HBA-TYH, ATS H.B. 1193 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1193 By: Telford Urban Affairs 7/21/1999 Enrolled BACKGROUND AND PURPOSE For thirty years, Texas has regulated the manufactured housing industry (industry). Since the Texas Department of Housing and Community Affairs replaced the Texas Department of Licensing and Regulation in 1995 as the agency responsible for regulating the industry, several factors have contributed to the industry's growth in Texas. One factor was the rebirth of the economy which has resulted in the creation of additional service-sector jobs. Another factor was the greater availability of financing, including longer loan terms. Because many more Texans were purchasing manufactured homes than ever before, changes to the law were necessary to keep pace with industry trends. H.B. 1193 amends Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by redefining "salvaged" manufactured home. Under the new definition, a "salvaged" manufactured home means a manufactured home that has been scrapped, dismantled, destroyed, or for which an insurance company has paid the full insured value. This bill provides that a person possessing the original title document to a used manufactured home that is salvaged must surrender the title document and receive a salvage title. Similarly, if a new manufactured home becomes salvaged, a retailer must remove the label and must surrender it along with the manufacturer's certificate of origin for issuance of a salvage title. It still remains unlawful for a person to sell, convey, or otherwise transfer to a consumer in this state a manufactured home for which a salvage title has been issued. This bill also includes a retailer among the persons prohibited from aiding or assisting a consumer in preparing or providing false or misleading information in a document related to the purchase or financing of a manufactured home, and provides that a retailer must give a consumer a copy, or a general description, of the manufacturer's new home construction warranty and the retailer's installation warranty before the signing of any binding retail installment sales contract or other binding purchase agreement. This bill also provides that a retailer must deliver certain warranties and information at the time of the initial installation at a consumer's homesite. Additionally, this bill defines a licensed retailer to mean a "warehouseman" (a person engaged in the business of storing goods for hire) for the storage of manufactured homes for hire. In addition, this bill authorizes a person licensed as a broker or salesperson under The Real Estate License Act to act as a manufactured housing broker or salesperson. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subdivision (1), Section 3, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), to redefine "advertising" and "advertisement" by including electronic media among the types of media on which commercial messages for the sale of manufactured homes are promoted. SECTION 2. Amends Section 4, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by deleting existing Subsections (b) and (e), which provided that standards in effect on September 1, 1989, remain in full force and effect for plumbing, heating, air conditioning, electrical systems, and construction and installation of manufactured homes. Other existing sections of the law articulate standards that are in full force and effect for these areas. Redesignates existing Subsections (c) and (d) to Subsections (b) and (c) and existing Subsections (f)-(j) to Subsections (d)(h). SECTION 3. Amends Subsections (h) and (1), and adds Subsection (m), Section 6, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), as follows: (h) Provides that it is unlawful for a person to sell, convey, or otherwise transfer to a consumer in this state a manufactured home for which a salvage title has been issued under Section 8 (Used Homes), rather than to sell, convey, or otherwise transfer a salvaged manufactured home. As currently defined, a "salvaged" manufactured home means a manufactured home obtained by a property and casualty insurer from the insured by reason of the insurer's payment of the policy value written on the home to the insured. (l) Includes a retailer among the persons prohibited from aiding or assisting a consumer in preparing or providing false or misleading information in a document related to the purchase or financing of a manufactured home. Adds the provision that it is unlawful for a retailer or a salesperson to submit information known to be false or misleading to a credit underwriter or lending institution. (m) Provides that it is unlawful for a retailer, salesperson, or agent of the retailer to refuse to refund a consumer's deposit except in accordance with this subsection. Provides that: _the deposit must be refunded within 15 days following the receipt of written notice from the consumer requesting the refund. _if a retailer, salesperson, or agent of the retailer violates the provisions of this subsection, the consumer may recover, cumulative of other remedies, three times the amount of the deposit plus reasonable attorney's fees. _the consumer's deposit may only be retained if the enumerated conditions apply. _the retailer must not retain more than five percent of the estimated cash price of the home which is specially ordered and must refund any amount of the deposit which exceeds five percent. _this subsection does not apply to a deposit in escrow in a real estate transaction nor to a down payment as shown on an executed retail installment sales contract. SECTION 4. Amends Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by adding Section 6A, as follows: Sec. 6A. LAND-HOME REGULATIONS. (a) Provides that this section is applicable to those transactions in which the manufactured home will be sold as personal property and titled under Section 19 (Manufactured Home Titles) of this article. Provides that this section does not apply to real estate transactions when the manufactured home is, or will become, real estate under Section 2.001 (Manufactured Housing), Property Code. (b) Provides that the retailer is prohibited from selling, or representing for sale, or offering for sale any real estate in conjunction with the sale of a manufactured home except as may be authorized by the department consistent with the provisions of The Real Estate License Act (Article 6573a, V.T.C.S.). SECTION 5. Amends Section 7, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by amending Subsections (o) and (q) and by adding Subsection (s), as follows: (o) Includes a license holder among the persons to whom the requirements of Subsection (o) do not apply when making application to license additional business locations, to renew or reinstate a license, or to make application for licensing as a salesperson. (q) Authorizes the executive director (director) of the Texas Department of Housing and Community Affairs (department) to recognize and approve a training program for an applicant for a license, rather than for installers, that is conducted by a nonprofit educational institution or foundation. Deletes the condition that the training program be conducted in the field by a private institution or other person. (s) Authorizes a person who is licensed as a broker or salesperson under The Real Estate License Act (Article 6573a, V.T.C.S.) to act as a manufactured housing broker or salesperson. Provides that a person licensed as a broker or salesperson under The Real Estate License Act is not required to be licensed or post bond or other security under this article, provided negotiation for the sale, exchange, or lease-purchase of a manufactured home is conducted on behalf of a person for whom the real estate licensee otherwise acts as a real estate broker or salesperson. SECTION 6. Amends Subsections (b) and (g), Section 8, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), as follows: (b) Adds the provision that Subsection (b), regarding written warranties, does not apply to a sale, exchange, or lease-purchase from one consumer to another consumer. (g) Replaces the existing definition of a "salvaged" manufactured home. Under the new definition, a "salvaged" manufactured home means a manufactured home that has been scrapped, dismantled, or destroyed or for which an insurance company has paid the full insured value. Provides that a person possessing the original title document to a used manufactured home that is salvaged, rather than to a salvaged manufactured home, must surrender the title document to the director for cancellation of the title and issuance of a salvage title. Adds the condition that if a new manufactured home becomes salvaged, a retailer must remove the label and must surrender it along with the manufacturer's certificate of origin to the director for issuance of the salvage title. Makes a nonsubstantive change. SECTION 7. Amends Subsections (e) and (g), Section 9, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), as follows: (e) Adds a provision requiring public and administrative hearings to be held in Travis County unless all parties agree to another location. (g) Adds the provision that all other rules are effective 30 days following the date of publication, rather than as provided by Chapter 2001 (Administrative Procedure), Government Code, or such later date as is published. SECTION 8. Amends Subsections (d), (i), and (j), Section 14, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), as follows: (d) Provides that a retailer must give a consumer a copy, or a general description, of the manufacturer's new home construction warranty and the retailer's installation warranty before the signing of any binding retail installment sales contract or other binding purchase agreement. Provides that the retailer must deliver certain warranties and information at the time of the initial installation at the consumer's homesite. (i) Requires the department to perform a home inspection within 30 days, rather than within 15 days, after it receives a request for an inspection. Requires the department to mail a written report and orders, if any, to the consumer, manufacturer, and retailer by certified mail, return receipt requested, within ten, rather than five, days following the inspection. (j) Includes an installer among the persons required to comply with the initial report and warranty service orders of the director. Adds a provision authorizing the department to issue an amended report and warranty orders if all parties receive notification of these orders and are given an opportunity to respond to these orders. Adds the provision that amended report and warranty orders must supersede the initial report and warranty orders. Deletes the provision specifying that neither initial reports nor warranty service orders can be construed as contested cases. Makes conforming changes. SECTION 9. Amends Section 18, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by amending Subsections (e) and (g) and by adding Subsection (j), as follows: (e) Makes a nonsubstantive change. (g) Includes transportation in the list of activities undertaken by a licensed retailer or installer of manufactured housing to which a local governmental unit or home-rule city is prohibited from requiring any permit, fee, bond, or insurance, except as may be provided by the department. Provides that this section does not prohibit the collection of actual costs incurred by a local governmental unit or home-rule city that result from the transportation of a manufactured home. (j) Defines a licensed retailer to mean a "warehouseman" as defined by Section 7.102 (Definitions and Index of Definitions), Business & Commerce Code, for the storage of manufactured homes for hire. A "warehouseman" is a person engaged in the business of storing goods for hire. Applies the provisions of the Business & Commerce Code relating to the storage of goods for hire to the licensed retailer acting as a warehouseman. SECTION 10. Amends Subsection (g), Section 19, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), by adding a provision authorizing a person to apply for a replacement title if an original document title is unavailable or if a home has been abandoned. SECTION 11. Repealer: Sections 347.303 (Deposit for Order of Manufactured Home), 347.304 (Deposit for Holding Manufactured Home for Purchase), 347.305 (Requirements for Retaining Deposit), and 347.306 (Effect of Exceeding Limits on Deposits), Finance Code. SECTION 12. Effective date: September 1, 1999. Except the effective date for Section 5 is January 1, 2000. SECTION 13.Emergency clause. Effective date: upon passage.