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Message # 928 Mobile homes (Pt. 1)

mp3 #928 Mobile Homes and Manufactured Housing Part 1 (mp3 file)

This message will cover:

--Choosing and buying a manufactured home.

--Legal considerations, such as purchase docul1ents warranties escrow taxes ownership documents, and installation.

--Placing a manufactured home on either a private lot or in a mobile home park, and

--Consumer services provided by the State Department of Housing and Community Development.

First, facts you need to know before choosing a manufactured home.

As with any other living situation, there are both advantages and disadvantages to living in manufactured housing. Homebuyers should be aware of these features before purchasing a manufactured home.

One of the most attractive aspects about a manufactured home is affordability; the initial costs of a manufactured home are usually lower than that of a conventional site-built home. And today, this comparatively inexpensive housing can be obtained without sacrificing livability; if bought from a dealer, a manufactured home may be made to the buyer's specifications concerning color scheme, furnishings, and appliances. Manufactured homebuyers also enjoy significant security; knowing that their home conforms to federal and state construction and safety standards, which cover such items as structure, fire safety, electrical, mechanical, and plumbing requirements. The State Department of Housing and Community Development also offers manufactured homebuyers and owners the services of the mobile home ombudsman, who responds to issues relating to manufactured homes or rental parks.

In spite of all these good things about manufactured homes, there are important differences between manufactured homes and conventional housing. Financing costs for a manufactured home, for example, may be higher than for a conventional home. Also, space for manufactured homes in California is often in high demand, and in certain areas, is restricted by local zoning requirements.

Nevertheless, manufactured homes are versatile and can be located in a variety of locations, typically in a rental park or on a private lot. Rental parks often require less individual maintenance and usually have convenient facilities. For these conveniences, park owners establish rules, which all tenants must follow, ensuring uniform standards for neighborhood maintenance.

Next, buying a manufactured home. Where do you buy manufactured homes?

Most manufactured homes in California are purchased through dealers, real estate brokers, and private owners.

As a protection to manufactured homebuyers, the state requires all dealers of manufactured housing to be licensed. Licensing ensures that the dealer will comply with state law concerning the sale and delivery of manufactured homes. Dealers offer a wide variety of housing styles to choose from, and many will arrange financing. Also, some dealers maintain lots, which display homes. Dealers can also special order features for a home, such as a specific carpet, appliances, and colors. Most dealers have repair facilities at their disposal. State law requires that all new manufactured homes displayed by dealers bear a label which contains essential information -- such as the make and model and the manufacturer's suggested retail price -- which is valuable when making comparisons.

Real estate brokers may also sell manufactured homes, new or used, which are installed on foundation systems; they may also sell used units which have a pier foundation, providing the homes have been registered for at least one year.

Many manufactured homes on the market today are sold by private parties, and buyers should evaluate these homes as they would a used conventional home.

What about inspecting a home?

Even though manufactured homes built in California have been inspected to ensure that they meet acceptable standards for health and safety, buyers should always make a personal inspection of any home, which they are thinking about buying. They should consider the home in a common-sense manner with regard to size, style, and suitability of the home for the family. They should also consider the suitability of a home for the location. Does the home have adequate heating, air conditioning, and insulation? Is the roof strong enough to support the weight of snow? To help buyers make this assessment, manufacturers post a compliance certificate within each home (which was built since June 15, 1976), which indicates the geographic area for which the home was designed and insulated.

Comparing prices: what else is included in the cost?

There are various costs to consider and negotiate when purchasing a manufactured home. Since there are many styles and types to choose from, it is a good idea to shop around, comparing homes at several different places in order to select the best buy. Be sure to compare the cost of financing, since one-half a percentage point of interest can add a significant amount to the total cost of a home. Buyers should also consider their yearly taxes before buying a manufactured home. The actual site of the manufactured home, if it is already installed, will affect the value. Buyers should negotiate the installation and transportation of the home, and decide whether or not they need to buy the tires and axles (manufactured homes are rarely relocated, so buying tires and axles may not be necessary). Appliances, skirting, awnings and sheds -- as well as the financing, transportation, taxes and installation will contribute to the overall costs. When price-comparing manufactured homes, ask for a bottom-line figure.

Be a cautious buyer. Under California law, manufactured homebuyers have even greater protection than do buyers of conventional homes, but this protection does not excuse the consumer from the responsibility of shopping intelligently. Wise shoppers protect themselves before they need the protection of the law. One of the best protections is to deal with a reliable dealer. Make sure that the seller is competent by asking questions. If the seller cannot answer questions satisfactorily, ask the same questions of another seller. If possible, check the dealer's reputation by talking to former customers.

Buyers may also protect themselves by being aware of what sellers may and may not do when selling a manufactured home. The basic rule of advertising is that retailers and salespeople cannot make any statement, orally or in writing, which is untrue or misleading. Here are some fundamental rules governing advertising:

-An item pictured in an advertisement must be the item for sale.

-A dealer cannot refuse to sell a manufactured home at the advertised price, not including sales tax (if it is a used home), title, and document preparation fees, and

-An advertised price must remain in effect until the manufactured home is sold, unless the ad specifies a time limit.

Next, legal considerations.

For many people, buying a home is the largest single transaction in their life, so it pays to shop around and be aware about purchase, warranty, escrow, taxes, ownership documents, and installation.

First, purchase documents.

For the protection of both buyer and seller, the California Health and Safety Code requires a purchase document, either a contract, a purchase order, or security agreement, to be completed with the sale of any new or used manufactured home through a dealer. This rule does not apply to private party sales. A purchase document is an important, legally binding document -- even if the people signing it do not understand the terms. All homebuyers should take the time to read and understand any contract before signing it, and should contact an expert, perhaps an attorney, to explain any unclear parts.

Everything the buyer and the dealer agree upon must be contained in the contract. In addition to stating the price of the home and the terms of financing, a contract must indicate who will install the home, who will keep the tires and axles, and when the home will be ready for occupancy. In short, everything should be in writing, and the buyer should read and understand everything he or she signs, and copies of all documents must be provided.

Here are some guidelines on how to approach a contract:

-Read everything carefully before you sign. If you are unsure of anything in a contract, do not sign. Have the contract rewritten so that you understand it, or have someone explain it to you so that you do understand. You may want to consult an attorney.

-Get a copy of everything you sign.

-Leave no blank spaces in a contract. Draw a line through any spaces which are not applicable.

-Get all promises in writing. Oral agreements are almost impossible to prove. If, for example, a salesperson says that the roof is six months old and still under warranty, include this statement in the written contract.

-Make the terms of the agreement specific. In writing, again, make the terms as specific and clear as possible. For example, "dealer will landscape front yard with sod, full sprinklers, one 10-gallon tree and five 2-gallow shrubs." if the contract is vague or not to your liking, have it rewritten.

-Record any changes in the contract terms. If the buyer and seller make any changes in the contract, the change must be noted in the contract, and both parties must initial them. Both parties must receive a copy of the changes.

-The dealer must prepare a purchase document for a buyer's signature before receiving any funds. Do not sign anything or give any money until you are certain that you want to buy. If you sign a purchase order, you are legally agreeing to buy.

-A dealer must give you a receipt of deposit each time you pay any money before the close of escrow. Insist on a receipt or that the dealer notes the additional funds on your original "receipt of deposit." by law the receipt must reprint certain sections of the Health and Safety Code that spell out your rights, and it will also say whether your money is a "deposit" or a "down payment."

-If there is a contingency to your sale, make sure it is written into the purchase document or offer. Common contingencies include: closing escrow upon the sale of your present home, or obtaining financing at a certain interest rate, or upon your approval after an inspection report by a professional specialist.

-The cash value of all property should be stated in your contract. If you are trading some asset, such as a car or boat, as a portion of your payment, make sure that the dealer records the cash equivalent value in the contract. Your title to the property must also be placed into escrow. If someone else owns part of the property (that is, you have not finished paying it off yet), make sure the contract states whom will pay off or assume the loan.

-The value of each accessory in a new manufactured home must be itemized in the purchase document. This must be done again in your escrow instructions.

Next, the manufactured home warranty.

By law, all new manufactured homes sold in California are covered by a one-year warranty, which assures the consumer that the home is free from substantial defects in workmanship or material. This warranty protects the consumer in the following additional ways:

-The manufacturer and/or dealer will take appropriate action to correct any substantial defect in a manufactured home at its present site. As a general rule, the manufacturer or dealer must repair any defects which appear within one year, provided the owner gives written notice of defects to the manufacturer and/or dealer, and they will be jointly responsible for fulfilling the terms of the warranty.

-The manufacturer and/or dealer must complete warranty service within 90 days of receiving a buyer's written notice of substantial defects, unless there are circumstances beyond the control of the dealer or manufacturer.

-While appliances in the home may have their own warranties, the primary responsibility for repairing appliances rests with the manufacturer and/or dealer, providing the buyer first reports all defects to the dealer or manufacturer.

-New manufactured homes, when purchased through a real estate agent, are covered by warranty through the manufacturer and/or dealer, not the agent.

Consumers should be aware that used manufactured homes are not covered by warranty; nonetheless, they must still conform to state Health and Safety Codes.

Next, escrow.

When a contract, purchase order, or security agreement is signed for the retail sale of a new or used manufactured home (one installed on a non-foundation system), the dealer must put the entire down payment and/or deposit, including any cash equivalents, into an escrow account within three working days. The conditions of sale are written into mandatory escrow instructions and require the buyer's signature. Among other things, the escrow instructions must specify the conditions of delivery for a manufactured home. These escrow rules only apply to the retail sale of manufactured homes. Manufactured homes sold for installation on foundation systems are subject to escrow requirements similar to those of conventional homes.

-An escrow for the sale of manufactured homes by dealers is required by law. Escrow protects the consumer, so if you are told that you can save money by not using an escrow, take your business elsewhere.

-The escrow instructions should state the date escrow is to close. The purchase document should also include this date. If, for some reason, it is not possible to close escrow by this date, it is possible for both parties to sign written escrow instructions extending the date.

-The value of each accessory in your home must be itemized in the escrow. This is important for your protection. For example, the manufactured home is ready to be occupied, except that the air conditioner, which costs $2,500, has not arrived. If you have paid your entire down payment or deposit on the home, and your lender has sent the funds to escrow, escrow could close, you could move in, and your $2,500 would remain in escrow until the air conditioner is delivered and installed. However, if you had not-specified the amount of the air conditioner, the escrow agent would not know how much money to hold until installation is complete.

-Know the difference between a "deposit" and a "down payment." a down payment is always refundable, and must be returned to you automatically if you decide not to purchase the home. A deposit, however, can be held in escrow pending a resolution of any dispute which may develop between you and the dealer. The amount placed as a "deposit" is negotiable and is not set by law. It is to your advantage to have your money characterized as a down payment and as little as possible characterized as a deposit. For example, suppose you have given a dealer $1,000 towards the manufactured home, and have agreed to characterize $500 of it as a deposit and $500 as a down payment. If you change your mind about buying the home, the $500 down payment would be returned to you right away. The $500 deposit, however, would remain in escrow until you and the dealer agreed on a total or partial release, or until a court decided and ordered the escrow agent to pay out those funds.

-The dealer must deposit all money and cash equivalents into the escrow account within three working days. To ensure protection, make your check payable directly to the escrow company. The dealer cannot, by law, withdraw funds from escrow before escrow closes. Always make sure the escrow instructions state how the money is to be used.

-If your home is located in a mobile home park, escrow cannot close until you sign the park rental agreement. A completed rental agreement must be placed into escrow. If the rental agreement is not signed, the purchaser does not have rights of tenancy.

-Escrow should not close until the home has been delivered and passes inspection. The only exception is if the buyer installs the home. The escrow instructions must indicate the delivery destination, and after the delivery, escrow may close.

-Do not sign any agreement, which limits your escrow protection. Any agreement which limits your escrow rights is prohibited by law, and any dealer who violates any provisions of the Health and Safety Code can be subject to license disciplinary action by the State Department of Housing and Community Development, a lawsuit by the purchaser, or both.

For more information, review Part 2 message # 929 of "Mobile Homes & Manufactured Housing".

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