New HUD On-Site Completion Rule

On September 8, 2015 HUD published the On-Site Completion of Construction of Manufactured Homes final rule.  This rule change was originally proposed back in June 23, 2010. The final rule establishes a procedure whereby construction of new manufactured housing that is substantially completed in the factory can be completed at the installation site, rather than in the plant. Before this rule, a manufacturer would first be required to obtain HUD approval for on-site completion of each of its designs using the alternate construction provisions of HUD's regulations. The goal of the final rule was to simplify this process by establishing uniform procedures by which manufacturers may complete construction of their homes at the installation site without having to obtain advance approval from HUD.

The final rule and public comments are available online.

The new “Substantial Completion Rule” for certain on-site construction garnered much attention during the Manufactured Housing Consensus Committee meeting with HUD during the Louisville Home Show and again at this week’s MHI meeting in Washington D.C.  TMHA’s Karl Radde and DJ Pendleton were in attendance at the MHI meeting that also included regulators from HUD. TMHA’s Jody Anderson is on the MHCC and attended the Louisville meeting.  Concerns from the industry at MHI’s meeting matched those expressed by both industry and consumer advocates on the MHCC at the Louisville meeting.  Concerns on applicability, process, inspections, liability, managing customers, and timing were expressed to HUD representatives at both meetings.  Additional concerns over increases to cost were also expressed with the expectation that HUD will be asked to conduct a cost-benefit analysis of the final rule.

The SC Rule is found in 24 CFR 3282 Subpart M and goes into effect March 7, 2016.  However, heeding implementation challenges expressed by the industry, HUD announced that they will allow a six month transition period, March 7 – September 7, 2016.  At the Louisville MHCC a resolution was passed asking HUD to extend the transition period from six months to 12 months, though currently only a six month extension is in place.

The new rule, when applicable for certain homes, will have the largest impact on manufacturers, Design Approval Primary Inspection Agencies (DAPIAs), and Production Inspection Primary Inspection Agencies (IPIAs). There is also a new required notice retailers will receive from manufacturers and must provide to consumers before a purchase agreement is signed stating what is intended to be completed on site.

In the coming months it will be critical that retailers and manufacturers communicate as the new rule is implemented and the industry awaits additional clarification from HUD.