HBA-JLV H.B. 1869 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1869 By: Wohlgemuth Financial Institutions 7/26/2001 Enrolled BACKGROUND AND PURPOSE Manufactured housing represents a growing proportion of the homes currently being purchased in Texas. Although manufactured housing can be constructed and sold more quickly than site-built housing, some counties and school districts experienced difficulties in keeping up with the rapid growth and the need to provide services for the community. Prior to the 77th Legislature, consumers were unaware of their obligation to pay county and school taxes, unaware of their duty to maintain private roads, and unaware of their need to provide for and maintain on-site sewage disposal. House Bill 1869 establishes financing and acquisition procedures for retailers and consumers of manufactured homes and provides for notification to consumers of their responsibilities before purchasing a manufactured home. 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. ANALYSIS House Bill 1869 amends the Texas Manufactured Housing Standards Act to establish financing and acquisition procedures for retailers and consumers of manufactured homes and provide for notification to consumers of their responsibilities before purchasing a manufactured home (home). The bill prohibits a retailer, broker, salesperson or any person acting on behalf of a retailer or broker from receiving or accepting any compensation or consideration of any kind or type whatsoever from the seller of the real estate or any person acting on the seller's behalf. The bill provides that no part of the down payment on the purchase of the home nor the payment of any fees, points, or other charges or "buy-downs" shall be made from funds from the seller of the real estate or any person acting on the seller's behalf (Sec. 6A). These provisions take effect September 1, 2001 (SECTION 10). If a home is permanently affixed or becomes an improvement to real estate, the manufacturer's certificate or the original document of title is required to be surrendered to the Texas Department of Housing and Community Affairs (TDHCA) for cancellation. Before the issuance of a certificate of attachment, a title insurance company authorized to do business in this state which surrenders the manufacturer's certificate or the original document of title to TDHCA is required to file a notice of improvement attachment in the real property records of the county in which the home is located. The bill sets forth the requirements of the notice (Sec. 19(1)). The bill provides that a home that is permanently attached to real property is classified and taxed as real property if the real property to which the home is attached is titled in the name of the consumer under a deed or contract for sale. The bill provides that a home is considered permanently attached to real property if the home is secured to a foundation and connected to a utility, including a utility providing water, electric, natural gas, propane or butane gas, or wastewater services. The bill provides that the installation of a new manufactured home must meet, in addition to applicable state standards, the manufacturer's specifications required to validate the manufacturer's warranty. The bill authorizes the purchaser in the county where a violation of these provisions occurs to bring civil action to enjoin the violation. The bill provides that a home permanently attached to real property before January 1, 2002, or placed in a manufactured home rental community is not subject to these provisions. These provisions do not require a retailer or retailer's agent to obtain a license under The Real Estate License Act (Sec. 19A). Prior to the completion of a credit application, the retailer or agent must provide the consumer with a statement to notify consumers of their responsibilities before purchasing a home. The bill prohibits a retailer from transferring title to a home or otherwise selling, assigning, or conveying a home to a consumer unless the retailer delivers to the consumer a written document disclosing certain relevant financial information and the consumer's responsibilities, before the consumer signs the documents relating to the closing of the loan. The bill exempts certain entities from the disclosure requirements (Sec. 21). The bill amends the Property Code to provide that a home is personal property if the home is placed on a lot, whether permanently or temporarily, that is not titled in the name of the consumer under a deed or contract for sale, or if the home is placed in a manufactured home rental community. The bill prohibits TDHCA from issuing a document of title for a new and untitled home at the first retail sale of the home if the home is to be permanently installed by a retailer directly on real property titled in the name of the consumer under a deed or contract for sale. The bill requires a title company or attorney at law conducting the closing of a transaction, or the retailer or the retailer's agent to file in the public land records for the county in which the real property is located a notice of installation not later than the 30th working day after the date the installation is completed and is required to forward the manufacturer's certificate of origin and a copy of the notice of installation to TDHCA. The notice of installation serves as a completed cancellation application. For a home that is being resold by a financial institution or a retailer and that is permanently installed directly on real property titled in the name of the consumer under a deed or contract for sale, the bill requires a title company or attorney at law conducting the closing of a transaction, or the retailer or the retailer's agent to file in the public land records for the county in which the real property is located a notice of installation not later than the 30th working day after the date the installation is completed and to forward the manufacturer's certificate of origin and a copy of the notice of installation to TDHCA. The notice of installation serves as a completed cancellation application. The bill sets forth the requirements of the notice. These provisions do not apply to a mobile home (Sec. 2.001). The bill provides that a home becomes a new improvement to the homestead of a family or of a single adult person upon the filing of the certificate of attachment. If the debt for the home was contracted for in writing, that debt is considered to be for work and materials used in constructing new improvements thereon and constitutes a valid lien in the Official Public Records of Real Property in the county in which the land is located. The bill provides that when the home converts to real property, the lien on the property exists independently of any existing lien on the real property to which the home is permanently attached (Sec. 62.005). The bill amends the Tax Code to provide that if the ownership of the real property on which a home is affixed and the home are the same, the home is required to be appraised and taxed as an improvement to the real property, and the tax lien attaches to the real property on which the home is located regardless of the classification of the home. The bill provides that if the ownership of the home, whether by deed or contract for sale, and the real property on which the home is affixed are not the same, the personal property home shall be separately appraised and taxed at the same rate and on the same ad valorem basis as other single-family residential structures. The tax lien on the home does not attach to the real property when the ownership of the home and real property are different (Sec. 32.014). EFFECTIVE DATE January 1, 2002. Provisions prohibiting certain persons from accepting compensation or consideration take effect September 1, 2001.