H-4747

AN ACT Relating to consumer remedies for purchasers of manufactured homes; amending RCW 46.70.070, 46.70.075, 46.70.135, and 46.70.180; adding new sections to chapter 46.70 RCW; and adding a new chapter to Title 59 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the purchase of a manufactured home is a sizable investment for most families. The legislature also finds that consumer remedies for purchases of manufactured homes lack clarity and are often inadequate. Therefore, the legislature declares that it is the purpose of this act to strengthen consumer warranties, clarify escrow provisions, and establish a recovery fund with respect to manufactured housing sales.

NEW SECTION. Sec. 2. The manufactured housing transaction recovery fund is created in the custody of the state treasurer. All assessment fees collected from manufactured home manufacturers, dealers, and installers in accordance with section 3 of this act shall be deposited into the fund. All interest earned by deposits in the fund shall accrue to the fund. The fund is not subject to allotment reductions under chapter 43.88 RCW, and no appropriation is required for expenditures. The department of community development may be reimbursed from the fund for its costs incurred for investigating and enforcing claims under this chapter. Only the director of the department of community development, or the director's designee, may authorize expenditures from the fund.

NEW SECTION. Sec. 3. Each manufactured home manufacturer, dealer, and installer doing business in the state of Washington shall pay an initial assessment fee to the manufactured housing transaction recovery fund established in section 2 of this act. The fee shall be assessed as follows:

(1) A manufacturer shall pay the sum of three thousand dollars for selling manufactured homes in the state;

(2) A dealer shall pay the sum of five hundred dollars for each retail location in the state;

(3) An installer shall pay five hundred dollars for each business location in the state.

The fee shall be collected by the licensing or certifying agency, or its agents, at the time the manufacturer, dealer, or installer submits an application for certification or licensure or renewal. A manufacturer or dealer who also acts as an installer of manufactured homes is not required to pay the fee required for an installer, but must pay the fee assessed for a manufacturer or dealer. This fee shall not be collected more than once except as provided in section 4 of this act. The department of licensing, the department of labor and industries, and the department of community development shall consult with each other before adopting rules necessary to implement this section. The fee shall be forwarded to the state treasurer for deposit into the manufactured housing transaction recovery fund.

NEW SECTION. Sec. 4. Whenever the balance of the manufactured housing transaction recovery fund falls below two hundred fifty thousand dollars, the department of community development may reimpose the fee established under section 3 of this act.

NEW SECTION. Sec. 5. A buyer of a manufactured home who wishes to recover damages from the manufactured housing transaction recovery fund must file an application with the department of community development. The department shall review the application and determine the buyer's eligibility for recovery in accordance with section 6 of this act. Any decision of the department concerning eligibility may be appealed as an adjudicative proceeding under the administrative procedure act, chapter 34.05 RCW.

NEW SECTION. Sec. 6. (1) A buyer of a manufactured home is eligible to recover from the manufactured housing transaction recovery fund, if the following conditions are met:

(a) The buyer obtains a final judgment in any court of competent jurisdiction against a manufactured home manufacturer, dealer, or installer;

(b) The judgment is on the grounds of failure to honor a warranty or guarantee, or for fraud, or for willful misrepresentation of the kind or quality of the product sold or the work provided, or for conversion, arising directly out of any transaction that occurs after July 1, 1992;

(c) The buyer has presented evidence that the judgment has been executed against all the assets of the judgment debtor or presented satisfactory evidence that the judgment debtor is judgment proof;

(d) The claim against the fund is filed within one year from the date of the judgment;

(e) The buyer has agreed to subrogate to the department all rights against the judgment debtor to the extent of the payment; and

(f) The fund balance is sufficient to pay the award.

(2) The amount of damages awarded from the fund is limited to the actual cost of repairs to the manufactured home. No punitive damages, court costs, or attorneys' fees may be awarded from the fund.

(3) If the aggregate of claims against the fund exceeds the balance in the fund, then the money in the fund shall be prorated by the department of community development among the claimants and paid in proportion to the amounts of their awards remaining unpaid.

NEW SECTION. Sec. 7. (1) The judgment debtor is liable for repayment in full for the amount arising from claims against the debtor paid from the fund, plus interest.

(2) A discharge in bankruptcy does not relieve a judgment debtor from the responsibility from repaying moneys paid from the fund to satisfy claims against the judgment debtor.

NEW SECTION. Sec. 8. If a claim is paid from the fund, or the manufacturer, dealer, or installer fails to pay the assessment required under section 3 of this act, the department that licensed or certified the judgment debtor shall suspend or deny the judgment debtor's license, registration, or certification until the judgment debtor has paid the assessment or repaid the fund the amounts paid on its behalf, plus interest. The department of licensing shall suspend a judgment debtor's license in accordance with chapter 46.70 RCW. The department of labor and industries shall suspend a judgment debtor's registration in accordance with chapter 18.27 RCW. The department of community development, the department of licensing, and the department of labor and industries shall consult with each other before adopting rules necessary to implement this section.

NEW SECTION. Sec. 9. For purposes of this chapter, "judgment debtor" means a manufactured housing manufacturer, dealer, or installer who is required to pay damages to a buyer of a manufactured home under a final judgment rendered by a court of competent jurisdiction.

NEW SECTION. Sec. 10. Sections 1 through 9 of this act shall

constitute a new chapter in Title 59 RCW.

NEW SECTION. Sec. 11. A new section is added to chapter 46.70 RCW to read as follows:

(1) In addition to the requirements contained in RCW 46.70.135, each sale of a new manufactured home in this state is made with an implied warranty that the manufactured home conforms in all material aspects to applicable federal and state laws and regulations establishing standards of safety or quality, and with implied warranties of merchantability and fitness for a particular purpose as permanent housing in the climate of the state.

(2) The implied warranties contained in this section may not be waived, limited, or modified. Any provision that attempts to waive, limit, or modify the implied warranties contained in this section is void and unenforceable.

NEW SECTION. Sec. 12. A new section is added to chapter 46.70 RCW to read as follows:

Any dealer, manufacturer, or contractor who installs a manufactured home warrants that the manufactured home is installed in accordance with the state installation code, chapter 296-150B WAC. The warranty contained in this section may not be waived, limited, or modified. Any provision attempting to waive, limit, or modify the warranty contained in this section is void and unenforceable. This section does not apply when the manufactured home is installed by the purchaser of the home.

Sec. 13. RCW 46.70.070 and 1989 c 337 s 15 are each amended to read as follows:

(1) Before issuing a vehicle dealer's license, the department shall require the applicant to file with the department a surety bond in the amount of:

(a) Fifteen thousand dollars for motor vehicle dealers;

(b) ((~~Thirty~~)) Ten thousand dollars for mobile home((,)) and park trailer dealers, and fifteen thousand dollars for travel trailer dealers((~~: PROVIDED, That if such dealer does not deal in mobile homes or park trailers such bond shall be fifteen thousand dollars~~));

(c) Five thousand dollars for miscellaneous dealers, running to the state, and executed by a surety company authorized to do business in the state. Such bond shall be approved by the attorney general as to form and conditioned that the dealer shall conduct his or her business in conformity with the provisions of this chapter.

Any retail purchaser, consignor who is not a motor vehicle dealer, or a motor vehicle dealer who has purchased from a wholesale dealer, who has suffered any loss or damage by reason of any act by a dealer which constitutes a violation of this chapter shall have the right to institute an action for recovery against such dealer and the surety upon such bond. However, under this section, motor vehicle dealers who have purchased from wholesale dealers may only institute actions against wholesale dealers and their surety bonds. Successive recoveries against ((~~said~~)) the bond ((~~shall be~~)) is permitted, but the aggregate liability of the surety to all persons shall in no event exceed the amount of the bond. Upon exhaustion of the penalty of ((~~said~~)) the bond or cancellation of the bond by the surety the vehicle dealer license shall automatically be deemed canceled.

(2) The bond for any vehicle dealer licensed or to be licensed under more than one classification shall be the highest bond required for any such classification.

(3) Vehicle dealers shall maintain a bond for each business location in this state and bond coverage for all temporary subagencies.

Sec. 14. RCW 46.70.075 and 1981 c 152 s 3 are each amended to read as follows:

Before issuing a manufacturer license to a manufacturer of mobile homes or travel trailers, the department shall require the applicant to file with the department a surety bond in the amount of ((~~forty~~)) twenty thousand dollars ((~~in the case of a mobile home manufacturer and twenty thousand dollars in the case of a travel trailer manufacturer~~)), running to the state and executed by a surety company authorized to do business in the state. ((~~Such~~)) The bond shall be approved by the attorney general as to form and conditioned that the manufacturer shall conduct his or her business in conformity with the provisions of this chapter and with all standards set by the state of Washington or the federal government pertaining to the construction or safety of such vehicles. Any retail purchaser or vehicle dealer who has suffered any loss or damage by reason of breach of warranty or by any act by a manufacturer which constitutes a violation of this chapter or a violation of any standards set by the state of Washington or the federal government pertaining to construction or safety of such vehicles has the right to institute an action for recovery against such manufacturer and the surety upon such bond. Successive recoveries against the bond shall be permitted, but the aggregate liability of the surety to all persons shall in no event exceed the amount of the bond. Upon exhaustion of the penalty of the bond or cancellation of the bond by the surety the manufacturer license is automatically deemed canceled.

Sec. 15. RCW 46.70.135 and 1989 c 343 s 22 are each amended to read as follows:

Mobile home manufacturers and mobile home dealers who sell mobile homes to be assembled on site and used as residences in this state shall conform to the following requirements:

(1) No new manufactured home may be sold unless the purchaser is provided with a manufacturer's written warranty for construction of the home in compliance with the Magnuson-Moss Warranty Act (88 Stat. 2183; 15 U.S.C. Sec. 47 et seq.; 15 U.S.C. Sec. 2301 et seq.).

(2) No new manufactured home may be sold unless the purchaser is provided with a dealer's written warranty for all installation services performed by the dealer.

(3) The warranties required by subsections (1) and (2) of this section shall be valid for a minimum of one year measured from the date of ((~~sale~~)) delivery and shall not be invalidated by resale by the original purchaser to a subsequent purchaser or by the certificate of ownership being eliminated or not issued as described in chapter 65.20 RCW. Copies of the warranties shall be given to the purchaser upon signing a purchase agreement and shall include an explanation of remedies available to the purchaser under state and federal law for breach of warranty, the name and address of the federal department of housing and urban development and the state departments of licensing and labor and industries, and a brief description of the duties of these agencies concerning mobile homes.

(4) Warranty service shall be completed within forty-five days after the owner gives written notice of the defect unless there is a bona fide dispute between the parties. Warranty service for a defect affecting health or safety shall be completed within seventy-two hours of receipt of written notice. Warranty service shall be performed on site and a written work order describing labor performed and parts used shall be completed and signed by the service agent and the owner. If the owner's signature cannot be obtained, the reasons shall be described on the work order. Work orders shall be retained by the dealer or manufacturer for a period of three years.

(5) Before delivery of possession of the home to the purchaser, an inspection shall be performed by the dealer or his or her agent and by the purchaser or his or her agent which shall include a test of all systems of the home to insure proper operation. At the time of the inspection, the purchaser shall be given copies of all documents required by state or federal agencies to be supplied by the manufacturer with the home which have not previously been provided as required under subsection (3) of this section, and the dealer shall complete any required purchaser information card and forward the card to the manufacturer. A purchaser is deemed to have taken delivery of the home when the inspection and systems test of the home have been completed subsequent to the installation of the manufactured home.

(6) Manufacturer and dealer advertising which states the dimensions of a home shall not include the length of the draw bar assembly in a listed dimension, and shall state the square footage of the actual floor area.

Sec. 16. RCW 46.70.180 and 1990 c 44 s 14 are each amended to read as follows:

Each of the following acts or practices is unlawful:

(1) To cause or permit to be advertised, printed, displayed, published, distributed, broadcasted, televised, or disseminated in any manner whatsoever, any statement or representation with regard to the sale or financing of a vehicle which is false, deceptive, or misleading, including but not limited to the following:

(a) That no down payment is required in connection with the sale of a vehicle when a down payment is in fact required, or that a vehicle may be purchased for a smaller down payment than is actually required;

(b) That a certain percentage of the sale price of a vehicle may be financed when such financing is not offered in a single document evidencing the entire security transaction;

(c) That a certain percentage is the amount of the service charge to be charged for financing, without stating whether this percentage charge is a monthly amount or an amount to be charged per year;

(d) That a new vehicle will be sold for a certain amount above or below cost without computing cost as the exact amount of the factory invoice on the specific vehicle to be sold;

(e) That a vehicle will be sold upon a monthly payment of a certain amount, without including in the statement the number of payments of that same amount which are required to liquidate the unpaid purchase price.

(2) To incorporate within the terms of any purchase and sale agreement any statement or representation with regard to the sale or financing of a vehicle which is false, deceptive, or misleading, including but not limited to terms that include as an added cost to the selling price of a vehicle an amount for licensing or transfer of title of that vehicle which is not actually due to the state, unless such amount has in fact been paid by the dealer prior to such sale.

(3) To set up, promote, or aid in the promotion of a plan by which vehicles are to be sold to a person for a consideration and upon further consideration that the purchaser agrees to secure one or more persons to participate in the plan by respectively making a similar purchase and in turn agreeing to secure one or more persons likewise to join in said plan, each purchaser being given the right to secure money, credits, goods, or something of value, depending upon the number of persons joining the plan.

(4) To commit, allow, or ratify any act of "bushing" which is defined as follows: Taking from a prospective buyer of a vehicle a written order or offer to purchase, or a contract document signed by the buyer, which:

(a) Is subject to the dealer's, or his or her authorized representative's future acceptance, and the dealer fails or refuses within forty-eight hours, exclusive of Saturday, Sunday, or legal holiday, and prior to any further negotiations with said buyer, to deliver to the buyer either the dealer's signed acceptance or all copies of the order, offer, or contract document together with any initial payment or security made or given by the buyer, including but not limited to money, check, promissory note, vehicle keys, a trade-in, or certificate of title to a trade-in; or

(b) Permits the dealer to renegotiate a dollar amount specified as trade-in allowance on a vehicle delivered or to be delivered by the buyer as part of the purchase price, for any reason except substantial physical damage or latent mechanical defect occurring before the dealer took possession of the vehicle and which could not have been reasonably discoverable at the time of the taking of the order, offer, or contract; or

(c) Fails to comply with the obligation of any written warranty or guarantee given by the dealer requiring the furnishing of services or repairs within a reasonable time.

(5) To commit any offense relating to odometers, as such offenses are defined in RCW 46.37.540, 46.37.550, 46.37.560, and 46.37.570. A violation of this subsection is a class C felony punishable under chapter 9A.20 RCW.

(6) For any vehicle dealer or vehicle salesman to refuse to furnish, upon request of a prospective purchaser, the name and address of the previous registered owner of any used vehicle offered for sale.

(7) To commit any other offense under RCW 46.37.423, 46.37.424, or 46.37.425.

(8) To commit any offense relating to a dealer's temporary license permit, including but not limited to failure to properly complete each such permit, or the issuance of more than one such permit on any one vehicle.

(9) For a dealer, salesman, or mobile home manufacturer, having taken an instrument or cash "on deposit" from a purchaser prior to the delivery of the bargained-for vehicle, to commingle ((~~said~~)) the "on deposit" funds with assets of the dealer, salesman, or mobile home manufacturer instead of holding ((~~said~~)) the "on deposit" funds as trustee in a separate trust account until the purchaser has taken delivery of the bargained-for vehicle. Delivery of a manufactured home shall be deemed to occur when the inspection and systems test of the home is completed in accordance with RCW 46.70.135(5). Failure, immediately upon receipt, to endorse "on deposit" instruments to such a trust account, or to set aside "on deposit" cash for deposit in such trust account, and failure to deposit such instruments or cash in such trust account by the close of banking hours on the day following receipt thereof, shall be evidence of intent to commit this unlawful practice: PROVIDED, HOWEVER, That a motor vehicle dealer may keep a separate trust account which equals his or her customary total customer deposits for vehicles for future delivery. For purposes of this section, "on deposit" funds received from a purchaser of a manufactured home means those funds that a seller requires a purchaser to advance before ordering the manufactured home, but does not include any loan proceeds or moneys that might have been paid on an installment contract.

(10) For a dealer or manufacturer to fail to comply with the obligations of any written warranty or guarantee given by the dealer or manufacturer requiring the furnishing of goods and services or repairs within a reasonable period of time, or to fail to furnish to a purchaser, all parts which attach to the manufactured unit including but not limited to the undercarriage, and all items specified in the terms of a sales agreement signed by the seller and buyer.

(11) Being a manufacturer, other than a motorcycle manufacturer governed by chapter 46.94 RCW, to:

(a) Coerce or attempt to coerce any vehicle dealer to order or accept delivery of any vehicle or vehicles, parts or accessories, or any other commodities which have not been voluntarily ordered by the vehicle dealer: PROVIDED, That recommendation, endorsement, exposition, persuasion, urging, or argument are not deemed to constitute coercion;

(b) Cancel or fail to renew the franchise or selling agreement of any vehicle dealer doing business in this state without fairly compensating the dealer at a fair going business value for his or her capital investment which shall include but not be limited to tools, equipment, and parts inventory possessed by the dealer on the day he or she is notified of such cancellation or termination and which are still within the dealer's possession on the day the cancellation or termination is effective, if: (i) The capital investment has been entered into with reasonable and prudent business judgment for the purpose of fulfilling the franchise; and (ii) ((~~said~~)) the cancellation or nonrenewal was not done in good faith. Good faith is defined as the duty of each party to any franchise to act in a fair and equitable manner towards each other, so as to guarantee one party freedom from coercion, intimidation, or threats of coercion or intimidation from the other party: PROVIDED, That recommendation, endorsement, exposition, persuasion, urging, or argument are not deemed to constitute a lack of good faith.

(c) Encourage, aid, abet, or teach a vehicle dealer to sell vehicles through any false, deceptive, or misleading sales or financing practices including but not limited to those practices declared unlawful in this section;

(d) Coerce or attempt to coerce a vehicle dealer to engage in any practice forbidden in this section by either threats of actual cancellation or failure to renew the dealer's franchise agreement;

(e) Refuse to deliver any vehicle publicly advertised for immediate delivery to any duly licensed vehicle dealer having a franchise or contractual agreement for the retail sale of new and unused vehicles sold or distributed by such manufacturer within sixty days after such dealer's order has been received in writing unless caused by inability to deliver because of shortage or curtailment of material, labor, transportation, or utility services, or by any labor or production difficulty, or by any cause beyond the reasonable control of the manufacturer;

(f) To provide under the terms of any warranty that a purchaser of any new or unused vehicle that has been sold, distributed for sale, or transferred into this state for resale by the vehicle manufacturer may only make any warranty claim on any item included as an integral part of the vehicle against the manufacturer of that item.

Nothing in this section may be construed to impair the obligations of a contract or to prevent a manufacturer, distributor, representative, or any other person, whether or not licensed under this chapter, from requiring performance of a written contract entered into with any licensee hereunder, nor does the requirement of such performance constitute a violation of any of the provisions of this section if any such contract or the terms thereof requiring performance, have been freely entered into and executed between the contracting parties. This paragraph and subsection (11)(b) of this section do not apply to new motor vehicle manufacturers governed by chapter 46.96 RCW.

(12) Unlawful transfer of an ownership interest in a motor vehicle as defined in RCW 19.116.050.