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Manufactured home sales, alternate construction, new laws


Manufactured Structures Bulletin 20

To:

Manufactured Home Dealers, Manufacturers and Installers

From:

Richard Brooks

Date:

February 1985

Subject:

Manufactured Home Sales, Alternate Construction, and New Laws

The sale of repossessed manufactured homes

All dealers who sell repossess manufactured homes that are in the possession of banks or lending institutions must have a written agreement with the bank or lending institution stating the commission the dealer will receive for selling the homes. The commission must be stated as a percentage of the sales price. This applies to all repossessions sold by the dealer regardless whether the dealer guarantees all or part of the buyer's performance.

Sales of repossessed manufactured homes must be treated as any other brokered manufactured home sale. A Statement of Sale (disclosure) must be provided to the seller (the bank) and to the buyer as required by Minnesota Statutes 327B.08 of Subd. 1.

Lists of manufactured homes being offered for sale by banks or lending institutions are often sent to dealers. These lists sometimes state the amount wanted for the home, allowing the dealer to add any amount as his commission. This practice constitutes a net listing prohibited by Minnesota Statute 327B.01 Subd. 15 & 17 and is cause for denial, suspension or revocation of dealer license per Minnesota Statute 327B.05.

A manufactured home dealer license and surety bond is not required of "any bank, savings bank, savings and loan association or credit union, chartered by either this state or the federal government which acts as a dealer only by repossessing manufactured homes and then offering the homes for resale through the brokering services of a licensed dealer or real estate broker or salesperson." (Mn. Stat. 327B.04 Subd. 1).

Fees by dealers for arranging financing

An additional fee (other than the Dealers Commission) may be charged by a dealer broker for arranging financing only when the dealer complies with all of the requirements of Minn. Stat. 327B.09 Subdivisions 4 & 5 as follows:

 

Minn. Stat. 347B.09 Subdivision 4. Net listing prohibited. No dealer shall use or offer to use a net listing agreement.*

 

Minn. Stat. 347B.09 Subdivision 5. Broker or dealer arrangement of financing. A dealer who is acting as a broker for the sale of a manufactured home and who can arrange financing for the sale may charge a separate fee for that service if:

 

a.

the listing agreement does not require that the seller or buyer use the dealer's services to arrange financing;

 

b.

in arranging the financing, the dealer will pay a fee or will guarantee all or part of the buyer's performance to a third person; and

 

c.

the listing agreement clearly and conspicuously discloses the amount of the fee, the fact that the fee is in addition to the dealer's commission and the fact that the seller and buyer are not required to use the dealer's services to arrange financing.

 

* 327B.01 Subd. 15 Net Listing Agreement. Net Listing Agreement means any agreement by any dealer to sell, offer for sale, solicit, broker, or advertise the sale of a manufactured home on behalf of any person which provides for the dealer to receive any consideration from any person other than a commission based on a single percentage of the price at which the home is actually sold.

Model year designations

Model year designations of manufactured homes should be assigned by the manufacturer at the time the home is manufactured. The Model Year originally assigned to the home must not be changed. Model year designations do not always correspond with the calendar year, and therefore tend to be confusing. The model year is not established by the year in which the home is titled. A dealer is responsible for stating the correct model year (when a model year is stated) whether it be verbally, in advertising, on sales agreements or other documents initiated pursuant to the sale of the home. To state the incorrect model year can be considered misrepresentation and could lead to suspension or revocation of the dealer's license.

We believe that it would be more proper to state the year of manufacture of the home. The date of manufacture is required by H.U.D. Standards to be shown on the Data Plate in every HUD manufactured home and may also appear on the Manufacturer's Certificate of Origin. The Data Plate has been mandatory since June 15, 1976 and used on some homes prior to that date. We will provide additional information on this subject in the near future.

Sales of new manufactured homes

A manufactured home dealer license is required for the sale of any new manufactured home including manufactured homes affixed to, or sold with, real estate. The seller may also be required to be licensed as a real estate broker or real estate salesperson. Real Estate Licenses are issued in this state by the Minnesota Department of Commerce.

Minnesota Statute 327B.04 Subdivision 1 states in part, that no person shall act as a dealer in new or used manufactured homes without a manufacturing home dealer license. The only exceptions are: 1) State or federal chartered banks, savings banks, savings and loan associations and credit unions selling repossessed homes through a licensed dealer, 2) Licensed real estate brokers and salespersons brokering the sale of used homes and 3) Owners selling a manufactured home used as their residence.

Length and width of manufactured homes

When the length and width are shown on documents including Certificates of Origin, Sales Contracts, etc., the length and width must conform to the requirements of Minnesota Rule Chapter 1350.9000, formerly (2MCAR 1.8021). This is generally designated as "Floor size" on some purchase agreement forms and does not include the hitch and drawbar in the length of the home. The "Hitch size", also included on some forms, is for the length of the home including hitch and drawbar. If only one size is shown it must be the "floor size" required by 1350.9000 (2MCAR 1.8021). The dealer or broker are responsible for stating the correct length and width and the dimensions should be verified by measurement.

Retail manufactured home sales by a manufacturer

Manufacturers who intent to sell manufactured homes directly to a consumer customer must also be licensed as a Manufactured Home Dealer as required by 327.B.04, if the sale takes place in this state. The Manufactured Home Manufacturers License issued by this Division does not include sales to consumer customers.

Alternative construction

Alternative construction of a manufactured home is construction which does not comply completely with the Federal Manufactured Home Construction and Safety Standards but has been approved under Section 3282.14 of the HUD regulations. The purpose of this section is to encourage innovation and the use of technology in manufactured homes. The section establishes certain criteria and procedures for specific HUD approval of alternative construction. Such construction items requiring specific approval could include frame removal, designs for basement furnace installations, non-insulated floors for basement installation, etc.

Minnesota statutes and rules changes

Chapter 327C of the 1984 Minnesota Statutes covering Manufactured Home Park Rentals includes the Manufactured (Mobile) Home Safety Feature Disclosure Form required for all in park sales. Chapter 327C can be reviewed and copied at most libraries.

Obtainable from the same source are the Manufactured Home Rules which are renumbered and replace the old (MCAR) Minnesota Code of Agency Rules numbers. These are now referred to as Minnesota Rules, Chapter 1350 and include the State Manufactured Home Building Code and the Manufactured Home Dealer/Manufacturer Licensing Rules. The cost is $4.00 plus 6% sales tax and $1.50 postage and handling.

Licensing law changes

A copy of the 1982 Dealer/Manufacturer Licensing Laws incorporating the 1983 Chapter 142 Revisions is being mailed under separate cover. Most of the changes are housekeeping in nature. A major addition, (327B.04 Subd. (e), requires the applicant for a license to have 2 years prior experience in the sale of manufactured homes working for a licensed dealer. The section on net listing agreements was clarified, and an appeals section was added for the purpose of appealing license denials.

It is in the dealer's interest to make all salespersons aware of all the provisions of the laws and rules, as the dealer is liable for salesperson activities regarding sales or attempted sales of a manufactured homes per Minn. Stat. 327B.07 Subd. 1.

Salesperson list

The Salesperson List, required to be submitted to the Commissioner by Mn. Stat. 327B, Subdivision 2 and Minnesota Rule Chapter 1350 Section 8200 (2 MCAR 1.8013), must be revised and submitted to the Commissioner within 10 days of hiring, firing or otherwise changing the employment status of a salesperson. The dealer must retain the original copy and send a copy of the revised list to this Division. The list must be a running list and all names remain on the list. If the dealer has several sheets of names, only a copy of the revised sheet need be submitted. Each sheet should be identified with a page number. Please highlight or circle the change with a colored pen. This will assist us in readily picking up the change in the salesperson status. It is important that you keep us informed with current salesperson information.

Missing construction seals

Recently, in a number of instances, manufactured homes were found to be missing State Construction Seals. This applies to homes built between July 1, 1972 and June 15, 1976.

It is a violation of Minnesota Rule Chapter 1350 Section 0400 Subpart 1 (2 MCAR ยง 1.90201A) to sell, offer for sale, or park a manufactured home in a manufactured home park in this State without a State Construction Seal or HUD Label being affixed. Application forms for replacement seals are available from the Building Codes and Standards Division.

Replacement seals can be issued for HUD Labeled used homes manufactured after June 14, 1976 if the original HUD Label Number can be verified and if the home has not been altered to bring it out of compliance with HUD Construction and Safety Standards.

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