The Uniform Commercial Code (UCC) defines “goods” as “all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale.”52 Courts uniformly find that manufactured homes are goods under this definition.53 This is so even if the buyer and seller both contemplate that the home will be permanently attached to land.
The Magnuson-Moss Warranty Act applies only to “consumer products.”63 The Federal Trade Commission (FTC) finds that manufactured homes, unlike modular homes that are built to local housing codes, are “consumer products.”64 HUD has reached the same conclusion.65 Most decisions find manufactured homes to be consumer products under the Act.66
When the UCC and the Magnuson-Moss Warranty Act do not apply to a manufactured or modular home, courts may imply warranties under the common law or by analogy to the UCC.74 The state may have a new home warranty law that applies.75 Many state unfair and deceptive acts and practices (UDAP) statutes apply to sales of real estate.76 Non-UCC claims such as fraud, negligence, and strict liability in tort may also be useful.
Construction and safety standards for site-built houses are set and enforced by local jurisdictions, usually based on codes adopted by national standard-setting organizations.
The federal statute applies to “manufactured homes,” defined as:
All manufacturers must comply with HUD-adopted manufactured home construction and safety standards.109 Every manufactured home sold must be certified as in compliance with minimum construction standards.110 These standards encompass all equipment and installations in the design, construction, room size, insulation, lighting, ventilation, windstorm protection,111 fire safety,112 plumbing, and heat prod
In addition to substantive standards, HUD establishes quality control requirements.
Each manufacturer must contract with a design approval agency to review and approve all home construction designs.130 The design approval agency must be accepted by HUD to do such design approvals.131 There are currently eight states that act as primary inspection agencies for the plants in their states. Five private inspection agencies conduct the inspections in the rest of the plants across the country.132
Each plant must have an approved quality assurance program to insure that homes being produced conform to the approved designs or the standards when the inspection agency inspectors are not in the plant. The manufacturer must prepare a quality assurance manual giving a step-by-step description of its quality assurance process,136 and a copy must be kept in the plant.137
A production order typically accompanies every home on the production line, detailing dealer-ordered special features, such as upgraded insulation, different floor decking, different bathroom layout and fixtures, skylights, fireplaces, gas or oil appliances (if electric are standard), different kitchen layout, fixtures, and appliances. The production order is helpful when a buyer claims that the home as delivered did not include requested extra features.
HUD regulations require a manufacturer maintain accessible records for each home produced.145 Manufacturers generally maintain a permanent file for each home, containing all records and documents pertaining to the home, including all service records, even records of repairs made by a dealer or contractor. Request the file in discovery, and also request specific documents that the attorney knows should be in the file.
Each manufacturer must contract with a HUD-approved inspection agency to conduct in-plant inspections of each home produced.146 The inspection agency must inspect each home at least once147 and supervises the placement of a label on the home, certifying that it meets HUD standards.148 The agency makes sure that each home carries a data plate with a serial number, the identity of the plant, and some information about the home’s specifications.
HUD must send an interstate monitoring team into each of the plants across the country about once a year to evaluate the primary inspection agency’s performance.156 When a particular plant is failing to follow its own quality assurance procedures and is routinely building defective homes, HUD may send the team back to the plant more frequently.157
The federal statute provides:
[N]o State or political subdivision of a State shall have any authority either to establish, or to continue in effect, with respect to any manufactured home covered, any standard regarding construction or safety applicable to the same aspect of performance of such manufactured home which is not identical to the Federal manufactured home construction and safety standard.158
There is no direct private right of action under the National Manufactured Housing Construction and Safety Standards Act.168 Consumers can enforce the federal standards by way of the Uniform Commercial Code (UCC) implied warranty of merchantability.169 Goods that do not meet government standards do not “pass without objection in the trade under the contract description” and are not fit for their ordinary purposes.170 Violation of a federal standard
As discussed in § 17.3.5, supra, the National Manufactured Housing Construction and Safety Standards Act preempts state laws that impose construction or safety standards that differ from the federal standards.179 The federal statute does not preempt state law private causes of action, whether statutory or common law,
While the federal Act may preempt state manufactured home standards,186 most courts find that the federal Act does not preempt state causes of action that seek to hold a manufacturer liable for a manufactured home defect, even though the home complies with federal standards. The leading decision is Choate v. Champion Home Builders Co.,187 a strict liability suit for damages for personal injuries and a death suffered during a manufactured home fire.
HUD has established a dispute resolution program to resolve disputes among manufacturers, retailers, and installers about which entity is responsible for manufactured home defects that are reported within the first year after installation, and to issue orders for correction or repair of these defects.214 Any state that assumes responsibility for enforcing HUD’s substantive construction standards215 must include provisions for a dispute resolution program in its state plan.
The HUD-operated dispute resolution program, which is in effect in states that have not created their own programs, has the following features:
A state is allowed to operate its own dispute resolution system in lieu of HUD’s if it is certified by HUD and complies with four minimum requirements: (1) timely resolution of disputes; (2) provisions for issuance of appropriate orders; (3) coverage at least of defects reported within the first year after installation; and (4) adequate funding and personnel.236
Sales of new manufactured homes usually include express warranties. Manufactured home manufacturers typically provide at least a one-year express warranty in writing,237 and a substantial number of warranties are for longer periods. The warranty may not, however, cover defects that arise from improper transportation and installation. Manufacturers’ warranties may also exclude non-structural items such as appliances, furniture, fixtures, and carpeting.
About half the states have enacted manufactured home warranty laws.253 These laws generally require a minimum one-year statutory warranty that the home is defect-free. Other features may include the following:
Whether or not a state has a manufactured home warranty law, it may have standards for construction and safety of manufactured homes.276 To the extent these standards address topics covered by a federal standard, they must be identical to the federal standard to avoid preemption.277 States often set standards for installation of manufactured homes,278 and preemption does not typically apply to these standards.2
When a manufactured home is purchased with financing insured under the FHA Title I program pursuant to 12 U.S.C. § 1703, HUD requires that the manufacturer give the consumer a one-year written warranty.282 The warranty obligates the manufacturer to correct any nonconformity with the safety and construction standards under the Manufactured Housing Construction and Safety Standards Act and any defects in material and workmanship.