Retailer
Boot Camp
May 12, 2015
Sponsored by:
Presenters
O Ross Kinzler, Executive Director
O ross@housingalliance.us
O Amy Bliss, Deputy Director
O amy@housingalliance.us
WI HOUSING ALLIANCE
258 Corporate Drive
Madison, WI 53714
(608) 255-3131 Phone
(608) 255-5595 Fax
Welcome
O Please shut off cell phones
O Feel free to ask questions, tell stories,
participate fully.
O Evaluations forms – please fill them out and
note ideas for future events as we go
throughout the day
O Most materials are in your binder, available
on our website or on the DSPS website
THANK YOU
O Use Home Dues
O Thank you to Bryan Folz for the challenge to
all members to donate $75/used home sold
O Thank you to all of the people in this room
that contribute this funding VOLUNTARILY!
O For those businesses that do not participate,
please consider this very important source of
funding the Alliance.
O In 2014, this contributed $18,000 and in
2013, $14,000
Please call it by it’s real name
O HUD Code Home is built to a federal code
which is preemptive. –Manufactured Home
O The Code requires that the home be
“habitable” when it leaves the factory.
O There is 3rd party design approval and 3rd
party in plant inspectors (DAPIA and IPIA)
HUD Code Dealer
Responsibilities
O Can’t sell a HUD Code home without seals
O Can’t sell a home out of conformance
O Don’t alter a home to take it out of
conformance – make no changes unless
authorized by the manufacturer
O Complete the information card
O Refer to the manufacturer
information/complaints about defects to the
manufacturer. If not satisfied refer to the SAA
HUD Code Licenses
O Manufacturer
O Dealer
O Salesperson
O Installer
O Community
2 Types of Dealer LicensesAll cost $215 / 4 years
O Non-Broker – (Full dealer license)
O Sales lot
O Inventory
O Ownership interest in some homes sold
O Broker – (limited dealer license)
O No sales lot
O No inventory
O No ownership interest
O Lists homes
Net Worth Requirements
O Non-Broker
O New initial dealer license - $50,000
O Succeeding licenses
O 1-50 $50,000
O 51+ $100,000
O Provide:
O Financial statement
O Purchase a bond
Brokers
O New initial broker license - $25,000
O Succeeding licenses
O 1-50 $25,000
O 51+ $50,000
O Provide:
O Financial statement
O Purchase a bond
Other Requirements
O There must be at least one licensed salesperson.
O Establish a permanent business location.
O Establish an office in which the business records are kept.
O If you carry and display inventory, display a sign with business
name.
O Display lots are not required for manufactured home dealers, but
if provided, must be within the same block or directly across the
street from the main business location.
O Establish a repair service facility to service manufactured homes
offered for sale. If a repair service facility is not provided, a
Service Agreement Form must be submitted.
Other Requirements
O If the business property is not owned, a copy
of the four-year lease must be submitted.
O Maintain Records
O Title for each used home
O Certificate of origin for each new home
O Factory invoices
O Sales contracts
O Listing agreements
O Detailed records of each sale
Signage
O When a retailer carries and displays inventory an
exterior business sign is required that names the
business and doesn’t misrepresent the business.
Additional Issues
O See your resource guide for
O Relocating your dealership
O Zoning
O Temporary sales locations like fairs
Modular Homes
O Homes built to Wisconsin One- and Two-
Family Dwelling Code (UDC)
O Homes built to Wisconsin One- and TwoFamily Dwelling Code (UDC)
O Home designs are submitted to DSPS
O Wisconsin seals are issued
Modular Home Sales
O No state license for selling just the home
O Real estate license if land is included
Building Permits
O Can be “pulled” by the homebuyer
O Can be “pulled” by a Dwelling Contractor
Qualifier
O Building permit application is included in your
packet.
Staying Out of Trouble
O Most violations are process violations
O Get the paperwork right and most things fall
into place.
O If you see the HUD logo, the slide only
applies to HUD Code home sales
Fair Trade
O The Department of Agriculture, Trade &
Consumer Affairs;
O The Department of Safety & Professional
Service and
O The Federal Trade Commission have rules.
Fair Trade - Advertising
O All business ads must include the business
name.
O You cannot run a classified ad that appears
to be a private party sale.
O This applies, even on craigslist!
Fair Trade - Advertising
O Advertising statements must be truthful and
the dealer must be able to prove the
statements.
False Advertising
O False advertising can ruin a business.
O False advertising can be proven if ALL of the
following are present:
O A false or misleading statement of fact
O The false statement either deceived or had the
capacity to deceive a substantial segment of
potential customers
O The deception is material to the purchasing decision
O The product is in interstate commerce
O The plaintiff has been or is likely to be injured
Puffery
O A defense to false advertising is that a statement
is mere puffery
O Puffery is
O An exaggerated claim or boasting statement that no
reasonable person would rely on
O A general claim of superiority that is vague
O Outrageous claims that cannot be backed up but
appear to be performance guarantees rather than
statements of opinion can lead to trouble
Fair Trade - Advertising
O Credit Advertising - NEW - You cannot
advertise a home at a monthly payment cost
unless you as a creditor can actually provide
the credit and are licensed by DFI to do so.
Fair Trade - Advertising
O It is illegal in Wisconsin to sell merchandise
or advertise to do so below its cost.
O Certain exceptions apply to bona fide
clearance sales, imperfect items or final
liquidation sales.
Fair Trade – All In Pricing
O When a price of a home is included in an ad,
a written statement or representation of the
price must include all of the charges that
are necessary to acquire ownership
O Exceptions:
O taxes, registration fees, permit fees and
charges by lenders or others.
Selling Below Cost
O Wisconsin has a minimum mark up law (6%)
that affects personal property sales.
New vs. Used
O A new home means a home that has never
been occupied, used or sold for personal or
business use.
O A model home is not “used” unless it has
been put into a business use other than for
display for sale
Purchase Contract
O You must use the State Forms for HUD Code
home sales
O A copy must be given at the time the
purchaser signs AND again after the offer
has been accepted by the retailer.
O A contract must be signed in order to accept
a downpayment, or a title for a trade in.
Termination of Offers
O Contract is void if the contract has not been
accepted by the close of the retailer’s next
business day. (Unless the contract provides
for a different time.)
O Once a contract is signed for a specific
home, the retailer cannot sell that home to a
different buyer until the first offer is rejected
or the first buyer cancels.
Termination of Offers
O If the retailer rejects an offer, then any
downpayment, deposit or title must be
returned within 2 hours. If the buyer is not
present, then return in person or by mail at
the close of the next business day.
Cancellation Penalties
O Cancellation within 24 hours has a penalty
limit of 1% of the cash price.
O After 24 hours the penalty is the amount
stated in the contract.
O DON’T LEAVE IT BLANK, other wise the
penalty is ZERO
Price Changes
O Only 3 legal reasons for a price change
O Addition of new equipment required by
federal or state law.
O State or federal tax changes
O Reappraisal of the trade-in which suffered
damage or is missing parts.
O Manufacturer price changes cannot be
passed on!
3 Day Right to Cancel
O If a sale occurs away from the sale center a
3 day cooling off period applies under the
Uniform Commercial Code.
O The buyer can back out without penalty
O Seller must provide a 3 Day Right to Cancel
Notice.
O Watch out – don’t complete sales away from
your office.
Legal Signatures
or
X
E-Sign
O Electronic documents are legal in all 50
states
O They are not common in manufactured
housing transactions
O There are several requirements to use them
so consult your legal counsel
Referral Selling
O NO NO
O OK
O Can’t offer $$ to a
O Give $$ to a past
buyer if they refer
another person and
that person buys
O We will take $$ off
your home purchase
if 6 people you refer
buy from us.
customer for a
referral and that
person buys.
Interference in Contracts
O Any intentional actions taken to induce or
otherwise cause a buyer not to enter into
or continue with a contract with a
competitor can result in liability for
money damages suffered by the other
retailer.
Warranty
O A one-year written warranty is required for
each HUD Code home sold.
O Joint & Several Liability
O Each has 30 days to make repairs after
notice of any defects. If the retailer makes
the repair, the manufacturer must fully
reimburse the retailer.
Warranty
O If the repair is inadequate and it is
discovered before OR after expiration of the
warranty the same condition must be
repaired again it must be repaired at no cost
to the homeowner.
Magnuson Moss Warranty Act
O Generally creates warranty rights for
consumers but 2 provisions are favorable:
O Consumer has right to recover attorney fees
but the seller must be given an opportunity to
cure the defect (no gotcha’s)
O A written warranty can limit coverage. That’s
why almost all warranties are titled Limited
Warranty
Warranty Tips
O Read the warranty – they are not all the
same
O Joint & several liability for HUD Code means
the dealer must not sit on their hands during
the 30 day repair period.
O Consider adding mediation/arbitration
clauses to contracts.
Waivers
O A purchase contract or other agreement
cannot waive the consumer’s rights. (Wis
Stats. 101.953(3))
Liens
O Anyone who performs work on real property
is entitled to a lien.
O Proper contract language and notices is
required.
O Doing liens right is a full day seminar
Contracts for
Builders
Contracts Address
Risks
What are your risks?
O You will order a home for big $ from a
manufacturer based on What?
O A promise or a contract
O You will do work on property owned by
others based on What?
O A promise or a contract
O You will arrange for others to do work on a
home based on What?
O A promise or a contract
Three Contracts to Discuss
O Modular Home Purchase Contract
O MH Purchase Agreement
O Sub Contractor Agreement
What we are NOT going to
cover
O Agreements between builder and
manufacturer
O Agreements between “owner/buyer” and
others
O There are particular risks here since they are
likely to directly affect you but you have little
control
How to Complete the
Manufactured Home
Sales Contract
Some Contract Basics
O Nothing happens until a contract is signed
O A contract to be valid must have these
elements:
O Signatures of all parties
O Sufficient detail to represent a “meeting of
the minds”
O Financial commitment that ties the customer
to the contract – not vague language
Purchase Contracts
O Is the contract current?
O Real vs. Personal property
O Security interests protected?
O Real meeting of the minds?
O Changes dated and initialed?
O Customer signing first?
O Use Change Orders – Don’t Re-write the
Contract !!!
The State Form
Leave No Blanks
The following Schedules apply: ___ A Home Options ___ B Warranties &
Representations; ___ C Personal Property Placement: ___ D Real Property
Placement; ___ E Additional Representations; ___ F Notice of Manufactured Home
Community Lease/Rules;
___ Others Attached.
A. Base Price of Home Sold $ ____________
B. Total Options from Schedule A, Part A $______
C. Total from Schedule C $ ____________
1. Sub Total (Sum lines A + B+C) $___________
2. Trade Allowance $ ________
3. Trade Difference (1 Less 2) $ ___________
4. ____ % Wisc. Sales Tax x line 1 $___________
(Includes 35% exemption if applicable)
□ Sales Tax Computed on line 4
□ Line 1 Price includes Sales Tax, if applicable
□ No Sales Tax imposed on purchaser because of realty
improvement
□ No Sales Tax imposed due to other exemption:
____________________________ (include ES # if
applicable)
(Note: Trade allowance may not be used in calculating tax.
No Tax on used homes exceeding 45 ft.)
5. Title, Lien, UCC-1, Other fees $______
6. Physical Damage Insurance $_______
7. Total from Schedule D $_____________
8. Total from Schedule A, Part B $__________
9. Balance Due to (below) On Trade in$_____
(_________________________________)
10. Sub-Total (3+4+5+6+7+8+9) $ ________
11. Less Down Payment $ ________
12. Sub-Total (10 less 11) $ ______
13. Additional Down Payment Due $________
14. Amount Due on Closing $______________
Don’t forget the Cancellation %
Personal Property Sale
O New Home
O Purchase Contract
O Used Home from
Inventory
O Schedule A
O Purchase Contract
O Schedule B
O Schedule B
O Schedule C
O Schedule C
O Schedule E if there
O Schedule E if trade in
is a trade in
O Schedule F
O Schedule F
Real Property Sale
O Purchase Contract (assuming new home)
O Schedule A
O Schedule B
O Schedule D plus worksheet
Modular Contract - Risks
Addressed
O Buyer backing out
O Builder wanting out if buyer doesn’t perform
O The buyer really owns the land – dah!
O Lot is build-able
O Scope of work – just what you are doing and
not doing
O Liability limitations
O Possession and control of the property
Risks Addressed - continued
O Owner responsibilities
O Lien Notices – more later on this
O Security agreement for property
O Insurance for property
O Price changes during contract
O Default remedies
Modular Contract
O Is a simpler document than the MH Contract
because the MH contract is dictated by
many provisions of WI law
O However, we’ve found that mistakes people
make are often the same.
How to Use the Modular Contract
O Pick the Version
O Standard
O Trade-in
# 1 Top Mistake
O No Blanks
O Don’t give the other party a chance to add
things you did not agree to
# 2 Top Mistakes
O Messing up the financing condition – this is NOT
OPTIONAL if contract is conditioned on getting
financing!
a. Minimum amount: $________________
b. Minimum term: ___________ months
c. Maximum interest rate: If checked here □, a fixed rate not more than
_______% per year. If checked here □􀂅, a variable rate loan in which
the initial interest rate is not more than ____% per year, which may
change not earlier than ________ months and thereafter not more
frequently than every _______ months, and will not change by more
than ____% per year at any change and not more than _____% per year
in total.
d. Maximum monthly payments: $___________
e. Maximum “points” or origination fees of any description
________________________
f. Other special terms apply if checked here □ and a schedule is attached.
Cash Deal?
O Make sure to check the box at the end of
finance section
#3 - Top Mistakes
O Scope of Work – What are you doing?
SCOPE OF THE WORK:
_____ HOME ONLY - Attach the Home on a foundation
provided by Owner, in accordance with Builder’s
procedures. Owner understands that the Home is a
modular home which will be constructed by
__________________________________________
designated as model
__________________________________ and delivered
to and installed on the Owner’s property as described in
this Contract.
_____ HOME PLUS – Attach the Home on the foundation
and perform other Work and services as described on
the Addenda.
#4 - Top Mistakes
O Failure to identify who is in charge of project
PRIME (GENERAL) CONTRACTOR:
_____If checked here, Builder is acting as Owner’s
general contractor. General Contractor’s License #
___________
_____If checked here, Builder is not acting as general
contractor and Owner is either acting as the general
contractor or has chosen to hire a general
contractor. As a condition to Builder’s obligation to
perform under this Contact, Owner will provide to
Builder originals of all permits that are the
responsibility of Owner to obtain under this Contract.
Owner acknowledges the construction and legal
risks in assuming the role of general contractor.
So You Don’t Want to be the
General Contractor?
O You generally will not escape liability by not
being the general contractor.
O Example – Putting home on basement
homeowner provided. If basement fails, it is
likely you will be held responsible anyway
# 5 - Top Mistakes
O Changing the contract by re-writing it.
# 5 - Top Mistakes
O Don’t do it. Use
Change Order
#6 – Top Mistakes
O Get enough detail in plans and specs
O Attach all relevant documents!
ADDENDUM A
Plans and Specifications Included In Scope of Work
[The following become a part of this contract once completed and signed or
initialed by the Owner – base model spec sheet, factory order form, floor
plan print, foundation print, plot plan and any other documents required by
lenders or other similar 3rd parties. ]
#7 – Top Mistakes
O
Other Construction - Getting enough detail in
Addendum B including pricing if appropriate
#8 – Top Mistakes
O Addendum C - Included items or Allowance
O Select one or the other or cross out!
#9 – Top Mistakes
O Get Initials on non-signature pages
_______________Initials
Page 2 of 9
#10 – Top Mistakes
O If you use an arbitration clause you may want to
delete the Jury Trial Waiver
Listing Agreement
O Protects you so you get paid for trying to sell
the home.
O Commission can be % of final price, a fixed
fee or the greater or a or b.
O Commission is due if you bring a buyer at
the agreed price whether the seller goes
through or not.
Offer to Purchase
O Modeled on standard real estate offer
contract. Offer and Acceptance
O Read the form carefully.
O Don’t use the MH Purchase Contract if you
don’t own the home, use this form instead
O The form has a mistake – 4 lines for buyers
to sign, change 2 to seller.
Used Home Disclosure
O This used to be a “dealer’s disclosure”
O We change the law to a “seller/owner’s
disclosure
O If you take in a trade, have the seller
complete the form
Used Home Disclosure
O Lead, mold, lead-based paint, asbestos and
radon gas – Get owner to sign on back page
O Purchaser acknowledgement on back page
Selling Used MH
O Who owns the home determines which
contract to use
O Listed home – Offer to Purchase
O This is an offer/acceptance contract
O Contract is between selling homeowner and
buyer
O You are the agent
O Inventory home – MH purchase agreement
O Dealer is the seller
Special Issues in Used Sales
O Contract must have name of current owner if
listed home
O Contract must name prior owner/address if
inventory sale
Special Issues in Used Sales
O If on-site in MH community and sold by dealer
O Clearly state whether home may have to be
removed from site
O Clearly state that the sale is voidable if purchaser
or home is not acceptable to the community
owner
O If home is to remain, dealer must inform customer
prior to executing the contract that the lease may
be obtained from the community.
Special Issues in Used Sales
O Used home inspection must be completed
and given to buyer prior to execution of the
contract
O Used home inspection is a seller’s
disclosure like in real estate so get one from
any you acquire a home from
O Dealer cannot charge for doing the used
home inspection
Special Issue in Used Sales
O Net Sales are prohibited.
O A net sale occurs when the dealer and seller
agree on a price and the selling commission
is whatever amount is received over the set
selling price.
Special Issue in Used Sales
O Is it a Listing or a Consignment?
O Listing – Seller remains owner of property
and retains the title until a closing occurs
O Consignment – Dealer receives the title and
gives it to buyer and remits money to seller.
O In a bankruptcy of the dealer, a consigned
home is considered an asset of the dealer.
The seller could lose their home.
Special Issues in Used Sales
O A Lead Paint Disclosure is required for all
home constructed before Sept. 1, 1978.
Special Issues in New Home Sales
O Notices required
O Formaldehyde (FTC)
O Temporary notice usually affixed to kitchen
counter top or cabinet
O Insulation (FTC)
O The type, thickness and R-Value of insulation
O Dispute Resolution (HUD)
O Let’s consumers know of a federal dispute
system
O Installation (HUD)
O Federal law requires notice about the
installation standards applicable to the home
Special Issues in New Home Sales
O Wheels and Axles
O Are a part of the home and bank’s collateral
O If the dealer is to keep the wheels and axles
the sales contract in advance must specify
that.
Special Issues in New Home Sales
O Title or No Title
O If the home is or is intended to be located on
land owned by the homebuyer, no title is issued.
Sub Contractor Agreement
O It is a template!
O Take to your attorney to square up with your
business practices
O One size probably doesn’t fit all
O This is a member benefit and will be revised
from time to time based upon member input
Sub Contractor Agreements
O Why?
O You don’t want the ‘tail’ wagging the dog
O You don’t want sub’s employees deemed to
be yours
O You want to establish standards
O This contract is between businesses
O You as builder and your sub contractor
O Not between you and your customer’s
subcontractors
Comments
O As you read this contract you realize all of
the areas where your customer’s sub can
get you in trouble. Why not control those
issues?
Agreement Basic Theory
O One General Agreement that might go on for years
O One Scope of Work/Project Schedule for each job.
O Acceptance Report to Verify end of each job
job
Job
Job
Agreement
job
job
Topics Covered
O Who provides/protects materials
O Payments and liens
O Payments subject to Scope of Work
O Completion – When is a job done?
O Job changes – builder must approve
O Clean up
O Performance to industry standards
Topics Covered
O Safety and OSHA compliance
O Extensive provision on default
O Builder can step in
O If builder takes over sub shall give permits and
materials to builder
O Permits and Laws
O Sub is responsible for their own compliance
O Insurance
O General Liability – builder to be additional insured
Topics
O Sub warrants their work
O All work to be done to meet/exceed UDC
O Mutual Indemnification
O Tools
O Availability for meetings
O Confidentiality
O Sub won’t solicit project owner
O Conduct & Appearance
Topics
O Independent contractor relationship – not
employer/employee
O Builder owns plans & specs
O Governing law
O Dispute resolution - options
O Courts
O Arbitration
Items You Might Add
O Insurance – consult with your insurance
O
O
O
O
agent for additional coverage they might
want.
Severability Clause
Compliance with Immigration Laws
Modify Scope of Work/Project Schedule to
add more information
Modify Acceptance Report
Sales & Use Tax
O Real verses Personal Property
O Sales tax on personal property
O Use tax on real property construction
O Who is the taxable entity?
O What is the rate?
O What is the taxable base?
O Is there a partial tax exemption?
O Do you deduct the trade in?
O How are used homes taxed?
Tax Issues
O Interstate off-sets
O Modular manufacturers generally collect the
tax
O To get the exemption on add-ons they have
to be on the home purchase agreement
O Tax audits hurt
O Sales to Native Americans and religious
groups
Overview of Right to Cure
O Homeowner can’t sue before exhausting
other remedies first
O Builder given chance to fix home
Installer
Contract
Buyer
Seller
Atty
Home
Law
Complaint
s
Overview of Right to Cure
O This law is designed to resolve construction
disputes before they land in court.
O The law became effective 9/1/2006.
O The builder has two specific duties under
the law at the time the home is sold
(contracted for).
Right to Cure
O
Builder must:
O give a notice and
O a brochure to all buyers
before the contract is
completed.
Right to Cure Resources
O Copy of Notice – See Alliance Website under
Retailer Resources ►Modular page
O Copy of Brochure – See Alliance Website or
Commerce website (UDC)
O Copies available in your packet
Definitions
O “Action” (lawsuit) means a civil action or an
arbitration under ch. 788.
O Working Days – This law talks about working
days in many places. A working day does
not include weekends and holidays
Definitions
O “Contractor” means a person that enters into a written or
oral contract with a consumer to construct or remodel a
dwelling.
O “Dwelling” means any premises or portion of a premises
that is used as a home or a place of residence and that
part of the lot or site on which the dwelling is situated
that is devoted to residential use. “Dwelling” includes
other existing structures on the immediate residential
premises such as driveways, sidewalks, swimming pools,
terraces, patios, fences, porches, garages, and
basements.
Definitions
O “Construction defect,” if there is a warranty then defect
means the definition of “defect” in the warranty. In all
other cases, “construction defect” means a deficiency in
the construction or remodeling of a dwelling that results
from any of the following:
1. Defective material.
2. Violation of applicable codes.
3. Failure to follow accepted trade standards
for workmanlike construction. NAHB Standards
Right to Cure Claims
O Step One:
Notice of Claim
At least 90 working days before commencing
an action against a contractor, a claimant
must deliver a written notice of the alleged
defect to the contractor.
Right to Cure Claims
Builder Response
O Step Two:
Contractor’s Response - You have 15 working days to
provide the claimant with a written:
O (1) offer to repair or remedy the defect;
O (2) offer to settle the claim with a monetary payment;
Right to Cure
Builder Response
(3) offer of a combination of (1) and (2);
(4) rejection of the claim and the reasons for rejecting the
claim; or
(5) proposal to inspect the alleged defect or perform any
necessary testing.
Right to Cure Claims
Customer’s Response
O Step Three:
Claimant’s Response - If you reject the claim,
the claimant may proceed to a lawsuit. The
claimant must serve written notice on the
contractor within 15 working days if he or she
either accepts any offer or rejects an offer.
Right to Cure Claims
O Step Four:
Contractor’s Supplemental Response - If the
claimant rejects the offer, the contractor has 5
working days to provide a written
supplemental offer or a notice that no
additional offer will be made.
Right to Cure Claims
O Step Five:
Claimant’s Response - If you send a written
notice that no additional offer will be made,
the claimant may commence a lawsuit or other
action against you. If the claimant has
received a supplemental offer from the
contractor, the claimant must respond within
15 working days.
Right to Cure – Other Aspects
O Claimants may:
1. accept settlement offers,
2. accept them in part, or
3. reject offers, doing so via detailed
written notice.
Other Aspects
O Remedies to claims may involve:
O repairs
O monetary payment, or
O a combination of repairs and
payments.
Other Aspects
O You have the right to:
1. inspect and, as appropriate,
2. test alleged defects.
Access must be provided in a
timely fashion for inspections,
tests, and repairs.
Notice from Consumer
15 Days
Offer to Repair
Offer to Settle
Offer to Settle &
Repair
Customer Rejects Offers
5 Days
15 days
Supplemental
Offer
Customer
Responds
Customer Sues
No Offer
Reject Claim
Fair Housing Hot Buttons
O Anti-discriminatory ads
O Steering
O Refusal to sell
Federal Law – Fair Housing
Act
1968 Title VIII - Civil Rights Act (THE ACT)
--prohibits discrimination in the sale, rental,
and financing of dwellings, and in other
housing-related transactions, based on:
O
O
O
O
O
O
O
race
color
national origin
religion
sex
familial status
handicap (disability).
Wisconsin has additions
O Marital Status
O Ancestry
O Check for additional
ordinances made by:
O Lawful Source of Income
O Sexual Orientation
O Age
O Status as a victim of
Domestic or Sexual abuse
or stalking
O Counties
O Municipalities
Wisconsin Law – Enacted 1982
O Refusing to sell, rent, insure, construct, and/or finance
housing.
O Refusing to discuss the terms of the sale, rental,
insurance, construction and/or financing of housing.
O Refusing to allow inspection of housing.
O Refusing to renew a lease or causing the eviction of a
tenant.
O Misrepresenting the availability of housing for sale, rent
or inspection.
O Applying different terms or conditions for the sale, rental,
insurance and construction and/or financing of housing.
O Printing, publishing or displaying advertisements or notices
that state or indicate a preference based on a protected
class.
O Engaging in harassment, coercion or intimidation.
O Blockbusting, which consists of efforts to induce or attempt
to induce a person to sell or rent a dwelling by
representations regarding the presence or entry of a
person or persons of a protected class or economic status.
O Steering, which is restricting or attempting to restrict, by
word or action, an individual’s housing choices.
O Segregation by floor, building, development, or community
based on membership in a protected class.
Beware of your advertisements
CHECK YOUR
ADVERTISING!!!
O “Perfect home for married
couple”
O “Home is near the Catholic
Church”
O “Quiet section perfect for
seniors.”
Is this a good
photo for your
advertisement?
Steering
O Steering occurs when you base your housing
recommendation using one of the protected
classes.
O Suggesting a elderly couple would be happier
located away from families with kids.
Quiz question: Can you advertise an Easter
Bunny Sale or a St. Nick special pricing or is
that religious discrimination?
Refusal to Sell
O Watch out for bias from homeowners using
you as a listing agent.
O Stay away from anyone who says – Don’t sell
my home to __________ (ethnic) (age) (etc).
O $10,000 minimum fine
Testers
O We are not talking about the people at
stores that spray perfume on you
O HUD and the Justice Department use
testers. So do advocacy groups.
American’s with Disabilities
Act
O Does NOT apply to single family homes or
your models, but if you don’t want to
eliminate potential buyers….
http://www.modular-wheelchairramps.com/?gclid=CPztpL34yK4CFQzGKgod62OzBg
O Does apply to your office
Ramps can be utilized
for an open house application
O $100-$140 per linear foot (Sample Price)
Compliance Issues
For your Sales Center
O Ramps
O Wide doorways for entry and bathroom
O Handrails for bathroom
Exemptions
O When making the changes is impractical.
O Don’t count on any exemptions for your
office.
O Using a HUD Code home as an office
doesn’t exempt you.
Renting verses Selling
O
O
O
O
O
O
O
O
Renting
Monthly revenue stream
Low cost entry to industry
Can always sell the home later
Can use as a trial period
More management needed
You need more cash to fund
homes
Potential damage to your home
Increased insurance costs
Selling
O One and done transaction
on the home
O Higher entry threshold
O Your funds are not tied up
O Need to find finance
source for buyers
Appraisal Rule
• Effective July 18,2015
• New and Pre-Owned home and land transactions will require a full
USPAP (Uniform Standards of Professional Appraisal Practices) Appraisal.
New Homes will not require a physical inspection of the interior of the
home.
• Higher Priced Mortgage Loans (HPMLs) that are not Qualified Mortgage
Loans (QM) are subject to regulatory requirements. Generally, HPMLs are
loans with an APOR of more than 1.5% over the APOR
• Loans less than $25,000 are exempt from the following requirements.
• Qualified Mortgages are exempt.
• Lenders are required to provide appraisals to the borrower 3 days in
advance of closing!
Business Impact of new Appraisal Rules on Land Home transactions
• None of the national lenders have given any indication
that this new rule will change their internal lending
guidelines with respect to their maximum allowable
loan advance.
- Conforming loans - those sold to Fannie, Freddie or Title II FHA
all required appraisals before…so no change.
– Loans held in portfolio that allowed the tax value of the real
estate to be used; or land in lieu transactions also using tax
values can still be done but will now require a full USPAP
Appraisal.
– Rural locations where comps are not easily found on average
have about a 30% fail rate…so if more land home transactions
are subject to full appraisals more loans will fail the appraisal
requirement.
– The question is if the appraised value is less than the selling
price of the home, will the borrower go through with the
purchase even if the lender is still willing to make the loan?
What is the industry doing to prepare for
these new rules?
• The rules are clear on land home transactions that a full USPAP
appraisal is required on new and preowned real estate transactions
so not much can be done at this point.
The industry will be monitoring the impact and if a significant negative
impact is determined then we will be going back to the CFPB.
Appraisal Rule
• New and Pre-Owned home loans without land will be exempt from
USPAP appraisals if the creditor provides the borrower one of the
following three types of information or valuations about the home.
• The Manufacturer’s Invoice
• An Independent Cost Service Unit Cost (Value) (NADAguides.com)
• A valuation conducted by an individual or company who has no
financial interest in the property or credit transaction and has
training in valuing manufactured housing. (DATAComp)
NADAguides
NADAguides will continue to provide a “cost based valuation”
but with significant additional data to influence their
algorithms.
– Requesting 5 years of sales data from lenders and other
key stakeholders.
– Requiring a commitment from the industry for 50% of the
new home business.
– Cost estimated between $30-$10 per valuation, based on
volume.
DATACOMP
DATACOMP is prepared to provide a “market valuation”
– DATACOMP is happy to have the last 5 years of sales data from the
lenders too but believes that the most accurate valuation is based on
sales within the last 12 months.
– Additionally they are asking for the “industry” (communities, retailers,
lenders) to provide the manufacturer’s invoice, and the Purchase
Agreement on all sales including cash sales beginning in August 2014.
That will provide a year’s history of sales data on which to base valuations
beginning in 7/15. On the MHICAS.org web page, Datacomp has prepared
an instruction page and a page where cash sales and sales financed by
“other lenders” can be recorded.
– Believe they can get the cost of a new home valuation to less than $50
Other Future Topics
O Dealing with building
O
O
O
O
O
inspectors
Liens
Deed restrictions
FEMA 185
installation
standards
Understanding the
UDC
Dispute resolution
O Dodd-Frank & SAFE
O
O
O
O
Act
How to sell Energy
Star Homes
Fair Dealership Act
FTC Privacy
Safeguarding Rule
Energy Rule impact
on housing costs
Upcoming Events
July 23 – Community Management Boot Camp I – Cranberry Creek, Tomah
August 13 – Community Management Boot Camp II – Holiday Inn, Wausau
September 17 – IL, IA, WI Golf Outing – Eagle Ridge Resort, Galena, IL
November 11/12 – Annual Convention / Ross Retirement Party –
Chula Vista Resort, WI Dells
Thank You For Coming
O Fill out the evaluation form-If you would like a
Bootcamp II, let us know and don’t be shy
about listing future topics.
O Consider becoming a Certified Housing
Consultant (CHC)-Discounts, Professionalism,
Plaque to prove it.