2013 Manufactured Housing Legislation

03 Sep 2013 3:06 PM | Anonymous

2013 Manufactured Housing Legislation

Approved by the SC Legislature 

The SC legislature has passed S310, designed to keep bad apples and under-qualified persons out of the industry.  The new law, now in effect, also gives lenders a legal way to dispose of repossessed homes.

IMPORTANT: This unofficial summary is designed to direct members to key features of the legislation and should not be considered legal advice.  Please consult with your legal counsel to determine how these changes in the law may impact your own company operations.

 

Financial Requirements for New Dealers Raised      

Agency staff can routinely approve dealer applicant who meets financial standards. Person who doesn’t meet the standards must appear before the SC Manufactured Housing Board (SCMHB).

Raises dealer financial standards: a) from 650 to 700 credit score, and b) 150K net worth to 150K “cash or cash equivalency.”    

SCMHB may grant license to company that doesn’t meet standards if they appear financially viable. Board can modify or restrict the activities of the licensee who doesn’t meet the standards.  

More details

 

Crackdown on Unlicensed Sales:

Dealer Number Required on Advertising

Advertising for the sale of manufactured homes located in South Carolina must include dealer license number.

Applies to print, Internet, or email advertisements   

More details

Lenders Get a Legal Way to Dispose of Repossessed Homes: Sales Through Licensed Dealers

A lienholder who sells a repossessed manufactured home through a licensed manufactured home retail dealer is not required to get its own dealer’s license. 

License not required for direct sale by lender if part of formal foreclosure as set out in SC law in section 29-3-610.

More details

       

Allows Board to Deny Denies License to Persons Who Have Violated Specified Laws

The SC Manufactured Housing Board may deny a license for a person convicted of one of the crimes listed in the code section. Or they can approve a license with conditions. Seven year time limit removed.

The SC Manufactured Housing Board must deny a license for a person currently under sentence including probation or parole for the specified crimes.

More details

Full text of new law, S310


Financial Requirements for New Dealers Raised

Highlights

Agency staff can routinely approve dealer applicant who meets financial standards. Person who doesn’t meet the standards must appear before the SC Manufactured Housing Board (SCMHB).

Raises dealer financial standards: a) from 650 to 700 credit score, and b) 150K net worth to 150K “cash or cash equivalency.”    

SCMHB may grant license to company that doesn’t meet standards if they appear financially viable. Board can modify or restrict the activities of the licensee who doesn’t meet the standards.

In Practical Terms…

In practical terms, this means a dealer applicant who meets the standards can have his or her license approved routinely by agency staff (as long as they don’t have other problems.)  If the applicant does not meet the standards, they can go before the licensing board and talk about their business plan and explain why they are unlikely to have problems meeting their obligations to customers.

In the past, the majority of applicants who have gone before the board have ultimately received a license. A typical case is a person who only wants to sell used homes or a small number of homes. They can suggest or agree to build such a restriction into their license.

Wording of the Provision

“Section 40‑29‑95.  (A) The board shall consider the financial responsibility of an applicant as determined by this section and regulations promulgated by the board.

   (B) A retail dealer applicant who fails to possess cash or cash equivalency in an amount equal to or greater than one hundred fifty thousand dollars or a credit score of less than seven hundred must appear before the board.

   (C) Should the board license an applicant who is unable to meet the financial responsibility guidelines of this section or the regulations of the board, then the board may modify or restrict the activities of the licensee.”

The Story Behind the Story

Back in the 1990’s the manufactured home industry had a problem with undercapitalized dealers suddenly going out of business. Industry leaders say the financial responsibility criteria have increased stability and improved the image of the industry.

The SCMHB adopted this and other policies over 10 years ago to help reduce future problems. The new law, S310, takes that policy and makes it a part of the official SC Code of Laws. The parent agency of the SCMHB, the SC Dept. of Labor, Licensing and Labor, told the board that they wanted the board’s policies to be enacted as official state laws approved by the SC Legislature.

 

Crackdown on Unlicensed Sales:  Dealer Number Required on Advertising

Highlights

Advertising for the sale of manufactured homes located in South Carolina must include dealer license number.

Applies to print, Internet, or email advertisements

In Practical Terms…

The information can be in a simple form such as DL #12345.  Television advertisements are not covered; mail-outs, newspaper, shopper advertisements and signs are.

Wording of the Provision

Dealer license number required in certain advertisements

Section 40‑29‑325.    Licensed manufactured housing retail dealers shall include their dealer license number on any print, Internet, or email advertisement by the retail dealer for the sale of a manufactured home located in South Carolina.”

The Story Behind the Story

The purpose of the provision is to help state regulators identify unlicensed home-sellers. If an advertisement runs without a dealer number, an investigator can check whether the seller is licensed. If the company or person is unlicensed, the board can make a case against them.


Lenders Get a Legal Way to Dispose of Repossessed Homes: Sales Through Licensed Dealers

Highlights

A lienholder who sells a repossessed manufactured home through a licensed manufactured home retail dealer is not required to get its own dealer’s license. 

Does not apply to a sale conducted through the foreclosure process

In Practical Terms…

Adds a way for a lienholder to legally sell a repossessed chattel home – through alicensedmanufactured home dealer. Removes the need for a lienholder to get a dealers licensed. These are theonlytwo legal ways for a lender to sell (or offer) more than two manufactured homes in any 12-month period.

Even if the lender is licensed as a retailer dealer, laws already on the books say the lender still cannot sell their repostoorthroughan unlicensed dealer or broker.

Wording of the Provision

Section 40-29-200.    (D)    The holder of a lien on a manufactured home who sells, exchanges, or transfers by lease-purchase a repossessed manufactured home subject to the lien is not subject to the provisions of this chapter if the sale, exchange, or transfer is through a licensed manufactured home retail dealer. A sale by a lienholder conducted through the foreclosure process of Section 29-3-610, et seq. may not be subject to the provisions of this chapter.

The Story Behind the Story

This provision fixes a situation where a lender / lienholder until now could only dispose of repos by getting a dealers license. Some lenders apparently have been selling homes to or through unlicensed sellers. With the SC Manufactured Housing Board planning a major crackdown on unlicensed sales that practice would not be an option for long. This legislation resolves the issue before it becomes a major problem for lenders and gives the lienholder a readily available legal method to sell their repossessed homes

 

Allows Board to Deny License to Persons Who Have Violated Specified Laws

Highlights

The SC Manufactured Housing Board may deny a license for a person convicted of one of the crimes listed in the code section.

The SC Manufactured Housing Board must deny a license for a person currently under sentence including probation or parole for those crimes.

In Practical Terms…

The licensing board can deny a person a license if they have been convicted of a large number of major crimes as well as other felonies “related to any aspect of the business of manufactured housing.” The applicant is totally disqualified while under probation or parole for the same crimes. Disqualifying offenses include violent and other very serious crimes such as large scale drug trafficking, 2nddegree arson, 2nddegree burglary as listed in SC Code Section 16-1-60.

Wording of the Provision

“(F)    The board may deny a license to an applicant who submits an application meeting the requirements of this chapter if the applicant has been convicted in a court of competent jurisdiction of a violent crime as defined in Section 16-1-60, a felony directly related to any aspect of the business of manufactured housing, or a felony, an essential element of which is dishonesty, reasonably related to any aspect of the business of manufactured housing.

 (H)    Notwithstanding any other provision of law, the board may not grant reciprocity or issue a license to an applicant: 

 (3)    who is currently under sentence, including probation or parole, for a violation of Section 16-1-60, a felony directly related to any aspect of the business of manufactured housing, or a felony, an essential element of which is dishonesty, reasonably related to any aspect of the business of manufactured housing.”

The Story Behind the Story

Previously the manufactured housing law prohibited licensing for persons convicted of a broader collection of crimes but did not allow consideration of convictions more than seven years old. The new provision narrows the types of crimes that can be considered but eliminates the seven-year cut-off. 

MHISC is the voice of the manufactured and modular home industries in South Carolina.

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