(1) Proper sizing of footings depends on the load carrying capacity of both the piers and the soil. To determine the load bearing capacity of the soil, the installer may use any of the following methods:

(A) Pocket penetrometer:

(i) Test a typical area adjacent to or within 10 feet of the perimeter of the unit;

(ii) Dig down to undisturbed soil. This should be a minimum of 1 square foot surface area; and

(iii) Using the pocket penetrometer take seven (7) readings, eliminate the highest and the lowest and average the remaining five (5).

(B) Soil surveys from the U.S. Department of Agriculture;

(C) Values from tables of allowable or presumptive bearing capacities given in local building codes. Such tables are commonly available from the local authority having jurisdiction; or

(D) Any other test data from soil analysis reports.

(2) The footing must be placed on firm, undisturbed soil, or fill compacted to at least 90% of its maximum relative density. Installation on loose, noncompacted fill may invalidate the home's limited warranty.

(3) Footer configurations:

Figure: 10 TAC §80.54(h)(3)

(4) Footer sizing and capacities: The following tables represent maximum loads and spacings based on footer size and soil bearing capacity. Other approved footers may be used if equal or greater in bearing area than those footer sizes tabulated.

Figure: 10 TAC §80.54(h)(4)

(5) Piers and pier spacings: One of the most important parts of home installation is proper pier installation. Incorrect size, location or spacing of piers may cause serious structural damage to the home. Spacing and location of piers shall be in accordance with the tables listed in these standards (Table 3B, without perimeter piers; Table 3C, with perimeter piers).

(A) Spacing shall be as even as practicable along each main I-Beam. Pier spacing may exceed tabulated values up to 30% so long as the total pier count remains the same. End piers are to be located within 24 inches of the end of the main frame.

(B) Piers shall extend at least 6 inches from the centerline of the I-Beam or be designed to prevent dislodgment due to horizontal movement of less than 4 inches.

(C) Load bearing supports or devices shall be listed by an independent testing laboratory, nationally recognized inspection agency, or other nationally recognized organization and approved by the department. Engineers or architects licensed in Texas may design load bearing supports or devices for a single installation. A copy of the design for this particular home and site shall be provided to the department before the home is installed, but department approval is not required.

(D) Sidewall openings greater than 4 feet shall have perimeter piers located under each side of the opening, i.e. patio doors, recessed porches/entries, bay windows and porch posts. Perimeter piers for openings are not required for endwalls.

(6) Pier design: Piers shall be constructed per the following details:

Figure: 10 TAC §80.54(h)(6)

(A) Shimming (if needed): Hardwood shims are commonly used as a means for leveling the home and filling any voids left between the bottom flange of the I-Beam and the top of the pier cap. Wedge shaped shims must be installed from both sides of the I-Beam to provide a level bearing surface. The allowable height must not exceed 1 inch. Shims shall be a minimum of 3 inches wide and 6 inches long. Over shimming should be avoided.

(B) Table 3B - Pier loads (pounds) at tabulated spacings WITHOUT perimeter supports:

Figure: 10 TAC §80.54(h)(6)(B)

Figure: 10 TAC §80.54(h)(6)(C)

(7) Typical multi-section pier layout:

Figure: 10 TAC §80.54(h)(7)

(8) Typical single section pier layout:

Figure: 10 TAC §80.54(h)(8)

(9) Multi-section units mating line column supports:

(A) On multi-section units, openings larger than 4 feet must have piers installed at each end of the opening. To determine the pier loads, refer to Table 3D in subparagraph (D) of this paragraph.

Figure: 10 TAC §80.54(h)(9)(A)

(B) Column loads for each section may be combined when the columns are opposite each other. The footer must be sized for the combined loading.

(C) Additional piers are required under marriage walls (see wall between column #3 and #4 in the Marriage Line Elevation drawing in subparagraph (A) of this paragraph). The maximum spacing is the same as the spacing at the main I-Beams, without perimeter piers, and one half the spacing of the perimeter piers, with perimeter piers installed.

(D) Table 3D: Mating line column loads (pounds).

Figure: 10 TAC §80.54(h)(9)(D)

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 18, 2003.

TRD-200305269

Timothy K. Irvine

Executive Director, Manufactured Housing Division of TDHCA

Texas Department of Housing and Community Affairs

Effective date: October 28, 2003

Proposal publication date: April 11, 2003

For further information, please call: (512) 475-2206

Subchapter E. GENERAL REQUIREMENTS

10 TAC §80.129

The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (Department) adopts new §80.129 with changes to the proposed rule as published in the February 21, 2003 issue of the Texas Register (28 TexReg 1597). The text will be republished.

The effective date of the rule is thirty (30) days following the date of publication with the Texas Register of notice that the rule has been adopted.

A public hearing was held on May 13, 2003. The following interested groups or associations presented comments either at the hearing or in writing: Texas Manufactured Housing Association ("TMHA") and the Consumers Union.

The department received the following general comments:

The Consumers Union made several comments on this proposed rule. They suggested setting a minimum penalty as well as a maximum penalty for a given violation involving a recurring offender. They also suggested that board approval be required for any exceptions to the application of the rule. The Texas Manufactured Housing Association (TMHA) commented that the department cannot assess a penalty that exceeds $1,000 for each violation, unless imposed through a judicial ruling. Also, TMHA believes this new rule could have been included as an amendment to §80.127 (relating to Sanctions and Penalties).

Staff Response: The department believes that it is appropriate to retain the ability to take an enforcement action without respect to a minimum penalty. There may be situations where consideration of all of the factors which must, by statute, be considered in assessing a penalty indicates that a monetary penalty would not be appropriate. To address TMHA's comments the portion of the grid referring to the penal amounts for recurring violations involving injury to a consumer, the penal amount was revised to indicate that it could be up to the maximum allowed by law. The staff are aware that this could have done as amendment to existing §80.127 but believed that keeping it separate made it easier to follow.

The staff does not believe that referring all exceptions to the board would be a workable solution due to the delay that it could involve and the varying nature of exceptions. Staff intends that exceptions will be few (if any), will need to be thoroughly justified and documented, and will be reported to the board so that it may monitor this issue and determine, if appropriate, whether changes might be in order.

Set forth below are comments regarding specific subsections and the analysis and recommendations of staff.

Section 80.129(a) - TMHA suggest revising the phrase "When the Department has reason to believe..." to "When the Department has evidence that...."

Staff response: We do not believe that this change is needed. Reason to believe is based on evidence and includes such ancillary issues as the credibility of witnesses.

Section 80.129(c) - TMHA suggest revising the phrase at the end of the paragraph from "suspension or revocation." to "suspension or revocation of licensees."

Staff response: Agree.

Except as noted below, the rule as proposed on February 21, 2003 is adopted as final rule with the following non-substantive changes.

In §80.129(c) at the end of the subsection "of licenses" was added per comments received.

In Figure 10 TAC §80.129(g) changes were made to the matrix referring to the penal amounts for recurring violations involving injury to a consumer, the penal amount was revised to indicate that it could be up to the maximum allowed by law.

The following is a restatement of the rules' factual basis:

Section 80.129 is adopted (with changes) and will set forth guidelines for the Department to use in determining the appropriate administrative penalty(ies) to pursue when a licensee is believed to have violated the Texas Manufactured Housing Standards Act (the "Act"), the rules (the "Rules") of the Department that implement the Act, or any order issued under the Act or the Rules.

Figure: 10 TAC §80.129(g) - The Enforcement Matrix is adopted (with changes) to determine appropriate administrative penalty(ies).

The new rule is adopted under the Texas Manufactured Housing Standards Act, Occupations Code, Subtitle C, Chapter 1201, §1201.052, which provides the Department with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and under Texas Government Code, Chapter 2306, §2306.603, which authorizes the director to adopt rules as necessary to administer and enforce the manufactured housing program through the Manufactured Housing Division.

No other statute, code, or article is affected by the new rule.

§80.129. Determinations Regarding the Pursuit of Administrative Penalties and Enforcement Actions.

(a) When the Department has reason to believe that a violation of the Standards Act, these Rules, or an administrative order has occurred, the Department shall determine what, if any, administrative action or actions may be appropriate to see that the purposes of the Standards Act are carried out. In that regard, in order to promote the uniform application of the Standards Act, the Department will follow these guidelines. The only time that the Department will deviate from these guidelines is when with either the Director or the Board determines, for documented bona fide reasons, that some other course of action, consistent with the Standards Act and any other applicable legal requirements would be more appropriate.

(b) As used herein, "dangerous conditions" means any condition which, if present, would constitute an imminent threat to health or safety, and "loss" means actual financial loss or damage, not including exemplary, punitive, special, or consequential damages. "Significant" means significant in relationship to the financial resources of the person who incurs a loss. "Promptly" means within the time prescribed by the Standards Act, these Rules, and any administrative order (including any properly granted extension) or, in the case of a matter that constitutes an imminent threat to health or safety, as quickly as reasonably possible.

(c) Any exceptionally flagrant, willful violation that constitutes an imminent threat to health or safety may be a basis for pursuit of maximum statutory penalties and/or suspension or revocation of licenses.

(d) Anytime the record indicates that there is a high likelihood that a licensee's violation is a direct result of a systemic problem, it is appropriate to request the licensee to develop a plan to prevent future occurrences. Undertaking to develop such a system is an appropriate factor to be taken into account in determining what penalty to pursue.

(e) Any and all penalties are IN ADDITION to full compliance with the Standards Act and Rules (i.e., full, prompt corrective action, restitution, or whatever else the Standards Act and rules would have required in the first place). Failure to provide such compliance on a timely basis, as specified in the applicable order, will be deemed to be a violation of the order and serve as a basis for pursuing additional administrative action, including the assessing of additional penalties and the pursuit of suspension or revocation of licensees.

(f) In determining the appropriate amount of a penalty or other action, all relevant factors shall be considered, including, but not limited to: the resources of the licensee and their ability to pay fines, efforts to achieve compliance, the nature and frequency of recurring violations, and monetary impact on consumers.

(g) Enforcement Matrix.

Figure: 10 TAC §80.129(g)

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 18, 2003.

TRD-200305268

Timothy K. Irvine

Executive Director, Manufactured Housing Division of TDHCA

Texas Department of Housing and Community Affairs

Effective date: September 28, 2003

Proposal publication date: February 21, 2003

For further information, please call: (512) 475-2206

10 TAC §80.133

The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (Department) adopts new §80.133 with changes to the proposed rule as published in the February 21, 2003 issue of the Texas Register (28 TexReg 1598). The text will be republished.

The effective date of the rule is thirty (30) days following the date of publication with the Texas Register of notice that the rule has been adopted.

The department received the following general comments:

The Consumers Union stated the department should ensure the consumer's rights under §80.133(b)(5) are clear to them. They stated that some consumers may want to perform the repairs themselves or arrange for the work to be done and file a claim for actual reasonable expenses under this section, instead of the department assigning warranty repairs to licensees. TMHA stated that the rule does not mention the method to be used to submit repair estimates or how the department will signify that a repair bid has been approved.

Staff response: Staff believes that the primary purpose of this section is to delineate staff responsibilities in reviewing direct claims by consumers. Staff believes that the most effective way to advise consumers of their rights will be through dissemination of consumer education materials, not through this rule provision. Staff does not agree with the Consumers Union as to the importance of advising consumers of their rights. However, those rights, as set out in the statute, are rights to reimbursement for certain specified claims. Staff does not believe it appropriate to subject consumers to the complexities and delays of bid review.

Set forth below are comments from TMHA suggesting revisions to specific subsections and the analysis and recommendations of staff.

Section 80.133(b) - TMHA suggested changing "the licensee" to "a licensee."

Staff response: Agree.

Section 80.133(b)(2)(A) - TMHA suggested rewording the subparagraph to "the amount billed shall not exceed the amount authorized by the director. The director must also approve additional items in need of repair discovered during the repair process and not included in the original authorization before the additional repair is billed."

Staff response: No, you cannot bill more than the time spent and costs incurred and executive director ought not be allowed to approve more than that.

Section 80.133(b)(4) - TMHA suggest deleting the rule. They commented that reassigned work should be voluntary and if no estimate is submitted it should indicate that a licensee is not interested or is unable to perform the work necessary. They do not believe that this should result in administrative action by the department.

Staff response: We do not believe that compliance with an order reassigning warranty work is or should be voluntary. The Standards Act provides no latitude to reassign such work to anyone other than the manufacturer or retailer that is still in business. Without the ability to direct such work, the Department would not have a way to see that consumers' problems were addressed, and consumers would be forced to assume the expense and burden of arranging for their own repairs.

Section 80.133(b)(5) - TMHA does not understand the rule and suggest rewording it so the rule can be clearly interpreted.

Staff response: The Fund may reimburse consumers directly for covered losses. Although most claims paid are to licensees designated as consumers in connection with reassigned warranty work, there are situations where the consumer makes claim directly for reimbursement. The staff believes that this will clarify the type of documentation that the Department ought to obtain to substantiate any such claim for reimbursement.

Section 80.133(g)(1) - TMHA suggested rewording to "When a follow-up inspection is to be conducted, the Department shall notify each licensee that has been assigned responsibility for warranty items, provided that the licensee still holds an active license, by regular mail to the address on file with the Department. If the party is no longer licensed but has left a mailing address on file with the Department, such party shall be given notice of the follow-up inspection by first class mail to that address."

Staff response: The paragraph is clear as proposed.

Section 80.133(g)(2) - TMHA suggested rewording to "When the department authorizes warranty work orders the work orders will be sent to each licensee or consumer to whom responsibility has been assigned. They shall be sent by regular mail to the address of record on file with Department."

Staff response: The paragraph is clear as intended, since all orders will be to licensees.

Section 80.133(g)(3) - TMHA suggested rewording to "...The party to whom the [re-]warranty work is re-assigned shall perform the warranty work and shall be a consumer, as provided for in the Standards Act, entitled to be reimbursed from the HORF."

Staff response: Agree.

The sections are now appropriately numbered in the format required.

Except as noted below, the rule as proposed on February 21, 2003 is adopted as final rule with the following non-substantive changes.

In §80.133 the name of the recovery fund and the Standards Act statute were changed to comply with revisions made by the 78th Legislature. The Standards Act is now under the Occupations Code, Chapter 1201, which replaces Article 5221f, Vernon's Texas Civil Statutes. The heading of the new rule has also been revised to reflect changes made by the 78th Legislature.

Section 80.133(a) is revised to reflect changes made by the 78th Legislature.

Section 80.133(b), is revised to reflect changes made by the 78th Legislature and comments received.

Section 80.133(b)(5) is revised to reflect changes made by the 78th Legislature and for clarification purposes.

Section 80.133(b)(6) changed to (b)(5)(A) and is revised to reflect changes made by the 78th Legislature and for clarification purposes.

Section 80.133(b)(7) changed to (b)(5)(B) and is revised to reflect changes made by the 78th Legislature and for clarification purposes.

Section 80.133(c) is revised to reflect changes made by the 78th Legislature.

Section 80.133(d) is revised to reflect changes made by the 78th Legislature.

Section 80.133(e) is revised to reflect changes made by the 78th Legislature.

Section 80.133(g)(3) is revised to reflect changes made by the 78th Legislature and comments received.

Section 80.133(g)(4) is revised to reflect changes made by the 78th Legislature.

Section 80.133(g)(6) is deleted and original paragraphs (7) and (8) are renumbered (6) and (7). Section 80.133(g)(6) that was originally (7) is revised to reflect changes made by the 78th Legislature.

The following is a restatement of the rules' factual basis:

Section 80.133 is adopted (with changes) that set forth the procedural requirements for the handling of claims that are subject to reimbursement or payment from the Manufactured Homeowners' Recovery Trust Fund (the "Fund"), administered by the Division of Manufactured Housing, Texas Department of Housing and Community Affairs (the "Department"). The Fund is established under §1201.405 of the Standards Act.

No other statute, code, or article is affected by the new rule.

§80.133. Administration of Claims under the Manufactured Homeowners' Recovery Trust Fund.

(a) The Manufactured Homeowners' Recovery Trust Fund (the "Fund") is established to reimburse consumers for actual unsatisfied claims against licensed manufacturers, retailers, brokers, and installers for violations of the Standards Act, these rules, the FMHCSS and its implementing regulations, and the Texas Deceptive Trade Practices-Consumer Protection Act. Payments from the Fund are subject to limitations, as set forth in §1201.405 of the Standards Act.

(b) Documentation of a claim by a Licensee who is deemed to be a "consumer" under §1201.358(d) of the Standards Act - When either a manufacturer or a retailer has their license revoked or goes out of business and the party that went out of business or had its license revoked has failed to perform required warranty work on a timely basis, the Director may direct a licensee that is still in business to perform the warranty work. A licensee so directed will be deemed to be a "consumer" under §1201.358(d) of the Standards Act and entitled to be reimbursed from the Fund for the costs of performing such re-assigned warranty work.

(1) The Director, before authorizing any party performing re-assigned warranty work to proceed, will require that an estimate be submitted, itemizing the hourly cost of labor required, the estimated time to complete the work, the itemized costs of any material, equipment, and supplies, and such additional out-of-pocket expenses as the licensee believes it will incur. Overhead costs may be included, not to exceed 20% of the cost of labor and materials. If the required estimate is not submitted and approved prior to the commencement of re-assigned warranty work, the party performing the work may not be reimbursed for that work until the Director has been provided with evidence establishing that the amount billed was justifiable in all respects. The estimate must be on the form prescribed by the Department, properly completed and executed.

(2) An order by the Director authorizing re-assigned warranty work to be performed will specify that:

(A) the amount billed shall not exceed the actual hours required and the actual out-of-pocket expenses incurred;

(B) the licensee should keep complete records, subject to audit by the Department for three years;

(D) the required evidence that the re-assigned warranty work was performed should be supplied to the Department within ten (10) days of completion; and

(E) re-assigned warranty work, once completed, is subject to being re-inspected.

(3) An order re-assigning warranty work and designating the party responsible for the re-assigned warranty work as a "consumer" under §1201.358(d) of the Standards Act becomes final if not appealed within thirty (30) days.

(4) Failure to provide a required estimate in connection with an order to perform re-assigned warranty work, once that order has become final, may serve as grounds for an administrative action against the licensee.

(5) Claims made by a consumer who is not a licensee and documentation of Fund claims -- when a consumer has a covered claim against a licensee and the licensee has not satisfied the claim, the Department shall take appropriate steps to make sure that the claim is proper and that all reasonable steps to satisfy the claim have been exhausted. In that regard:

(A) The Department, working with the consumer, shall identify the specific section(s) of law or rule that gave rise to the damages;

(B) If the damages arose as a result of a violation of the Texas Deceptive Trade Practice - Consumer Protection Act, the specific violation must be adequately documented. Acceptable documentation would include a court order finding that such a violation had occurred or the establishing of confirmed facts that would specifically constitute such a violation, along with proof that the court order could not be satisfied. The specific violation must relate directly to the manufactured home or the sale transaction regarding the manufactured home. Tangentially related matters, such as deception in connection with actions as a mortgage broker or real estate broker, are generally not covered and the person responsible should be pursued in the other capacity though appropriate means.

(c) Attorneys' fees are subject to reimbursement from the Fund, subject to certain limitations. Before reimbursing a consumer for attorneys' fees, the Department shall review the fee statement(s), which must indicate the specific services performed, the amount of work required, and the hourly rate(s) charged. Fees not directly relating to efforts to recover the unsatisfied claims are not reimbursable.

(d) The Department shall require reasonable proof of efforts to collect the damages for which reimbursement from the Fund is sought.

(e) The Department may require the assignment of claims against licensees for any amounts for which payments are made from the Fund. The Department may re-assign any and all such claims to any bonding company or other surety that reimburses the Fund for such payments.

(f) If there is no licensee that can be assigned responsibility for warranty work or corrective action, the Department may enter into agreements with one or more licensees to perform such work after requesting bids from the qualified licensee(s) in the immediate area where the work is to be performed or if, because of the scope and nature of the work, there are no qualified local licensees, with such other licensees as may possess the resources and expertise to submit bids and perform the work. If the only acceptable remedy is the replacement of a home, the Department may negotiate with qualified manufacturers to identify the lowest cost acceptable resolution.

(g) Notification of warranty work orders, inspections, and re-assigned warranty work

(1) When an inspection is to be conducted, other than an initial installation inspection, such as a follow-up installation inspection or a complaint inspection, the Department shall notify each licensee that has been assigned responsibility for warranty items, provided that the licensee still holds an active license, by notifying the licensee, by regular mail to their address of record, as on file with Department. If a party to be notified of an inspection is no longer licensed but has left a mailing address on file with the Department, such party shall be given notice of any such inspection by first class mail to that address.

(2) When warranty work orders are issued, they will be sent to each licensee to whom responsibility has been assigned. They shall be sent to the licensee by regular mail to their address of record, as on file with Department.

(3) If a licensee who has been assigned warranty responsibilities is no longer in business, the Department will, in addition to notifying their surety, notify them of the time and place of the inspection. Such notification to the out-of-business licensee shall be sent to them at their latest business address of record on file with the Department. Unless the out-of-business licensee advises the Department, in writing, on or before the date of the inspection or actually attends the inspection, the Department will re-assign the warranty work, if any, arising from the findings of the inspection to the retailer or manufacturer who is not out-of-business. The party to whom the warranty work is re-assigned shall perform the warranty work and shall be a consumer, as provided for in §1201.358(d) of the Standards Act, entitled to be reimbursed from the Fund.

(4) Notification of the surety of an out-of-business or no longer licensed licensee is given in order to afford the surety an opportunity, in accordance with §1201.407 of the Standards Act, to participation in the informal dispute resolution process.

(5) The Director shall consider the views of the surety, if any, as expressed in the informal dispute resolution process. However, the ultimate responsibility to determine how best to proceed rests with the Director, who shall make his or her decision based on a consideration of all relevant factors and the need to protect the health and safety of consumers and to carry out the purposes of the Standards Act.

(6) Once a payment is made from the Fund, the Department shall file a claim under the bond of the party primarily responsible for the unsatisfied claim. In the case of re-assigned warranty work reimbursed by the Fund, the claim shall be against the bond of the party that is no longer in business or whose license has been revoked.

(7) A surety bond issued in connection with a person or entity that is a licensee shall remain in effect with respect to that person or entity, even though the surety bond may be amended to cover one or more additional person or entities or to cover that person operating under one or more different names or identities UNLESS the amendment to the bond specifically terminates the bond with respect to such person or entity.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 18, 2003.

TRD-200305267

Timothy K. Irvine

Executive Director, Manufactured Housing Division of TDHCA

Texas Department of Housing and Community Affairs

Effective date: September 28, 2003

Proposal publication date: February 21, 2003

For further information, please call: (512) 475-2206

10 TAC §80.134

The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (Department) adopts new §80.134 with changes to the proposed rule as published in the February 21, 2003 issue of the Texas Register (28 TexReg 1600). The text will be republished.

The effective date of the rule is thirty (30) days following the date of publication with the Texas Register of notice that the rule has been adopted.

The department received the following general comments:

This proposed rule generated significant comments. The Consumers Union filed a comment in support of the rule, stating the belief that it neither narrowed nor expanded the application of the Deceptive Trade Practices Act to the activities of licensees. That was the intent of staff in drafting the rule, and the rule was proposed primarily to provide more detailed guidance as to practices that staff had identified as needing to be more closely monitored and limited. However, comments from the Texas Manufactured Housing Association and members of the industry expressed concerns that the proposed rule did not adequately address the ability to continue certain legitimate business practices and could subject the industry to added exposure under the Deceptive Trade Practices Act. TMHA states the department has no judicial authority to label any activity "deceptive." They state it is up to a court of law to determine if DTPA applies to a given situation. Also, they state that some proposed violations could be simple mistakes and to arbitrarily label them as deceptive is to deny the accused due process. They state that many proposed violations are currently addressed in existing department rules and are referenced in the Standards Act. TMHA suggest the entire rule be withdrawn.

Staff Response: The staff has made appropriate revisions to clarify that these are practices which they would regard as evidentiary of deceptive or abusive practices. The staff certainly understands that any preliminary finding or determination is subject to review and right to a hearing. It is also understood that there are existing laws that to varying degrees address these practices, but the staff believes that it is appropriate to provide specific guidance as to how it would view these practices, most of which have arisen in the context of actual complaints. It is believed that the rule will provide useful guidance to licensees regarding enforcement practices of the Department.

Set forth below are comments regarding specific subsections and the analysis and recommendations of staff.

80.134(a)(1) - One commenter expressed the view that a retailer would be unlikely to make a sale financed by an interim loan if there were any question about the likelihood of permanent financing being approved. They also pointed out the difficulty in "unwinding" a transaction financed by an improper interim loan. It was pointed out that in the interim lending phase, it is the dealer who is largely at risk, and that legitimate costs, such as construction of foundations, are being incurred and may not be readily unwound. Another commenter observed that this subsection turns on questions of the seller's belief or perception and questioned what was being attempted by this rule. A third commenter expressed the view that interim lending practices were already regulated by other agencies.

Staff response: Although the majority of licensees are probably avoiding this practice, we have seen instances where retailers were involved in arranging questionable interim financing. The proposed provision regarding escrowing and unwinding such transactions was an attempt to create a mechanism to protect the retailer. We recommend that this portion of the subsection be deleted, but it is the staff's position that if a retailer participates in making or arranging an interim loan when they have actual knowledge of facts that would indicate that the borrower will be unable to obtain permanent financing is a deceptive practice.

80.134(a)(2) - A number of commenters pointed out that there may be legitimate situations in which a discount from the stated price may be appropriate. TMHA commented that negotiating a discount on a sale would be a deceptive trade.

Staff response: The staff recommends that the subsection be revised to read "To sell or offer to sell manufactured home at a price in excess of its advertised price based on whether the sale is for cash or financed." The staff does not believe that this prohibition limits the ability or right of a seller or lender to charge additional fees, subject to applicable law, for costs other than the basic cost of the home itself, such as appraisal fees, lender's fees, installation fees, or even options on the home, as long as they are not advertised or represented as being included in the price of the home.

80.134(a)(3) - Several commenters objected to this provision, questioning whether it was even within the province of the Division of Manufactured Housing to address such issues. One commenter asked what the purposes of the subsection was, and another commenter asked if it would extend to disclosing an interest in a title company.

Staff response: The staff very much believes that it is appropriate for this Division to require licensees to disclose when they have an interest in providing financing or settlement services and to inform customers of that interest so that customers may, if they wish, obtain financing and/or settlement services elsewhere without being penalized for doing so. We believe that the inclusion of settlement services would extend to any settlement service covered by the Real Estate Settlement Procedures Act.

80.134(a)(4) - One commenter questioned whether changes in components, to comparable items of equal or better quality would be a material misrepresentation. Another commenter said that this would open a "can of worms," turning disputes into "he said/she said" situations. A third commenter said that this was already adequately covered under the Deceptive Trade Practices Act. TMHA asked how the department will enforce the rule if the consumer receives information that is not in writing. It will always be "my word against yours."

Staff response: The commenter is absolutely right that it has the potential to open a can of worms, but the staff believes that is appropriate. If a retailer represents that a particular valuable good and/or service will be "thrown in" as an inducement to buy a home (free big screen TV, free driveway, etc.) and this is not set out in the documents, how does the consumer enforce it? Almost all standard forms have a "boilerplate" statement that the contract is the full and final agreement and no oral side agreements are enforceable, yet we all know that some sellers persist in making oral side agreements that they do not ultimately deliver. When this occurs, we believe that the consumer has been deceived. All that this provision says is that if we establish that such a representation was made, that it was material, and that it was never put in writing, we believe that the consumer was deceived and that the party who made the representation should not be allowed to hide behind boilerplate contractual provisions stating that oral agreements are not enforceable. Of course, if the Division cannot establish that the material misrepresentation was made, which would require more than the mere statement of the consumer, there would be no issue. Sometimes allegations come down to issues of "he said/she said," and the Department does not believe that the consumer's ability to pursue the matter should be summarily foreclosed for failure to "get it in writing."

80.134(a)(5) - One commenter stated that this was already covered by existing laws and rules. TMHA commented that is this is covered in §80.121 (relating to Retailer's Responsibilities).

Staff response: Clearly, existing laws and rules require delivery of good and marketable title within a specified timeframe, but in instances where the seller delays the submission of the required paperwork, the consumer is victimized. The title they ultimately get may be adequate, but they did not receive the benefit of the timeframe specified by law. Too often sellers are finally forced to submit title information long after the 30 day period has expired, and they claim that having delivered title they should be deemed to be in compliance. The inclusion of this provision will make it clear that delay is inherently abusive and will not be tolerated. However, to accommodate those unlikely but theoretically possible instances where the seller is unable to avoid delay, staff has re-worded the paragraph to "Except for good cause shown, failure to submit the required forms to enable the purchaser to obtain evidence of good and marketable title within the time required by the Standards Act."

Section 80.134(a)(6) - A commenter stated that the notice requirements are already addressed under the rules. TMHA commented that this is covered under the Standards Act.

Staff response: Even though the rules underscore the statutory requirements to give the notices, staff believes that proceeding with a transaction when the notices have not been given is both deceptive and abusive. When a notice has not been timely given, the requirement about timely notice cannot be cured but to proceed with no curative effort at all would be improper, and that is what this section addresses.

Section 80.134(a)(7) - A commenter states that this provision is already addressed under other rules.

Staff response: A misrepresentation is deceptive. When a consumer comes to a licensed seller, they ought to be able to assume that their transaction is handled as a regulated transaction with that licensee. If that is not the case, it should be the responsibility of the licensee to tell the consumer what is going on, whom they are dealing with, and what their capacity is.

Section 80.134(a)(8) - A commenter states that this is already regulated.

Staff response: The thermal and wind zone requirements are already addressed, but the deceptive nature of proceeding when an improper zone is involved is the subject of this rule. We have encountered situations where retailers have proceeded with sales and installations into improper locations and have then argued that the consumers had agreed to it. Because the remedy, replacing the home with a conforming home, is often beyond the scope of what can be addressed through the Homeowners' Recovery Fund this is a serious problem, and staff believes that this rule will help curtail such practices.

Section 80.134(a)(9) - A commenter stated that this was already regulated. Several commenters also raised the issue of contingencies, such as weather, delaying the date by which something would be provided. Several commenters said this proposed requirement was burdensome. A commenter noted that it could be difficult to identify at closing a third party that would be providing something. One commenter stated they would need the phrase "after the fact" defined for clarification.

Staff response: Obviously, a licensee is not expected to provide information about something that is not known and cannot be known. If, however, the licensee knows who is to provide something or when it is supposed to be provided, they ought to be willing to share that information with the consumer. If an unforeseen contingency beyond someone's control, such as weather, a personal emergency, or a failure of a supplier, results in something being delayed, there should be no problem, and it certainly is not the intention of the Division to hold people accountable for timetables that are frustrated by events beyond their control. Staff believes that "after the fact" is sufficiently clear in the context. If something is to be provided after a disclosure is given, the disclosure, by its nature can only provide the best information available, i.e., an estimate.

Section 80.134(a)(10) - A commenter offered that by allowing the consumer to require detailed specifications on any item, regardless of value, this could put the retailer at the consumer's mercy while they asked for extensive and meaningless data, such as the specifications of screws of screws used in assembly. A commenter argued that it was excessive to require a disclosure if an item was new or used, proceeding on the assumption that all items in new homes are new and all items in used homes are used. One commenter stated it was burdensome and duplicates current laws. One commenter suggested the term "detailed specifications" be more clearly defined. One commenter suggested requiring retailers to provide the size and type of a new appliance rather than the make and model because the make and model may not be known at the time of disclosure.

Staff response: Staff has determined that the ability to ask for detailed written specifications items of less than $250 in value should still provide adequate consumer protection without burdening retailers. However, we will monitor this to see if the threshold ought to be adjusted. As for disclosing if an item is not "new," staff believes this is appropriate. If all items are used, the disclosure can simply be that the home and all items in the home are "used," "not new" or the like. This will avoid the situation where a consumer is shown and thinks they are buying a used home with new appliances, only to receive the same home with old appliances. The language has been revised to provide more flexibility in describing items.

Section 80.134(a)(11) - A commenter argued that this is already covered by other laws.

Staff response: While this may be covered by other laws, the fact remains that the Division continues to encounter situations where consumers are asked to sign incomplete disclosures, rendering the whole disclosure process meaningless at best and potentially misleading.

Section 80.134(a)(12) - A commenter argued that this is covered by existing law.

Staff response: While this may be covered by existing law, staff believes it is appropriate to identify as a deceptive practice because it is often used to document a transaction that the consumer should not even consider since they do not, in fact, have the financial resources presented. Moreover, by bringing a consumer into what is in essence a fraud, unscrupulous parties may feel that they gain a degree of power over consumers.

Section 80.134(a)(13) - A commenter said that this was covered by existing laws.

Staff response: Although it may be covered by existing laws, the Division had identified several very specific issues that form the basis for this rule such as: situations where the licensee argues that there was no down payment or deposit because it was called something else, situations where the licensee asserts that is entitled to a deduction or set-off because there was an understanding that some portion of what was collected was to pay for other services, and situations where the licensee is out of business and the only evidence of money being taken is an inconclusive document that does not make it clear who got the money and in what capacity they were acting.

Section 80.134(a)(14) - A commenter said this was covered by existing regulations. Another commenter said that this might be prejudicial in the instance of a small operator threatened with closing its operations down. A reduced refund might be better for the consumer than being forced to become a creditor in a bankruptcy.

Staff response: If a consumer had to decide between a negotiated settlement and becoming a claimant in a bankruptcy proceeding, this rule might be a bad idea. However, since the consumer can obtain a full recovery from the Texas Manufactured Homeowner's Recovery Trust Fund, which will in turn claim on the out of business licensee's bond, we believe that this is appropriate.

Section 80.134(a)(15) - A commenter expressed serious concern about the situation where the retailer goes to great trouble and expense to sell, deliver, and set a home, only to have the consumer refuse to accept it. A commenter said this was already regulated. Another commenter asked how this would be accomplished. Does it mean the home should be initially delivered and set-up at the sales center where the consumer can inspect it prior to delivery to the permanent site? They stated that the requirements are not clear and suggested defining "delivery," "accept," and "inspect."

Staff response: First, a non-substantive revision has been made to make it clear that this rule does not give a consumer carte blanche to reject a home for any reason, only if it does not conform to their contract. The Division has encountered numerous situations, especially on the sale of used homes, were the home actually delivered was not the home that the customer looked at and thought they had purchased. Given that all manufactured homes have unique identification, this should not be a problem for the conscientious dealer who documents on the contract and in their records the exact home they are acquiring and selling.

Section 80.134(a)(16) - This was duplicative and has been deleted.

Section 80.134(a)(17) - One commenter said this was already covered by existing rules, and another commenter said it was burdensome. They pointed out that people would need to get their cards re-printed. A commenter asked if it would apply to "line" advertisements. TMHA stated that advertising regulations are covered in §80.125, but there is no mention in §80.125 that failure to display your license in advertising is deceptive.

Staff response: This is in line with the requirement that other regulated industries utilize, such as real estate brokers and mortgage brokers. If someone wants to avoid or defer re-printing cards, they can simply write their license type and number, e.g., RBI 123. This will serve as integral part of ongoing consumer education efforts to get consumers to be sure they are dealing with licensed parties. In our view it would apply to all published advertisements (newspapers, flyers, radio, etc.). It would not apply to signage on an actual licensed location and relating to that location, at which the license itself must be displayed. It seemed unnecessary to place a twin provision in the advertising section.

Section 80.134(b) - One commenter said this was already required and regulated.

Staff response: We believe that it is appropriate to confirm if the retailer is or is not providing installation. As much as anything, this ought to protect retailers who elect to sell FOB and will serve to emphasize to the consumer the importance of installation, which comes with a warranty.

Except as noted below, the rule as proposed on February 21, 2003 is adopted as final rule with the following non-substantive changes.

Section 80.134(a) is reworded for clarification in response to comments received.

In Section 80.134(a)(1) the last half of the sentence is deleted starting at "...; PROVIDED, however, that such ..." in response to comments received.

Section 80.134(a)(2) is reworded for clarification in response to comments received.

Section 80.134(a)(5) through (a)(10) and (a)(15) are reworded for clarification in response to comments received.

Section 80.134(a)(16) is deleted in response to comments received.

Section 80.134(a)(17) is renumbered due to deleting paragraph (16).

The following is a restatement of the rules' factual basis:

Section 80.134 is adopted (with changes) which describe specific practices that the Department has observed to have taken place and which have been found to be deceptive. The adopted new rule provides greater clarity to licensees as to the manner in which they ought to conduct their businesses and it will enhance consumer protection.

No other statute, code, or article is affected by the new rule.

§80.134. Deceptive Practices.

(a) The following practices will be considered by the Department as indications of deceptive or abusive practices. This section in no way limits or affects whether practices not enumerated or addressed herein are deceptive, abusive, illegal, or the basis for a claim or cause of action.

(1) Interim lending - To sell a manufactured home in a transaction that utilizes interim financing while an application for permanent financing is pending if the seller has any reason to believe that the purchaser will not qualify for the permanent financing.

(2) Price alterations - To sell or offer to sell a manufactured home at a price in excess of its advertised price based on whether the sale is for cash or financed.

(3) Role in credit transaction - To have a role in the financing of a manufactured home or any interest, direct or indirect, in a party providing such financing or acting as a third party settlement service provider with respect thereto unless that role is disclosed in writing to the consumer and the consumer is advised, in writing, of the right to obtain financing elsewhere without affecting the contractual terms, including price, relating to the purchase of the manufactured home.

(4) Making any material representation about a manufactured home and failing to evidence it in a document that the purchaser may enforce.

(5) Except for good cause shown, failure to submit the required forms to enable the purchaser to obtain evidence of good and marketable title within the time required by the Standards Act.

(6) Failure to give the notice required by §1201.162 of the Standards Act, formaldehyde notice, or any other required notice.

(7) If title to the manufactured home is in the name of any party other than the person negotiating and completing the sale transaction or the business on whose behalf he or she is acting, that fact must be disclosed, the identity of the true owner must be disclosed, and the person acting in that capacity must be acting as a licensed broker with authority to negotiate a sale that will result in the delivery of good and marketable title.

(8) Installing a manufactured home in a wind zone or thermal zone for which it is not approved or delivering such a home to such a wind zone or thermal zone for installation by someone else.

(9) Failure to provide a single contractual document that evidences all items to be provided in connection with the manufactured home and, if any such items are to be provided after the fact, specifying the estimated date by which they will be provided and the identity of any party other than the retailer responsible for any such items.

(10) Failure to provide detailed specifications of any item to be delivered or provided in connection with the sale of a manufactured home if the item has a retail value in excess of $250. For example, disclosing that a refrigerator is provided is insufficient. The disclosure should specify the make and model or describe the size and features. If any item will not be>

(11) Asking for or accepting any executed document that has not been completed or altering, without all parties' signed agreement, any executed document.

(12) Knowingly accepting or issuing any check or other instrument appearing on its face to be a bona fide payment but known not to represent good funds.

(13) Accepting from a consumer any deposit or down payment, regardless of what it is called, without first giving the consumer a written statement setting forth:

(A) The amount of that deposit or down payment;

(B) A clear statement as to whether the deposit or down payment is refundable;

(D) Providing a written receipt identifying the name and address of the licensee taking the deposit or down payment and describing the manufactured housing transaction to which it relates.

(14) Negotiating or offering any required refund of less than the full amount the consumer is entitled to receive by law.

(15) Requiring a purchaser to accept delivery of a manufactured home, whether new or used, without giving them an opportunity to inspect the home to make sure that it conforms to their contract. When the purchaser signs a document acknowledging that the home which has been delivered conforms to their contract, the sale becomes final, but this in no way affects the operation of any warranty required by law or granted contractually or affects or abridges any rights or obligations of either of the parties to the transaction.

(16) Failing to identify one's self as a licensee by displaying the type and license number on a business card or advertisement.

(b) Other disclosures: On the sale of a used home, the retailer or broker must provide the purchaser with a disclosure advising the consumer either that they will be responsible for the installation (which will have a written warranty of not less than one year) or, if they will not be installing the home, a statement that they will not be installing the home and therefore will not be providing any warranty as to installation.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 18, 2003.

TRD-200305266

Timothy K. Irvine

Executive Director, Manufactured Housing Division of TDHCA

Texas Department of Housing and Community Affairs

Effective date: September 28, 2003

Proposal publication date: February 21, 2003

For further information, please call: (512) 475-2206

10 TAC §80.137

The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (Department) adopts new §80.137 with changes to the proposed rule as published in the April 11, 2003, issue of the Texas Register (28 TexReg 3025). The text will be republished.

The effective date of the rule is 30 days following the date of publication with the Texas Register of notice that the rule has been adopted.

A public hearing was held on May 13, 2003. The following interested groups or associations presented comments either at the hearing or in writing: Texas Manufactured Housing Association ("TMHA").

Set forth below are comments from TMHA suggesting revisions to specific subsections and the analysis and recommendations of staff.

Section 80.137(a)(2)--One commenter indicated that the Down Payment Verification Affidavit, as proposed in Figure: 10 TAC §80.137(a)(2), would place a licensee in the untenable position of having to swear to items outside of his or her knowledge and ability to verify.

Staff Response: The staff agreed to revise the form to make it possible for the licensee to sign it without taking on the task of verifying factual matters beyond the scope of what could be readily confirmed.

Except as noted below, the rule as proposed on April 11, 2003 is adopted as final rule with the following non-substantive changes.

Section 80.137(a)(1) and Figure: 10 TAC §80.137(a)(1) are revised to conform with revisions made to the Standards Act by the 78th Legislature and for clarification purposes.

Figure: 10 TAC §80.137(a)(2) is revised to conform with revisions made to the Standards Act by the 78th Legislature, in response to comments received, and for clarification purposes.

Figure: 10 TAC §80.137(a)(3) is deleted because the Covenant Disclosure Notice form is no longer needed.

Section 80.137(a)(4) and Figure: 10 TAC §80.137(a)(4) are renumber to subsection (a)(3) and the form is revised to confirm with revisions made to the Standards Act by the 78th Legislature.

The following is a restatement of the rules' factual basis:

Section 80.137 is adopted (with changes) to list and provide the format for all forms which the department requires to be used in connection with the administration of the Standards Act. The Department will, from time to time, make available on its website other forms which are suggested or "acceptable" sample forms that do not require the use of a specific format, and those forms are not included in this proposed regulation.

Section 80.137(a) is adopted (with changes) that sets forth those forms that are required forms to be used in connection with the installation of manufactured homes; that are required to be used in connection with the titling of manufactured homes; and that are required to be used in connection with the administration of the Manufactured Homeowners' Recovery Trust Fund, including the performing of reassigned warranty work under the Standards Act.

Figure: 10 TAC §80.137(a)(1) is adopted (with changes) to the Notice of Installation (Form T).

Figure: 10 TAC §80.137(a)(2) is adopted (with changes) Down Payment Verification Affidavit.

Figure: 10 TAC §80.137(a)(3)--Covenant Disclosure Notice is deleted.

Figure: 10 TAC §80.137(a)(4) is renumbered to subsection (a)(3) and is adopted (with changes) to the Estimate for Reassigned Warranty Work.

Section 80.137(b) is adopted (without changes) to provide for the approval of alternative forms.

No other statute, code, or article is affected by the new rule.

§80.137.Required Forms.

(a) The following forms are required by the Department to be used for the purposes described therein, as set forth in the Standards Act:

(1) Notice of Installation/Form T;

Figure: 10 TAC §80.137(a)(1) (.pdf format)

(2) Down Payment Verification Affidavit;

Figure: 10 TAC §80.137(a)(2) (.pdf format)

(3) Estimate for Reassigned Warranty Work.

Figure: 10 TAC §80.137(a)(3)

(b) Any alternative form or any modification of any of the foregoing forms may be accepted by the Department if the Director determines that all information necessary to the administration of the Standards Act has been provided and that in all other respects the alternative form or modified form is acceptable AND the director has evidenced such approval in writing prior to the acceptance of any such alternative or modified form. The director may require a legal opinion from counsel for the person seeking to use an alternative or modified form that it complies with the Standards Act and addressing such other legal issues as the director may determine. The director may place limitations or conditions on the approval of any alternative or modified form.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on August 18, 2003.

TRD-200305265

Timothy K. Irvine

Executive Director, Manufactured Housing Division of TDHCA

Texas Department of Housing and Community Affairs

Effective date: September 28, 2003

Proposal publication date: April 11, 2003

For further information, please call: (512) 475-2206

Part 5. TEXAS DEPARTMENT OF ECONOMIC DEVELOPMENT

Chapter 195. MEMORANDA OF UNDERSTANDING

10 TAC §§195.1, 195.2, 195.9