Realty Times July 20, 2000

Texas Law Neglects Manufactured Housing
by Broderick Perkins

At a time when housing is at a premium, Texas law offers little legal protection for many consumers who can only afford manufactured homes.

Unlike Arizona, California and Florida, where manufactured housing is also popular, Texas law does not fully protect home owners who rent space in rental communities from improper installations, unrestricted rent increases and other financial hardships.

According to the American Association of Retired People, 58 percent of all manufactured home owners rent the lot where their home is located leaving most manufactured home owners in the Lone Star state with few consumer protections.

That's prompted the Consumers Union, publisher of Consumer Reports magazine, to recommended the Texas legislature fill the legal void with consumer protection measures.

Recently testifying before the Texas House Urban Affairs Committee, Consumers Union recommended:

  • Written leases. Texas needs legal standards for security deposits, causes for evictions, and landlord repair obligations, as well as guidelines for tenant issues unique to manufactured home communities, including common area facilities and park maintenance. Lease agreements should include a disclosed cooling off period, they should limit penalties on late payments much as there are limits on late payment penalties or mortgages for site built homes. Communities should also provide formal notice procedures to inform renters preceding a rental community's closure or sale.

  • Installation inspections. Manufactured home buyers pay an installation inspection fee, but the Texas Department of Housing and Community Affairs is required to inspect only 25 percent of manufactured home installations.

    "We recommend the law be amended to require 100 percent of installations receive an inspection," said Janee Briesemeister, senior policy analyst for the Southwest Office of CU.

    "Providing a proper inspection of every installation is essential to making manufactured homes a safe and long-term affordable option for consumers."

    Briesemeister also said Texas' state housing programs could help provide manufactured housing loans with interest rates more in line with interest rates on mortgages for site-built housing.

    Interest rates on manufactured home loans are typically several percentage points higher than the prevailing rate on residential mortgages.

    A Consumers Union survey showed that lenders and retailers in Austin's tight housing market were charging rates between 9 to 14 percent on a 30-year loan for manufactured home purchasers with good credit. Mortgage rates for site built housing are below 9 percent.

    "Problems such as costs associated with improper installations and the unpredictability of costs in rental communities must be tackled," Briesemeister said.


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