Texas Court of Appeals Eighth District Rules on Proper Remedy for Non-payment

Summary

Court rules that when a manufactured home is personal property, which all are by default unless properly converted to real property, the remedy for non-payment of a promissory note is not an eviction. Also, parties cannot by merely writing into purchase contracts establishing jurisdiction or remedies, like eviction, from courts where the court would not otherwise have jurisdiction.

Facts

Segoviano bought a manufactured home in 1996 and entered into a 25-year promissory note with the lender, Green Tree Financial Servicing Corporation. In 2003 Guerra bought the home from Segoviano and assumed the promissory note with Green Tree by agreeing to make the remaining home payments for 18 years. However, Segoviano did not transfer the title of the home to Guerra at the time of the sale. The contract Guerra and Segoviano entered into had the parties agree that only after all of the remaining payments were made would the title then be transferred.

In 2014 a dispute occurred and Guerra stopped making payments so Segoviano filed for eviction in justice court. The first attempt was based on asserting Guerra did not pay her rent, which the court dismissed, presumably because it was her obligation under the promissory note not a lease contract for rent she defaulted on. On Segovianos second attempt at eviction the reasoning offered to the court was that Guerra was now a trespasser. Segoviano argued that in the contract to purchase the home it stated that after the contract was cancelled, here due to non-payment, that Guerra would leave the home and if she didn’t she would be evicted.

Guerra argued that the contract was a purchase contract not a lease contract, so no landlord tenant agreement existed. And since there was no landlord tenant agreement the justice court did not have the jurisdiction to evict her. Rather than a dispute about unpaid rent, Guerra argued the parties had a title dispute and such disputes are outside of the jurisdiction of a justice court.

The courts agreed with Guerra and dismissed the case. Segoviano appealed.

The Appeal

The appellate court agreed with Guerra that justice court and eviction remedies were not available for this type of dispute.
The court concluded the determinative issue was the classification of the manufactured home as personal property versus real property. Evictions (more formally called “forcible detainer”) are remedies to recovery possession of real property when another person enters the real property without legal authority. The issue in an eviction case is to determine who has the right to possess the real property.

Segoviano didn’t offer evidence that the home had been properly converted to real property. To the contrary evidence showed in the tax records that the home was personal property. The court ruled that parties cannot by contract create subject matter jurisdiction, so the fact that the contract to buy the home said that if Guerra didn’t pay she would be a trespasser subject to eviction was void.

Conclusion

Disputes coming from non-payment of a personal property manufactured home purchase contract for possession of the home is a “trial of a right of property” governed by Chapter 25, Texas Property Code and must be brought in district of county court with jurisdiction of the amount in controversy.
An important take away is that if a home purchase was financed with a property perfected finance lien on the home, then the property remedy for a default is not a trial of a right of property but rather a foreclosure of the lien.

The remedy for non-payment of a purchase contract for a personal property manufactured home cannot be an eviction, even if in the contract it states and the parties agree that an eviction will be the result.