SRC-TNM H.B. 2703 75(R) BILL ANALYSIS Senate Research Center H.B. 2703 By: Stiles (Harris) State Affairs 5-9-97 Engrossed DIGEST The manufactured housing industry has been regulated by the Texas Department of Housing and Community Affairs (TDHCA) since 1995. Prior to 1995, the Texas Department of Licensing and Regulation regulated the industry. The purpose of the Texas Manufactured Housing Standards Act is to protect the citizens by imposing regulations on the construction and installation of manufactured housing, to provide economic stability of housing manufacturers, retailers, installers and brokers, and to provide for consumer remedies. Manufacturers, retailers, brokers, installers and rebuilders are required to post bonds or other security as a condition of licensure. H.B. 2703 would increase the amount of the retailer bond from $30,000 to $50,000. PURPOSE As proposed, H.B. 2703 outlines provisions and provides penalties regarding the regulation of manufactured housing. RULEMAKING AUTHORITY Rulemaking authority is granted to the executive director of the Texas Department of Housing and Community Affairs under SECTION 8 (Section 9(m), Article 5221f, V.T.C.S.) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 3, Article 5221f, V.T.C.S. (Texas Manufactured Housing Standards Act), to define "advertising," "advertisement," "alteration," "board," "broker," "code," "consumer," "department," "director," "HUD-code manufactured home," " installation," "installer," "label," "lease-purchase," "license holder," "manufactured housing," "manufactured home," "manufacturer," "mobile home," "person," "retailer," "salesperson," and "seal." Deletes existing definitions. SECTION 2. Amends Section 3A, Article 5221f, V.T.C.S., to provide that certain terms may not be defined in any manner that is not identical to the definitions set forth in Section 3 of this Act. SECTION 3. Amends Sections 4(g)-(i), Article 5221f, V.T.C.S., to provide that in order to obtain approval from the governing board of the Texas Department of Housing and Community Affairs (board), the local governmental unit must demonstrate that the public health and safety require the different standards. Requires the executive director of the Texas Department of Housing and Community Affairs (director) to publish a notice and conduct a public hearing under Section 9 of this Act, rather than in accordance with Chapter 2001, Government Code, not sooner than the 30th day following the publication of notice, before the adoption of any standards authorized by this section. Makes a conforming change. SECTION 4. Amends Article 5221f, V.T.C.S., by adding Section 4B, as follows: Sec. 4B. INSPECTIONS; FEDERAL STANDARDS FOR WIND ZONE II. Requires the Texas Department of Housing and Community Affairs (department) to establish an inspection program whereby at least 25 percent of the manufactured homes installed are inspected on a sample basis for compliance. Requires the department's program to place priority on multi-section homes and homes installed in Wind Zone II. Sets forth counties located in Wind Zone II. Provides that all other counties are in Wind Zone I. Sets forth requirements regarding federal standards for Wind Zone II. SECTION 5. Amends Section 6, Article 5221f, V.T.C.S., by amending Subsections (e)-(h) and by adding Subsection (l), to provide that it is unlawful for a manufacturer to sell or offer to sell, exchange, or lease-purchase a manufactured home to any person in the state other than a licensed, rather than registered, retailer. Provides that it is unlawful for a salesperson to aid or assist a consumer in preparing or providing false or misleading information on a document related to the purchase or financing of a manufactured home or for a salesperson to submit information known to be false or misleading to a retailer or a credit underwriter. Makes conforming changes. SECTION 6. Amends Section 7, Article 5221f, V.T.C.S., to prohibit a person from constructing or shipping a manufactured home into the state unless the person possesses a valid manufacturer's license, rather than certificate of registration, at the time the home is constructed. Provides that while acting as an agent for a license holder, rather than registrant, an employee is covered by the business entity's license, rather than certificate of registration. Authorizes the director to refuse to issue or permanently revoke, or suspend with certain conditions, any license if the director finds that the license holder, among other actions, failed to file the bond or post other security for each location as required by Section 13. Requires the director to conduct any hearing involving renewal of a license in accordance with Chapter 2001, Government Code. Requires each applicant for a salesperson's license, rather than certificate of registration, to file an application with the director. Requires any person not licensed with the department as of September 1, 1987, to complete 20 hours of instruction as a prerequisite for a license, rather than prior to any registration. Provides that this subsection does not apply to a registrant making application to license additional business locations or to renew or reinstate a license, or making application for licensing, rather than to register, as a salesperson. Sets forth requirements and provisions regarding a renewal license. Makes conforming changes. SECTION 7. Amends Section 7A, Article 5221f, V.T.C.S., as follows: Sec. 7A. New heading EDUCATION PROGRAMS. Authorizes the director to recognize, prepare, or administer certification programs for persons regulated under this Act. Requires the director to issue an appropriate certificate to a person who completes a certification program or who participates in a continuing education program. SECTION 8. Amends Sections 9(d)-(g) and (m), Article 5221f, V.T.C.S., to define "rule." Provides that an administrative order that is not of general applicability but that is directed to a specific license holder relating to a warranty, the correction of a defect or compliance with the law and regulation is not a rule. Deletes text requiring the director to publish a certain notice. Requires rules to be adopted as provided by Chapter 2001, Government Code, and this section. Deletes text requiring the director to afford interested persons an opportunity to participate in the rulemaking. Sets forth requirements regarding a proposed rule, amendment to rules, and repeal of rules. Makes a conforming change. SECTION 9. Amends Sections 11(c) and (d), Article 5221f, V.T.C.S., to make conforming changes. SECTION 10. Amends Sections 13(a) and (f)-(i), Article 5221f, V.T.C.S., to require a retailer to be bonded or post other security in the amount of $50,000, rather than $30,000. Requires any other security on file with the department to remain on file and be maintained for two years after the person ceases business as a manufacturer, retailer, broker, rebuilder, or installer. Makes conforming changes. SECTION 11. Amends Sections 13A(e)-(g) and (k), Article 5221f, V.T.C.S., to make conforming changes. SECTION 12. Amends Section 14, Article 5221f, V.T.C.S., by amending Subsections (f) and (k) and adding Subsections (n) and (o), to provide that when a new HUD-code manufactured home is permanently affixed to real estate the manufacturer's certificate of origin is canceled, a certificate of attachment shall be filed in the deed records of the county, and the seller of real estate may give the initial purchaser a written warranty that combines the manufacturer's warranty and the retailer's warranty required in this section. Provides that if a combination warranty is given, the manufacturer and retailer are not required to give separate written warranties. Provides that the manufacturer and retailer are jointly liable with the seller of the real estate to the purchaser for the performance of the respective warranty responsibilities of the manufacturer and retailer. Makes conforming changes. SECTION 13. Amends Section 17(b), Article 5221f, V.T.C.S., to make a conforming change. SECTION 14. Amends Sections 18(d), (f), and (g), Article 5221f, V.T.C.S., to make conforming and nonsubstantive changes. SECTION 15. Amends Section 19(k), Article 5221f, V.T.C.S., to make a conforming change. SECTION 16. (a) Effective date: September 1, 1997. (b) Provides that a certificate of registration that is valid immediately before the effective date of this Act remains valid until the expiration date of the registration. SECTION 17. Emergency clause.