Safety and Buildings Manufactured Home Dealers and Salespersons Council Meeting Summaries

The summary is considered unofficial until approved by the council at its next meeting.

Wednesday, April 21, 2004, 9:30 a.m., Room 3B, Thompson Commerce Center, 201 West Washington Avenue, Madison, Wisconsin

Member - Attendance:
Russ Gilson - Excused
Bart Huntington - Present
Jim Loechler - Present*
Tom Palecek - Present
Allen Schwoerer - Present
Mark Thiede - Present
Lynn Wehner - Absent
Steve Wetts - Present
Kathleen Zurawski - Present
*Gary Wegner, alternate

Visitors:
Ross Kinzler

Staff:
Larry Swaziek
Ronald Acker

1. Welcome, Introductions, Review of Agenda: Chairman Bart Huntington opened the meeting and welcomed everyone. The agenda was reviewed and everyone introduced themselves.

2. Review Progress Report (Meeting Summary) from March 11 Meeting: The Progress Report from the March 11, 2004 meeting was reviewed and approved as written.

3. Review Draft One of Proposed Comm 5.323 for Dealer License: Draft 1 of proposed Comm 5.323 for a dealer license was previously sent to all members. The following is a brief summary of the council review of the draft.

Comm 5.003 Definitions. The definitions of terms used in the proposed rules have been consolidated from chapters Comm 96 to 98 into section Comm 5.003 in their appropriate alphabetical location. For some terms that were used only once in the proposed rules, the definition has been incorporated into the rule and the term deleted from the list of definitions.

Tables 5.02 and 5.06 Additions to the tables include the branch and sublot licenses, and date of issuance for the expiration date.

Comm 5.323 (2) (d) 2. Financial Statement. The council recommended changing the rule for the financial statement to require the use of form SBD-10678 or equivalent. Because of this change, the council discussed the need for the list of items in paragraphs a. to g. and in subsections (3) to (5). It was agreed that all of those rules could be deleted except for (5) (d) and Table 5.323 relating to acceptable net worth or bond. The council then discussed the net worth or bond dollar amounts in Table 5.323. It was generally agreed that those amounts need to be increased. Larry Swaziek reported that the trend is toward using more bonds for the financial eligibility requirement. Ross reported that the cost of a bond is $17 per $1000 of bond. The council recommended a dollar amount of $100,000 for a new dealer and for 1 to 50 homes sold per year, and $200,000 for 51 and up homes sold per year. The council also recommended separate dollar amounts for a broker who has no sales lot, no inventory and no ownership interest as follows: new dealer and 1 to 50 homes sold per year - $25,000; 51 and up homes sold per year - $50,000.

Comm 5.323 (6) Types of Entities. It was noted that this subsection requires submittal of a financial statement for the various entities. This conflicts with the application requirements that state either a bond or financial statement must be submitted. The council agreed with the suggestion to delete this subsection and to use the standard wording in Comm 5 that indicates that the person applying for the license shall be the owner of the business, a partner in the business applying on behalf of a partnership, or the chairman of the board or chief executive officer applying on behalf of the corporation.

Comm 5.323 (9) (b) Contract Requirements. It was noted that the Department needs to develop the purchase contract form.

Comm 5.323 (9) (e) 3. Reappraisal. The 2 phrases "parts or accessories" were changed to "furnishings, appliances or accessories".

Comm 5.323 (12) Facilities and Records. The council discussed a requirement that the dealer must have authority from a manufacturer to sell the manufacturer's homes. Verification of such authority could be in the form of an affidavit, letter or written certification from the manufacturer. The council recommended adding such a requirement to the application form and adding a rule indicating that the verification is one of the records that must be kept. The council then briefly discussed qualifications for obtaining a dealer license, such as 2 years experience as a salesperson, a builder or a manufactured home installer. It was reported that Minnesota requires 2 years experience as a salesperson. The council agreed that most of the problems relating to manufactured home sales are related to installation, and that experience as a salesperson will not address those problems. It was noted that the Department will be developing rules for manufactured home installation and for certification of installers. No recommendations for qualifications were made.

4. Review Current and Proposed Salesperson License Rules; The council reviewed the draft proposal for the manufactured home salesperson license that was distributed at the March 11 meeting. This draft created section Comm 5.325. No changes were recommended in the draft; however, the council recommended adding a rule requiring the salesperson to obtain a separate license for each dealer employing the salesperson. It was noted that the Statutes require the license to indicate the employer of the salesperson.

The council then reviewed the current rules for salespersons in section Comm 98.03 (2). No changes were discussed, and the council recommended including all of Comm 98.03 (2) in proposed Comm 5.325. It was noted that Comm 98.03 (3) relating to registration plates is not needed because the plates are no longer required for the manufactured home itself.

5. Next Meeting/Adjournment: The meeting was adjourned with no future meeting scheduled. Department staff will prepare a draft of proposed rules for the dealer and salesperson licenses based on the recommendations from today's meeting. The draft will be sent to council members for review and comment. Based on the comments from members, there may be another council meeting. If there is not another meeting, council members will be sent the public hearing rule draft and notice of public hearing after the hearing material is approval by the Department Secretary.

(Editorial Note: Gary Wegner has been appointed to the council to replace Jim Loechler. An updated membership list is attached to this report.)

Manufactured Home Dealers and Salespersons Council
Russ Gilson, Manitowoc, Wisconsin Housing Alliance, Real Estate Agent
Bart Huntington, Bonduel, Wisconsin Housing Alliance, Dealer/Community Owner
Tom Palecek, Marshfield, Wisconsin Housing Alliance, Manufacturer
Allen Schwoerer, Eau Claire, Wisconsin Housing Alliance, Installer
Mark Thiede, Chippewa Falls, Wisconsin Housing Alliance, dealer
Gary Wegner, Oxford, Wisconsin Housing Alliance, Salesperson
Lynn Wehner, Fond du Lac, Wisconsin Housing Alliance, Lender/Mortgage Broker
Steve Wetts, Clinton, Wisconsin Housing Alliance, Salesperson
Kathleen Zurawski, Stevens Point, USDA Rural Development, Public

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Manufactured Home Dealers and Salespersons Council Meeting Summary

Thursday, March 11, 2004, 9:30 a.m., Tommy G. Thompson Commerce Center, 201 West Washington Avenue, Madison, Wisconsin

Member Attendance:
Russ Gilson Excused
Bart Huntington Present
Jim Loechler Excused
Tom Palecek Present
Allen Schwoerer Present
Mark Thiede Present
Lynn Wehner Absent
Steve Wetts Present*
Kathleen Zurawski Present
*Bill Wolgram, alternate

Visitors:
Ross Kinzler

Staff:
Todd Taylor
Larry Swaziek
Ronald Acker

1. WELCOME, INTRODUCTIONS, REVIEW OF AGENDA. Council members were welcomed and thanked for their willingness to serve on the council. Members are encouraged to send an alternate if they are unable to attend a meeting. The agenda was reviewed and everyone introduced themselves.

2. REVIEW OF COUNCIL MEMBERSHIP. The council membership was reviewed and updated. (An updated membership list is included with this report.) It was noted that although several members are listed as belonging to the Manufactured Housing Alliance, they have been selected to represent specific segments of the manufactured homes industry, such as salespersons, dealers, manufacturers, installers and lenders. Council meeting facilities and procedures were discussed. Todd Taylor briefed the council on how to get on an Email list in order to be notified of Department activities related to manufactured homes. Todd distributed a packet of information on the Department's Web sites where various program information can be found. See
http://www.commerce.state.wi.us/SB/SB-DivEmailSignup.html
http://www.commerce.state.wi.us/SB/SB-ManufacturedMobileHomesProgram.html

3. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON. The chairperson's responsibilities, as contained in the Advisory Council Manual sent to all members, were briefly discussed. Bart Huntington was nominated, seconded and unanimously elected as chairperson. Mark Thiede volunteered as vice-chairperson, with no objections.

4. OVERVIEW OF MANUFACTURED HOMES CURRENT AND PROPOSED RULES. Department staff distributed and reviewed a handout containing information regarding manufactured homes major subjects, Department code proposal and advisory councils. The 7 major subjects included areas dealing with the homes themselves, parks, and licenses. These subjects are spread into 6 Commerce code chapters and 1 Public Service Commission code chapter that is now under Commerce authority. The Department's code proposal will involve chapters Comm 2 - Fee Schedule, Comm 5 - Licenses, Certifications and Registrations, Comm 26 - Manufactured Home Parks (new), and Comm 27 - Manufactured Homes. The Department has formed 2 advisory councils to assist in the revision and update of the existing rules: Manufactured Homes and Home Parks Council, and Manufactured Home Dealers and Salespersons Council. Copies of the membership list for the homes and home parks council were distributed.

5. REVIEW CURRENT DEALER LICENSE RULES. Department staff distributed copies of a Proposal for Manufactured Home Dealer License and a Proposal for Manufactured Home Salesperson License. These proposals show how the dealer and salesperson license requirements will be moved from chapters Comm 96-98 to chapter Comm 5. The council then began review of the current dealer license rules in chapters Comm 96 and 97. The following is a brief summary of the council discussion of the review.

Comm 96.02 Definitions. Terms needing defining from both chapters Comm 96 and 97 will be put in section Comm 5.003; statutory definitions will be used whenever possible.

Comm 96.03 (1) (intro.) It was noted that both the surety bond and the balance sheet are not required to be provided to fulfill the financial ability requirement; only one is required. The intro sentence needs to be changed to clarify this.

Comm 96.03 (1) (a) Surety bond. The Department form number SBD-10679 needs to be added.

Comm 96.03 (1) (b) Balance sheet information. GAAP needs to be written out and eliminate the definition of GAAP. It was noted that the 90-day requirement may require the preparation of a special balance sheet. It was commented that it may be helpful to see what other industries are required to submit for balance sheet information when obtaining licenses. Later in the meeting, Larry Swaziek reported that Wisconsin statutes chapter 452, Real Estate Practice, does not require financial statements or bonding when applying for a broker or salesperson license. Larry also reported that, in accordance with Wisconsin statutes section 218.0114 (5), a bond or irrevocable letter of credit must be provided and maintained in force of not less than $50,000 for a motor vehicle dealer license, and $25,000 for a sales finance company license or wholesale dealer license.

Comm 96.04 (5) (a) In response to a question, it was noted that the $40,000 in the rule comes from the statutes.

Comm 96.06 (3) Negative Net Worth. It was noted that this rule stating that "the license shall be denied" doesn't agree with Comm 96.05 (2) that states "the department may deny" the license. The council recommended changing Comm 96.05 (2) to read "(2) Ratio Analysis. A ratio analysis comparing liabilities with assets shall be used to evaluate a dealer's financial potential." and to change Comm 96.06 (3) to read "(3) Negative Net Worth. A financial statement with a negative net worth is evidence of a lack of financial ability to conduct business and the license shall be denied or revoked. An exception to this subsection shall be made when the current ratio as specified in s. Comm 96.05 (2) is less than one to one solely due to the manner the dealership has chosen to account for leasing operations."

Comm 96.07 (3) Corporation. It was suggested to change "corporate applicant" to "corporation".

Comm 96.07 (4) Limited Liability Companies. It was noted that the rules don't account for a limited liability partnership (LLP). It was suggested that the Department ask the Department of Financial Institutions for code wording addressing LLP's.

Comm 96.09 (1) Operating Statement. The council questioned the need for this rule as written and its location in the code. The council recommended moving this requirement up to the beginning of the code provisions, combining it with the submittal requirements in Comm 96.03 (1), and clarifying the financial information that must be submitted. It was recommended that the financial information must be submitted with an application for an initial license and a renewal of a license, and it may be required to be submitted for a change in the license or if any questions arise regarding the dealer's financial condition.

Comm 96.09 (2) Acceptable Net Worth. Under paragraph (a), the council questioned what are other industries required to have for net worth when obtaining licenses. [See Larry's report under Comm 96.03 (1) (b)] It was suggested that the Department look at chapters Trans 140 and 141, and review recent submittals for licenses. It was also noted that the rule needs to be revised to address the amount of the surety bond. Under paragraph (b), the council recommended changing "may" to "shall" and moving this requirement to be Comm 96.06 (4).

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At this time, Ross Kinzler distributed copies of code change recommendations for chapter Comm 97 from the Wisconsin Housing Alliance's Manufactured Housing Council. Department staff distributed packages of documents and information for the Manufactured Home Dealer Program.

Comm 97.03 (3) Disclosures Required When Advertising Price. In response to a question about use tax, it was commented that use tax is paid by the dealer and not the consumer. The council recommended adding exclusions for government required permits or charges from lenders or other entities.

Comm 97.04 (1) Usage. Under paragraph (a), the council discussed the need for the second copy of the purchase contract and agreed that the second copy is not needed if the contract is signed and agreed to by the dealer at the time of purchase. The council recommended changing the second sentence in paragraph (a) to read "An exact copy of the purchase contract shall be provided to the purchaser at the time the purchaser signs the offer and again after the offer is accepted by the dealer if accepted at a different time than accepted by the purchaser."

Comm 97.04 (2) Contract Face Requirements. The council recommended deleting paragraphs (a) thru (h) and requiring the use of a Department form for the purchase contract.

Comm 97.04 (3) Termination of Offer to Purchase. Under paragraph (c), it was commented that the timelines may not be possible to meet for a person selling only used homes.

Comm 97.04 (4) Penalties for Cancellation by Purchaser. Under paragraph (a), the council recommended changing the time references to "the close of the next business day" instead of 24 hours.

Comm 97.04 (5) Price Changes. Under paragraphs (a) and (b), the council recommended changing the wording to read "local, state or federal".

Comm 97.04 (6) Warranties. The council recommended deleting paragraphs (a) thru (d) and requiring warranties to be as specified on the approved purchase contract.

Comm 97.05 Selling Agreements. The council recommended changing this title to "Consignment and Listing Agreements", and dividing subsection (1) into 2 parts covering Department forms to be required. One part would be for a listing or consignment form between the dealer and the seller of the used home, and the other part would be for a sales agreement form between the dealer and the purchaser of the used home.

Comm 97.05 (2) On-Site Sales on Rental Sites. The council recommended revising this rule to reference the requirements in Comm 97.04 (8).

Comm 97.06 (3) Used Manufactured Home General Condition Disclosure. The form mentioned in paragraph (a) needs to have a form number added. The council recommended that wording should be added similar to that used by the Department of Regulation and Licensing for inspection procedures. Also recommended was that the disclosure of information requirements should be divided into 2 parts, one for dealer disclosure and one for owner disclosure if it is a listed/consignment sale. The disclosure form must be provided by the dealer or the seller, depending on the type of sale.

Comm 97.07 (1) Business Facilities. The Department form number SBD-10680 needs to be added under paragraph (c).

Comm 97.07 (5) Temporary Sales Locations. Because the requirement in paragraph (d) doesn't just apply to temporary sales locations, the council recommended moving paragraph (d) to Comm 97.04 (4) and changing the title of (4) to be Cancellation of Agreements. It was commented that this entire section Comm 97.07 may need further revisions to correct some current problems with unfair trade practices if they are not covered by rules under the Department of Agriculture, Trade and Consumer Protection.

Comm 97.07 (6) (intro.) It was recommended to delete the reference to the Department of Transportation statutory section 342.16 (2).

Comm 97.07 (6) (a) To account for times when a title may not be available, the first sentence was changed to read "The title or other evidence of ownership for each used home . . ."

Comm 97.07 (6) (c) The reference to MVI Wisconsin title and registration application forms will be deleted and a reference to SBD-10687 will be added.

Comm 97.07 (6) (d) In order to allow for different formats for maintaining records, the council recommended revising the second sentence of this paragraph to read "The following information shall be maintained for each licensed location: Date acquired, Acquired from name and address, New or used, Year make-ID, Date sold or disposed of, Disposed of or sold to name and address."

Comm 97.07 (7) Maintenance of Records. This subsection was revised in order to remove the references to the motor vehicle related requirements. The council recommended changing this subsection to read "The records described in sub. (6) shall be maintained for 5 years. The records shall be kept in the place of business during business hours and shall be open to inspection and copying by the department during reasonable business hours."

6. ADJOURNMENT/NEXT MEETING. The meeting was adjourned, and the next meeting was scheduled for Wednesday, April 21, 2004, beginning at 9:30 a.m. in Room 3B.

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