MH TDHCA Enforcement on Timing Deadlines Increased

The Manufactured Housing Division of TDHCA has recently changed its enforcement policies. The blunt assessment is they have shifted into a more aggressive posture and are cracking down on laws that have been in place for decades but previously were more loosely enforced.

The Texas laws on timing requirements for both titling and installation reports have existed in the law even before Chapter 1201, Occupations Code was created in 2002 (prior to the Occupations Code our laws were in Texas Civil Statutes, Article 5221f). The most significant tweak to these reporting requirements occurred in 2007. The 2007 law change did two significant things. First, the previous reporting timeline was only 30 days, and in 2007 that was increased to 60 days. Second, the law explicitly stated that failure to timely submit title applications could result in up to a $100 fine. And to be sure the industry was fully aware of this requirements, and possible consequence, the law mandated that the Statement of Ownership Application carried an explicit warning in the exact language that is in the law (see 1201.206(h)). This warning has been on the application ever since and still is today (see the top first box on the Statement of Ownership Application)

But for the last 18 years the department has regulated those provisions with flexibility and warning letters. That is no longer the case. 

Many in our industry have already encountered this enforcement shift receiving notices of violation and fines. While we continue to work for equitable solutions and greater clarification (perhaps with some wording changes to state forms), TMHA wants to help our members through education and recommendations to eliminate their regulatory liability.

Recommended Course of Action – Retailers and Lenders:

To maximize the 60 day timeline, in the hopes of avoiding the new regulatory exposure and scrutiny the industry needs to be sure that:

For purposes of filing out the Statements of Ownership Application, the date of “sale, transfer or ownership change” in block 4d should be the date money is actually exchanged from the buyer to the seller for the full price of the home.

• For cash sales the applicable date is when the retailer accepts the full cash proceeds for the home.
• For financed sales, according to the department’s recent clarifying interpretation, the date is the final funding by the lender when the amounts are distributed.

(NOTE: the department is running data queries and any date filled in by the retailer (or lender) on Block 4d that is more than 60 days from when the SO Application is filed, gets flagged and a violation is issued.)

All Form T installation reports must be submitted within 7 days of completed installations.

Block 4d and Statement of Ownership Application Independent from Right of Rescission:

There is some industry confusion that the date purchase contracts are signed should be the date used on the Statement of Ownership Application.

According to the department, this is not the case.

The date to be used on the Statement of Ownership Application is the day full money value is actually exchanged, and most often will not be (even for cash sales) the same date as when the contracts are signed by the buyer and seller. In the vast majority of cases the date on the Statement of Ownership Application will be later, possibly much later, in time.

However, the date on the Statement of Ownership Application is not controlling or determinative of when the consumer’s 3-day right of rescission begins. These two actions – filling out the Statement of Ownership Application and both parties signing contracts – are two completely separate acts that don’t impact the other.

The dates on the sale purchase contact for a cash sale, and the lending contract for a financed sale are the controlling dates to start the 3-day right of rescission “clock.”

Texas’ manufactured housing 3-day right of rescission laws says:

Sec. 1201.1521. RESCISSION OF CONTRACT FOR SALE OR EXCHANGE OF HOME. 

(a) A person who acquires a manufactured home from or through a licensee by purchase or exchange may, in a cash transaction occurring not later than the third day after the date the sales purchase contract is signed, rescind the contract without penalty or charge other than the real property appraisal and title work expenses incurred in accordance with Section 1201.1511.

(b) A person who acquires a manufactured home from or through a licensee by purchase or exchange may, in a transfer that is based wholly or partly on a credit transaction occurring not later than the third day after the date of the signing of the binding note, security agreement, or other financing credit contract with respect to which the consumer's purchased manufactured home will serve as collateral for the credit transaction, rescind the contract without penalty or charge other than the real property appraisal and title work expenses incurred in accordance with Section 1201.1511.

Therefore, Texas’ right of rescission law remains as it has been, unchanged, for decades, and the clock starts after signing purchase and loan contracts. The final exchange of cash or loan proceeds will, most often, occur much later in time, and well after the 3 day right of rescission has expired. But do not match the contract signing dates to the date of ”sale, transfer, or ownership change” in block 4d on the Statement of Ownership Application. That date doesn’t occur until the parties are fully paid.

TMHA expects, as the industry accepts this clarification, ultimately compliance with the 60-day mandate to submit Statement of Ownership Applications after final sale (i.e. fully funded completed sales) will be easier and rarely a source for violation.