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Consumer fraud issues

Manufactured Structures Bulletin 33

To:

Manufactured Home Manufacturers, Dealers, and Limited Dealers

From:

Thomas R. Joachim State Building Official

Date:

September 20, 2001

Subject:

Consumer Fraud Issues

 

This Information Bulletin addresses violations of Minnesota statutes and rules governing manufactured home sales through 1) use of the term modular home and 2) changes made to contracts and agreements connected with the sales. The Minnesota Building Codes and Standards Division has uncovered these violations during dealer record reviews and through investigation of consumer complaints.

Consumers registering complaints with this division have stated they purchased a "Modular Home." Upon questioning the consumers, division personnel discovered that what the consumer purchased is a home constructed to the HUD Code of Federal Regulations (CFR) and defined as a "Manufactured Home", per The National Manufactured Housing construction and Safety Standards Act, Section 603 (6). Consumers were under the impression they had purchased a modular home constructed to site-built construction standards (i.e. Industrialized Building Commission or Prefabricated Building labeled in accordance with Minnesota Building Code Chapters 1361 or 1360).

Minnesota Licensed Manufactured Home Dealers or Limited Dealers that fail to identify on contracts and agreements the type of home sold to a consumer as a manufactured home are in violation of Minnesota State Building Code 1350.8600. Minnesota State Building Code 1350.8600 requires a Dealer or Limited Dealer to furnish accurate documents material to the transaction. Not identifying or representing a manufactured home as anything other that a 'manufactured home' to consumers will be considered misrepresentation, a misleading statement, or deceptive practice, per Minnesota Statute 325F.69, subdivision 1, and consumer fraud. Violations of 325F.69 are reason to deny, suspend, or revoke a Dealer or Limited Dealer's License as per Minnesota Statute 237B.05, subdivision 1 (d).

In accordance with Minnesota Statute 327B.12, subdivision 2 and Minnesota Statute 8.31, consumer fraud actions are prosecuted by the Office of the Attorney General.

To insure proper disclosure and help protect all of the parties involved, all verbal communications, purchase agreements, contracts, listing agreements, and other documents material to a manufactured home sale shall reference the home as a 'manufactured home'. If a reference is made to the code the manufactured home complies with, it must be the "Code of Federal Regulations (CFR) 3280".

Consumer complaint investigations by this division have found manufactured home Dealers or Limited Dealers changing prices, or commission amounts, or other terms and conditions on agreements or contracts without notifying or obtaining validated permission from consumers (sellers and purchasers) in the sales and brokered sales of manufactured homes. If changes in commission, or price, or other terms and conditions of the sale occur in the sale or brokered sales of manufactured homes the changes must be documented by initials/signatures and dates, by all parties involved in the creation of the document. Minnesota State Building Code 1350.8600 that requires that true and accurate copies be given to all parties at the time the documents are signed and become available. Failure to provide true and accurate copies of agreements, contracts, statements of sale, or other documents related to the sale are violations of Minnesota State Building Code and Manufactured Home Sales Laws and is reason to deny, suspend, or revoke a Dealer or Limited Dealer's license as per Minnesota Statute 327B.05, subdivision 1 (d & j), and would be a violation of Minnesota Statutes 325F.69, subdivision 1, Consumer Fraud, for deceptive practices. In accordance with Minnesota Statute 327B.12, subdivision 2, and Minnesota Statute 8.31, consumer fraud actions are prosecuted by the Office of the Attorney General.

All Manufactured Home Dealers and Limited Dealers shall provide true and accurate copies of all contracts, agreements, statements of sale, and other documents related to the sale (dealer or limited dealer) or brokered sale (dealer) of a manufactured home to all of the parties of the transaction. Any changes in amounts, commission, or other terms and conditions of sale on agreements, contracts, statements of sale, or other documents related to the sale or brokered sale, shall require the signing and dating of the changes by the parties to the transaction to verify acknowledgement of the change to the documents.

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