1-1                                   AN ACT
 1-2     relating to the acquisition of manufactured homes through financing
 1-3     or other means and to persons associated with those acquisitions.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 6A, Texas Manufactured Housing Standards
 1-6     Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
 1-7     adding Subsection (c) to read as follows:
 1-8           (c)  A retailer, broker, salesperson or any person acting on
 1-9     behalf of a retailer or broker shall not receive or accept any
1-10     compensation or consideration of any kind or type whatsoever from
1-11     the seller of the real estate or any person acting on the seller's
1-12     behalf.  No part of the down payment on the purchase of the
1-13     manufactured home nor the payment of any fees, points, or other
1-14     charges or "buy-downs" shall be from funds from the seller of the
1-15     real estate or any person acting on the seller's behalf.
1-16           SECTION 2.  Section 19(l), Texas Manufactured Housing
1-17     Standards Act (Article 5221f, Vernon's Texas Civil Statutes), is
1-18     amended to read as follows:
1-19           (l)  If a manufactured home is permanently affixed or becomes
1-20     an improvement to real estate, the manufacturer's certificate or
1-21     the original document of title shall [may] be surrendered to the
1-22     department for cancellation.  This requirement does not apply to an
1-23     owner who is not issued a title under Section 2.001(e) or (f),
1-24     Property Code.  The legal description or the appropriate tract or
 2-1     parcel number of the real estate must be given to the department
 2-2     when the certificate or document of title is surrendered.  The
 2-3     director may require the filing of other information.  The
 2-4     department may not cancel a manufacturer's certificate or a
 2-5     document of title if a lien has been registered or recorded on the
 2-6     manufactured home.  If a lien has been registered or recorded, the
 2-7     department shall notify the owner and each lienholder that the
 2-8     title and a description of the lien have been surrendered to the
 2-9     department and that the department may not cancel the title until
2-10     the lien is released.  Permanent attachment to real estate does not
2-11     affect the validity of a lien recorded or registered with the
2-12     department before the manufactured home is permanently attached.
2-13     The rights of a prior lienholder pursuant to a security agreement
2-14     or the provisions of a credit transaction and the rights of the
2-15     state pursuant to a tax lien are preserved.  The department shall
2-16     issue a certificate of attachment to real estate to the person who
2-17     surrenders the manufacturer's certificate or document of title.
2-18     The certificate of attachment [or document] must contain the legal
2-19     description or the appropriate tract or parcel number of the real
2-20     estate and the identification number of the home, and must certify
2-21     that the manufacturer's certificate or original document of title
2-22     has been canceled.  Before the issuance of a certificate of
2-23     attachment, a title insurance company authorized to do business in
2-24     this state which surrenders the manufacturer's certificate or the
2-25     original document of title to the department shall file a notice of
2-26     improvement attachment in the real property records of the county
2-27     in which the home is located.  The notice must state that the
 3-1     manufacturer's certificate or the original document of title has
 3-2     been surrendered for cancellation and a request has been made for
 3-3     the issuance of a certificate of attachment.  The notice must
 3-4     include information sufficient to identify the home and must
 3-5     contain the legal description or the appropriate tract or parcel
 3-6     number of the real property on which the home is located.  The
 3-7     notice is valid for all purposes until the certificate of
 3-8     attachment is issued and filed in the real property records of the
 3-9     appropriate county.
3-10           SECTION 3.  The Texas Manufactured Housing Standards Act
3-11     (Article 5221f, Vernon's Texas Civil Statutes) is amended by adding
3-12     Section 19A to read as follows:
3-13           Sec. 19A.  CERTAIN MANUFACTURED HOMES CONSIDERED REAL
3-14     PROPERTY. (a)  A manufactured home that is permanently attached to
3-15     real property is classified and taxed as real property if the real
3-16     property to which the home is attached is titled in the name of the
3-17     consumer under a deed or contract for sale.  A manufactured home is
3-18     considered permanently attached to real property if the home is
3-19     secured to a foundation and connected to a utility, including a
3-20     utility providing water, electric, natural gas, propane or butane
3-21     gas, or wastewater services.
3-22           (b)  The closing of a transaction for the acquisition of a
3-23     manufactured home considered to be real property under this section
3-24     must occur at the office of a federally insured financial
3-25     institution, a title company, or an attorney at law.  If the real
3-26     property is purchased under a contract of sale, the contract must
3-27     be filed in the real property records of the county in which the
 4-1     home is installed.
 4-2           (c)  Installation of a manufactured home considered to be
 4-3     real property under this section must occur in a manner that
 4-4     satisfies the lending requirements of the Federal Housing
 4-5     Administration (FHA), Fannie Mae, or Freddie Mac for long-term
 4-6     mortgage loans or for FHA insurance.  The installation of a new
 4-7     manufactured home must meet, in addition to applicable state
 4-8     standards, the manufacturer's specifications required to validate
 4-9     the manufacturer's warranty.
4-10           (d)  A civil action to enjoin a violation of this section may
4-11     be brought by a purchaser in the county where the violation occurs
4-12     or by the county where the violation occurs.
4-13           (e)  A manufactured home permanently attached to real
4-14     property before January 1, 2002, or placed in a manufactured home
4-15     rental community as defined by Section 232.007, Local Government
4-16     Code, is not subject to this section.
4-17           (f)  This section does not require a retailer or retailer's
4-18     agent to obtain a license under The Real Estate License Act
4-19     (Article 6573a, Vernon's Texas Civil Statutes).
4-20           SECTION 4.  The Texas Manufactured Housing Standards Act
4-21     (Article 5221f, Vernon's Texas Civil Statutes) is amended by adding
4-22     Section 21 to read as follows:
4-23           Sec. 21.  DISCLOSURE BY RETAILER AND LENDER. (a)  Prior to
4-24     the completion of a credit application, the retailer or agent must
4-25     provide to the consumer the following statement that is printed in
4-26     at least 10-point type and not attached to or combined with any
4-27     other written material:
 5-1           "When buying a manufactured home, there are a number of
 5-2     important considerations, including price, quality of construction,
 5-3     features, floor plan, and financing alternatives.
 5-4           "The United States Department of Housing and Urban
 5-5     Development (HUD) helps protect consumers through regulation and
 5-6     enforcement of HUD design and construction standards for
 5-7     manufactured homes. Manufactured homes that meet HUD standards are
 5-8     known as 'HUD-code manufactured homes.'  The Texas Department of
 5-9     Housing and Community Affairs regulates Texas manufacturers,
5-10     retailers, brokers, salespersons, installers, and rebuilders of
5-11     manufactured homes.
5-12           "If you plan to place a manufactured home on land that you
5-13     own or will buy, you should consider items such as:
5-14           "ZONING AND RESTRICTIVE COVENANTS.  Some municipalities or
5-15     subdivisions may restrict placement of manufactured homes on
5-16     certain lots, may prohibit the placement of homes within a certain
5-17     distance from property lines, may require that homes be a certain
5-18     size, and may impose certain construction requirements.  You may
5-19     need to obtain building permits and homeowner association approval
5-20     before you place a manufactured home on a certain lot.  Contact the
5-21     local municipality, county, and subdivision manager to find out if
5-22     you can place the manufactured home of your choice on a certain
5-23     lot.
5-24           "WATER.  Not all lots have immediate access to water lines.
5-25     You may have to drill a well.  Be sure that your lot has access to
5-26     water.  If you must drill a well, contact several drillers for
5-27     bids.  If water is provided by a municipality, utility district,
 6-1     water district, or cooperative, you should inquire about the rates
 6-2     you will have to pay.
 6-3           "SEWER.  If your lot is not serviced by a municipal sewer
 6-4     system or utility district, you may have to install an on-site
 6-5     sewer facility (commonly known as a septic system).  There are a
 6-6     number of concerns or restrictions that will determine if your lot
 6-7     is adequate to support an on-site sewer facility.  Check with the
 6-8     local county or a private installer to determine the requirements
 6-9     that apply to your lot and the cost to install such a system.
6-10           "HOMEOWNER ASSOCIATION FEES.  Many subdivisions have
6-11     mandatory assessments and fees that lot owners must pay.  Check
6-12     with the manager of the subdivision in which your lot is located to
6-13     determine if any fees apply to your lot.
6-14           "TAXES.  In Texas, real property is taxed annually based on
6-15     its market value.  Attaching a manufactured home to a lot improves
6-16     the lot's value and will increase the taxes assessed on the lot.
6-17     You are liable for the payment of all ad valorem taxes assessed
6-18     against your home by the municipality, county, school district, and
6-19     other tax authorities (utility district, community college, etc.).
6-20     As with other residential structures, the applicable tax rate will
6-21     apply to the market value of the home.  You should contact the
6-22     local chief appraiser or the county tax assessor-collector for
6-23     specific tax information.  They will need to know the price you
6-24     paid for, and the specific location of, the home.  If the
6-25     manufactured home is your principal place of residence, you should
6-26     be able to claim a HOMESTEAD EXEMPTION.  You should also make
6-27     certain that the lot or land you are purchasing is not subject to
 7-1     any rollback tax liability because of the change in use of the
 7-2     property."
 7-3           (b)  A retailer may not transfer title to a manufactured home
 7-4     or otherwise sell, assign, or convey a manufactured home to a
 7-5     consumer unless the retailer delivers to the consumer a written
 7-6     document disclosing:
 7-7                 (1)  the total purchase price of the manufactured home,
 7-8     as adjusted for:
 7-9                       (A)  any agreed interest rate and any points or
7-10     fees; and
7-11                       (B)  the length of time for any loan repayment;
7-12     and
7-13                 (2)  regardless of whether the real property proposed
7-14     as the site for the manufactured home has been sold through an
7-15     executory contract for conveyance, any responsibility of the
7-16     consumer to:
7-17                       (A)  pay property taxes associated with the
7-18     manufactured home;
7-19                       (B)  maintain private roads proximate to the
7-20     manufactured home's location;
7-21                       (C)  maintain a contract for an on-site sewage
7-22     disposal system;
7-23                       (D)  obtain property damage insurance; and
7-24                       (E)  obtain mortgage insurance.
7-25           (c)  If the information is available, a person making a loan
7-26     to a consumer to fund acquisition of a manufactured home shall also
7-27     make the disclosures described by Subsection (b) before the
 8-1     consumer signs documents relating to the closing of the loan.
 8-2           (d)  A federally insured financial institution or lender
 8-3     approved or authorized by the United States Department of Housing
 8-4     and Urban Development as a mortgagee with direct endorsement
 8-5     underwriting authority that fully complies with federal Truth in
 8-6     Lending disclosures concerning the terms of a manufactured housing
 8-7     transaction is exempt from the disclosure provisions of this
 8-8     section.
 8-9           (e)  Failure to comply with the disclosure provisions of this
8-10     section does not affect the validity of a conveyance or transfer of
8-11     title of a manufactured home or otherwise impair a title or lien
8-12     position.
8-13           SECTION 5. Section 2.001, Property Code, is amended to read
8-14     as follows:
8-15           Sec. 2.001.  MANUFACTURED HOUSING. (a)  Except as provided by
8-16     Subsection (b), a manufactured home is real [personal] property.
8-17           (b)  A manufactured home is personal [real] property if the
8-18     home is placed:
8-19                 (1)  on a lot, whether permanently or temporarily, that
8-20     is not titled in the name of the consumer under a deed or contract
8-21     for sale [the home is permanently attached to real property]; or
8-22     [and]
8-23                 (2)  in a manufactured home rental community as defined
8-24     by Section 232.007, Local Government Code [the manufacturer's
8-25     certificate of origin or the original document of title is
8-26     surrendered for cancellation and a certificate of attachment
8-27     described by the Texas Manufactured Housing Standards Act (Article
 9-1     5221f, Vernon's Texas Civil Statutes) is filed in the real property
 9-2     records of the county in which the home is located].
 9-3           (c)  In this section, "consumer," "document of title," "first
 9-4     retail sale," "manufactured home," and "mobile home" have [has] the
 9-5     meanings [meaning] assigned by the Texas Manufactured Housing
 9-6     Standards Act (Article 5221f, Vernon's Texas Civil Statutes).
 9-7           (d)  This section does not affect or change the
 9-8     classification of a manufactured home as personal or real property
 9-9     if the manufactured home was permanently affixed to real property
9-10     before January 1, 2002 [1996].
9-11           (e)  The Texas Department of Housing and Community Affairs
9-12     may not issue a document of title for a new and untitled
9-13     manufactured home at the first retail sale of the home if the home
9-14     is to be permanently installed by a retailer directly on real
9-15     property titled in the name of the consumer under a deed or
9-16     contract for sale.  Before installation, the consumer must provide
9-17     the retailer with a legible copy of the deed containing a legal
9-18     description of the real property.  The retailer is not required to
9-19     determine the validity of the legal description of the real
9-20     property.  A title company or attorney at law conducting the
9-21     closing of a transaction under Section 19A, Texas Manufactured
9-22     Housing Standards Act (Article 5221f, Vernon's Texas Civil
9-23     Statutes), or the retailer or retailer's agent shall file in the
9-24     public land records for the county in which the real property is
9-25     located a notice of installation not later than the 30th working
9-26     day after the date the installation is completed and shall forward
9-27     the manufacturer's certificate of origin and a copy of the notice
 10-1    of installation to the Texas Department of Housing and Community
 10-2    Affairs.  The notice of installation serves as a completed
 10-3    cancellation application.
 10-4          (f)  For a manufactured home that is being resold by a
 10-5    financial institution or a retailer and that is to be permanently
 10-6    installed directly on real property titled in the name of the
 10-7    consumer under a deed or contract for sale, a title company or
 10-8    attorney at law conducting the closing of a transaction under
 10-9    Section 19A, Texas Manufactured Housing Standards Act (Article
10-10    5221f, Vernon's Texas Civil Statutes), or the retailer or
10-11    retailer's agent shall file in the public land records for the
10-12    county in which the real property is located a notice of
10-13    installation not later than the 30th working day after the date the
10-14    installation is completed and shall forward the document of title
10-15    and a copy of the notice of installation to the Texas Department of
10-16    Housing and Community Affairs.  The notice of installation serves
10-17    as a completed cancellation application.
10-18          (g)  A notice of installation filed under this section must:
10-19                (1)  be notarized;
10-20                (2)  be on a form prescribed by the Texas Department of
10-21    Housing and Community Affairs;
10-22                (3)  contain a description of the manufactured home,
10-23    including, as applicable, the home's make, model, dimensions,
10-24    federal label number, state seal number, and identification or
10-25    serial number;
10-26                (4)  include a verification of the installation of the
10-27    manufactured home as prescribed by Section 19A(c), Texas
 11-1    Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
 11-2    Civil Statutes);
 11-3                (5)  include the wind zone designation of the county in
 11-4    which the manufactured home was installed, if known; and
 11-5                (6)  be signed by:
 11-6                      (A)  the retailer, for a manufactured home
 11-7    described by Subsection (e); or
 11-8                      (B)  the installer, for a manufactured home
 11-9    described by Subsection (f).
11-10          (h)  Subsections (e), (f), and (g) do not apply to a mobile
11-11    home.
11-12          (i)  This section does not require a retailer or retailer's
11-13    agent to obtain a license under The Real Estate License Act
11-14    (Article 6573a, Vernon's Texas Civil Statutes).
11-15          SECTION 6. Section 62.004, Property Code, as added by Chapter
11-16    742, Acts of the 76th Legislature, Regular Session, 1999, is
11-17    amended to read as follows:
11-18          Sec. 62.004.  REFINANCING OF LIEN. (a)  A person who provides
11-19    funds to refinance a lien secured by a manufactured home is
11-20    subrogated to the lien position of the previous lienholder.
11-21          (b)  If the holder of a lien secured by a manufactured home
11-22    transfers loan or credit advance documents to a lender refinancing
11-23    the lien, that lender and a title insurance company, title
11-24    insurance agent or direct operation, or attorney to whom the loan
11-25    or credit advance documents are delivered holds the loan or credit
11-26    advance documents in trust for that lienholder.  In this
11-27    subsection, "direct operation" has the meaning assigned by Article
 12-1    9.02, Insurance Code.
 12-2          (c)  A lien that is converted to a purchase money lien on
 12-3    real property under Section 62.003, or a lien for the debt for new
 12-4    improvements thereon under Section 62.005, may be refinanced with
 12-5    another lien on the real property to which the manufactured home is
 12-6    permanently attached as provided by Section 2.001 [2.001(b)].
 12-7          SECTION 7.  Chapter 62, Property Code, is amended by adding
 12-8    Section 62.005 to read as follows:
 12-9          Sec. 62.005.  CONVERSION OF LIEN FROM A PERSONAL PROPERTY
12-10    LIEN TO A REAL PROPERTY LIEN FOR THE DEBT FOR THE NEW IMPROVEMENTS
12-11    THEREON. (a)  A manufactured home becomes a new improvement to the
12-12    homestead of a family or of a single adult person upon the filing
12-13    of the certificate of attachment as provided in the Texas
12-14    Manufactured Housing Standards Act (Article 5221f, Vernon's Texas
12-15    Civil Statutes).  As such, if the debt for the manufactured home
12-16    was contracted for in writing, that debt is considered to be for
12-17    work and materials used in constructing new improvements thereon
12-18    and thus constitutes a valid lien on the homestead when the
12-19    certificate of attachment is filed in the Official Public Records
12-20    of Real Property in the county in which the land is located.
12-21          (b)  When the manufactured home converts to real property as
12-22    provided by Section 2.001 of this code, the lien on the property
12-23    exists independently of any existing lien on the real property to
12-24    which the home is permanently attached.
12-25          SECTION 8.  Section 32.014, Tax Code, is amended to read as
12-26    follows:
12-27          Sec. 32.014.  TAX LIEN ON MANUFACTURED HOME [SUBJECT TO
 13-1    SECURITY INTEREST]. (a)  If the ownership of the real property on
 13-2    which a manufactured home is affixed and the manufactured home are
 13-3    the same, the manufactured home shall be appraised and taxed as an
 13-4    improvement to the real property, and the tax lien attaches to the
 13-5    real property on which the manufactured home is located regardless
 13-6    of the classification of the manufactured home under the Property
 13-7    Code [A tax lien to secure the payment of a tax and any penalties
 13-8    and interest imposed on a manufactured home does not attach to the
 13-9    real property on which the manufactured home is located, even if
13-10    the manufactured home is affixed to the real property by
13-11    installation on a permanent foundation, if on the January 1 on
13-12    which the tax is imposed, the manufactured home is subject to a
13-13    lien of record on a document of title issued on the manufactured
13-14    home by the Texas Department of Housing and Community Affairs.  If
13-15    such a lien is not of record on January 1 and the ownership of the
13-16    manufactured home and the real property is the same, the
13-17    manufactured housing may be appraised and taxed as an improvement
13-18    to real property, notwithstanding any other law relating to the
13-19    classification of manufactured housing as real or personal
13-20    property].
13-21          (b)  If the ownership of the manufactured home, whether by
13-22    deed or contract for sale, and the real property on which the
13-23    manufactured home is affixed are not the same, the personal
13-24    property manufactured home shall be separately appraised and taxed
13-25    at the same rate and on the same ad valorem basis as other
13-26    single-family residential structures.  The tax lien on the
13-27    manufactured home does not attach to the real property when the
 14-1    ownership of the manufactured home and real property are different.
 14-2          (c)  In this section, "manufactured home" has the meaning
 14-3    assigned by Section 3, Texas Manufactured Housing Standards Act
 14-4    (Article 5221f, Vernon's Texas Civil Statutes).
 14-5          SECTION 9.  The change in law made by this Act applies only
 14-6    to a manufactured home that is acquired by a consumer on or after
 14-7    the effective date of this Act.
 14-8          SECTION 10.  (a)  Except as provided by Subsection (b) of
 14-9    this section, this Act takes effect January 1, 2002.
14-10          (b)  Section 1 of this Act takes effect September 1, 2001.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I certify that H.B. No. 1869 was passed by the House on May
         1, 2001, by a non-record vote; and that the House concurred in
         Senate amendments to H.B. No. 1869 on May 25, 2001, by a non-record
         vote; and that the House adopted H.C.R. No. 327 authorizing certain
         corrections in H.B. No. 1869 on May 28, 2001, by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
               I certify that H.B. No. 1869 was passed by the Senate, with
         amendments, on May 17, 2001, by a viva-voce vote; and that the
         Senate adopted H.C.R. No. 327 authorizing certain corrections in
         H.B. No. 1869 on May 28, 2001, by a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
         APPROVED:  __________________________
                              Date
                    __________________________
                            Governor