Partners (Winter 2002)
Partners (Winter 2002)
Legislative initiatives for many years were centered on the quality of construction of manufactured homes. Safety concerns drove the adoption of the HUD code in 1976, which now regulates the construction quality of new manufactured homes. Although critics still question the safety of manufactured homes, overall quality has greatly improved. More recently, greater focus has been placed on the need for better laws to protect consumers financing manufactured homes and those placing those homes on leased property.
All recent legislative initiatives have been undertaken at the state level. The majority of manufactured homes are financed as personal property, so the homeowners do not have the federal protections or the detailed consumer disclosures afforded under the Real Estate Settlement Procedures Act (RESPA). States have not directly addressed consumer protection laws for the financing of manufactured homes as personal or real property, but some states have at least passed laws that require that manufactured homes be titled as real property, assuming that the homes meet certain requirements. There are also states where lenders do not have to recognize manufactured homes placed on permanent foundations on private property as real estate, thereby leaving homebuyers unprotected and with only personal property loans as an option for financing.
State Laws Protecting Park Tenants
Recent legislative initiatives in states with a concentration of manufactured home parks have focused on the rights of the homeowners who are tenants in these parks. For many homeowners, placing their home on leased spaced is the most affordable option. However, the limited consumer protections afforded park tenants makes them vulnerable to unscrupulous landlords.
Unlike apartment renters, manufactured home owners who rent space where their home sits have no legal rights if the park owner decides to terminate their stay. Typically, term leases are either not offered or only available on a month-to-month basis. Thus, there are usually no landlord-tenant protections to prevent landlords from increasing rents at their discretion. Skyrocketing rents in addition to utility costs and community fees frequently trap these homeowners who have limited income and are often struggling to meet their monthly house payments.
The cost to move a manufactured home ranges from $1,500 to $3,000, so for most homeowners, moving to a new park is not a viable option. Even if the homeowner has the money to move, finding a place for the home is a challenge since many parks are full or won’t take used homes. Increasing rents can force the homeowner into making a difficult choice between facing foreclosure if they cannot make their monthly payment or selling the home to the landowner at a bargain basement price.
According to Consumers Union, there are 38 states with laws governing lot rentals for manufactured homes directed at problems faced by lease-less tenants. Vermont and Washington passed a law giving park tenants the right of first refusal if the park owner decides to sell the park. Illinois requires landlords to offer a one-year lease option with automatic renewal unless the landlord has good cause to terminate. Arizona limits unreasonable community rules.
Florida requires a one-year notice before closure of a park. Oregon prevents a landlord from forcing a home from the park based on age, architectural style, or original materials, if the home meets the codes of the date of manufacture. Texas, with over 1,300 manufactured housing communities and the largest seller of manufactured housing, recently passed legislation granting the homeowner the right to an initial six-month lease, a 60-day notice if the lease is not to be renewed, and prompt return of security deposits, plus requires proper maintenance and repair of park facilities by the landlord.
These are some of the examples of the range of protections states provide to their manufactured home park residents. While there is growing recognition of this problem, not all states have enacted special consumer protection laws. In fact, as of February of 2001, Consumers Union reported that four of the top seven states selling manufactured housing still did not provide any consumer protection for tenants in manufactured home communities.
An effort has clearly been made by the federal government to improve safety and quality standards for manufactured homes, and the HUD code has increased consumer confidence and greatly improved the manufactured housing industry. The legislative initiatives at the state level are also addressing some of the concerns about manufactured housing and the need for tenant rights for vulnerable homeowners in manufactured home communities. If manufactured housing is to be seriously considered as an affordable housing option, more efforts need to be made in providing its homeowners with comparable consumer protection laws as those provided to owners of site-built homes.