Mobile Home Park Mastery: Episode 294

A Primer On Housing Laws

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The simple “trailer” becomes a ball of complexity when you examine the laws governing remodeling and selling these units. In this Mobile Home Park Mastery podcast we’re going to review the basic rules on getting new and used mobile homes refurbished and sold so you can stay on the right side of federal, state and local laws.

Episode 294: A Primer On Housing Laws Transcript

There are more lawyers in America than all the other countries in the world combined. And that's because we have so many laws. This is Frank Rolfe, Mobile Home Park Mastery Podcast. I want to give you a primer just on some of the house and laws that Mobile Home Park owners have to deal with concerning their own mobile homes, homes that they bring in, or homes that they inherit, and then they want to go out and sell those. There's so many things, many of which the average person has never even heard of, yet they have to be aware of these national, state and local laws. So let's just break this up into those categories. Let's start off with the national laws regarding mobile homes. The first one is HUD Installation. Now, HUD installation is a federal thing if you're a state that elects to go with that.

So this one falls both on a national basis but also on a state basis. And HUD says how you're supposed to install that home. And in the states that adopt HUD, you have to pour typically a concrete pad, piers or runners underneath the home in question before you can set it. Now, it's not always quite that simple. Sometimes it's only for brand new homes but not used homes. And in other states it may be for both new and used homes. But you have to be aware of this. You can't just go in a HUD installation state and put the home on dirt like you can in Texas. You won't be able to do it that way in Minnesota. So based on where you are in the nation, you either will fall under this national mandate or you will not, but you have to know to ask for it. The average person has never heard of HUD installation standards. They don't even know how you build a pad or how you build piers or how you build runners. But if you skip those steps, the ramifications can be just terrible for you.

Another national law, of course, is fair housing. You have to understand the laws of fair housing. Now, the number one place where most people get screwed up on that, is something that's called steering. We all know that you have to let everybody into your mobile home park community regardless of age, race, creed, color, those we all know. But steering seems really awkward and backwards to me, because when a manager steers a customer into a home, the customer asks the manager, I've got three kids, I'd like to be around other families. Where are the homes with the other families so I can be near them?

And if the manager says, well, you know these people over here and these three lots, they all have young children, and your children will be very happy near them because they'll have people they can walk to and play with, under fair housing you can't do that. You have to treat all the customers in all the lots identically like you have no idea. And to me, that's always so strange because people do in fact like to be near people who have similar situations.

So many park owners think they're doing a favor to the resident by saying, "Oh yeah, we'll you be happy as probably over here because this is exactly what you're asking for." But no, you can't do that. So be sure and read... Every manager should read the Fair Housing Handbook and understand it. And you should also as the park owner, because there are some things in fair housing that the average person has never heard of, but again, can come back to really harm you if you run a foul of it.

Another national law are HUD seals, homes and remodeling. If you buy a home to put in your mobile home park and it's got a HUD seal on it, which means it was built in 1976 or later, there are certain things you cannot do as far as the remodeling of the home. Those things include making larger window openings or a larger door opening. Why is that? Because there's no load bearing interior walls in a mobile home.

And if you enlarge those, you reduce the strength of the walls and the thing is no longer considered to be safe. Also, you're not allowed to change out that horrible paneling stuff inside the mobile home with drywall. Why is that? Because you're adding weight to the home. Weight to the frame. So once again, research up, look at what you are and are not allowed to do. You can do just about anything you want cosmetically, and there's many things you can do on interior walls. In many of these homes you can actually remove some of the interior walls, but there are some things that are forbidden and you have to make sure you know what those are as well. Then you got the most dreaded item on this entire list, which is the Safe Act in Dodd-Frank. What a bunch of crazy laws. Where did they come from? Well, under the Obama administration after the 2007, 2008 great recession, the nation decided, or actually the government decided to blame it all on mortgage companies and to try and punish them, when they weren't in any way at fault.

They're the ones who got burned. They issued the mortgages to people who lied on their applications, who never had the job they claimed they had. They did zero in... Zero down, no income documentation loans, and they knew they were highly risk and they couldn't make the payments, but the lenders did it anyway. And then the lenders ended up getting blamed for helping those people. It's crazy. Under the Safe Act, you can no longer make a note on an individual residence unless you become Safe Act licensed and compliant. Most park owners are not going to want to go through the steps to do that, namely because your manager has to also be Safe Act licensed and compliant. And if you have any churning of your managers, you'd be constantly sending people to school. It would drive you nuts. So under the Safe Act, you're only allowed at this point in the movie to either sell a home for cash or to rent it. You can't sell a home and create a mortgage. You can't. There are others you can, people like 21st mortgages cash program, performance Equity Partners, Triad, but they are all Safe Act licensed mortgage companies. You can't just do that on your own.

And then there's another set of regulations called Dodd-Frank, which is equally or even dumber than the Safe Act regulations. And you also have to abide by those. So the bottom line is you can no longer sell a mobile home and carry paper that is off the table. Today all you can really do is rent it or sell it. Then if you're gonna sell it and the customer doesn't have the money to pay you for cash, you'll have to enlist the aid of an actual licensed mortgage company like 21st or Pep or Triad. Another national law is snow load and wind load. Most people don't even know this exists. And that can be tragic for you because if you put the wrong home in the wrong spot and something ever happened, you'd surely be sued. The snow load makes kind of sense. When I say snow load, you can already think of the states we're talking, which is the northern half of America as most of your snow load, but the wind load is all just running right down the very edge perimeter of the US map on the eastern seaboard.

That's where all of your wind zone is because that's all depending on hurricanes mostly. When it comes to tornadoes, no tornadoes really aren't treated quite the same. The hurricanes are where they're really the most concerned. But you can find these maps fortunately right on Google. If you Google up US mobile home wind load snow load maps, they will pop right up. And you have to make sure if you are in one of the states you see on that map that you meet those wind load and snow load qualifications.

And if you're buying a used home, you better darn well make sure that if you're putting it in one of the wind load areas, that you do have a wind load home, which is prominently marked on the title. Is normally not a problem with the used homes... No, I'm sorry with new homes, it's always a potential problem with used homes.

Now, let's look at the state laws out there. One of the big state laws that people have never heard of is a law called habitability warranty. That's an anti-slum lord law that most states have adopted. And what it says is you cannot sell a mobile home necessarily in as is condition. In Texas, for example, under habitability, you have to have no holes in the roof, but you can have holes in the floor as long as they don't exceed the size of a dime. You must have hot water, cold water, a tub, a sink, a toilet. You must have heat, but you don't have to have air conditioning. But if you don't have air conditioning, the windows have to open and you have to have access to a place to cook. Now, why do states have habitability laws? Because there are some people out there who will sell or rent homes in abysmal condition without any intent to make any improvements, and they don't want that to occur.

So by having strict habitability laws, it stops people from living in complete squalor because the landlord can't rent or sell the home until they've brought it up to code. It's very important you understand these laws in your state because if you don't and you get caught, not only can you be sued, but they can make you go in and do massive amounts of renovation to the home, far in excess of what the code actually required. And that's kind of your punishment.

Another law is a law of titles. It's another state law. There's no federal law on mobile home titles, it's all state oriented. The only part of the movie that federal contributed was when the... When they brought out the whole concept of the license plates, when HUD took over the industry in 1976 and put those little HUD seals on the homes, at least it made it possible to track titles, because prior to that, you could normally not even find any serial number on a home.

So titling was basically impossible. Today, however, titling is still very, very, very, very difficult. You have to really understand the laws of your state when it comes to getting titles, and I can tell you right now, it's gonna be a subject of mass frustration. So when you're looking at putting homes in your park, you got to make sure that those homes already have a title, because getting a title to a home is probably one of the most difficult feats you'll ever face.

And then you have your preeminent local laws, which are gonna be pro... Mostly focused on permitting and the use of certified workmen. So if you've got a home and you want to do work on that home, make sure you understand what the city requires you to pull a permit in and not pull a permit on. Because again, if you get caught, the inspector will drive through your park constantly try to see what new shenanigan you're up to.

And if you're supposed to use a certified plumber or a certified electrician on some piece of the work and you didn't, they'll make you rip it all out and do it all over again. They have a very, very little sense of humor on that issue. The bottom line to it all is there are many, many federal, state, and local laws you must observe when you are dealing in the homes, in their remodeling, in their sale, whether it's used or new.

So this was just a primer. I'm not a lawyer, I'm just trying to keep you out of trouble, but I want to give you a rough overview of all the different laws you must understand because if you want to stay safe in America today, you've got to make sure you're following the rules. This is Frank Rolfe, Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.