Consumer Warranty Law: 13.4.3.3 When Originating Creditor Is Not the Dealer
The Truth in Lending Act (TILA) provision prevents arbitration agreements from being inserted into the documents for a direct loan from a third-party lender that is secured by the manufactured home. But in such a case, as the dealer did not extend the credit, the TILA provision does not prohibit the insertion of an arbitration clause in the contract for sale between the dealer and the buyer. Nevertheless, the limit on arbitration in the third-party lender’s loan documents has important implications for the consumer’s ability to raise warranty claims in court.