Selling Mobile/Manufactured Homes not Legally Affixed

By guest blogger Michael A. Parham, Esq.

At the REALTOR® Caucus in September 2016, the issue of selling manufactured and mobile homes in mobile home parks was brought forward and ultimately placed on the Arizona REALTORS® 2017 legislative agenda. Recognizing the need for this legislation, Representative Jeff Weninger introduced HB 2072: manufactured homes; real estate transactions where it easily sailed through the legislative process. – Mobile and Manufactured Home Sales Restrictions Easing (April 26, 2017)

Arizona House Bill 2072 (HB 2072) went into effect on August 9, 2017; see summary of changes here. This allows Arizona Department of Real Estate (ADRE) licensees to sell mobile and manufactured homes not legally affixed to the land in manufactured housing communities.

Although physically attached, homes in mobile home parks are not legally affixed. Arizona Motor Vehicle Division (MVD) certificates of title cover them, but ownership does not pass with ownership of the land. The ownership document for these is the same as an MVD title.

For someone to broker these homes under pre-August 9 laws, he or she needs to be separately licensed by the Manufactured Housing Division of the Arizona Department of Housing (ADOH). Homes on rented land are off limits to ADRE licensees not separately licensed by the ADOH.

There are around 2,000 Arizona manufactured housing communities with about 200,000 homes. These range from high-end communities with homes valued up to $200K, down to small, older communities with homes priced at only a few thousand dollars.

In recent years, the number of ADOH licensed brokers and dealers has declined and in many areas there are not enough to serve industry needs. The Manufactured Housing Communities of Arizona (MHCA) industry trade association has been looking at ways to open this market up. It has learned that in other states, allowing real estate brokers and salespersons to sell these homes has been helpful. So, this year MHCA successfully lobbied HB 2072 opening this business up to ADRE licensees.

HB 2072 amends A.R.S. § 41-4028 to allow this in two ways:

• It allows real estate brokers and salespersons to act on behalf of a Department of Housing licensed dealer in the sale of mobile homes and new or used manufactured homes located in mobile home parks, if the licensed dealer submits the required fees and paperwork.
• Alternatively it allows real estate brokers or salespersons to act in the sale of mobile homes and used manufactured homes located in mobile home parks, if the broker or salesperson remains compliant with ADRE requirements. They cannot sell new ones under this alternative. New home sales must still be through an ADOH licensed dealer.

So, an ADRE licensee can sell all homes through an ADOH licensed dealer without being licensed by it, as long as the sale closes through the dealer. Or, the ADRE broker and salesperson can independently sell used homes without being involved with a dealer by simply following ADRE requirements.

ADRE licensees getting involved in this business need to be aware of a number of subtleties in the law:

1.  The home must be located in a “mobile home park”, defined at A.R.S. § 33-1409 as a parcel of land with four or more rental spaces for these kinds of homes.
2.  The home must be either a “manufactured home” or a “mobile home”. A manufactured home is one built after June 15, 1976 and identified as such by an ID plate attached to it. A mobile home is a dwelling unit made before that date but built as a residence.
3.  Do not rely on the certificate of title to identify the unit as a mobile or manufactured home. MVD definitions are different from the landlord tenant definitions used in this law and many recreational vehicles that are not mobile or manufactured homes are titled as if they are.
4.  The authority does not extend to RV’s including “park models” that look like small manufactured homes (though there are no laws requiring any license to sell them).
5.  Closing on these is different from normal real estate sales. Deals are closed by escrowing the purchase price except any part required to pay off existing liens, and not releasing money to the seller until the MVD accepts the old title and issues a new one to the buyer.
6.  For new homes, the sale must always be through an ADOH licensed dealer. ADRE licensees not working through a dealer cannot sell new units.

There is a new opportunity here for interested ADRE licensees, but this industry is different from the normal single-family residence business and this is going to be important to understand. Normal sales forms are not going to suffice since mobile and manufactured homes are chattel sales, not land sales.

MHCA is working on developing a purchase contract and related forms for use in these types of transactions and they should be available on the Arizona REALTORS® website by the time the new law is effective. In addition, ADRE licensees need to become familiar with mobile home parks landlord tenant laws. They are quite different from normal residential laws.

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