HBA-JLV C.S.H.B. 1869 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 1869 By: Wohlgemuth Financial Institutions 3/23/2001 Committee Report (Substituted) 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 have experienced difficulties in keeping up with the rapid growth and the need to provide services for the community. Consumers may be 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. C.S.H.B. 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 C.S.H.B. 1869 amends the Texas Manufactured Housing Standards Act to provide that a manufactured home (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 located outside the corporate boundaries of a municipality. The bill provides that a home is considered permanently attached to real property if the home is tied down and connected to a public utility. The bill authorizes the county where a violation of these provisions occurs to bring a civil suit to enjoin the violation. The bill provides that a home placed in a manufactured home rental community is not subject to these provisions (Sec. 19A). At the first personal meeting between a retailer or agent of the retailer and a consumer, 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 prohibit the Texas Department of Housing and Community Affairs from issuing a document of title for a new and untitled home at the first retail sale of the home or for a home that has been repossessed and is being resold by a financial institution or a retailer, if the home is to be permanently installed by a retailer directly on real property titled in the name of the consumer. The bill provides that a new home or a repossessed home that is permanently installed directly on a real property titled in the name of the consumer becomes real property on completion of the installation, and a certificate of attachment is not required for the home to become real property. The bill requires the retailer or the retailer's agent to file a notice of installation not later than the 10th day after the date the installation is completed in the public land records for the county in which the real property is located. These provisions do not apply to a mobile home (Sec. 2.001). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 1869 modifies the original to provide that a manufactured 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 located outside the corporate boundaries of a municipality. Whereas, the original bill allowed the consumer to designate the home as personal property. The substitute sets forth provisions authorizing civil action for violation of these provisions and provides that a home placed in a manufactured home rental community is not subject to these provisions. The substitute modifies the original to require the retailer to provide a written notification to the consumer detailing the consumer's responsibilities, including any points or fees agreed upon during the sale, and responsibilities of the consumer to obtain property damage insurance and mortgage insurance. The substitute exempts a federally insured financial institution or lender approved or authorized by the United States Department of Housing and Urban Development to act as a mortgage from the disclosure requirements (Sec. 19A, Texas Manufactured Housing Standards Act). The substitute prohibits the Texas Department of Housing and Community Affairs from issuing a document of title for a new and untitled home at the first retail sale of the home or for a repossessed home that is being resold by a financial institution or a retailer, if the home is to be permanently installed by a retailer directly on real property titled in the name of the consumer. The substitute sets forth responsibilities of the consumer and the retailer in the sale. The substitute provides that these provisions do not apply to a mobile home (Sec. 2.001, Property Code). The substitute modifies the original by removing provisions specifying that the bill applies only to a consumer who acquires a manufactured home that is to be placed on a nonpermanent foundation system located on land owned by the consumer or located on land to be purchased by the consumer in conjunction with the acquisition of the home, regardless of whether the consumer acquires the land and home from the same person. The substitute removes provisions requiring a consumer who does not elect to designate a home as personal property to make monthly payments to the retailer, who must place the payments in escrow, to provide for any required property taxes on the home, any required maintenance of private roads, and any required onsite sewage disposal system. The substitute also removes provisions providing that escrow deposits may be placed in interest-bearing accounts, and the interest is payable as may be agreed in writing between the consumer and the retailer. The substitute removes provisions providing that a consumer is not required to make the monthly payments if, at the time the consumer acquires the home, the consumer makes a down payment equal to at least 25 percent of the total purchase price of the home and any land purchased by the consumer in conjunction with the acquisition of the home (Sec. 19A, Texas Manufactured Housing Standards Act). The substitute removes provisions requiring the executive director of the Texas Department of Housing and Community Affairs to prepare and administer continuing education programs for retailers. The substitute no longer requires a retailer to complete 25 hours of continuing education programs (Sec. 7A, Texas Manufactured Housing Standards Act).