizona’s homestead exemption statute.” He quoted the state statute as exempting a “dwelling house,” a condominium or a cooperative “in which the person resides.”
The same statute also exempts a “mobile home in which the person resides” and a “mobile home in which the person resides plus the land on which that mobile home is located.” The statute, Justice Beene said, “does not expressly define ‘motor home.’”
Justice Beene said that dictionary definitions “are too varied to categorically establish any plain meaning.” However, he said that they “all suggest a mobile home must generally have a permanent location — either by design or intent,” but “none . . . describe what makes such a location permanent.”
Justice Beene found the notion of permanence in the exemptions for traditional stick-built homes, condos and coops. Similarly, he also found the sense of permanence in the exemption given to a “mobile home” and the land on which it is situated.
Justice Beene answered the certified question by holding that a “motor home cannot be a ‘mobile home’ under the homestead statute because it is intended to be readily movable and is not tied to the land upon which it sits in any significant way.”
Lower Court Decisions Rejected
Justice Beene disagreed with contrary decisions by Bankruptcy Judge Randolph J. Haines in In re Irwin, 293 B.R. 28 (Bankr. D. Ariz. 2003), and by Bankruptcy Judge Daniel P. Collins, who was upheld in district court in Warfield v. Froemming, 663 F.Supp.3d 1079 (D. Ariz. 2023).
Because he found that the statute was not ambiguous and because he employed the interpretive canon noscitur a sociis, Justice Beene said it was improper for the lower courts to have relied on the proposition that homestead exemptions should be “interpreted liberally.”
The Dissent
Vice Chief Justice Ann A. Scott Timmer “respectfully” dissented. She opened her opinion by saying that homesteads had been exempted since Arizona’s statehood “to prevent families from being rendered homeless by the debt collection process.” She agreed with the three lower courts, which “have maintained for decades that the term ‘mobile home’ can include a motor home used as a permanent residence.”
With regard to an exemption for a “mobile home” or a mobile home and the land where it is located, Justice Timmer found “no language” in the statute to “suggest[] that a ‘mobile home’ must be designed to stay in one location or be physically attached to land.”
Recognizing that mobile homes are “different from traditional dwellings,” Justice Timmer noted how the statutory exemption for a mobile home and the attached land has no language “about permanent attachment, a foundation, removal of wheels and axles, hard-wiring or hard-plumbing.” She also noted that “a mobile home can be ‘located’ on land without physical attachment.”
“For these reasons,” Justice Timmer said that she “agree[d] with federal court decisions that ‘mobile home’ . . . can reasonably be interpreted as either a trailer home that is not self-propelled or a motor home that is self-propelled when either is used as a permanent residence.”
Finding the term “mobile home” to be ambiguous, Justice Timmer consulted “secondary interpretive principles” and the purpose of the homestead exemption, which is to prevent individuals from becoming homeless. Dissenting, the “focal point” for her interpretation of the exemption was “whether it actually serves as the owner’s residence.”
Observations
The statute exempts a “mobile home.” A nonexempt RV or “motor home” is inherently more “mobile” than an exempt “mobile home,” which can’t be easily or quickly moved. Ironically, the state Supreme Court has made homes nonexempt when they are more mobile.
Take the case of a retired couple living in the northeast on limited income from Social Security. They sell their modest home, buy a used RV with the equity, and move to Arizona for lower taxes and lower cost of living. If uninsured medical expenses force them into chapter 7, they become homeless. Where housing would cost little with the RV, after chapter 7 they’d be spending a sizeable portion of their Social Security benefits on housing.
Chapter 13 likely would be infeasible because people living on Social Security wouldn’t have income to buy back the value of the RV.
The majority opinion could be read to mean that exemptions are not to be read liberally anymore in Arizona, because the Supreme Court found the answer just in the language of the statute by use of interpretive canons. Let’s also hope that lower courts in Arizona will interpret the opinion to mean that the mobile home exemption is the only exemption to which the idea of liberal interpretation does not apply.
The opinions are those of the writer, not ABI.
Believing that two bankruptcy judges and a district judge were wrong, the majority on the Arizona Supreme Court answered a certified question by holding that a self-propelled motor home (a/k/a an RV) is not a “mobile home” and therefore does not qualify for an Arizona homestead exemption.
The dissenter believes that an exempt “mobile home,” an undefined term in the statute, “can reasonably be interpreted as either a trailer home that is not self-propelled or a motor home that is self-propelled when either is used as a permanent residence.”
The majority opinion by Arizona Supreme Court Justice James P. Beene refers to vehicles that are commonly known as recreational vehicles, or RVs. Given how many retirees in Arizona live in RVs, this writer hopes that the Arizona legislature will amend the state’s exemption statute to protect people who live in RVs as their permanent residences.