Manufactured Home Contract Documents Review
As a real estate broker, you may find yourself in the situation of being asked to represent a client with the sale of a manufactured home. In that instance, you need to know that there are many differences contractually, as well as the increased risks and liability involved in handling this type of transaction. The Colorado Real Estate Commission, through its forms committee, has created mandatory Commission approved forms to assist the broker in the sale of a manufactured home.
New Manufactured Home Contract Documents
These forms are available for use on January 1, 2021, and can be found on the Division’s website:
Sale of a Manufactured Home
Normally, the sale of a manufactured home requires that a seller or a person selling on behalf of a seller must be registered as a dealer with the Colorado Division of Housing.
For instance
A seller must be registered if they own the land they are selling or leasing with a manufactured home that they are selling.
Manufactured home park owners must be registered if they are selling a home on a lot that they are leasing.
Real Estate Broker Exemption
There is a real estate broker exemption that allows a licensed real estate broker to sell a manufactured home, however, it only applies when there is land involved in the sale of the manufactured home and they do not own the land. This includes sales where a lot lease is involved if the broker is negotiating the terms of a separate land lease with the owner of the land where the home already sits or will be installed in the future in addition to selling the manufactured home OR the sale of the manufactured home is in conjunction with the sale of the land. In these instances, a person is required to be a licensed real estate broker through the Division of Real Estate if the circumstances in this paragraph apply to them.
The Colorado Department of Local Affairs (DOLA) issued a memorandum on November 5, 2020, setting forth the requirements to sell manufactured homes and clarifying the real estate broker exemption and the licensed broker’s ability to assist in these transactions. A review and understanding of these requirements from DOLA is imperative before representing a client in these unique sales. This information and memorandum can also be found on the Division’s website.
Risks Involved
It should be noted that these are high risk transactions. For instance:
The contract provisions in the sale of a manufactured home differ substantially from the standard contract to buy and sell real estate.
Knowing when and how to use the different Commission approved forms.
One must be familiar with UCC-1 Financing Statement searches, as they are very important (as it encumbers personal property) to undertake in the Secretary of State’s office.
There are competency concerns if you have never handled these types of transactions.
There are differences and complexities with the transfer of title to a buyer.
Finding a closing entity that is familiar with these transactions.
Does your broker E&O insurance cover these types of transactions?
Therefore, it is advised that before you represent a client in the sale of a manufactured home that you take a class to familiarize yourself with the complexity of these transactions, talk with your employing or managing broker, get advice from a mentor, or get advice on the process from a real estate attorney familiar with these types of transactions.
Resources
Additional resources for assistance in learning more about the sale of manufactured homes:
Manufactured Homes Brochure at the DOLA site. (Information on buying and selling, taxation, permanently affixing to the land, relocating, and destroying manufactured homes.)
Flowchart - Requirements for the Sale of Manufactured Homes.
Information on manufactured home title “Purging” (permanently affixing a manufactured home to real estate) can be found on the website of the Clerk and Recorder’s Office where the home is located, and on the Colorado Department of Revenue website.