Changes require community fees disclosure in manufactured home sales

Recent changes to the Manufactured Home Community Rights Act affect Realtors® and transactions involving manufactured homes (also known as mobile homes).

These changes now require sellers of pre-owned manufactured homes to provide prospective buyers with a disclosure of community fees and a copy of the current rules and regulations prior to a purchase. In practice, this will be very similar to existing rules for condominiums and planned communities – sellers will notify the community owner of their intent to list the home for sale, the community owner must provide the seller with a copy of the fee disclosure and their rules and regulations, and the seller will then pass that form on to prospective buyers. There are a few wrinkles to watch out for, however.

• There are two possible fee disclosures, dependent on the type of lease commonly used by the community. Communities using longer term leases must include a multi-page lease addendum as their fee disclosure; communities using month-to-month leases will use a shorter and less detailed form. The Pennsylvania Manufactured Housing Association (PMHA) has developed form templates for its members to use for this purpose.
• Regardless of the form used by the community, sellers must attach an additional one-page notification to the front of the form.
• Where a seller does not obtain a written acknowledgement of receipt by the buyer, the buyer has the right to terminate a purchase agreement. Failure to provide the fee disclosure and rules and regulations would therefore allow buyers to cancel the agreement at any time prior to closing with no penalty.
• Buyers have five calendar days from receipt of the fee disclosure to cancel any agreements with the community owner (e.g., a ground lease) but not the purchase agreement. The only way to terminate the purchase agreement (assuming the disclosure has been given) would be to write that contingency into the agreement.

If you are representing a seller of a manufactured home, be sure to advise them of their new responsibilities under the law.  Since failure to provide the fee disclosure and the community rules and regulations allows a buyer to terminate a purchase agreement at any time, there is considerable risk where a seller has not been properly informed of these duties.  Best practice will probably be to attach the required forms to the seller’s property disclosure form and provide all of the documents at once to prospective buyers to ensure receipt.